The Bitcoin Standard Summary
Part VII: Government Money
Part VII: Government Money
Today, we use money that holds no real value. The only reason it has any value is that enough people believe it does. If those people stop believing it did, then it would simply be worthless, as it should be.
Today, gold continues to underpin the global monetary system, but there is no true gold standard anymore. So, government decisions and monetary policies shape the monetary reality of the world, and everyone else is at their mercy.
The name for the money we use is fiat money. And it comes from the Latin word for order, which means "Let it be so." In other words, money is money because the government "says so, "not because it holds any actual value.
Under a gold standard, the government can't change the gold supply on a whim. But without the gold standard, the government is free to do with the gold as they wish. And once upon a time, that gold belonged to our last generations. All the gold in the government's vaults was once redeemable by the population, and then the government robbed our grandparents.
Most countries maintain some gold in their reserves and the ones that don't maintain any hold another fiat currency in their reserves, which is backed by gold, and for many countries, it is the USD. And since these foreign countries don't have gold in their own reserves, their currency depreciates against the USD extremely quickly when there is inflation. This is why Lebanon is in shambles right now.
In the 10th century, there was fiat money, known as jioazi, in China. Just like our currency, it was backed by gold until the government abolished it. Then the same thing happened to Rome when they engaged in coin clipping with Emperor Nero. Their people fell into poverty, and many resorted to being slaves and even selling their children into debt slavery.
When sound money ended, the free world did too, and people became slaves to the government. When the world wars broke out, it was too enticing for the government to print new pieces of paper without acquiring more gold, for their lives depended on it. Had governments remained on the gold standard throughout history, the wars would have been much shorter.
Running out of money didn't stop the government from continuing the war, even though it should have. In the past, when a tribe ran out of gold, they had to either invade new ones or strike peace, and they couldn't just print more gold and continue the war.
Every war devalues the currencies we use more. The government sends soldiers to the front lines for an issue they are knowingly causing, and they divert the attention away by blaming other countries their population doesn't have accurate data on.
But not all countries took this route. Switzerland stuck to the gold standard during WWI and remained neutral. See the exchange rate of other currencies against it (they get less valuable as they print more money).
The wars ended because the other parties couldn't keep up with the endless money printing and countless resources the states had. And when the war ended, the major European economies declined in value, especially Germany and Austria. This hyperinflation Germany faced was to be a big motivator for Hitler's actions in the future.
The carnage was not worth it in the end, all nations gained or lost marginal lands, and no one claimed more land to justify the sacrifice. It was a conflict because of money. Their European monarchies were replaced with republican regimes, but this transition pales in comparison to the devastation the war caused to the innocents of each country.
After these wars, gold would never again return to being the world's homogeneous currency, as now restrictions and monopolies were built. Society was marked for death until the Bitcoin Standard.
Education is also negatively affected when a society goes off the gold standard. When Universities run out of money, they lose their independence and become part of the government's rule. This means Universities are just another arm of the government without their financial independence.
Today, we say, "omg burgers used to be $0.69?" the next generation will say, "omg burgers used to be $25?" unless we discover a new sound money (which we have, and it's called Bitcoin).