Author: iamking

Fiat

What is Fiat Money?

Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money. Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro and other major global currencies.

The word “fiat” comes from the Latin and is often translated as the decree “it shall be” or “let it be done.”

How Fiat Money Works

Fiat money only has value because the government maintains that value, or because two parties in a transaction agree on its value.

Historically, governments would mint coins out of a valuable physical commodity, such as gold or silver, or print paper money that could be redeemed for a set amount of a physical commodity. Fiat money is inconvertible and cannot be redeemed.

Most modern paper currencies, including the U.S. dollar, are fiat money.

Because fiat money is not linked to physical reserves, such as a national stockpile of gold or silver, it risks losing value due to inflation or even becoming worthless in the event of hyperinflation. If people lose faith in a nation’s currency, the money will no longer hold value. That differs from currency backed by gold, for example; it has intrinsic value because of the demand for gold in jewelry and decoration as well as the manufacture of electronic devices, computers and aerospace vehicles.

The U.S. dollar is considered to be both fiat money and legal tender, accepted for private and public debts. Legal tender is basically any currency that a government declares to be legal. Many governments issue a fiat currency, then make it legal tender by setting it as the standard for debt repayment.

Earlier in U.S. history, the country’s currency was backed by gold (and in some cases, silver). The federal government stopped allowing citizens to exchange currency for government gold with the passage of the Emergency Banking Act of 1933. The gold standard, which backed U.S. currency with federal gold, ended completely in 1971, when the United States also stopped issuing gold to foreign governments in exchange for U.S. currency. Since that time, U.S. dollars are known to be backed by the “full faith and credit” of the U.S. government, “legal tender for all debts, public and private” but not “redeemable in lawful money at the United States Treasury or at any Federal Reserve Bank,” as printing on U.S. dollar bills used to claim. In this sense, U.S. dollars are now “legal tender,” rather than “lawful money” which can be exchanged for gold, silver or any other commodity.

Pros and Cons of Fiat Money

Fiat money serves as a good currency if it can handle the roles that a nation’s economy needs of its monetary unit: storing value, providing a numerical account, and facilitating exchange. It also has excellent seigniorage.

Fiat currencies gained prominence in the 20th century in part because governments and central banks sought to insulate their economies from the worst effects of the natural booms and busts of the business cycle. Since fiat money is not a scarce or fixed resource like gold, central banks have much greater control over its supply, which gives them the power to manage economic variables such as credit supply, liquidity, interest rates, and money velocity. For instance, the U.S. Federal Reserve has the dual mandate to keep unemployment and inflation low.

The mortgage crisis of 2007 and subsequent financial meltdown, however, tempered the belief that central banks could necessarily prevent depressions or serious recessions by regulating the money supply. A currency tied to gold, for example, is generally more stable than fiat money because of the limited supply of gold. There are more opportunities for the creation of bubbles with a fiat money due to its unlimited supply.

The African nation of Zimbabwe provided an example of the worst-case scenario in the early 2000s. In response to serious economic problems, the country’s central bank began to print money at a staggering pace. That resulted in hyperinflation, which ran between 230 and 500 billion percent in 2008. Prices rose rapidly and consumers were forced to carry bags of money just to purchase basic staples. At the height of the crisis, 1 trillion Zimbabwean Dollars were worth about 40 cents in U.S. currency.

https://www.investopedia.com/terms/f/fiatmoney.asp

Letters patent

Letters patent (always in the plural) are a type of legal instrument in the form of a published written order issued by a monarch, president, or other head of state, generally granting an office, right, monopoly, title, or status to a person or corporation. Letters patent can be used for the creation of corporations or government offices, or for the granting of city status or a coat of arms. Letters patent are issued for the appointment of representatives of the Crown, such as governors and governors-general of Commonwealth realms, as well as appointing a Royal Commission. In the United Kingdom they are also issued for the creation of peers of the realm. A particular form of letters patent has evolved into the modern patent (referred to as a utility patent or design patent in United States patent law) granting exclusive rights in an invention (or a design in the case of a design patent). In this case it is essential that the written grant should be in the form of a public document so other inventors can consult it to avoid infringement and also to understand how to “practice” the invention, i.e., put it into practical use. In the Holy Roman Empire, Austrian Empire and Austria-Hungary, imperial patent was also the highest form of generally binding legal regulations, e. g. Patent of Toleration, Serfdom Patent etc.

The opposite of letters patent are letters close (Latin: litterae clausae), which are personal in nature and sealed so that only the recipient can read their contents. Letters patent are thus comparable to other kinds of open letter in that their audience is wide. It is not clear how the contents of letters patent became widely published before collection by the addressee, for example whether they were left after sealing by the king for inspection during a certain period by courtiers in a royal palace, who would disseminate the contents back to the gentry in the shires through normal conversation and social intercourse. Today, for example, it is a convention for the British prime minister to announce that they have left a document they wish to enter the public domain “in the library of the House of Commons”, where it may be freely perused by all members of parliament.

https://en.wikipedia.org/wiki/Letters_patent

perpetual (adj.)

mid-14c., from Old French perpetuel “without end” (12c.) and directly from Latin perpetualis “universal,” in Medieval Latin “permanent,” from perpetuus “continuous, universal,” from perpetis, genitive of Old Latin perpes “lasting,” probably from per “through” (from PIE root *per- (1) “forward,” hence “through”) + root of petere “to seek, go to, aim at” (from PIE root *pet- “to rush, to fly”). Related: Perpetually. Perpetual motion is attested from 1590s.

Code of Hammurabi

The Code of Hammurabi is a well-preserved Babylonian code of law of ancient Mesopotamia, dated to about 1754 BC (Middle Chronology). It is one of the oldest deciphered writings of significant length in the world. The sixth Babylonian king, Hammurabi, enacted the code. A partial copy exists on a 2.25-metre-tall (7.5 ft) stone stele. It consists of 282 laws, with scaled punishments, adjusting “an eye for an eye, a tooth for a tooth” (lex talionis)[1] as graded based on social stratification depending on social status and gender, of slave versus free, man versus woman.[2]

Nearly half of the code deals with matters of contract, establishing the wages to be paid to an ox driver or a surgeon for example. Other provisions set the terms of a transaction, the liability of a builder for a house that collapses, or property that is damaged while left in the care of another. A third of the code addresses issues concerning household and family relationships such as inheritance, divorce, paternity, and reproductive behavior. Only one provision appears to impose obligations on a government official; this provision establishes that a judge who alters his decision after it is written down is to be fined and removed from the bench permanently.[3] A few provisions address issues related to military service.

The code was discovered by modern archaeologists in 1901, and its editio princeps translation published in 1902 by Jean-Vincent Scheil. This nearly complete example of the code is carved into a diorite stele[4] in the shape of a huge index finger,[5] 2.25 m (7.4 ft) tall. The code is inscribed in the Akkadian language, using cuneiform script carved into the stele. The material was imported into Sumeria from Magan – today the area covered by the United Arab Emirates and Oman.[6]

It is currently on display in the Louvre, with replicas in numerous institutions, including the Oriental Institute at the University of Chicago, the Northwestern Pritzker School of Law in Chicago, the Clendening History of Medicine Library & Museum at the University of Kansas Medical Center, the library of the Theological University of the Reformed Churches in the Netherlands, the Pergamon Museum of Berlin, the Arts Faculty of the University of Leuven in Belgium, the National Museum of Iran in Tehran, the Department of Anthropology, National Museum of Natural History, Smithsonian Institution, the University Museum at the University of Pennsylvania, the Pushkin State Museum of Fine Arts in Russia, the Prewitt-Allen Archaeological Museum at Corban University, Garrett-Evangelical Theological Seminary, and Museum of the Bible in Washington, DC.

https://en.wikipedia.org/wiki/Code_of_Hammurabi

etymology (n.)

late 14c., ethimolegia “facts of the origin and development of a word,” from Old French etimologie, ethimologie (14c., Modern French étymologie), from Latin etymologia, from Greek etymologia “analysis of a word to find its true origin,” properly “study of the true sense (of a word),” with -logia “study of, a speaking of” (see -logy) + etymon “true sense, original meaning,” neuter of etymos “true, real, actual,” related to eteos “true,” which perhaps is cognate with Sanskrit satyah, Gothic sunjis, Old English soð “true,” from a PIE *set- “be stable.” Latinized by Cicero as veriloquium.

In classical times, with reference to meanings; later, to histories. Classical etymologists, Christian and pagan, based their explanations on allegory and guesswork, lacking historical records as well as the scientific method to analyze them, and the discipline fell into disrepute that lasted a millennium. Flaubert [“Dictionary of Received Ideas”] wrote that the general view was that etymology was “the easiest thing in the world with the help of Latin and a little ingenuity.”

As a modern branch of linguistic science treating of the origin and evolution of words, from 1640s. As “an account of the particular history of a word” from mid-15c. Related: Etymological; etymologically.

As practised by Socrates in the Cratylus, etymology involves a claim about the underlying semantic content of the name, what it really means or indicates. This content is taken to have been put there by the ancient namegivers: giving an etymology is thus a matter of unwrapping or decoding a name to find the message the namegivers have placed inside. [Rachel Barney, “Socrates Agonistes: The Case of the Cratylus Etymologies,” in “Oxford Studies in Ancient Philosophy,” vol. xvi, 1998]