Hell
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This story has been repeated countless times in human history worldwide. An empire gets too big. Its involvement in warfare and warfare keeps increasing. Taxes continue to grow and reach a point where they cannot be increased without a high risk of mutiny. Empire hits the wall and wonders about how to pay for ever-increasing expenses. Some smart-asses devise the same old beaten-up solution: debase the money. It meant shaving the gold and silver coins and using that stolen metal to mint more. The ultimate result in every single instance was incredible inflation and the destruction of the economy. However, the criminal mentality never disappears, and the governments keep repeating this story.
Mixing cheaper metals with gold and silver with cheaper metals has been another solution governments have adopted and faced similar consequences even with this trick. Later, when gold and silver coins were replaced by gold and silver-backed currencies, governments would still run out of tax money. So, fractional reserve banking was introduced. In this system, the currency was not backed 100% by gold or silver. Instead, the banks would be required to store a smaller fraction of 100% of the gold or silver for the money issued, like 50%, 75%, 25%, or whatever. This not only caused inflation, but bank runs also became common. People would rush to the bank to redeem their money for gold or silver as soon as they knew it was running out.
Of course, many account holders would hold the bag because the bank ran out of commodities before they made it there. This much disaster was not enough for the government, as the appetite for free stolen money never ends. So, the Bank of England came into existence. The bank’s stated purpose was to make money supply more liquid, aka bringing it even more to the discretion of politicians and bureaucrats, as they please. In reality, it meant that the government would issue debt certificates on interest, aka bonds and securities, i.e., mortgage the so-called citizens to debt collectors, and the so-called central bank run by politicians and bureaucrats would print money and buy those bonds and certificates with that money printed out of thin air, with interest that would go to member banks which were mostly large conglomerates of the banking industry.
In the US, Alexander Hamilton led the pack that wanted to build a big government primarily built and run by debt-based money, modeled on the country of former masters, Britain. Opposition in the US was massive. Americans did not want a debt-based economy at any cost. They were doing better than anyone else with actual commodity-based money. Abraham Lincoln made war on tariffs an excuse and issued fiat currency, the Greenbacks, for the first time in America. As expected, these caused incredible inflation again. After the war, the greenback disappeared, and opposition to the central bank and fiat money became even more substantial. Before Lincoln, First and Second National banks were erected on two different occasions, but both failed and went away. One was ended by Andrew Jackson, the only American president who brought sovereign debt to zero.
The descendants of Hamilton never gave up, though. They had a powerful lobby with the largest and most influential bankers backing them up. They finally succeeded in 1913 when the Federal Reserve Bank and IRS were born. This was a very dark year in American history. It gave the government the courage to sacrifice thousands and thousands of young American men and women and spend enormous amounts of money in World War 1 that was entirely unrelated to America and Americans. The inflationary boom caused by the Fed soon resulted in the bust commonly known as the Great Depression. World War 1 was not the only war encouraged by fiat money printed by the Fed. After this wars became a routine in American history, world’s dealiest and the most expensive war ever the Second Wrold War, Korean War, Vietnam War, Philipines, Iraq War, world’s longest war ever the Afghanistan war and many many others.
Defense, which was offense, became so massive that its budget was more significant than the subsequent six most enormous defense budgets combined. The Pentagon became fully infested with cronyism, corruption, and waste. On September 10, 2001, then-defense secretary Donald Rumsfeld told Congress that the Pentagon was missing trillions of dollars. The next day, 9/11 happened, and the whole issue got buried in the ground. Since 1913, the US has spent trillions over trillions of dollars in spreading Democracy around the world with essentially zero results. Instead, the US has lost lots of its credibility as a result of these wars, interferences, regime changes, and assassinations. This is crazy, and our imperialism still does end. Now, we want Canada, Greenland, and Gaza. What a nightmare!
Another lousy trend started by the Fed’s fiat money is welfare. It became a routine for both political parties to buy votes by promising war and welfare. It was not only foreign wars; domestic wars, targetless and endless wars, also became a routine. The war on drugs and the war on terror are two major ones. None of the two wars had an end or any benefit. Drug cartels are getting stronger and stronger, and drug problems are getting broader, more significant, deeper, and more complicated. At the same time, many countries have acquired complete control of drugs without spending a single penny on the war on drugs just by legalizing them. The countries that were targeted in the war on terror are now mostly in worse shape than they were before the beginning of this war.
Finally, the rooster is coming to the roast. The US now has a two-trillion-dollar annual budget deficit, and debt is hitting the forty trillion-dollar mark. Interest payments have surpassed defense spending, about six times larger than the next defense budget. Interest rates are increasingly out of the Fed’s control and continue to rise, making interest on debt payments even more expensive. This is another decisive factor hurting the Dollar, which accounts for sixty percent of the world’s fiat currency reserves. On the other hand, a Bitcoin is now worth more than a hundred thousand Dollars.
