What Is Happening to Money 101?
By: The Bitcoin Buzz
Tags: Gold, Bitcoin, Stocks, Money, Politics

Money

Money is a technology.

It is a technology used to exchange value between parties instead of the limitations of direct barter (ex: I’ll give you this corn for that tobacco). It is highest quality financial potential energy. With money you can pay for goods, energy, water, fire, movement, protection, fuel, chemical, mechanical, or potential energy. It is the highest form of stored energy.

Properties of money are divisibility, scarcity, durability, fungibility, salability across time and space.

Free Trade Capitalism

In a free trade capitalist society, (with no money printer) money is rewarded to people who provide value to others. Do you want million dollars… solve a dollar problem for a million people, or create a service that provides enough value to 4 companies and charge them 250k each. There are many ways, but they all require one person or group to specialize in a product or service that others are willing to voluntary part ways with their money to get the product or service you are offering. Over time this improves society’s quality of life as people are financially rewarded to keep solving each others problems / inconveniences.

What about monopolies? There has never been a monopoly in world history that has maintained monopoly status without government support to artificially keep them solvent. When large companies get too big, they cannot keep everyone internally on the same page and become bloated with chains of commands, boards that become out of touch with customer needs etc. They naturally would die off as smaller, more nimble companies improve on their archaic processes and eat away their market share. Like a big tree eventually dying in nature to make way for new fresh plants. Only through government allocation of money and/or favorable regulation moats can these “zombie” companies stay alive engaging in non valuable products or services.

Gold

Gold was used for a long time as it fit almost all of the qualities of money mentioned in the Money section.

Scarcity — It was essentially finite in total supply because there is only so much gold in the world. The supply of gold increases only ~2% / year.

Divisibility — It is okay at this property, it can be in gold bars, coins, rings however any smaller means of measurement becomes less efficient to use as a means of exchange.

Salability — Salability across time, gold excels greatly because it is a rock that has been here for thousands of years. Salability across space, gold is very durable for the physical journey of transferring through space. However, imagine the logistics of buying something directly with gold across the world, it would take a lot of trusted third parties to monitor this transaction to make sure no gold was “lost” along the way.

Fungibility — an ounce of solid gold = an ounce of solid gold. They are swap-able in value for the most part.

Paper money was created to represent gold in storage (The Gold Standard) because it was easier to move around. This was in effect until early 1900s and was completely abandoned in 1971. The US government wanted more money for Vietnam etc and decided to spend more than they were collecting in tax revenues. They removed the dollar’s peg to gold and started printing money (Fiat Currency). Until this point, dollars were actually redeemable in gold at US treasuries in the early 1900s. Now instead of having to raise taxes immensely to sustain their spending (which would be publicly known knowledge that may have upset the population), they could now print “more money” and devalue the savings of everyone in a less obvious way. It is the same thing as taxing the population except many are not aware of this theft on their savings occurring.

Central Banks & Money Printer

Since 1971 our money is based off of no limitations in the real world, thus completely getting rid of scarcity property. It can be created at the mercy of whoever controls it (The FED). This has enormous consequences touching every aspect of the entire world, this is infinite, undemocratic, and unnaturally large amounts of power.

Imagine 2 dollars as 2 slices of an 8 piece pie. Now imagine someone takes the pie and cuts each of the slices in half, making a total of 16 slices now. Your slices have been cut in half, but you are forced to still only hang on to 2 of the newly made slices. You technically still have two slices as before, but you now have less of the pie. This is what happens when the government “prints” money.

What does that looks like in action?

This is the USD monetary base overtime. This visually shows overtime how they’re “adding more slices” to pie.

It does not create more value, it just steals value from everyone else holding pie, making the slices worth less. There is no limit to how small your slices get yet you are still mandated to conduct commerce in these shrinking mandated slices. This is why stimulus bills created from printed money that shrink the slice of your pie by 5% and then they carve out .5% of the bill to give back to you are actually a delayed net loss to the stimulus check recipients. All while the bigger players and corrupt organizations that are closer to the “spigot” get the freshly made dollars (or freshly cut slices) first.

Since March 2020, over 30% of all dollars in the history of America’s existence have been “printed”. The rate of printing, or the rate of debasement of your savings, is accelerating. Houses aren’t going up in value, stocks aren’t going up, used cars aren’t going up, it is really the dollar that is going down. It is falling in purchasing power as 30% more slices have been squeezed into the finite pie and allocated to people and companies closest to those in control of the printer.

Mandating the use of this depreciated currency tied to nothing makes it a “Fiat Currency”. It is important to note, every fiat currency throughout world history has failed.

Impacts on Society Since 1971: