The Moral Corruption of Fiat Money

At the Library of Law and Liberty Dalrymple addresses the case of Mohamed Aziz, a Spaniard who defaulted on his mortgage yet won a case in the European Court of Justice against his lender:

Mr Aziz signed a contract without duress, and now wants to go back on its terms. And he will feel no dishonor in doing so, as hundreds of thousands or millions of other repossessed Spaniards will feel no dishonor in so doing. Why will Mr Aziz, and they, feel no dishonor?

The reason is, of course, that [his lender] the Catalunyacaixa has itself been bailed out by the government: that is to say, the taxpayers, of whom Mr Aziz is presumably one. So while he is expected to pay for the bad decisions of others, he has hitherto been expected to assume the consequences of his own bad decisions. And this is patently unfair and unjust. If the Catalunyacaixa can be bailed out because failing to bail it out would have terrible consequences, why should Mr Aziz not be bailed out because failure to bail him out would have terrible consequences?

No chain of reasoning ever comes to an end, and so we may ask ourselves why the Catalunyacaixa needed bailing out? It needed bailing out because of its habit of conjuring money out of nothing, which is possible only under a fiat money regime.

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