Central banks have been printing money for about 50 years. Could the current inflation crisis be the end of the money-printing era?
The history of the ‘Federal Reserve’
In the beginning, the US constitution only recognized gold & silver coin as legitimate payment for debts. This served as part of a system of checks & balances that would limit the power of the federal government. In 1913, Woodrow Wilson signed the law allowing for the creation of the ‘Federal Reserve’. This was the beginning of paper money.
Despite the creation of the Federal Reserve, federal notes were still backed by a fixed amount of gold or silver until 1973. In 1973, President Richard Nixon signed a clause allowing for the Federal Reserve to print notes that were not backed by gold & silver.
Then the US government began printing notes like no tomorrow. These are the notes that we still use today; so-called greenbacks that aren’t grounded by anything besides the force of the US government. US dollars have lost more than 96% of their purchasing power since the creation of the Federal Reserve.
US companies have done outstandingly well in this environment. However, the people working for these companies haven’t seen the same growth since 1948; the same year Jewish settlers invaded Muslim Palestine to form the terror state of Israel.
Many adults in America have never taken a second to ask themselves how much things have changed in the last 50 years. The truth is, the America of 50 years ago is not the same America that exists today. In some ways, society might be better than it was 50 years ago. For example, racism might be less prevalent today than it was 50 years ago. However, the allowance of the federal reserve to print money with no accountability has been an absolute disaster for society & mankind. The above graph demonstrates how the federal government has affected the American economy. Fiat has also allowed the federal government to sponsor wars & commit atrocious crimes against humanity around the world.
People in the United States constantly criticize the skyrocketing debt of the federal government; however the US congress continues to approve more & more funding for them. It is well known that the US congress has very low approval rates. Members of US congress do not take the interests of their voters seriously.
As a result of endless money-printing by the US government, many people are beginning to worry about an impending currency crisis.
Gold
As a result of these problems, people have turned to several assets known as ‘safe-havens’. The first & most popular safe-haven is gold. While gold is the most historically reliable safe haven, there are some concerns. In 1933, President Roosevelt actually criminalized gold.
Although this law was overturned, there is a historical precedent for the government to steal your gold. This is one reason why jewelry is so popular among victims of US government policy; while the US government has criminalized personal investment in gold coins & bars in the past, they have never criminalized gold jewelry. Gold jewelry remains one of the few ways to save your money with full control over your the value of your property, although it is more expensive than gold coins or bars.
However, since the payment system became digital, the advantages of physical gold & silver have diminished. While gold & silver allow you to save your money without it being undermined by the Federal Reserve, businesses don’t normally accept gold & silver as payment. If you want to use your savings to purchase something, you need to sell your gold or silver, for a fee. You pay a fee when you buy the metal, and you pay a fee when you sell it.
In California, you also pay a huge tax on precious metals unless you spend at least $1500. Regulations like this make it painfully difficult to escape from the erosion of the US dollar.
Unless you have perfect timing on your investment, it usually takes quite some time to get your money back on gold & silver. Although it’s a good investment in the long-term, many people don’t have the time to wait years to get their money back. There are more efficient ways to gain exposure to precious metals, such as ETFs, but these methods come with increased risks.
Bitcoin
In 2009, someone who called themself ‘Satoshi Nakamoto’ invented something called Bitcoin. Nobody knows whether this person is actually Japanese or not, but Japanese people have a long history of contributions to the financial system. Japanese people invented futures; which are a very popular financial instrument that people use to obtain leveraged exposure to certain assets.
However, the invention of Bitcoin is much different than the invention of futures; despite the fact that ideas are both apparently products of the Japanese mind. Bitcoin was invented to eliminate central banks.
Bitcoin eliminates middlemen in the financial system by providing a peer-to-peer network that functions anonymously. It also provides a way for people to secure their assets outside of their physical possession, without using the bank. Nobody can rob your Bitcoin unless they know your seed phrase; even the government.
While this sounds good, unless you maintain the security of your devices well, you can still be hacked for your seed phrase. This is why we recommend using cold-storage methods.
Setup your own cold-storage Bitcoin wallet using Electrum
Although there is nothing backing Bitcoin, it is functionally superior to the US dollar which is also backed by nothing. Bitcoin provides higher privacy, security, & efficiency than US dollars. Businesses all around the world are beginning to accept Bitcoin. Countries like El Salvador have even made Bitcoin legal tender. As Bitcoin continues to be accepted as a medium of exchange, it becomes a viable alternative to gold, since Bitcoin can buy gold the same way US dollars can.
The price of Bitcoin today equals roughly $17k. In the world of exchange rates, anything that costs $17k is a very strong currency, to say the least. It is clear that Bitcoin has already hit central banks where it hurts.
Is this the end of the money-printing era?
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