Money, money, money, what is going on with the money? Where are the two+ trillion dollars coming from that are funding the Care’s Act and other bailouts are funding? Knowing the answers to this question is crucial, so we can make wise decisions in preparing every needful thing.
First, what is money? It is any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic situation. As a general rule, there are three basic types of money: commodity money, representative money, and fiat money. The U.S. dollar is fiat money. Unlike commodity money that has value in and of itself or representative money that represents something of worth, fiat money has no intrinsic value. Its only perceived value is that which the U.S. Government says it is worth. That is until the people no longer believe that it has any value.
History provides us with a view of the cycles that fiat money goes through. Dinar Dirham has written a concise description of these cycles. In his essay “The Rise and Fall of Fiat Currencies,” he refers to a study of 775 fiat currencies. The average life expectancy of a fiat currency is 27 years. The oldest fiat currency is the British Pound which has been around for 319 years. The problem is that it has lost more than 99.5 percent of its value. Now it can only purchase 1/200 or 0.5% of its original value.
In America, during 1933 the US Government started to abandon the gold standard and totally disconnect from it in 1971. President Richard Nixon was responsible for that change. From 1971 forward our purchasing power of the dollar began to erode at an ever-increasing rate. In 1933 the average cost of a loaf of bread was 9 cents, in 1971 it was 25 cents. Today it is $3.50. Today’s dollar has approximately 2 ½ cents worth of the purchasing power it had 87 years ago.
The problem lies in the fact that when we lost one penny of purchasing power in 1971, we lost less than 5% of the purchasing power. Today, when we lose that one penny of the original purchasing power, we will lose 40% of our remaining purchasing power in a matter of days. This is called hyper-inflation. So, what is the cause of this inflation? It is the government putting more money into circulation that has no intrinsic value. Today, they create more money with just a computer entry. This is a simple explanation of a complex house of cards. The cards are falling with all of the money being created out of thin air. Without any intrinsic value, creating more money just devalues the money until the population loses confidence in that medium of exchange and refuse to honor it anymore.
An example: If you have 100 seats on an airplane and you sell those seats for $100 each, you have created a viable exchange rate. There is an established value for each ticket. Now, if you start selling more tickets than seats, people will stop paying the $100 per ticket, because they no longer can trust that a ticket will ensure a seat on the plane. In fact, when you realize that they are now selling over 2,500 tickets for only 100 seats, you will refuse to do business with them. As with the U.S. dollar, there has been so much money created with no backing, and you take in to account all of the debt associated with it, we can now see history repeating itself over and over. The United States is financially headed, via inflation, the way of WWII Germany with their wheelbarrows of money to buy a loaf of bread and modern-day Venezuela where they have a shortage of bread and other foodstuffs.
The by-product of this inflation is the ongoing erosion of savings accounts and retirement accounts. Another by-product will be that the cost of necessities, such as food and fuel will skyrocket. The pandemic has provided the perfect storm to collapse the food production supply chains and the bankruptcy of many of our energy suppliers. The banks and financial institutions that rely on the paper currency will erode to nothing. History has proven this with all fiat currencies.
One solution would be placing one's resources into food-producing properties that rely on solar or wind power. These and other sustainable energy sources will become the gold standard of the future. Those who control the food sources will control the populace. I highly encourage individuals and families to become truly independent food and other resource producers, with the goal of making more than they consume.
God speed, Philip J. Gleason Director |