Central banks want to stretch the money and credit cycle to make it last for as long as it can because that is so much better than the alternative. (1/4) 
So when the system of hard money and claims on hard money becomes too painfully constrictive, governments typically abandon it in favor of what is called “fiat money.” (2/4)
No hard money is involved in fiat systems; there is just paper money that the central bank can print without restriction. As a result, there is no risk that the central bank will have its stash of hard money drawn down and have to default on its promises to deliver it. (3/4)
For the complete picture of how things work and where we are, my new book, Principles for Dealing with the Changing World Order, is now available: amazon.com/Changing-World… (4/4)
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