We all know what the dollar is… or at least we think we do.
We all trust the current financial system… or at least we’d like to believe so.
We all think that money printed by the government is the only way forward and there is no alternative.
Until we don’t.
Fiat money is a system that was around before we were born. Some still remember when money was backed by gold but for the majority, money and state as one, is an axiom and an oxymoron.
However, in recent times this belief has been questioned. The idea that fiat is the only solution to the money problem is currently under review and people are starting to doubt it.
Could we be better off by having a harder asset to measure value? Is inflation a good thing or even inevitable? Is money printing ethical? Is infinite debt sustainable?
These and many other questions go through the mind of many awaken individuals over and over and the answers that start to emerge don’t shed a positive light on the current monopoly on money.
Let’s not talk about Bitcoin today. Let’s just examine our current beliefs and try to determine if the fiat system is likely to survive the next decade or sink under its own weight.
Here are 10 misconceptions we all have about money.
1. Money is Backed by the Government
The dollar is better money than Bitcoin because is backed by the economy, the government, and the Fed.
However, believing something doesn’t make it true.
Here is the thing. When money loses value through inflation, does the government pay you extra to compensate for the loss of purchasing power?
When a currency collapses, do you get your money back?
When your nation defaults, will they restore order and balance?
I think you all know the answers to those questions so we can conclude that the money-backing fallacy is just a mirage, a platitude that was never intended to be real.
Governments can print money. When that money goes down in value there is nothing they can do. The system is not designed to have a safety valve, an escape route, or a reset button. They can only back the economy with more debt which eventually leads to default. The only other alternative is raising interest rates which destroy the economy and make things even worse.
Fiat can only move forward faster and faster until it inevitably collapses. There is no backing. There is no support. There are no guarantees. There never was.
2. Inflation is Good
Keynesian economists go to great lengths to make us believe that prices going up and money losing value is a good thing for the economy and for you.
This is the equivalent of building a pool that leaks many gallons per minute and trying to convince the owners this is actually a feature and not a bug.
Nobody in their right mind can believe such nonsense. Any engineer that designs a system that wastes energy on purpose for no reason will be sacked on the spot.
Inflation is a failure. We, humans, have the capacity to be inventive, efficient, and productive. We make systems better, faster, and cheaper. Then inflation comes and screws everything up.
Prices should always go down. As technology evolves, productivity makes it possible to create more with less, and therefore over time prices should trend downwards.
This is not only true with technology like computers or TVs, it also includes any form of production that can be automated, scalable, and leveraged.
To grow corn is now infinitely cheaper than a hundred years ago and this is thanks to human inventiveness.
Inflation is a force pulling in the opposite direction and discouraging people to try harder.
Inflation comes from printing money limitlessly. This is good for governments and their friends but is terrible for us.
Inflation is just another hidden tax that extracts wealth from the productive class while making the parasites richer.
When they steal your money, they steal your time, your energy, and your life. Inflation is immoral and needs to be stopped. You don’t need vampires sucking your blood in order to survive but of course, they would like you to believe so.
3. Price Stability
Another popularly held belief is that money printing helps stabilize prices by injecting or tightening liquidity into the system.
While this apparently works in the short term, in the long run, creates the opposite effect.
The idea that volatility can be reduced by increasing the money supply is preposterous.
Quantitative easing leads to inflation which needs to be corrected with quantitative tightening which leads to job destruction, disinvestment, and recession.
In order to control prices, governments create chaos which leads to more instability. Top-down approaches rarely work in free markets and the more they try the more they screw things up.
Every time the government tries to control prices one way or another, inflation, volatility, and instability shoot through the roof.
‘I’m the government and I’m here to help’ is certainly the worse thing you’ll ever hear. Run fast and don’t look back.
Another reason to inject cash is to stimulate the economy in times of crisis.
Last year, $8 trillion dollars were printed to help people and companies during the crisis triggered by the lockdowns.
While this measure increases spending in the short term and revamps commercial activity, it clearly comes at a stiff price.
Peeing in your pants when you are cold is never a good idea despite the momentary relief. Not thinking of the long-term consequences of your actions is stupid and irresponsible.
Those in charge have peed in your trousers and now they say you should be grateful for it.
Those in power are incentivized to make you believe that centralizing the economy and concentrating power at the top is the most efficient way to run an economy.
Then how come the most centralized economies always end up collapsing?
Venezuela, Argentina, Zimbabwe, and the URSS. Politicians with no skin in the game playing God with people’s livelihoods has never been a good idea, but since the livelihood of the rent-seekers depends on it, they keep pushing the narrative and the propaganda to convince you otherwise.
Letting people, that have never done an honest day of work in their lives, manipulate the markets in a centralized manner is preposterous. Don’t become their victim.
The fiat system is based on trust. Trust in the government, the central bank, and the Keynesian dogma.
But could you really trust politicians and bankers after everything they’ve done to you?
Bureaucrats are inefficient at the very least and corrupted at the worse. Trust has been broken many times and nobody believes it can ever be restored.
A system based on trust breaks down as soon as doubts emerge. ‘Trust me, I’m a politician’ is something even they don’t dare to say.
7. Wealth Redistribution
Probably the biggest lie is that fiat money helps to redistribute wealth.
Well actually it does, but the wrong way around.
Thanks to the Cantillon effect, those closer to the money printer benefit disproportionally from the extraction of wealth.
If fiat does something well is stealing from you, the productive class, and giving it to the parasites.
They promise you one thing and do exactly the opposite. If you still believe their lies, you need to get your brain examined.
8. Credit-Based System
The main selling point of the fiat system is the ability to run an economy on credit rather than on tangible assets.
Certainly, credit can be good and it often helps to develop projects that wouldn’t see the light otherwise.
However, there need to be checks and balances in a credit-based system to avoid failures like the subprime mortgage crisis and other bubbles instigated by the inflow of easy money.
Credit is good when based on real assets and real possibilities of success. However, it can be argued that most excess liquidity ends up creating bubbles, crises, and recessions.
When a credit system is based on debt, money printing, and hot air it becomes unsustainable and eventually collapses.
The incentives to be selective when allocating resources disappear once the money flows freely. Fiat is credit that is backed by more credit. The whole idea is a fallacy, an empty promise, and a huge bubble waiting to explode.
We’ve been sold the idea that money controlled by the government is a moral choice.
The government knows best who is disadvantaged and will allocate the necessary resources to them.
While in principle this could work, in reality, it just doesn’t.
Redistributing wealth is the fastest way to impoverish people. It has been tried a hundred times before with a zero success rate.
Handouts create a false economy and disincentivize people from doing the hard work while becoming dependent on the government’s help.
Morality that is built bottom-up instead of top-down is much more effective. You helping your neighbors works better than some government giving handouts.
The moral case for fiat is immoral.
Behind the fiat system lies the idea that the elite knows better and needs to impose their views on the populace in order to save them from themselves.
Coercion, even when it works, has never led to the betterment of nations in the long run. Using force to push an agenda implies they are actually right about what they are trying to achieve and know how to get there.
As we know, this is another excuse they use to gather more power, and more control while keeping to milk you dry.
Fiat is a system based on coercion, lies, and control.
It doesn’t work and the inevitable collapse destroys lives, nations, and hope.
You know intuitively that the system of banks, wall street, and money printing wasn’t designed to benefit you. However, you still find it difficult to fight all the propaganda, the lies, and the brainwashing you’ve been subjected to.
You can carry on as normal and pretend all is good. Or you could wake up and start questioning those who keep stealing from you.
Most people are sheep and even though intuitively they know they are being taken to the slaughterhouse, they won’t do anything about it. It’s always easier to comply.
But since you have read this far, maybe there is hope for you.
Don’t believe anything I say. Question everything. Think for yourself.
No matter how difficult this is, it’s the only way to live.
Don’t trust, verify.