The dollar is heading towards a massive correction. Up until a few decades ago, the Federal Reserve was printing so many dollars that they couldn’t even count them. The printing presses were always steaming hot because the United States needed money to fund wars and government spending.
One of the best indicators of that is the national debt. Starting from 500 billion dollars in the 1970s, it’s now close to 30 trillion dollars. The economy of the world can’t handle such a massive bubble. Since states can’t default on one another as easily as a person can default on a bank, an even bigger problem emerges. Follow this website to find out more.
The market crash in 2008 was supposed to sort things out, yet a completely unexpected outcome happened. Instead of the United States putting its finger on its head and thinking for a minute, it put its finger on a computer button and created even more dollars out of thin air. Instead of running a press, now they can click a button and bring new money and value into the world. That’s a massive problem for the economy of the entire planet.
What are the principles that are supposed to govern money?
Money by itself is a social phenomenon. There’s no explanation for it in physics or chemistry. It’s something that humanity has created. The only reason why it came into existence is that individuals recognized that some of the same objects are universally wanted.
Farmers, soldiers, miners, and teachers used to sell their services and goods to get that particular item, which was gold. Storing this commodity and keeping it as a source of value made it perfect for situations in the future when times would be rougher.
Our decisions today are based on what we want to achieve in the future, and money is the only thing that can create the largest number of options. Buying a form of money today means that you can change your future tomorrow. That’s one of the main reasons why so many people are buying gold and Bitcoin. It’s because they think that one of them is going to be the reserve currency of the world.
Every action in our economy begins with desire. The easiest way to see that inaction is by using a primitive example. If you want to eat meat, you have to go into the forest and hunt for it. If you want to eat fish, then the only choice is to make a rod and try to catch something.
Each person has an ordered set of desires that they fulfill throughout the day, and they can’t multitask on all of them. Since the world is limited and scarce, we can’t achieve everything we want at the same time. That’s why we create tools to make our lives easier. Here’s a page that explains it better https://moneyweek.com/investments/property/house-prices/604694/how-many-ounces-of-gold-does-it-take-to-buy-an-average.
Instead of hunting with a stick and a sharp rock as a tip, humanity used time, resources, and brainpower to create guns to hunt faster. Another tactic is domesticating the wild animals and keeping them like cattle. This freed our time to do other, more important things.
However, in order to obtain capital in the future, we need to make sacrifices today. Instead of eating at the most expensive restaurant today and spending your entire paycheck, you decide to budget and think of the rest of the month. Careful planning leads to better organization and increased satisfaction with your life.
Next comes the perceived value of specific tools. An expensive piano might not mean anything to someone who isn’t interested in music. Even if it’s worth millions of dollars, in the hands of an amateur, that tool will not provide its maximum effect.
That’s why value is subjective. For that reason, past costs of specific things aren’t important. The bread used to be much cheaper 20 years ago, but most people still eat it on a daily basis. Even though the cost has increased, it’s economically irrelevant. People are still going to buy and eat it in the present and the future.
Can gold replace the dollar?
Just like we mentioned before, the value of the dollar is completely subjective. It’s a marketable good and increases our options for the future. However, the dollar has failed at that task. Ten grand could buy more things a few decades ago compared to today. This means that if you decide to hold your wealth in dollars, you’re not going to get the perceived future that’s inside your head.
Due to inflation, the value of the dollar gets watered down with every new monetary unit that gets created. Since the institutions responsible for its maintenance are printing it like crazy, it’s going to be worth much less in the following years. This forces consumers to spend it as soon as possible to ensure they’re getting the maximum use of it.
The only solution is gold which is a confirmed hard asset and has a limited supply. This Only Gold review has more great information. Gold increases the freedom of the world because it doesn’t care about borders. It’s worth the same in every country, and the exchange rates are identical.
The state doesn’t need to create it out of thin air because gold was there before the state existed. Governments only accepted and pushed it as the ideal form of money because the free market selected it.
However, the reason why it was replaced was that it couldn’t be manipulated. Now, the entire monetary supply of the world is in the hands of a few people. That means that it’s completely centralized. Gold, on the other hand, has gone through a process of decentralization that has lasted for thousands of years. Even though states have hoarded it, individual investors still have a massive supply compared to them.
Using gold as the base currency will improve the economy because the markets will recover, and the prices will keep dropping in the future. Because it’s a store of value, people will be more willing to save and invest instead of spend.