What’s the Difference Between Precious Metals & Fiat Currency?

fiat currency, printing money, My Gold AdvisorQ: What is fiat currency, and how are precious metals any better?

A: Only gold and silver are real money, just as they have been for thousands of years. These days, the “money” we carry around in our wallets isn’t real money, but rather a fiat currency made up out of thin air by the federal government and the Federal Reserve. Paper money is by definition a giant counterfeiting scam, but done legally by act of Congress. In 1971, President Richard Nixon took the United States (and thus the entire world) off of the gold standard. This move turned our money into something called “fiat money.”

A fiat monetary system means a system of money that isn’t backed by anything except the faith of the people. Today this system is breaking down as the people, banks, and governments holding the dollars are losing confidence in the reckless spending of bloated governments.

A question to ask is, do you think the United States government is going to suddenly, magically balance its budget? Or is it more likely that Congress and the White House will continue to drive multi-trillion-dollar deficits for years to come, so politicians can stay in power?

If the politicians keep deficit spending, that means more borrowing. More borrowing means more printing of U.S. dollars. The more U.S. dollars in print, the less buying power each individual dollar will have. Simultaneously, as the dollar falls in value, gold and silver expand their purchasing power.