Why Elon Musk calls fiat currencies a scam

Elon Musk calls fiat currencies a scam. The entrepreneur, who has become increasingly involved in political debates in recent days, agrees with the point of view of many crypto enthusiasts. Why Musk rejects US dollars etc. and which currency he prefers.

Why Elon Musk calls fiat currencies a scam

Elon Musk recently called fiat currencies a scam on Twitter, making headlines. The entrepreneur responded with his comment to a question from Twitter user Wall Street Silver .

He asked his followers about a “scam that has been so normalized that it is no longer perceived as a scam . ” Elon Musk answered matter-of-factly with “fiat currencies” and received a lot of support for this statement.

Fiat currency

— Elon Musk (@elonmusk) October 1, 2023

Five minutes after this comment, he posted a satirical picture of Ukrainian President Vladimir Zelensky criticizing his request for aid to Ukraine.

To a certain extent, this political criticism also raises a objection to the fiat money system. The donated or borrowed funds are created by the relevant central banks. Due to the increase in circulating supply, the assets of those people who own the respective fiat currencies are devalued.

According to the US think tank Council of Foreign Relations , the US has supported Ukraine with $75 billion since the outbreak of war with Russia in February 2022. Musk himself has lived in the USA since 1992 and received citizenship in his adopted country in 2002.

How US dollars, francs and euros deceive users

Fiat money is an unbacked currency. Historically, this idea came up again and again when a government got into financial difficulties and wanted to increase its own wealth by producing a cheap currency at the expense of the people of the state.

The widespread popularization of fiat currencies only occurred in the 20th century. Today, no monetary system is based on a material asset. Instead, the money supply is managed by central banks. The institutions themselves pride themselves on ensuring a stable financial system. However, critics often evaluate the work of central banks in a different way.

The system behind the US dollar, the Swiss franc or the euro only differs in detail. Due to the increase in the money supply in the euro area and the USA, the inflation rate of the two currencies has risen in recent months to highs of around ten percent compared to the same month last year and thus around twice as high as for the CHF.

Inflation, which often resulted from political conflicts or the war in Ukraine, puts additional strain on many citizens in the affected countries. Based on this situation, Musk is now also criticizing the monetary system.

The amount of money in circulation depends entirely on the will of the issuing organization. In cases of hyperinflation, many people face a total loss of their assets.

Historical currencies were often based on metals such as gold or silver. To make it easier to use and manage money, banknotes were eventually used that represented a certain amount of gold. This use was gradually phased out.

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Many crypto enthusiasts long for a scarce currency and usually find this in the cryptocurrency of their choice – such as Bitcoin. Elon Musk prefers Dogecoin (DOGE). The Memecoin has a comparatively high inflation rate.

Several analysts explained that the inflation rate of five billion coins (currently around 6.50 percent per year) is ideal for a means of payment.