You have probably heard of the Gold Standard. If you have, it may have been in relation to the US and how they are no longer on it. In 1933, Franklin Roosevelt started this transition away from tying the US Dollar to gold, and in 1971, Richard Nixon finalized the move when he terminated the direct convertibility of the USD to gold. This fully converted the dollar to a fiat currency domestically and internationally. Given the timeline, most people alive today will know very little of the differences between a gold-backed currency and how it plays out in their relationship to money.
Now, there are some perfectly good reasons a country may move away from a tangible-backed currency, and many of these have served the economy relatively well for the last 90 years or so. It allowed the US to print money in order to rapidly expand the economy and pull itself out of the great depression. It gave spending power that, when backed with a stable system, allowed for the USD to become the most valuable currency in the world. Being the currency the world traded in, it brought in a lot of foreign investment and revenue. Again, all good things, but the shift to fiat currency has shown its share of cracks along the way.
Fiat money or fiat currency is a type of government-issued currency, authorized by government regulation to be legal tender but not backed by a precious metal, such as gold or silver, nor by any other tangible asset or commodity.
Today, the world operates on fiat currencies. The US’s move away from the gold standard forced that move for the rest of the world. Our economies and money are no longer tied to tangible goods; instead, we have drifted from actual value to perceived value. This shift from the real to the theoretical, despite all its benefits, presents real problems for real people in their relationship to money and much more. Money is one of the more important aspects of everyone’s lives; to separate that from the tangible world requires a rewiring of our brains, and it isn’t going so well. Many of the problems we see on a national and global scale trickle down to the individual level. Same problems, personalized.
Dysphoria
Any ordinary person can see that the U.S. stock market is no longer an accurate representation of the economy. Maybe it never was, but at least it used to seem representative. It used to travel in the same direction with shorter timelines for peaks and valleys to reflect what is actually happening. Part of this is due to volume and business regulations, but part of it is due to the increased speculative (Gambling) nature of the market and the amount of foreign investment. In 2023, nearly 30% of US investments were foreign, with that number ticking up until very recently. This influx of cash, investing, and private equity skews what the real numbers are and hides significant amounts of shortcomings in the business sector. The growth is more funded by debt than income, which looks good today, until defaults start rolling in.
Our personal credit system presents this same dysphoria for people. You can have an 800 credit score and be in an impossible financial situation. At this time, the average person can purchase much more than they can actually afford because of credit. This difference between being able to obtain something and pay for it creates real tension in the minds of a population fed a constant stream of entertainment, where they are fed 5,000 ads per day or more. Credit isn’t a representation of healthy spending habits; it is the ability to take on and manage debt, not pay it off (that can hurt your credit), but manage it.
When our money, investing, or spending, becomes fiction and rewards risk over responsibility, we have to reframe our mentalities to play the game. Our entire economy is focused around borrowing, so it encourages it. If everyone only invested in reliable picks and spent only cash, large parts of the system would quickly break down, starved of instant purchases and interest. Keeping the dysphoria going is the only option aside from a hard reset. The mentality must be reinforced to keep this going.
Tangible Spending
Most of our lives are online. I hate to be the one to spoil this for you, but online isn’t reality. The biggest separation of the real world and the digital one is consequences. Good old-fashioned, instant consequences for actions.
When you have to shop online, clothes tend to look better on the models, and gadgets seem more useful in theory. Things may be a little cheaper by skipping the brick-and-mortar experience. Then there is the fact that you don’t have to physically go look for what it is that you want. You can search the web from the comfort of your couch and have it at your door in a day or two. Just enough time to have forgotten what you bought. Even seeing the money leave your bank account can be drawn out for months. Between credit cards and buy-now-pay-later options, pressing “buy” is completely divorced from the idea of paying for things.
Cash is different. First of all, it is inconvenient to get and hold. Most paychecks are direct deposit, and bank branches are fewer than in the past. Take out too much ($10,000 today with lower thresholds incoming), and you are flagged by the government, if the bank will even give it to you. Some places won’t accept cash as a form of payment. It feels inconvenient.
When you have to hand over cash, it can hurt. There is something about holding cash, knowing that it’s all your budget, and when you part with it, it’s gone. “The Cashless Effect” highlights how people tend to spend significantly more on cards than they do with cash, between 20–80% more, depending on the study. Here is a cool article that outlines some early studies on the psychological effects. It is simply easier to part with numbers on a screen than to count out the dollars and change for what it is you are purchasing. It is the concept that the numbers are less real. Casinos have known this for a long time and is a major reason why you play with chips and not cash: It never even registers as hard-earned money.
More Than Money
The fiat currency concept has bled into nearly every aspect of life. Think about how many things you do every day that feel meaningless, unimportant, or void of engagement. One-in-five people say their job is meaningless, 40% of people feel indifferent or negative about dating, and as much as 90% of young people report feeling their lives were meaningless: things that I would expect there is some level of excitement around.
This sense of meaninglessness is more than dissatisfaction; it is full disconnection. So little of our lives have the sort of haptic response we require to feel like we are participating. These disjointed experiences leave us with the notion that our actions do not create reactions, not in our lives or the lives of others.
We can no longer count on the fact that we are interacting with people, so why bother just being nice? 51% of internet traffic is now bots, 14% of those are “bad bots,” just trying to make things worse. When there is such a large segment of the world we interact with that is not real, working for ends that are not real, how on earth could we expect to feel like anything actually matters? It is no wonder that we can completely dissociate from seeing people as equal, worthy, or more than something to “add value” for us.
As much as I hate to sound like an old crumudgin, talking about walking up hill, both ways in the snow, that may be what we need to reconnect. We need some discomfort, some friction, some pushback, and immediate consequences. We don’t need this because “hard times make you stronger.” We need it simply to know that we are participating. We need it to feel meaning, even if that meaning is to mitigate suffering, because how can we mitigate it if we can’t even relate to it?
Suffering isn’t the empathy you feel for things in your feed; it is feeling the haptic feedback from the world. Pain of failure and loss, learning from mistakes, and feeling truly accepted after working to gain that acceptance. Suffering can be done via fiat, meaning it cannot. We can empathize with suffering, but we can’t with meaning. We can imagine pain, but we can’t imagine what it actually means to feel like we matter. When we see people we admire, who seem like they are making a real impact, we can imagine what we would do with that fame, that network, those resources, or the accolades, but we can’t imagine the gratification of having a sacrifice pay off. We don’t want to think about the risks and the pushback from the universe to make things happen, because there always is. You can have meaning and fail. You can be impactful and not comfortable. That is where the meaning is, and that cannot be outsourced.
Moving Past the Illusions
You can be well fed and lack necessary nutrition. That is the fiat problem. Everything looks and feels real, but it isn’t. The feeling that your reality isn’t reality. When you look around and see a vast world, but when you start to move, it turns out to be a small cage.
Will going back to cash fix all your fiat problems? No. However, if you do it earnestly for a while, you may be able to recenter your relationship with money. If you can get comfortable with the friction, you may be able to engage with people in a deeper way. If you can appreciate a flawed world for what it is and not what you wish it could be, you may be able to take a step towards a better future. None of that happens without discomfort. It isn’t easy, and you don’t have to set foot in the real world if you are happy where you are. That is the challenge unique to us at this time.
You can choose to operate in the default system and experience default realities, curated and muted. The real world will show up at times, though. When it does, it will feel harsh, like a hot day in the sun when you are accustomed to air conditioning and fluorescent lights. The sun can burn, and you will start to sweat, but that is what makes it real.
What my fiat currency definition failed to mention is that it only runs on trust and stability. When things become unpredictable and turbulent, it breaks down. When trust that the system works for everyone is shattered, the value plummets. It requires more than compliance; it requires intentional goodwill and a genuine desire for everyone to benefit (even if others don’t benefit quite as much). In a fiat system, if you can create losers, that trust and stability is shaken. If you have actual losers, your trust is gone, and collapse is imminent.
We are meant for more than a fake life. We are built for things we can touch. We are built to become stronger under pressure. We are built to work together towards a common goal. It seems like a waste to trade that for the comfort of a curated, artificially modified life.
What is your fiat problem?