Look, I'll be honest with you – understanding money properly has been one of the most eye-opening and somewhat terrifying journeys I've been on.

It’s completely changed how I invest and look at my future now, sounds dramatic I know.

And reading "The Fiat Standard" by Saifedean Ammous? Well, that was like having someone hand me the blueprint to a system I'd been trying to reverse engineer for years.

If you're interested in how this connects to building wealth with Bitcoin, check out my guide on Achieving Financial Independence with Bitcoin.

You might be thinking – "WTF Adam, why are you reviewing a book about monetary systems?"

Well, stick with me here. As an engineer living as an expat in the Middle East, I've had a front-row seat to watching this fiat money system in action, and let me tell you, what I've seen has proper done my head in.

Why Should You Care About This Book?

Before we dive in, let me tell you why this book hit differently for me.

Remember when I wrote about how I couldn't even save enough for a house deposit after 8 years of working as an engineer?

Well, this book finally explained WHY.

And trust me, once you understand the mechanics of our current monetary system, you can't unsee the design flaws.

The Historical Setup: How We Got Here

Right, let's break this down properly:

The Great Money Switcheroo (1915-1971)

The author explains how we got into this mess through what I'd call a series of "temporary emergency measures" that became permanent (sound familiar to any project managers out there?):

  • 1915: Bank of England suspends gold convertibility (the first major "it's just temporary" moment)
  • 1922: Genoa Conference – basically a meeting where they tried to patch the system
  • 1931: Britain completely abandons the gold standard (the "sod it, let's start fresh" moment)
  • 1944: Bretton Woods Agreement (like trying to create a new stable version after the system crash)
  • 1971: The US finally kills gold convertibility completely (the "YOLO" moment in monetary history)

Why This Matters to Everyone, Not Just Engineers

Here's what's fascinating from an engineering perspective – this wasn't a planned system upgrade. It was a series of hacky patches that became the production environment. Imagine if we ran our engineering projects this way:

  1. Start with a solid, tested system (gold standard)
  2. Remove key safety features during an emergency (WWI)
  3. Never reinstall those safety features
  4. Keep adding complexity to hide the problems
  5. Call it "modern monetary policy"

[Link: Read more about why governments keep playing this game in my post about Why Governments Keep Printing Money]

The Technical Debt Nightmare

What Ammous brilliantly explains (and what resonates with my engineering brain) is how each of these changes added massive technical debt to the monetary system:

  1. Removal of Physical Constraints:
    • Like removing input validation from your code
    • No more hard limits on money creation
    • System basically running in permanent debug mode
  2. Centralization of Control:
    • Single points of failure everywhere
    • No proper redundancy
    • Administrative privileges given to politicians (yikes!)

The Core Problem: Money Creation

This is where it gets proper mental. In my post about fiat money, I touched on this, but Ammous goes DEEP into how modern money creation works:

  • Money isn't just "printed" – it's primarily created through debt
  • Banks can lend out more money than they have (try explaining that in a technical spec!)
  • The whole system is built on what engineers would call "circular dependencies"

Let that sink in for a minute

Imagine if I tried to submit a structural engineering design where the safety factors were just suggestions, and the actual load-bearing capacity could be adjusted based on political needs.

I'd be laughed out of the room!

The Economic Operating System: How Fiat Changes Everything

Right, now that we understand how we got here, let's look at what this system actually does to our economy. As someone who's lived and worked across multiple countries, I've seen these effects firsthand, and Ammous breaks them down brilliantly.

The Savings Bug 🐛

Remember in my journey to financial independence how I talked about struggling to save money in the UK and Canada? Well, this book explains exactly why:

  • Inflation = Negative Interest Rate: Your money literally loses value while you sleep
  • Time Preference Gets Messed Up: Instead of thinking long-term, everyone starts thinking short-term
  • Debt Becomes "Smart": The system actually punishes savers and rewards borrowers (proper mental, right?)

The Cantillon Effect (Or Why Being Close to the Money Printer Matters)

This is where it gets interesting for us expats. The book explains something called the Cantillon Effect, which basically means:

  1. New money isn't distributed evenly
  2. Those closest to the money creation (banks, big corporations) benefit first
  3. By the time it reaches regular people, prices have already gone up

I've had, in retrospect, like everyone else who wants to look, a front-row seat to watching this play out –

EVERYTHING is more expensive.

As I discussed in my SovFIRE article, this is why traditional FIRE strategies might not be enough anymore.

Government Market Interventions: The Ripple Effects

Ammous goes into detail about how fiat money changes every market it touches. As an engineer, this fascinated me because it's basically a cascade failure in slow motion:

1. Food and Agriculture

  • Industrial agriculture gets subsidized
  • Natural farming methods get pushed out
  • Result: Lower quality food becomes cheaper than real food

2. Energy Markets

  • Market signals get distorted
  • Long-term planning becomes impossible
  • Just like I covered in my energy saving tips, we end up with inefficient solutions

3. Education and Research

This one proper did my head in:

  • Research follows funding rather than truth
  • Universities become dependent on fiat debt
  • Students take on massive debt just to participate

The Global Reserve Currency Problem

Now, here's where my experience as an expat gives me a unique perspective on what Ammous is describing:

  1. The Dollar's "Exorbitant Privilege"
  2. Impact on Other Countries

The Government Spending Trap

This part of the book really resonated with my engineering mindset – it's like watching a system with no negative feedback loops:

  1. Government can spend without limits
  2. Military-Industrial Complex
    • Endless funding for war
    • No real cost constraints
    • Public never feels the true cost

Bitcoin: The Engineer's Solution?

Right, this is where the book gets properly interesting. After spending most of the book dissecting the problems with fiat (and believe me, as Ammous has written before in the Bitcoin Standard, there are many), Ammous presents Bitcoin as an alternative.

The Technical Specs of Sound Money

As an engineer, I love how Bitcoin solves many of the technical problems we've discussed:

  1. Fixed Supply Schedule
    • No "emergency" money printing
    • Predictable inflation rate
    • Actually functions as sound money
  2. Decentralized Architecture
    • No single point of failure
    • No central administrator
    • Proper peer-to-peer system

The Energy Question

Now, this is where Ammous makes some fascinating points about Bitcoin's energy use:

  1. Grid Stabilization
    • Uses excess energy
    • Can be turned off instantly
    • Creates demand for cheap energy
  2. Energy Market Effects
    • Incentivizes renewable development
    • Makes stranded energy valuable
    • Actually reduces waste (which as an engineer, I proper appreciate)

Critical Analysis: An Engineer's Perspective

Right, let's be honest here – while I agree with a lot of what Ammous says, my engineering brain needs to point out some things:

The Good Bits 👍

  1. Technical Analysis
    • Proper systematic breakdown of the fiat system
    • Clear cause-and-effect relationships
    • Solid understanding of system incentives
  2. Historical Documentation
    • Well-researched evolution of the system
    • Clear timeline of changes
    • Good explanation of how we got here
  3. Solutions Framework

The "Needs Improvement" Bits 🤔

  1. Bias in Analysis
    • Look, I'm big on Bitcoin (as you know if you've read my previous posts), but the book sometimes reads like a Bitcoin maximalist manifesto
    • Some arguments feel oversimplified
    • Doesn't fully address transition challenges
  2. Scope Creep
    • Ventures into topics like nutrition and education without same rigor
    • Sometimes feels like feature creep in a project
    • Could have stayed more focused on monetary aspects
  3. Implementation Questions
    • As an engineer, I wanted more detail on practical transition plans
    • Some proposed solutions feel understudied
    • Network effects challenges not fully addressed

How This Book Changed My Thinking

Living as an expat, I've already seen plenty of evidence of what Ammous describes. But this book helped me:

  1. Better Understand the System
  2. Improve My Strategy
    • Shifted more towards hard assets
    • Started thinking more about energy independence
    • Focused on building real-world skills

Final Verdict

Should you read this book? If you're interested in understanding why your money seems to buy less every year, why house prices keep going mental, or why saving feels impossible – then yes, absolutely.

But remember:

  • Read it with a critical mind
  • Don't take everything as gospel
  • Use it as a starting point for your own research

Who Would Benefit Most?

  • Engineers (especially for the systems thinking)
  • Expats dealing with multiple currencies
  • Anyone interested in sound money principles
  • People questioning the current financial system

What Next?

If this review has sparked your interest, I'd recommend:

  1. Read my Bitcoin Standard review first
  2. Learn about sound money principles
  3. Explore the concept of SovFIRE

Drop a comment below: Have you read The Fiat Standard? What did you think? Did it change how you view money and banking? I'd love to hear your thoughts!

Want to dive deeper into these topics? Check out my related posts on why governments keep printing money, what fiat money really is, and how to protect yourself from inflation.

Adam

I am on a journey to embracing a less stressful, more self sufficient life through my passions for renewable energy, off grid living and financial independence.

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