The Big Secret

Jun 24, 2024

Everybody silently groaned and tried to look busy as Stuart entered the room, pants around his ankles. Poor Stuart, he tries so hard to be a smart guy, a well-intended guy, but time after time, his pants fall, and he just doesn't know it.

Stuart rapidly waddles up to the first person that wasn't able to saunter away in time, and proclaims in the most histrionic voice available within his purchase, "OMG!!! Did you know the government steals from us through endless money printing!!!! AUGHH!!!!", blasting the earlobes off the unfortunate recipient.

"Yes Stuart", his victim replied while trying not to look down at Stuart's exposed Mickey Mouse underwear, "everyone knows that money printing is a flat tax on held cash".

Not to be dissuaded from his role as humanity's liberator from tyranny, "EXACTLY! Did those sneaky bastards think they could get away with this?? I'm going to tell the whole world and expose them so we can get back onto the gold standard!!". And true to his word, he waddles over to his next victim to spread the TRUTH so everyone will eventually know about this giant ruse so we can all collectively do something about it, while worshiping Stuart as our savior.


Jesus fucking Christ, you fucking Stuart's drive me fucking crazy.

Yes, money printing robs cash holders of value. This is by design. It's not a secret. It's not ever been a secret. It wasn’t meant to be a secret. Most importantly, every single person has the ability to escape this devaluation so it’s not even a problem! Let me explain:

GOLD STANDARD

Let's start at the beginning. Long before the concept of fiat, things were primarily paid for with gold. Gold is a limited resource, so its value naturally increases with demand, and this demand comes from gold being employed as a medium-of-exchange to trade with (remember, MOE. MOE MOE MOE MOE. fucking MOE. Medium-of-Exchange. Got it?); gold for goods. What happened over time is that as global population scaled, gold's value went up so much that people would rather hoard it (in anticipation of further appreciation) than spend it, and this artificially increased the value of gold (due to scarcity created by hoarding), and simultaneously choked the economy because nobody would spend their forever-appreciating gold to buy anything. More importantly, the government would struggle to be able to afford acquiring more gold to be able to finance stuff like wars and infrastructure. Gold became a runaway ponzi.

But what is gold really, and I do mean the actual metal. Is gold a youth serum granting us eternal life? Can gold make you smarter? Does it make sense to walk around with a brick of gold in your pocket? No no no. Gold is a shitty MOE, I don't care how you spin it. So why was it so popular as a MOE? Well, not a lot of good alternatives throughout history, plus scarcity made it valuable, and historically hard to fake, durable enough, and found its role in this MOE capacity thousands of years ago so it's got this long-running deeply-entrenched HUGE global adoption by every single economy.

If you think about it though, gold, the metal, isn't really that useful if we distinguish its MOE characteristic from its actual "utility". It's a good conductor of electricity, there's some jewelry value to it, etc. etc. but very little of that represents the monstrous value we ascribe to the trading value of gold, the "commodity" itself. Let's just pick an arbitrary value of 20% utility and 80% MOE value, meaning 80% of gold's value comes from using gold as a MOE.

THE NEW WORLD OF FIAT

Because it was so shitty as a MOE, in the 19th century, governments around the world started telling people, "Hey, stop carrying gold around, put it in a bank, and we'll give you paper deposit receipts (essentially bank IOUs of gold to you) that you can use to trade for goods instead of trading with actual gold. Anyone with deposit receipts can redeem them for gold whenever they want, even if not the original depositor!". People thought this was a great idea, and the concept of fungible gold-backed fiat was born, and flourished to the point where nobody used physical gold as currency any more, just these government-backed gold receipts. This of course, was just the first step to move towards non-backed fiat, but this is how it started.

The missing piece for most people here is the belief that gold itself has value (talking about the 80% MOE part), but it doesn't, gold is simply a "vehicle" for value, a shipping container, nothing more. That "value" we're talking about isn't the gold itself, but actually the value of "labor" morphed into something physical that the gold represents. What I mean by this is that the MOE value of gold can be converted into paying for people's time/energy to produce something, exactly how paying someone with paper money can equally compel people to produce something, which is why paper money can ALSO have MOE value, even if the paper itself is worthless. It's easier to understand gold, or paper money, as a train of cargo cars shipping human labor from one pool to another pool. So if you think about it, the nature of the MOE vehicle (gold or paper) is completely irrelevant, because its "value" is from the contained human labor, not the container itself. This is also why crypto can have real value even though there's nothing physical about crypto. It's never been about the physicality of the shipping container, just the MOE mobility of the value it transports.

This gold-backed deposit receipt thing worked fine for a while, but as I mentioned earlier, the population kept growing, and demand for gold (and hence their receipts) made hoarding a major problem. You see, in order for an economy to thrive, it needs people to spend money, keep it circulating. The perfect analogy is how blood flows in our bodies. You can consider different parts of our bodies to be like different assets. Say infrastructure is our bones, commerce is the muscles, defense is the skin, and government is the brains (I said that on purpose to piss you off). ALL of these aspects need blood to survive. Now imagine if the muscles hogged all the blood and didn't share with any other body parts... Death.

This is a major challenge for the Stuart's of the world to grasp. Centuries of understanding currencies to ALSO be commodities has led to long-held beliefs and behaviors that "cash savings" are a critical part of logical money-management skills, and this has historically always been accurate. But the second that fiat was no longer gold-backed was the same second that this ages-old truism was no longer valid. “Savings” in cash, was now a bad thing because the saving’s "value" was now a decreasing thing, not increasing as it was traditionally. It was a monumental shift in money philosophy that was never successfully conveyed or adopted by the masses, and was never meant to be ulterior, yet it still created armies of Stuart’s that just didn’t get it.

Why did the government do this to its people? Again, blood flow makes the economy run. If nobody can benefit from hoarding fiat, then they'll spend it, moving "value" (again, abstracted human labor) around much more readily, bringing much needed blood to all other body parts of civilization. The entire intent of value-losing fiat is to encourage people to invest their accumulated "value" into the economy, buying stuff, buying stocks, buying real estate, etc, instead of just hoarding it. Essentially putting the blood to use for the benefit of everyone. And by buying and investing like this, you're effectively escaping inflation, because only money intentionally inflates away value, whereas investments at least have the opportunity to increase in value. Sure there's risk, but you're guaranteed to lose "value" just holding fiat.

I REPEAT! Since the gold-standard was abandoned, it no longer makes sense to stockpile cash as a form of savings! Get that through your head. Buy a government savings bond at the very least.

When viewed this way, we can see that we have a significant problem when using gold as a MOE because it inherently has opposing properties. If gold itself is both a commodity AND a MOE, then the desire to hoard gold because it continues to increase in value because of its demand as a MOE, creates a serious ponzi problem, and eventually halts the flow of blood (human labor) because nobody will spend their gold (a blood clot). The gold standard fails because it's a finite resource that mathematically results in collapse. This is the singular reason that non-backed fiat was created, to finally have a MOE "vehicle" that wasn't also a "commodity" that destroyed the MOE aspect. Fiat is MEANT to be "undesirable" to hold, because BY DESIGN it "loses value" through inflation.

FIAT WAS INEVITABLE

Governments understood this inevitable systemic-collapse due to the gold ponzi was coming, so they had to do something, and I think pretty much everyone knows in the 70s that the US was forced to demand their citizens relinquish their gold and accept fiat in exchange (which soon became a remarkable loss to those hoarders, but hey, they were bilking the system at everyone else’s expense; blow me), and the modern day unbacked fiat system was born.

Stuart, foaming at the mouth, spittle flying from his gaping mandible as his hoarse-yet-unfledling voice propagated down the streets, his ankle-bound pants sopping wet with mud and dogshit, screamed, "The government STOLE everyone's GOLD! Thieves!!". Stuart would call this theft, but Stuart also believes everything should be given to him for free. How lucky is Stuart to be born in a civilization where he can freely vent those emotions while his pants are around his ankles. Stuart never had to kill enemy soldiers for his right to speak his mind. Stuart collects Bitcoins in case a meteor strike destroys most of humanity because obviously nobody would accept paper money in the apocalypse.

Stuart doesn't believe in taxes. He feels that citizens should have the right to self-rule. What Stuart doesn't realize is that historically, primitive humanity has pretty much always been in a self-rule mode. From ancient pre-hunter-gatherer days, right up until the earliest attempts at civilization, with sputtering failures to sustain the adoption of civilization mottling our history (Mongol hordes, medieval times, etc.). Stuart expects that civilization can conduct itself without an overseeing body, believing lord of the flies type rule would suffice. But reality is, civilization requires order, laws, people in charge, infrastructure, schools, defense, etc., and all of that needs to be paid for. Taxes are inevitable, necessary, unless you like tyrants and daily massacres. Go live in the jungle if you don’t believe we need taxes. See what a tax-free lifestyle gets you.

Stuart wants to believe that we don't need governments, but the reality is, without the advent of government, Stuart would never have gotten his grade-3 education, he wouldn't have any of his studio apartment left after accidentally lighting it on fire from the joint he dropped when he passed out and the firetrucks had to come save him, he wouldn't be able to walk down the street with his pants around his ankle without police protection, there wouldn't even be a street for him to walk down, etc. Stuart's major failure is connecting taxes to all the things that he benefits from.

Every single penny the government spends is for our benefit. I just said that to piss you off. Yes, we could deeply head into the level of corruption and waste that our grossly-imperfect governments represent: pork-barreling, insider-trading, gerrymandering, these bastard criminals into roles of leadership where they can dip into the fiat pies with their filthy greedy paws. Ok, that's all true, and significant, and worth discussing....but that's not what we're talking about right now. What I'm talking about is the concept of money, not about how it can be abused.

Stuart can't let it go though, he wants to throw the baby out with the bathwater, firmly believing that all this corruption comes from the ability to print money, completely failing to acknowledge that corruption was as equally rife with the gold standard. Stupid. So stupid in fact, that Stuart is convinced that the end of times will come due to spiraling debt, the economy will collapse and will send us back to the gold standard eventually, or even more cluelessly, the Bitcoin standard, lol. Ya, so the economy is destroyed back to the dark ages with all out wars and infrastructure collapsing and you want to spend Bitcoins to buy steaks and beer at the local store? Fucking retard. Stuart will be the first half-eaten body found with a crossbow arrow through his skull.

SPIRALING DEBT

Is it true? Will rocketing national debt send global economies into death spirals and destroy entire civilizations in true Roman empire style? No. It will not happen. This time is different. I just said that to piss you off. Ok, yes, many economies fail, but not because the economic model of fiat is wrong, but because of global economies competing with each other. There has to be losers if there are to be winners, and the citizens of the winning economies generally have much higher quality lives than the losers. All that matters is which country is best able to manage their debt to GDP "ratio" to determine the survivors of this global battle of economies. How does this happen though?

If we step back in time, imperialism is a blatantly obvious form of taking "value" from one country and bringing it to another. The British empire is probably the most notorious of all historical imperialists but there's countless other examples of imperialists raping valuables (precious metals, slaves, oil, etc.) from all corners of the world to accumulate what remains today as galactic repositories of stolen wealth. Remember, at its heart, value is just an abstraction for human labor, no matter what the vehicle is, so all of these stolen goods even today can still be used to purchase human labor. Imperialism is a great investment, if you don’t have a conscience.

You might think the days of imperialism are long over but it's merely changed forms. No longer is it necessary to have imperialist boots-on-the-ground occupations of countries in order to force them to relinquish their valuables, no, that ancient form of imperialism has been supplanted by economic imperialism, or more succinctly, suckering poor countries into going into debt so they are forever obligated to keep paying interest. It's ingenious, and this form of economic raping is most prolifically exercised today by the United States. It's the premise for the "Dollar Milkshake" theory, in which the US dollar is so dominant that it becomes its own gravity, forcing other countries to convert into US dollars in order to not only trade with the US, but to pay interest to the US, creating the perfect self-reinforcing virtuous feedback loop that drains all the value out of every other currency simply because the dollar intercepts demand for all other competing currencies. In fact, economic imperialism is how most modern warfare is conducted, without even a single bullet being fired. Economic tariffs and sanctions are the new nukes.

So back to the spiraling debt problem. Stuart sees the national debt going up every single day in incomprehensible numbers, far beyond his grade 3 education’s ability to help him make sense of. What Stuart does know however, is he owes $20k on his maxed-out credit card and can barely make the interest payments each month, much less cover his bar tab, corvette payments, DUI-fine monthly payments, prime-rib steaks, etc. If he can't even afford this, then how is the USA EVER going to get out of debt if it's increasing faster than they're paying it down??

Well I have news for you, the US isn't going to pay down the national debt, and more importantly, it doesn't have to, because it doesn’t matter. And yes I'm saying that to piss you off but it's also true.

What is the US debt exactly? Put simply, it's the value (human labor) that the US government indiscriminately "borrowed" (via inflation) from not only its citizens, but from every country and foreigner that also holds US dollars. The whole world pays for US debt. What makes this kind of debt different from Stuart's credit card debt however, is the manner of repayment. Stuart has to pay back the same amount he borrowed in order to settle the debt. The US government however, simply reduces the "value" of the debt, and it does this by printing money to debase the currency (meaning make the money less valuable), so the debt isn't quite as large when compared to all the money out there (this is grossly oversimplified but essentially correct). In essence, this takes "value" away from those holding fiat, which effectively means that the government printing money EQUALS citizens paying for the debt via a flat tax on those that hold fiat.

Now here's where it gets trickiest, and catches most people, so I'll do my best to break it down. Most people have the same take on the rocketing national debt: it's bad, going bankrupt, impossible to pay down, collapse of the Roman empire, etc, etc., because they’re projecting their understanding of credit card debt onto the national debt, which is a limiting perspective keeping you from seeing the other option that only the government has. If we were still on the gold standard, you'd be absolutely correct, everyone would hold gold to valhalla and eventually society would collapse. This is EXACTLY why fiat was created, to fix this blood clot. In the fiat world, when the government goes further into debt, it doesn’t try to pay down the debt, it instead “prints more money” to reduce the debt indirectly, and you'd probably expect this to be the analogy of creating more blood...it's not. There's only one measure of blood, and it's the sum of human labor. So when the government prints more money, it's not more blood that it's creating (because there's still the same amount of human labor), it's actually just taking some of the existing blood from other parts of the body. Nor does the increasing national debt require more blood! I know, it's weird, but I'll expand on that a bit.

Why it works like this is obvious if you take into consideration how the perpetually increasing cost of living has been largely matched all throughout history by the increasing salaries. I just said that to piss you off. Stuart loses his shit, "WHAT!!! Are you fucking kidding me!! People used to be able to buy 6 big macs on the hourly minimum wage, and now they can't even buy 1!!". Exasperated, Stuart finally trips over his pants, busting his nose open on the federally-funded pavement. Stuart will never understand that captialism is responsible for this, not inflation, and it would be exactly the same in a gold-backed scenario.

Yes, the class disparity between rich and poor continues to spread and optimize (ironically becoming more "efficient"), but that has absolutely ZERO to do with the properties of fiat, but rather to do with the nature of capitalism itself and technology advancements, and would happen EXACTLY the same on a gold-standard. On a gold standard, inflation comes in the form of the hoarding rich being able to pay a lot more for things than the poor, which similarly drives up the prices (supply and demand), but in the gold standard there's equally little motivation to pay employees more than they have to (capitalism), so the same effect happens where lower classes get priced out. Price inflation happens whether you print money, or hoard gold, but gold inflation is long-tail because it's a limited resource, whereas fiat inflation is short-tail because it's an infinite resource, which means gold price eventually exponentially explodes/collapses, fiat doesn't. How's that broken nose Stuart?

Back to the blood, if inflation is printing more money, then what “counterbalances” inflation is the "increasing salaries", and sure the Cantilon effect of lower-class salaries lagging behind inflation, benefiting the rich, is every Stuart's favorite go-to counterargument, but again, the gold standard has the same problem as I just explained, so let's not get distracted by how abuse of these monetary models brings us pain, because either model is pain for the poor. I'm just trying to show you how inflation and debt isn't the devil it's been made out to be by the Stuart's of this world.

So if your money is debased (devalued) by say 3% inflation every year, but your salary increases by 3% every year (shut up Stuart), then what the fuck does it matter if things are 3% more expensive every year?? It's a net zero sum game. People go on and on about how you used to be able to buy a 3-bedroom house for $30k in the 50s. Well, fuck, they were only making $400/month back then! You see, you can't look at the dollar value of anything and try to make sense of it. The ONLY way to look at things is how many hours you had to spend at work to get it.

Using this concept instead, you can see that the relatively MONSTROUS salaries we make these days bring the actual "value" of purchases to still be quite equitable. It still takes 20-30 years to pay off a mortgage, just like it was back in the 50s. Inflation does not change the ACTUAL LABOR cost of most things (cost of milk takes just as long to earn, etc.)(shut up Stuart), so this just means that the dollar is nothing more than a conversion "Index" from labor to goods, and the value of that index means nothing, absolutely nothing. Everything is relative. Inflation draws blood into the brain, increased salaries bring that blood back into the body. It's a perpetual balanced cycle in which only the dollar index changes. Things aren't really getting more expensive in terms of labor so it doesn't matter what they cost in dollars.

Which brings us to the spiraling debt. Imagine if you were your grandfather buying his first home in the 50s, getting a $30k mortgage on your new home, and paying $150/month out of your $400 monthly salary. That almost seems like chump change by today's standards, but it was a lot of money back then, because the "index" value conversion was so much higher than it is today. Now also imagine getting a 3 bedroom-house worth $300k for $30k today, and paying $150/month on that. Super sweet deal right?

That's exactly what happens when the government prints money, it reduces the dollar's conversion index relative to labor, WHICH MEANS, that multi-trillion dollar debt, goes through the same transformation that your 3-bedroom home goes through by now becoming relatively cheaper, like a $300k mortgage now (relatively speaking) effectively "becomes'' a mere $30k mortgage (I’m exaggerating to piss you off), better known as, inflating themselves out of debt, but with the bonus of actually being able to spend that money instead of it disappearing by paying down debt. Future Stuart's 100 years from now will still be proclaiming how the government's quintillion dollar debt is spiraling out of control, unlike the good old days when it was only trillions, lol. Stuart will never get it. It won't be any inherent flaws in the concept of inflation that might bring down the economy, no more than a hammer is inherently a murder weapon, no, it would only be from the cancer of corruption pushing the debt to destruction levels (way beyond GDP). However, inflation and hence debt, is sustainable if properly administered.

SANGRE

In summary, the only trick needed is to keep the blood flowing, and the economy will live, no matter what the dollar is worth. Inflation doesn't change the amount of blood needed to live, it just reallocates existing blood to the brain so it can continue operating in the best interests of the rest of the body, whether that be infrastructure, defense, or buying a belt for Stuart. We can never return to the gold standard simply because it allows hoarders to "trap" value (blood clots), but thankfully fiat does what it's supposed to, simply "move value", nothing more, and inflation not only keeps fiat undesirable to hold (no blood clots), but as long as salaries "somewhat" reflect inflation, then the real cost of goods in terms of human labor doesn't increase, only the dollar index changes. And when the dollar index decreases due to inflation, so too does effectively the national debt, which means it is being paid off by making the debt less in actual value in terms of labor, not by actually reducing the dollar amount, see how that works Stuart? Stuart?...

It's not that complicated, but it does take some effort to understand, which Stuart's are incapable of, and so you'll never hear the end of the screaming pants-down Stuart's crying about the end of times, proudly showing their dollar-devaluation-over-time charts without also showing the appropriate salaries-increase-over-time charts, when in reality fiat is working perfectly as designed, and was a genius move to save literally the entire world from the gold ponzi. You’re welcome.

So if all of the above still evades you, and you still don't understand how to protect yourself from inflation, just pull up your fucking big boy pants, and...

DON'T HOLD FIAT, STUART!


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