The Nixon shock of 1971 marked a decisive turning point in the international monetary system when the United States stopped exchanging dollars for gold. This action cemented the transition to a purely fiat monetary system, where the currency's value is no longer tied to physical assets like gold, but depends on the authority and promise of the government. This shift has had far-reaching consequences for the global economy, the policies of national banks and the financial well-being of the average consumer.

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One of the most significant aspects of the transition to fiat money is the increased power it has given central banks and financial institutions. In a fiat system, national banks are technically allowed to print unlimited amounts of currency, which can lead to a devaluation of the monetary value over time. This ability to "print money out of the blue" has led to concerns about inflation and the erosion of savings, as the increased money supply without corresponding economic growth can reduce purchasing power.

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Further, the fiat system complicates the relationship between banks, their clients, and the wider economy. Critics point out that it allows banks to issue loans at a rate that far exceeds their actual reserves, a practice known as fractional-reserve banking. This system potentially allows banks to favor certain customers with interest-free and interest-free loans, raising questions of fairness and transparency. When banks extend credit without firm limits, it can create economic bubbles and contribute to financial instability.

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Even more troubling is that the lost purchasing power resulting from this unlimited money creation is often passed on to ordinary consumers. When the value of the currency falls, it is people with fixed incomes, savings and pensions who feel the consequences the hardest, as their money buys less over time. This can lead to an increase in the cost of living and a wider sense of economic insecurity among the population.

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Although the fiat money system allows governments and central banks to respond more quickly to economic crises by adjusting the money supply, it also brings with it risks and challenges. Debate and discussion continue on how best to balance the need for economic flexibility with the need to protect the value of the currency and ensure a fair and stable economic order.