England UK

<snip for space>

> >
> > A debt based banking has no name, as far as I know. US dollars, GB
> > pounds, Euros are examples of this type of currency. Features of the
> > debt based system are high national debts, high taxes and high
> > unemployment.
> >
> > A currency that is not backed by debt but based solely on the goodwill
> > of the people is called a fiat currency. An example of a fiat currency
> > is the Guernsey pound. In Guernsey income tax is twenty percent,
> > unemployment is zero and there is no national debt.
> >
> > People try to confuse us by claiming US dollars are a fiat currency.
> > They are not. The dollar is backed by bonds which are in turn backed by
> > income tax. The dollar is a debt based currency.
>
> How is the dollar backed by bonds? Usually when we say that money is
> backed by something, we mean that its value is guaranteed by some
> commodity. If a dollar is backed by gold, then people value it because
> they know they can trade it to the government for gold. Do you mean
> that its value is propped up by the sale of bonds removing dollars from
> the economy? If so, that doesn't follow because whatever means the
> government uses to adjust the supply of dollars doesn't equate to a
> backing of that dollar. The dollar is still fiat.

There are many reputable internet sites on which fiat money is defined
simply as a currency not redeemable in a commodity. This would make
your meaning of the word fiat the correct one.I must say, though, that
I disagree. I would have said that a fiat currency does not need
reserves. US dollars use treasury bonds as a reserve. Ben Franklin's
Colonial scrip is an example of what I mean by a fiat currency.

"Debate over the term

What exactly is a "fiat" currency is a matter of some debate, with a
spectrum of opinion that runs from hard money advocates which declare
that anything other than a one to one currency basis is "fiat money",
to a range of economic theories which hold that market dynamics enforce
fiscal discipline. In general, ultra-conservatives define fiat money
stringently, and an opposition to fiat money is coupled with an
opposition to fractional reserve banking and governments having a
central bank. Advocates of "debt-free money" argue, in contrast, that
money which requires the issuing of central bank debt is a burden on
the public. In essence, just as there is a school of thought which
opposes any money which is not linked to specific, countable, and
measurable reserves, there is a school of thought which denies the
value of any encumbrance on the government's ability to issue notes at
all"

http://www.reference.com/browse/wiki/Fiat_money


> Moving from a debt based currency and a fiat currency is called
> intelligence


Sorry, that should read

Moving from a debt-based currency TO a fiat currency is called
intelligence