I think all fiat currencies are fallacies. One most notable fact about all fiat currencies that scares me most is that all fiat currencies can be multiplied out of thin air. The problem is that nobody has real control over a fiat currency’s multiplication.
What on earth I’m saying? Let’s discuss this further. Let’s say if the government that is responsible for a specific fiat currency is printing the money, then it can basically use financial tools such as interest rates to control the fiat money supply. What if an enemy of a state is capable of printing the same fiat currency to introduce hyperinflation into an economy? Even if the government is trying to stop inflation by raising interest rates, buying back government issue bonds, raising the banks’ reserve ratios and so on, these tools might be too blunted by then since an enemy is printing the government’s fiat currency in untold amount of units.
I might be wrong, but in my opinion fiat currencies are the derivatives of non-fiat currencies such as gold. Unfortunately, even gold can be rigged with derivatives such as gold future contracts. Without any real delivery of hard assets such as physical gold units, future contracts can be switched to different owners at specific contract prices, thus these future contracts are rigged to move prices. With prices can be inflated or deflated at will, even gold itself is sound, the gold market itself isn’t sound. Since gold isn’t using as a unit of money as it supposed to be in the past when there was a gold currency based system, a rigged gold market isn’t a catastrophe if the market gets corrected. Nonetheless, a rigged fiat monetary market would be a catastrophic life changing event for all walks of life if this market gets corrected. After all, modern societies are using fiat currencies as real money!
If the keeper of a fiat currency isn’t doing well in regulating ebbs and flows of the inflation/deflation and the flight of the currency, such a fiat currency may very well become valueless and destroy the whole economy of a country. If a country’s fiat currency is too influential in the world market, the whole world market may as well appear to be on a verge of collapse if such a country’s fiat currency is out of whack.