(Joakim Book, Money Metals News Service) Anyone who looks at fiat currency long enough, eyes wide open, usually comes to the conclusion that this is an upside-down world.
Unlike gold or silver as sound money, under fiat currency thrift is penalized, financial surpluses are burdens, and losses are good. With tax write-offs, loss harvesting, and interest deductions, more debt is (almost) always better.
Absurdities abound, ranging from debt-fueled corporate buyouts ruling America’s capital markets to “negative gearing,” a political hot potato in countries like Australia: income-generating assets are intentionally acquired, with maximum debt loads, to run at a loss (point being to offset relatively high tax liabilities on incomes earned elsewhere).
Under ever-depreciating fiat currency, the universal, natural-order virtues of thrift, of creating a little something for one’s future self, or living below one’s means, become replaced by their exact inverse. Borrowing becomes not primarily a means for making productive, entrepreneurial investments or smoothing out consumption across periods of volatile incomes — but to short the currency.
Most people believe that mortgages are either something of a human right or a convenient way to reduce the expenses associated with renting — building capital, as my octogenarian grandpa says. His large, mostly unmortgaged house with a sea view (recently sold for an impressively inflated number) is “literally clouding this vision on this topic,” as I’ve put it before.
In late-stage fiat, the prime benefit of a mortgage isn’t said stability of owning one’s home… but to be short dollars, in the safest, most accessible way there is.
What you’re doing when you put down, say, 18% for a house, is to have a bank front you a 5.5x-leveraged-short position on the currency — with slow re-pricing and conveniently low risks for liquidation or margin calls.
Here’s another version of that: student debt.
If you look through the commentariat’s opinion on student debt, they fall somewhere between profligacy for worthless degrees and a necessary evil to get ahead in a credentially inflated modern economy.
Looking into my own student debt finances recently, I noticed something else. I am shorting the currency.
By financing my college education via cheap debt that depreciated in real terms, I acquired an asset that keeps paying financial dividends in terms of professional opportunities; all it saddled me with were liabilities that become easier to carry the more our monetary overlords inflate the money. Safe bet.
We can call it a personalized university-degree carry trade.
A carry trade — itself a fiat monstrosity — is a trading strategy that, according to Investopedia, “involves borrowing from a lower interest rate currency to fund the purchase of a higher interest rate currency.”
You take advantage of financing conditions in one currency to acquire assets in another, with an FX option that appreciates in case the currency pair in question should move against you.
I didn’t set out to do this. I wasn’t exactly a financial literature genius when a decade and a half ago, I saw the incentives written on these fiat walls: next to zero interest rates for most of the ZIRP-decade of the 2010s and statutorily capped repayment schedules tied directly to my income.
This was unbelievably low for an unsecured loan, backed by an otherwise questionable asset. (For university degrees, today scare quotes around “asset” are usually warranted… but I suspect that my Oxford degree qualifies as something of the positive-value sort.)
What I hadn’t foreseen was the depreciation of the currency itself. Servicing SEK-denominated student debt with dollars that I currently earn becomes easier and easier when the USD/SEK rate continues higher. And if you’ve been paying attention to global currencies in the last decade or so, there’s only ever been one direction for the world’s reserve currency: up. To Americans, Europe is perpetually on sale.
Between the time I saw my first funds and I received my last payout, the Swedish krona had depreciated against dollars by 32%.
In the years since, while I have had to make minimum payments of interest and principal, it has depreciated a further 11% (more if I had run these numbers before the recent Trump tariff announcements).
The debt I took out to attend some of the world’s elite universities and pay my bills while doing so is melting away before my eyes. There were entire college semesters in the 2010s where, while I kept increasing the nominal SEK debt, my debt pile fell in dollar terms.
In effect, the world’s currency markets rewarded me for attending university… but really for shorting the currency. Fiat logic at its best.
One obvious objection here is that this was just a lucky currency windfall and that the dollar could have depreciated instead. Not quite.
In a carry trade, you have another asset (option) that appreciates in value in case the relevant currency pair moves against you. In my case, to service SEK debts, I could always get a job in my native Sweden, which would pay me in SEK. Thus, had the world been situated differently — had America not been the world’s money center or the monetary policy of Sweden been more like Switzerland’s — I could always have exercised that option.
What’s worse is that at every level of Fiat Land, this same tendency is repeated. Almost nobody “pays off their house” — not even my grandpa, whose house was practically speaking paid for by an appreciating real estate market. Combined, rising housing prices and pay rises, real and nominal, make the debts easier and easier to carry.
The U.K. and the U.S. never “paid off” their truly massive World War II debts.
Instead, their economies outgrew the debts while they were modestly inflating their currencies and using financial repression (forcing financial institutions to hold debts at below-zero real rates) to ensure that there were always buyers to roll over debt coming due.
The current U.S. federal debt of $36.2 trillion won’t be paid off either; a combination of growth, repression, inflation, and default will once more make it manageable.
No matter how hard you’re working, how smart and prudent you are with your finances, you can’t outwork the monetary tide rising against you.
That makes savings a burden since they must out-earn the most powerful monetary force ever created (fiat currency printing) and pay capital gains taxes on top of that fake “profit.”
In contrast, debt usually comes with interest deductions, which are highly efficient when taken against taxable incomes in the higher brackets.
The perverse conclusion of our fiat times is to never, ever hold fiat currency. Which is in contrast to holding sound money like gold and silver, being the very object whose social-economic function is to move economic value across time and place.
Fiat currency turns monetary civilization upside down.
Happy borrowing.
Joakim Book is a professional editor and writer with a passion for monetary economics and financial history, and a 2025 Sound Money Fellow, conducting advanced comparative analyses of economic history and financial behavior under a gold standard in 19th-century Britain and America versus current times.
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