What is Fiat Money?
Fiat money refers to any currency lacking intrinsic value that is declared legal tender by a government.
How does Fiat Money work?
As valid currency solely by virtue of a government declaration, fiat money is not backed by any commodity, such as gold, but only by the faith of the bearer. In this respect, unlike currencies backed by gold or silver, fiat money does not have any intrinsic value (e.g., paper money and much coinage). The U.S. dollar is an example of fiat money.
Why does Fiat Money matter?
Fiat money allows the declaring government to employ virtually any material, such as paper (which is lightweight and convenient for carrying), as a medium of exchange. However, since the value of fiat money lies solely in the faith of those using it, its value can be easily diminished and result in rapid inflation.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
Two mild-mannered school teachers taught me everything I know about flipping houses -- and not in a good way. I met this couple in 2006. They were very nice people -- but extremely...
Read More →
Question: I want to buy a house in five years, but I won't have quite enough for a 20% down payment by that time. What if I invested in stocks to make...
Read More →
If you want to make money in the stock...
Read More →
Wall Street has a long history of con artists and crooks who bend and break the rules to benefit themselves. This...
Read More →
It's that time of year again. Not March Madness -- that comes a little later. It's shareholder letter season. ...
Read More →
