b.Exploration - Fiat Currency

The last part is here:   Exploration - Town Planning (II)

I am feeling so brillant today. I think I have cracked the concept of fiat currency.

(From Wiki)
Fiat money has been defined variously as: 

• any money declared by a government to be legal tender.
• state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.
• money without intrinsic value.

The term derives from the Latin fiat ("let it become", "let it be done", "it shall be").

While gold- or silver-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of gold or silver, fiat money's value is unrelated to the value of any physical quantity. Even a coin containing valuable metal may be considered fiat currency if its face value is defined by law as different from its market value as metal. 

The Nixon Shock of 1971 ended the direct convertibility of the United States dollar to gold. Since then, all reserve currencies have been fiat currencies, including the U.S. dollar and the Euro.

The countries around would never agree to revert back to non-fiat days. But, the people around the world is keen to protect their purchasing power, but the government are keen to erode them. The push-pull will go on forever.

The power of wealth comes from the number of goats or camels one possessed during the Egyptian times. Even gals/slaves were exchanged in terms of goats per gal/slaves. Everything is exchanged based on assets per exchange. This type of exchange protects the purchasing power.

But, when fiat currency was introduced, primarily because the government-of-the-day refused to honour their part of the bargain by honouring value. The government-of-the-day just want to suck value off their people. Short of a better way, the government-of-the-day just do it fiscally.

There are not many things one can invest in:

• Shares - The company corrupts and cons your investments by paying themselves high salaries, first class tickets and share options.
• Commodity - Easy to buy. Volatile. Fun. But, when you want to encash they kill you with very high administrative fee.
• Insurance - This life insurance is a joke. Easy to buy, Good on paper. But, when claiming they give all sorts of reasons as their investment returns are not guaranteed. Fuck them.
• Forex - This is just pure gambling. The winner is the gambling house.
• Bonds - This is the worst investment. Fully manipulated by the government-of-the-day.  
• Coins/Notes/Old Paintings/Stamps/Artifacts - Useless. Easy to buy. Difficult to sell.

To protect one's purchasing power is key to the problem sum.

My Solution:

This can apply to any commodity.

I got this inspiration from Bitcoin.

Assuming I have 10 sheep. Each sheep is priced at say, $50 (Assuming I bought it for $25). I sell them each at $50 in year 0 to 10 investors as perpetual sheep. Each investor would receive a certificate stating they owned 1 perpetual sheep. These sheep after 1 year would give birth to some more sheep. Some sheep might also die. But, that's the farm's problem. The farm will feed these sheep. Pander after them. Cut their fur for sale. Based on preliminary assessment, the fur and the offsprings more than compensate the keeping and feeding of the sheep on the farm land. This must be the case, else the farmer will quit.

At the end of the year 1, the farmer would announce some dividends in terms of number of sheep per perpetual sheep (say 1-10% of the perpetual sheep), hopefully this dividend would improve the investment value. Each year, each sheep would be worth more in terms of fiat currency, which protects the purchasing power of the investor. The dividend is definitely a bonus to the investment vehicle.

In bitcoin concept, the "miners" are the farmers of the sheep. While the "coins" are the perpetual sheep which are way more valuable.

These perpetual sheep can be traded or exchange for other valuable goods or fiat cash. The choice is absolutely free-forming.

Every year, the investor is given an opportunity to convert the perpetual sheep to other form of assets, such as perpetual birdnest.

In the event you wish to take delivery of the sheep, the farmer will let you into the farm and based a random generator, you may collect your sheep free-of-administrative-charge. There shall be no hustle.

Going back to Egyptian time is key. Modern concepts are bullshit in protecting value.

For those of you more intelligent people out there, try applying this concept to birdnest and give me your feedback. Thank you. 黑皮 New Year.