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About Me

Darren Winters is a self made investment multi-millionaire and successful entrepreneur. Amongst
his many businesses he owns the number 1 investment training company in the UK and Europe.
This company provides training courses in stock market, forex and property investing and since
the year 2000 has successfully trained over 250,000 people.

Monday, 5 January 2015

Paper Money Eventually Returns To It's intrinsic Value - Zero

“Paper money eventually returns to its intrinsic value – zero.” Voltaire, 1694-1778

What is meant by this statement? Is it possible that eventually all fiat currencies, currencies backed by nothing of tangible value, eventually end up worthless?

Some monetary scholars reckon that the average life span of a currency is about 27 years with only a few being able to survive to a ripe old age. For example, the British pound is more than 300 years old and counting. While it has survived the test of time, it has done so at great cost. For example, on the pounds inception the currency had an exchange value of 12 ounces of silver. Today, one British pound would buy you less than 0.5% of this original value. Put another way, the longest surviving currency has lost more than 99% of its value.

Indeed, the history of fiat money has been a story of failures.

Every fiat currency, since the beginning of Roman times has led to devaluations and eventually the collapse of currency and the economy that houses it.

The following is a list of currencies that have failed either through hyperinflation or sovereign credit default; Angola (1991-1999); Argentina (1975-1991); Austria (1921-1922); Belarus (1994-2002); Bolivia (1984-1986); Brazil (1986-1994); Bosnia-Herzegovina (1993): Bulgaria (1991-1997); Chile (1971-1973); China (1939-1950); Ecuador (2000); Greece (1944-1953); Georgia (1995); Germany (1923-1924, 1945-1948);Greece (1944-1953);Hungary (1922-1927, 1944-1946); Israel (1979-1985) Japan (1944-1948); Mexico (2004); Nicaragua (1987-1990);Peru (1984-1990); Poland (1922-1924, 1990-1993); Romania (2000-2005); Russia (1921-1922, 1992-1994); Taiwan (late-1940s); Turkey (1990s); Ukraine (1993-1995); United States (1812-1814, 1861-1865); Vietnam (1981-1988); Zaire (1989-1996); Zimbabwe (1999-2007).

You'll notice from the above that even the world's largest economies, the US, Germany and Japan have all experienced currency collapse sometime in their history.

Note also Russia was no exception, with its currency collapsing several times in the last seventy years and it is probably experiencing an engineered collapse today.

So, irrespective of whether a country has a large or small economy, or whether it is a heavyweight on the world's political stage, its fiat currency is susceptible to a crash.

So it may be true, that eventually the value of all fiat currencies is zero.


Maybe what the French writer and philosopher was trying to tell us all those centuries ago is that the collapse of a fiat currency is a certainty, a mathematical one.

Similarly, when Edward Smith, Captain of the titanic summoned his chief engineer to assess whether the ship would stay afloat after hitting the iceberg, the engineer sombrely replied that the titanic is going to sink, it’s a mathematical certainty.

The idea, that the collapse of a fiat currency is a mathematical certainty, can be understood if we know how money is created and its relationship with debt. If I cut out all the jargon, which is designed to confuse people, then it is not beyond the scope of most people to understand why a fiat currency is ultimately destined to fail.

Firstly, money is created by the central bank. In most cases no printing press is involved, the central bank creates the money digitally, it is literally a few taps on a keyboard. The newly created money is then lent out to government and to a number of very large commercial banks at interest. This interest doesn't exist in the system.

When you sum up the amount of money being created by the central bank plus the interest payments required to be made by the borrower, government or commercial bank, you may realise there’s a problem for the borrower.

What is it?

Put simply, there is not enough money being created to payback the debt plus interest payments. So what is the solution? To borrow more money which further perpetuates the problem. So the money created by the central bank is never enough to payback the debt with interest, unless the borrower goes further into debt. This explains why governments are forced to go back to the bank for more loans, which creates more money and interest payments (paid by taxpayers).

It is similar to a Ponzi scheme.

We know how it ends. Eventually the debt reaches such astronomical proportions that it becomes impossible to service the debt.

So why would anyone design a system that is engineered to fail?

Perhaps that’s a question for a criminologist.

The world's most powerful central bank, the Fed, has private stockholders. It is not government owned. A small group of elite individuals become unbelievable rich before the system falters, then the “digital” money that they create is used to buy up trophy assets before the currency collapses.

Perhaps we are now in the final stages. The government imposed austerity on the masses and higher taxation so that interest rate payments can be met. The looting goes on with government forced to sell the family silver i.e. anything the country has of value, such as water infrastructure, energy, health system, historic assets, whatever.

If history repeats itself, then the final outcome, to conceal what is going on might regretfully be war.

Already, we are seeing an enemy being fabricated.

No doubt the military-industrial interests are rubbing their hands.

It is interesting to note that money mastermind, Warren Buffet, is piling out of paper assets and buying tangible assets.

They say with Billionaires, analyse their actions rather than their words.

If that is the case, then Buffet might also be of the opinion that the value of all fiat currency is eventually zero and he is preparing for the turmoil that may follow.


  1. Money is NOT "created by the central bank"; at least not here in America. Money is created when the commercial banks make loans. And when loans are paid off , money is destroyed.
    So, whether the money supply is being increased or decreased depends on "the ratio of loans made to loans paid", a dynamic process that the FED, our central bank has nothing to do with, and is, therefore, un-able to control the money supply making it no good as a central bank.



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