The Illusion of Money: How Fiat Currency Undermines Value

By Doug Young – 13 March 2024

Introduction

In a world driven by faith and trust, the concept of money holds immense power. It is the driving force behind economies, shaping our lives and influencing our decisions.

But what if we were to question the very foundation of our financial system? What if we were to uncover the illusion that undermines the value of our currency?

The Faith-Based Nature of Fiat Currency

In the realm of fiat currency, faith reigns supreme. It is the belief that gives our paper money its purchasing power and establishes it as a medium of exchange.

Fiat currencies are essentially faith-based, deriving their value from the collective trust we place in them. However, this blind faith comes at a cost.

The Creation and Manipulation of Currency

As we delve deeper into the world of currency creation, a startling truth emerges. Today, the majority of currency is brought into existence through the simple act of typing numbers into computers. Central banks and commercial banks alike play a role in this counterfeiting process, manipulating currency to suit their interests. But at what expense?

The Three Forms of Currency

To truly understand the intricacies of our monetary system, we must examine the three forms of currency: Bank Reserves, Paper Notes, and Bank Credit.

1. Bank Reserves, hidden from public view, serve as a separate monetary system used solely for inter-bank settlement.
2. Paper notes, the physical currency we handle, make up only a small fraction of the overall currency supply.
3. The bulk of our currency exists in the form of Bank Credit, created through loans and indebtedness.

The Value Backing Fiat Currency

What gives fiat currency its value? The answer lies in the extraction of future work hours. When the central bank purchases assets such as U.S. Treasury bills, notes, or bonds, it imagines IOUs matching the value of these assets. These IOUs are backed by the future taxation of the public, guaranteeing their value.

Similarly, bank credit IOUs are secured by the collateral that borrowers offer, ensuring the value of these digital representations.

The Monetary System’s Wealth Transfer

The monetary system operates as an intricate wealth transfer mechanism, benefiting a few at the expense of many.

Those who create and receive newly created currency reap the rewards, while those who don’t receive it bear the cost. This cost manifests as inflation, eroding purchasing power and widening the wealth gap.

The very essence of this system can be characterized as a transfer of wealth from the victims to the robbers and beneficiaries.

The Circular Reasoning of Debt-Based Money

The circular reasoning behind debt-based money becomes apparent when we examine the interconnectedness of deposits, loans, and value.

Deposits are considered valuable because they represent IOUs from commercial banks to households and companies. The value of these IOUs is determined by the ability of the public to repay their debts. This circular argument places the burden on individuals, perpetuating the cycle of debt.

Consequences and Call to Action

The consequences of this monetary system are far-reaching.

It perpetuates inequality, indebts individuals and nations, and fosters a sense of slavery to the currency we hold. It is imperative that we question and challenge this system. Awareness is the first step toward change. By understanding how we have been monetized, we can strive for a fairer, more honest financial system that truly serves the interests of all.

Conclusion

The illusion of money is a sobering reality that needs to be acknowledged.

The faith-based nature of fiat currency, the creation and manipulation of currency, and the underlying value that backs it all contribute to the complex web we find ourselves entangled in.

It is up to us to advocate for transparency, educate ourselves, and explore alternative monetary systems that prioritize fairness and honesty. Only then can we break free from the illusion and forge a path toward a more equitable financial future.

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