• This opinion editorial by Jimmy Song discusses how fiat money has changed incentives at the individual and company levels.
• Lack of savings vehicles mean individuals have to work hard to keep any value, while debt enables them to bring forward consumption.
• Companies are artificial and don’t have the same history as families, but provide safety nets through health insurance, unemployment insurance, social security, pensions and life insurance.
Fiat Money and Individual Incentives
In his opinion editorial, Jimmy Song covers how fiat money ruins individual incentives. The lack of savings vehicles means that individuals have to work hard to keep any value they have, while the availability of debt enables them to bring forward their consumption. This results in a lot of people who consume rather than save.
Fiat Money and Company Incentives
At the company level, we used to be organized into families or tribes but are now organized into companies which are much less close-knit. Companies in a fiat economy provide all manner of safety nets for individuals including health insurance, unemployment insurance, social security pensions and even life insurance which protect people from disaster. These government/corporate safety nets existed before but became more popular after fiat money was introduced due to governments providing all sorts of incentives to win popular support.
The Impact on Families
The increased reliance on these safety nets has meant that people no longer depend on their families for security like they used to do in the past – instead relying on unemployment insurance when losing their job or life insurance if a wage earner dies unexpectedly. Government benefits can never replace human relationships but act as poor substitutes like seed oils for butter – just as toxic in some ways.
Jimmy Song’s opinion editorial explains how fiat money has changed incentives at both the individual and company levels leading people away from depending on their family for support towards depending on government goodies such as health insurance, unemployment insurance etc.. All these benefits come with a cost though – replacing human relationships with cold cash is never going to be beneficial in the long run.