50 years of fiat: start of a new era of financial innovation, or end of the road?

3 min readSep 13, 2021

Did anyone else notice that on the same day in August, two renown financial writers separately wrote articles on Bloomberg about the 50th anniversary of the death of the gold standard?


  • Niall Ferguson: Fiat was a major innovation, crypto is next
  • John Authers: Fiat is a crazy experiment, there will be hyperinflation, then there will be a new standard (maybe it will be crypto, or gold, or something else — we need a standard)
  • Both end up with a conclusion that leaning strongly into crypto may not be a bad idea

Niall Ferguson, historian and author of a seminal book on money, the Ascent of Money, wrote that the deliberate birth of fiat money was a financial innovation that allowed the US to establish itself as leader of the world’s financial markets.

This position as global financial leader accords influence that spreads far beyond finance, allowing the US to exert power over global events like the Russian annexation of Crimea and Swedish bank secrecy. For those of us that have worked in financial services outside of the US, the onerous FATCA regulations are another byproduct of American financial paramountcy.

Ferguson says in no uncertain terms that he believes crypto is the next major financial innovation after fiat money, one that will protect the US’ place in the world.

He sees the approach US politicians and regulators are taking, which is a mix of cluelessness and incumbent-protecting, as a serious threat to the US’ ability to maintain its position of global financial leadership.

On the other hand, John Authers, a longtime Financial Times and now Bloomberg columnist who spent almost three decades reporting on the financial markets, instead highlights that the un-tethering of money from any anchor (gold, oil), i.e. fiat, is an unstable experiment.

While you and I may have taken fiat for granted, since it is all many of us have known, he reminds us that this is a very new experiment relative to the long history of money. He seems to believe, like Paul Volcker did, that no system can replace the current one without an inflationary crisis. (Authers is most definitely not a believer in Modern Monetary Theory, an economic theory widely promoted by Ray Dalio in 2020 that supports unfettered money printing by the US government.)

Authers belives that after hyperinflation, there will emerge a new standard — maybe crypto, maybe gold, maybe a “numeraire” consisting of a basket of currencies — but there has to be a standard.

What is the point?

As someone active in crypto, I had different initial reactions to both articles.

Ferguson’s take was strongly pro-crypto, which was surprising to me, but certainly not new since I have the pleasure of hanging out with inveterate (but lovable) crypto heads.

Auther’s take, however, forced me to zoom out and look at the history of money in the last few decades. His fears of uncontrolled inflation reinforced my intuition that uncontrolled money printing and surging national debt levels cannot be sustainable, no matter what the MMT folks say. The $100 I own today could be worth $20 with just a few years of hyperinflation.

Both roads, though, lead to Rome: diversify, and don’t be afraid to lean into $crypto.

PS — I do not encourage wild speculation! It is stressful, a waste of your limited time on earth, and can lead to ruin.

First published on my mailing list at https://irregularmail.substack.com. Click to subscribe.




I do business things and nerd things. Also crypto things. Twitter: @michlai007