Basicaly we are living in a world where we have different cultures, different history background, different life style,… but what we all got in common is we are all living (or using whatever you call it) in the same monetary system, which is called FIAT. FIAT is the Latin word for "it shall be."
What is 'Fiat Money' ?
Fiat money is a currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on the faith and credit of the economy. Practicaly the system functions because people believe in it (they believe in the agreement that all people accept it), just for example the way people agree and believe in the rules of road regulations (ofcourse that's a different thing but just an example so random Joe's will be able to understand it).
Random question & short answer: So why did we switch from Gold Standard (when countries currency was backed by gold)? The system had few issues, few central entities were also abusing it & as a civilisation we were progressing inredibly slowly, nations progresses were beeing measured in promiles not in percentages like today, but on the other hand markets were more stable.
Why is monetary system so important? Well most of ordinary people don't even know in what monetary system they live and that's not the saddest part, the saddest part is that people don't know that this system is not made for little people but in fact it helps more or less likely corporations and the very few insanely rich people. I'm not trying to write a conspiracy theory but i'll try to explain it to you how the FIAT monetary system works in a very simple way. For first example i'll be taking few undeveloped African countries. In some countries people are living with 1$ per day, and this hasn't changed over past years (decades), but on the other hand $ has lost huge amount of value from the past. What i'm trying to say is that there is constantly beeing bigger difference between undeveloped countries and developed ones. Developed ones are always few steps in front of the undeveloped ones, because FIAT system keeps people on top and it helps them more than it helps out the poor people.
I will explain it now in the simpliest way i know to and i hope i have helped you understand why FIAT system is bad for us as a civilisation if we want all to have equal chances and living standard:
The Hand with 5 fingers: it represents a country, each finger represents 1 person which owns 1$. (In total 5$)
The Fist: It represents a Central bank, a legal entity which controls the money supply and artificialy effects the market.
NOTE: There are no imports and exports, this is the only country existing on planet Earth, we will take this as an example so average person can easily undertand it.
Step A
As we said in 1 country there are 5 people, every person has 1$, this means we got 5$ in 1 country . Every person has different interests and needs, let's say Mr.Thumb decides to save his 1$ under the bed, so he can afford to buy more luxury items later (Computer, vacation, house, etc….).
If he decides to save the money this means there are still 5$ in the country, but only 4$ are circulating, which impacts the economy, the economy get's slowed down a bit, because 20% of the money supply is not circulating, by not beeing spent this can lead to profit loses, job loses, etc…
Step B
Finger Pinkie: Let's say it's a company (1 person company) which started facing negative economical impacts because of low money circulation and country wants to help it out so it doesn't effect the countries economy status in even more bad way.
Central Bank ''prints'' a new dollar out of nowhere, not beeing backed by nothing and gives it to a company so it doesn't bankrupt or faces even bigger troubles which would have bigger negative impacts on the countries economy.
This means now that Finger Pinkie has in possesion 2$, the total money circulation is now 6$. ** Finger Pinkie has now 33.3% of money supply in possesion so he can afford to buy and spend more than others can.** Since money is power, the more you stack the more control you have, yeah the inequality differences start apearing slowly.
Remember 1 thing now we said there are 6$ in the country but the problem is only 5$ are circulating. This means Finger Pinkie has 40% control of money supply that's currently circulating. Since the new $ was printed this means that value of each $ has droped and now our poor guy Thumb will have to save for even longer time to be able to buy luxury item. DO YOU SEE WHERE WE ARE GOING? =)
Step C
Because Central Bank created a bank note out of nowhere, it created DEBT, and the TAX payers have to pay for it (little ordinary people). Our poor guy Mr.Thumb, was saving for months his 1$, which has lost in value because of inflation (creation of new notes) and now he needs to pay for tax, because a company which is very important for the country can survive. The funny thing is he's not the only guy which got screwed up, there are 3 more fingers out there which have to pay for tax so Finger Pinkie can survive the little crisis country had. Let's say the tax was 20%, so first 4 fingers have now only 0.8$, when Finger Pinkie has 2$(he doesn't get taxed because he recieves help from authorities).
Let's calculate the holdings now:
4 fingers together without Finger Pinkie have now 3.2$ in total (each of them has 0.8$).
Finger Pinkie has 2$ of holdings. There are still 5.2$ in the country now. Finger Pinkie holds 38.46% of money supply. There is still more money supply than it was before ''inflation'', but 4 fingers lost money holdings due to tax and Mr.Thumb lost even more because he was saving while other 3 guys were spending whole time and now he's depressed. ;=(
This cycle keeps on repeating to infinity until recessions keep on happening.
I hope my explanation was easy enough for an average Joe to understand it and i hope it helped people to understand the most basic thing everyone should know how our economical system is functioning and why we need to change it. I also do believe by knowing how your monetary system works you can manage to find out how you can benefit from the system, in order to benefit from the system you have to be smarter than the system ;)
NOTE: Please keep in mind the system is much more complex but my goal was to explain it in simple most basic way i know to explain it to an average Joe. The bankers and politicians are constantly using phrases which confuse people how economy system works and it makes them look smarter but i think the real smartasses are the ones which get to understand simple way how things work.