With the approaching tsunami of central bank digital currencies (CBDCs) looming ever closer, it shouldn’t come as a surprise when central banks shill their coins at the expense of sounder assets. Recently, European Central Bank president Christine Lagarde went so far as to say that cryptocurrency is “worth nothing.” According to Lagarde, crypto has “no underlying asset” like the upcoming digital euro. But fiat money’s secret source of value is the real explosive scandal.
[With crypto] there is no underlying asset to act as an anchor of safety.
This begs the question of what guarantees the value of the euro itself, or the U.S. dollar, or any fiat currency. As their worth is supposedly established by the decree of governments (groups of mere individuals just like you and me), what then is the “underlying asset” which gives these currencies their value? In the case of government money, the answer might blow you away.
Gold is sought after for its beauty, rarity, and utility. Societies across time have valued it almost ubiquitously, so it naturally became a good means of exchange and store of value.
According to the Bible, the world was created by fiat.
The European Central Bank can neither go bankrupt nor run out of money even if it were to suffer losses on the multi-trillion-euro pile of bonds bought under its stimulus programmes.
It’s a matter that needs to be agreed at a global level, because if there is an escape, that escape will be used.