You just think that the papers in your hand are money, but they are not. Money has not been used in the world since 1971. How Does? Money is just gold and silver. It has always been like this throughout history. thousands of years. The first foundations of the paper money system that continues today were laid with the industrial revolution after the French Revolution in 1789.
This new era was called the Age of Enlightenment. At first everything was fine. Checks corresponding to precious metals were issued by banks to real money (gold/silver) holders. And these papers represented a real value.
Let's try to explain this with an example. You took your pants to the dry cleaners. The dry cleaner gave you a delivery receipt in return. You're going to take that paper and get your pants back. Normally that paper has no value; It's your pants that have value. Paper is useless if there are no pants. So is paper money. It is actually a voucher that represents real money (gold/silver), not money. It has no real value unless there is real money behind it.
This monetary system continued well until the establishment of the FED in 1913 and contributed to trade. The founders of the FED were the owners of private banks, that is, today's global capital elite. Then the gold ratio on the back of the paper money was changed to 10/6. Now, a partial transition has been made to the “fiat” monetary system.
“Fiat” is a Latin word meaning “to get”. Someone says “be” to money and it becomes so called. This was the first of the three phases that the menators set up. Now they were printing dollars. In the second stage, they made the dollar the world's common foreign exchange reserve unit.
This happened with the Bretten Woods agreement signed by 44 countries in 1944. By 1971, under US President Nixon, they had reduced the gold rate behind the dollar to zero. So they could print as much money as they wanted arbitrarily. It was called the "Nixon Shock". The Bretten Woods agreement was formally dissolved, but the Bretten Woods system remained de facto.
Now let's come to the most disturbing aspect of the job; Currently, all countries in the world are printing “fiat”, that is, “voluntary money”. In short, papers that do not have a real counterpart, only based on will and trust. Fiat (voluntary) money production is a kind of counterfeiting done by the states. The collapse of this system, which has been maintained since 1971, is near and it will not end well.
Let's take an example: Let's say there is only $2 on the market. In other words, the government gave $2 bonds to the central bank, and this $2 was printed and released to the market in return. But the bond also has interest. So the question should be:
When there is only 2 dollars in the market, in what money will the government pay the interest of this 2 dollars? Let's say the interest is $1. Answer: He will print another $1 to pay the interest. But now he is facing the interest of $3 and there is only $2 in the market. So it needs to be printed and released for another 3 dollars. Let's say this is done, this time you have to print another 6 dollars.
It goes on like this, you always pay interest. Such a system is unsustainable, it just lives for a while and eventually turns into hyperinflation.
A terrible end awaits the system we are in right now. In the fiat (voluntary) monetary system, “money” is created as DEBT. This debt appears to be undertaken by the state and is called a bond, and of course it is always the people who will pay it. The voluntary monetary base created in a country, after exceeding the limit that that society can pay, has now reached such a point that it can be defined simply in three words: "To drown future generations in debt."
So what right? And that is exactly what is being done all over the world right now. The fiat money system has been implemented many times in history, but now for the first time on a global scale and all the wheels of the system are intertwined.
In history, in China in the 11th century, in Britain in the 12th century, in France in the 18th century, etc. Silver and gold were repeatedly disqualified in various places, and fiat currencies were tried to be used. And all of them eventually collapsed with hyperinflation. All printed paper money disappeared and people lost all their wealth. This is the inevitable consequence of the fiat money system.
inflation rates, data for you
But these examples were all local. We will experience the same on a global scale this time. With the domino effect created by the overturned bond markets; all over the world at the same time. Moreover, in the near future. All balloons will burst and sleeping societies will wake up in pain, but when that day comes, they will do nothing.
We will watch the consequences of this together. We are at a very important turning point in history. The current system has already exceeded the critical limit that can be reversed. Because the debt was created to be unpaid. In addition, the derivative bubble has reached much more dangerous dimensions than bonds.
According to 2018 data, derivatives in world markets are over $1.5 quadrillion. A derivative is a type of contract. For example, gold and silver contracts. They are also called "paper gold" and "paper silver" because there is no real metal, only a commitment to pay. Derived. These were one example, there are millions of derivative contracts like this one.
Unfortunately, I could not find an up-to-date chart, derivative contracts up to 2013. It has nearly doubled since 2013. scary growth. academiclibrary
So what is the total value of all real assets in the world (houses, cars, land, factories, machinery, manufactured goods and everything else)? It is estimated at $300 trillion. Derivatives, on the other hand, are over 1.5 quadrillion, that is, if you sell the world 5 times, you still cannot pay the commitments made with derivative contracts.
As in past examples. But much, much bigger. The paper money you have now will become a thing of the past and the world will have to switch to a new monetary system. Either we will be ready for this change or we will hit rock bottom with this change