While monetary policy certainly affects inflation, the role of productivity deserves greater consideration. Environmental regulations, excessive taxation, bureaucratic red tape all increase manufacturing cost, reduce productivity and drive manufacturing offshore. All this reduces productivity, increases cost and reduces supply. All inflationary.
Jeff, I agree with your point (mainly), but I do think that you are leaving out another thing . . . capitalism.
If my costs are $100 per unit and the other person's are $70 per unit, I will need a compelling reason for the consumer to buy my product over the other provider's. If I cannot get a reason why the consumer will pay more for mine, I will be out of business. Thus, regardless of regulations, taxation, or red tape, a company will seek the ability to compete. If that means chasing labor that is 10% of the labor cost here, then so be it.
And, no, it is not inflationary. It has everything to do with buying power. An example I gave was around 1995, I spent $1000 on a portable DVD player from Panasonic. That DVD player had value to me. It meant that when I had a long road trip with my child, I could go 3 hours without stopping. Before that, I would have to stop for every hour to ninety minutes. Now, you can find a portable DVD player for $50. My dollar today buys more than it did when goods were made in the US.
It is easily arguable that tariffs are inflationary.
There are a few things that you left out and I believe are misled on.
You need to look a little higher up in the chain to see where the real power is. The real power is in the banking system. SWIFT came about because America was becoming too powerful in the global banking system. FNCB was the issue. Decent article, but it misses the forest for the trees and gets some fundamentals backwards.
You're right to focus on government spending and the dollar system, but you need to look higher up the chain. The real power isn't in Washington—it's in the global banking infrastructure. SWIFT exists precisely because America was becoming too dominant in international banking through FNCB and similar institutions. SWIFT, headquartered in Belgium, was meant to distribute control. Yet despite this nominal internationalization, the US still effectively controls SWIFT—which is exactly why BRICS nations are working to build alternatives.
Here's what you're missing: undermining SWIFT wouldn't just hurt the US economy—it would collapse the entire power structure that allows dollar hegemony. This is the real game, not your neighbor's credit card debt.
Your debt analogy fundamentally misunderstands how sovereign debt and productive borrowing work. The old banking joke goes: if you owe the bank $100, that's your problem; if you owe the bank $1 billion, that's their problem. The US currently owes tens of trillions, which makes it the world's problem—and paradoxically, the world's investment opportunity.
Foreign investment in US Treasuries doesn't just "keep us afloat"—it's a mutual dependency. China, Japan, and other major holders need a stable dollar as much as we need their capital. This isn't weakness; it's structural power. When everyone needs your system to work, you control the system.
Not all debt is created equal. A family going into debt for designer clothes is wasteful. A business borrowing to expand capacity is investment. A nation borrowing to build infrastructure, fund research, or stabilize during crisis is strategic. Your article conflates consumer debt with sovereign debt, which is like confusing a home mortgage with a payday loan.
Senator Kennedy's quote—"Washington doesn't make money. It takes it, and borrows the rest"—is catchy but misleading. Washington doesn't need to "make" money in the production sense. It creates the framework, infrastructure, legal system, and stability that allows everyone else to make money.
Does Washington "make" the internet? No—but DARPA funded its development. Does Washington "make" pharmaceutical innovations? No—but NIH grants fund the basic research. Does Washington "make" the GPS satellites that enable billions in commerce? Actually, yes—but private industry couldn't have done it alone.
The government's role isn't to compete with private enterprise in making widgets. It's to provide the foundation that makes private wealth creation possible. Roads, courts, patent systems, national defense, basic research—these aren't "taking" money, they're investing in the infrastructure of prosperity.
Your article notes that currency in circulation increased 400% since 1997 while paychecks didn't. But you're comparing apples to oranges. If population grows, if the economy grows, if productivity increases, the money supply must grow proportionally—or you get deflation, which is far worse than moderate inflation.
The real question isn't whether money supply grew, but whether it grew faster than the productive capacity of the economy. Some inflation occurred, yes. But your 400% figure ignores that real GDP roughly doubled in that period, population grew, and global dollar demand increased. The money supply expansion wasn't pure dilution—much of it represented real economic growth requiring more monetary units to facilitate.
Here's what your article gets exactly backwards: a country where everyone saves and nobody spends creates economic stagnation. This is the paradox of thrift. If everyone hoards money, businesses have no customers, workers get laid off, and the economy contracts. Your savings become worthless when the economy collapses around them.
A healthy economy requires money velocity—spending, investing, borrowing, and yes, some inflation to encourage using money rather than burying it. The alternative isn't stability; it's deflation spirals like Japan's lost decades or the Great Depression.
You're free to believe that BRICS should undermine US power, that the petrodollar system is purely extractive, that we should return to gold standard constraints. But understand what you're advocating for: a world where US influence declines, where the dollar loses reserve currency status, where we face the same capital constraints as any other nation.
Maybe that's preferable to you. But it means giving up the "exorbitant privilege" that lets us borrow in our own currency, that keeps US Treasury rates low, that allows us to finance deficits other nations couldn't dream of. It means accepting that when crisis hits, we won't be able to print our way to stability—we'll be subject to the same external constraints as everyone else.
Is the current system perfect? No. Does it create dependencies and distortions? Absolutely. But the alternative isn't some idyllic return to "sound money" and balanced budgets—it's a multipolar world where US power contracts and other nations fill the vacuum.
You can't have it both ways: condemning the system that maintains US dominance while presumably wanting America to remain the global superpower. Pick one. SWIFT controls the movement of money between countries and is headquartered in Belgium. BUT SWIFT is still mainly controlled by the US. BRICS looks to undermine SWIFT. Undermining SWIFT would decimate the US economy and its power structure worldwide.
Debt is not always a bad thing. Debt is a bad thing when you can not repay it. The running joke is that if you owe the bank $100, that is your problem. If you owe the bank $1bn, that is their problem. Right now, foreign investment in the US Treasury keeps the US afloat. It also keeps the US in power in the world.
If you do not want the US to be in power in the world, that is your choice. I'd disagree with it.
David: Debt is a bad thing when there’s massive waste and fraud that supports a spoils system and politician enrichment. Our country has major problems. When it cannot print more money — create it— we are increasingly taxed. You address macro big picture economics in your post: global power positions and inter-dependencies. Americans live and vote micro which this article addresses within word count limitations.
What’s troubling voters struggling for answers? Waste, fraud, ever increasing taxation and bond fees, the continued erosion of the standard of living of the majority of American citizens.
Ah yes, the infamous cliché: "waste, fraud, and abuse." When asked to quantify it, people fall silent. So let's get specific—what exactly is this waste, fraud, and abuse? Give me dollar amounts per category.
Let me save you the trouble and address what you're likely to say:
"Waste" is subjective. You might think the military is underfunded and undermanned. I'll point out that the Department of Defense is the largest employer in the world with approximately 3 million people—roughly 1% of the US population. Sound small? Consider this: India employs about 2.5 million in their military with nearly 5 times our population. China has similar numbers with similar population. They're both at roughly 0.15% of their population while we're at 1%. One person's "bloated military budget" is another's "essential deterrent." Waste is in the eye of the beholder.
Fraud is human nature. It exists everywhere, always has, always will. What disturbs me is the misplaced focus. The media loves to spotlight the welfare recipient with six kids from four fathers getting $500 a month—"How dare she!" Over 18 years, that's $108,000. Meanwhile, Senator Rick Scott oversaw fraud at HCA that resulted in a $1.7 billion settlement. Let that sink in: it would take 16,000 welfare recipients defrauding the system for 18 years each to equal what Scott's company paid in one settlement.
We're outraged by someone stealing a bag of chips while someone else robs the bank. The focus is deliberately misdirected.
The US must print more money. This isn't optional; it's mathematical necessity. In 1970, the US population was about 200 million. Let's say hypothetically there were $100 billion in currency. Today there are 350 million people. If you kept that same $100 billion, money becomes scarcer. Scarcity drives up value—that's deflation. Prices would have to fall by 75% for the same economic activity to occur. That's not stability; that's economic collapse.
Money supply must scale with population and economic activity. The alternative is deflationary death spiral.
Americans are taxed because we demand services. We run deficits because the services we demand cost more than the revenue we generate. It's that simple. You want lower taxes? Fine—tell me which services you want eliminated. Social Security? Medicare? Defense? Interstate highways?
We could balance this by raising revenue, but that means higher taxes—which you just complained about. Or we could cut services—which voters consistently reject when specific cuts are proposed.
The deficit isn't a bug; it's a feature. As I said before, that debt structure gives us power in the global system. You can't have it both ways: demanding low taxes, expansive services, and global dominance while complaining about the debt that makes it all possible.
So again: quantify the waste, fraud, and abuse. Give me numbers. Show me what you'd cut. Because vague complaints about "waste" while enjoying the benefits of the system is just intellectual laziness.
THAT was a very informative response, David. You should be teaching at one of our crappy institutes of learning. Maybe then the kids would learn a thing or two. I learned more about world finance in your “semi“ article then I did during four years at university. Well, I agreed with the authors premise that Washington needs more fiscal control, I see that it must be blended with more of a worldwide nuance than I ever imagined. Thank you for the lesson. Happy new year.
Since you are trying to find out about me, why not check out some of the economics teachers I had? One was David Denslow. I was awake during these classes.
For Bergersons comment run though CPTZero I got...
Lightly edited by AI
We are highly confident this text was originally human writtenand polished by AI
Probability breakdown
6% AI generated
94% Mixed
0% Human
For the piece Brain wrote today that Bergerton was commenting on I got -
We are moderately confident this text was AI generated
Probability breakdown
78% AI generated
22% Mixed
0% Human
I think it's the sign of the times (for better or worse) that most folks are running most of the serious stuff they publish through some sort of AI. Aren't spell checks some kind of rudimentary form of AI?
If you cannot control the local government and spending what have you?
The County of Santa Barbara was told it basically is broke in August. To use a phrase it was robbing Peter to pay Paul.
The City of Santa Barbara, City of Goleta and others have been doing this for decades. Spending dependent on beggars handouts. (e.g. pass through from a broken State of Calif. that depended on in-sustainable Federal funding and inflation.)
Think about the increased taxes locally and then contemplate this quote from Mr. Campbell (In 1997 there were about $475 billion in U.S. currency in circulation. Today there are around $2.4 trillion, a 400% increase. ) All political parties own a part of this but which is mostly responsible?
The bike boys stated spending $10 of millions on bike paths would improve and strengthen the economy? Where did that money come from? The anti car Visionless Zero groups said shut down the streets, spend money on failed bulbouts, and make driving miserable, so the economy would flourish? Where did that money come from?
Sacramento stated High Speed Rail is the answer. That was sold by false advertising and dependency on magic tax dollars. You were sold the proverbial bill of goods. The HSRA laughable statement to justify their failure by stating we have more bike paths and side walks now. Huh? That is High Speed Rail. Where did that money come from after the lies about cost and return? The demanded Sacramento Social Programs are decades of failures and spending the people into debt.
Has the Cities and County of Santa Barbara depended and designed projects based upon dollar stability or has it and does it continue to waste your taxes and efforts based upon inflation? Quote Mr. Campbell "Inflation is created in the printing press, not the checkout line."
Faced with deficit the City of Santa Barbara is on a spending frenzy spending for trees, and plants. At a time when it cannot cover its own debt! What makes it so ridiculous, is the reoccurring multi year droughts have proven this one sector of government is basically planting uncontrolled water faucets 24/7. The water table of the area has already shown it is bad planning and long term trees die for lack of ground water.
Focusing on local government and questionable spending makes the point of this article.
I'll finish with this. If you cannot control the local government and spending what have you?
Interesting and thought provoking article Mr. Campbell
Appreciate the reminder Brian that we’re controlled and held captive by our rulers; increasingly taxed to pay for their reckless, self-serving bad behavior. Who can keep up besides those making big money in real estate, tech, finance, or tax payer funded government jobs?
What’s the solution? A mass tax-payer rebellion? Some of us are sinking in quick sand. Don’t we have a right to our money?
Gold is the money of kings, Silver the money of gentlemen, Barter the money of peasants, and Debt the money of slaves…
We are debt slaves, BUT, Team Trump is working on elimination of the Federal Reserve Bank (which is not a bank, has no reserves, and is not part of the federal government), along with the illegal IRS…the plan is to transition to a new money system, with sound money…constitutional dollars, back primarily by gold and silver, plus a basket of other commodities (see BRICS model).
This is another one of those absurd "return to gold" fantasies. Let me dismantle this quickly:
Gold has NO intrinsic value. It's worth exactly what someone is willing to pay for it—nothing more, nothing less. Sitting in the ground, it has zero value. We assign value to it because of scarcity and collective agreement, just like we do with currency. Gold has some industrial applications, like diamonds, but for the vast majority of humanity it's useless metal. You can't eat it, burn it for warmth, or build a house with it.
You're arguing you want something "tangible" in exchange for your dollars because gold has "real value." But you're just replacing faith in a government with faith in a shiny rock. What's the functional difference? Both require collective agreement that the thing has value. At least a functioning government can enforce contracts, maintain stability, and adjust monetary policy. Your gold bar just sits there.
Now let's talk mathematics. The US holds approximately 8,133 metric tons of gold—roughly 261 million troy ounces. At current prices (~$2,650/oz), that's about $690 billion in gold.
The NYSE has a market capitalization of approximately $28-30 trillion. Nasdaq adds another $20-22 trillion. Combined, we're looking at roughly $50 trillion in just publicly traded equities—and that's before counting bonds, real estate, private equity, or any other assets.
So you want to back a $50 trillion stock market (not to mention the rest of the economy) with $690 billion in gold? That's a ratio of roughly 70:1. The math doesn't work. You'd need to either acquire 70 times more gold or accept that asset values would have to collapse by 98.5% to match gold reserves. Is that your plan? Economic apocalypse?
Deflation is a feature, not a bug—and it's catastrophic. Gold is finite. If I recall correctly, all the gold ever mined would fit in a cube about 75 feet on each side. It doesn't grow. World population grows. Economic productivity grows. Under a gold standard, as the economy expands and population increases, the money supply stays fixed. That means each unit of currency becomes more valuable over time—deflation.
Sounds good, right? Your savings grow automatically! Except deflation destroys economies. Why would anyone borrow money to start a business if they have to pay back more valuable dollars later? Why would anyone spend today when their money buys more tomorrow? Consumption collapses. Investment freezes. The economy spirals downward. Ask Japan how their deflationary decades went.
"But we'll use a basket of commodities like BRICS!" Fine—same problem, different rocks. Commodity supply doesn't scale with economic activity. You're still creating artificial scarcity that forces deflation. The BRICS nations aren't proposing this because it's economically superior—they're proposing it because they want to undermine dollar dominance. It's geopolitical positioning, not sound monetary policy.
And the Federal Reserve conspiracy? The Fed isn't perfect, but "eliminating" it means what exactly? Going back to the financial panics and bank runs of the pre-Fed era? The 1907 panic that nearly collapsed the banking system? The wildly unstable currency supply of the National Banking Era? You want stability, but you're advocating for the system that produced maximum instability.
The current system allows monetary flexibility to respond to economic shocks. The gold standard removes that flexibility and turns every recession into a potential depression because you can't adjust money supply to match economic conditions.
You're not a "debt slave." You're a participant in the most prosperous economic system in human history. Your standard of living—even with inflation—vastly exceeds what 99% of humans throughout history experienced. You have options, mobility, and opportunity that a gold standard would strangle.
But sure, let's crash the economy chasing a 19th-century monetary theory that failed repeatedly. I'm sure that'll work out great this time.
Hmmm…gold and silver have been real money within cultural systems for thousands of years. Paper money (fiat currency), have life spans of 50 to 70 years on average. Why? because the governments that you trust are not trustworthy.
The US has far more than 8000 tons of gold, as you’ve been taught to believe…10 times if not much more. The Grand Canyon is loaded with gold…thus the reason why Roosevelt tied it up and made it off-limits in the early 1900s.
Barley was used as currency for more years of human civilization than gold or silver ever were. Mesopotamian shekels were literally defined as weights of barley.
I'll be visiting the Lydian kingdom (modern Turkey) next month—where coins were actually invented around 600 BCE. The Lydians chose gold/silver not because it had intrinsic "value," but because it doesn't rust. It was a pragmatic engineering choice for standardization, not some mystical store of wealth.
Your "50-70 year average lifespan for fiat currencies" claim is statistically meaningless when over half the countries in the world didn't exist 70 years ago. You're measuring currency longevity against the age of nation-states themselves—most of which were created in the 1960s decolonization wave. Of course their currencies are "young."
As for the Grand Canyon gold conspiracy: Roosevelt designated it a national park in 1919, not the early 1900s, and it was Teddy Roosevelt in 1908 who made it a national monument—21 years before FDR took office. If there were commercially viable gold deposits there, mining companies would've exploited them in the 1800s before any federal restrictions existed.
The "US has 10x more gold than reported" claim is unfalsifiable conspiracy thinking. Fort Knox is audited. If you have evidence, present it. Otherwise, you're just asserting things without data.
Hmmm… The Lydians’ choice of electrum (a natural gold-silver alloy) for the world’s first coins around 600 BCE wasn’t primarily because gold/silver “doesn’t rust” (though that’s a key practical advantage) or solely for portability over commodities like barley. It was a mix of factors rooted in availability, economics, and the metal’s properties.
Primary Reasons
• Local abundance — Electrum was plentiful in Lydian rivers (especially the Pactolus near Sardis), making it a ready resource for a wealthy trading kingdom. Lydia had legendary deposits of this alloy, which fueled their economy and made it practical to standardize into stamped pieces rather than import or use scarcer materials.
• Pre-existing use as bullion — Precious metals (gold, silver, electrum) were already valued and used in trade as weighed ingots or dust long before coins. Stamping them with a royal mark (like the famous lion head) guaranteed weight and purity, speeding up transactions without constant weighing or testing— a huge efficiency boost for merchants.
Thanks for making my point on the base currency’s lasting 50 to 70 years on average, our petrodollar has been detached from gold backing for over 50 years, it’s now nearly dead. It’s on death doorstep. Look for the new constitutional dollars back by gold and silver (+++). No intrinsic value? Have you been tracking Silver? It’s many uses within industry? Just designated national strategic resource? Is the silver market rigged by the banksters?
Have a good trip.
PS…It was Roosevelt, Teddy, who set aside 800,000 acres (off limits) in the Grand Canyon in 1908. The question remains why?
There will always be a bottom 10%. It's impressive how math works.
The same thing that you are saying was said to my generation. But to prove my point, I bought my first house at 22, paid it off by 26, and retired at 28.
Amazingly, most of Gen Z's issues can be resolved through legislation to rein in capitalism.
You can not have equality because humans are not equal.
You can have narrower gaps between the top and the bottom.
My point is still the same. Every generation supposedly does not have it as good as the prior generations. That is false. Some do, and some do not. One means one, and some means some, and all means all. Gen Z is doing fine. Some are doing horrendously. That is the distribution of life.
I brought my life up as an example. I was told the same thing in my generation. I did fine.
No one who is poor cares if I retired at 28 or even if I am poor. They care about the next meal and surviving. But, there will always be that bottom 10%.
Great article, Brian, you quote: “Washington Doesn’t Make Money. It Takes It, and Borrows the Rest.” Senator John Kennedy (R-LA). I would modify Kennedy's quotes to: "Washington Doesn't Make Money, It Steals It, Prints It and Wastes most of It. The term "borrowing" money is simply a prettier term for stealing. Government steals what they so-call "borrow." Since the Feds "man" the printing presses, they can print all they want and bully their way into raising taxes.
A good example of waste is by the Feds watching over us. I've concluded the Fed's FBI is likely filled with special agents' family members which these relatives in turn are given safe and wasteful work. They watch me, such as in a restaurant and the FBI guy next door hacking into my computer. In the restaurant, a round table sat about six FBI guys about twenty feet from me and my wife. They all sat quietly looking at their cellphones. As I quietly spoke to my wife, I said a word that got the attention of one of the six and he said out loud exactly what I said except he added the word "not" to what I said. We have a local FBI office in town. The FBI now monitors me because they know they did a lot of illegal stuff to me and my wife in Dem SB with a Dem FBI ... in other words, I can get them (City and FBI) into serious legal trouble for big bucks. With all the crime out there, we are paying FBI probably millions of dollars to harass me and others. More tons of money waste of just another dead end trail the FBI created.
Thank you for illuminating this huge problem. I have often mentally debated: Does the American experience really work if it takes massive borrowing and inflation to keep status quo; is the model viable? It could was and could be if restraint was exercised, but it is not.
Brilliant piece on the paycheck-to-paycheck couple masquerading as successful. That parallel to government spending realy cuts through the noise better than any economics textbook I've read. I've seen this firsthand with friends who kept upgrading homes every few years, each time convincing themselves they "needed" the space, until 2008 wiped them out. The printing press observation is spot on becuase it shifts blame away from regular people and puts it exactly where it belongs.
For those who dismiss the California dumpster fire, losing billions in fraud, waste, corruption and incompetence, blaming “mean ol’ Republicans” and Trump; California’s own Auditor has given FAILING ratings.
Exceptional article, leading us back to the basics of life, history and wise counsel. I opened my bible and reviewed the verses mentioned. Thank you, and bless you for your work and gift of giving.
Not sure how I got on this list, but it seems from the comments this is nothing but a right wing echo chamber.
What ever happened to supporting government of, by and for the people? Can you show me a country that has a better system that you would like to emulate?
To you, government is a leech that saps the lifeblood of our economy. I think you have it backwards.
Good government invests in the science and technology of the future. Then private industry uses those public investments to make private profits. Show me private profits and I will show you public investment that made it possible.
The real issue is corruption: Is government investing in the public interest? Or in the interest of those who buy the elected officials?
The current administration has taken this corruption to new levels:
Literally selling pardons for cash.
Setting up crypto money laundering schemes to accept bribes.
Directly accepting multimillion dollar "gifts" like an airplane.
I don't expect anyone here to give my comment a moment's thought. After all, there are dozens more that can safely keep you in your familiar world where you are right and everyone else is wrong.
Thoughtful reply David. Interested in how you feel our system would be affected if the government could no longer devalue the dollar at will as it currently can, and our economy was instead based in part or in whole on a system such as bitcoin where the government can still use that ‘currency’ to spend, lend and borrow, but loses its ability to unilaterally devalue the currency the economy would then be based on?
Your premise is incorrect from the start. The government doesn't "devalue the dollar at will." The dollar's value is determined by market forces—supply, demand, interest rate differentials, economic growth expectations, trade balances, and global confidence in US assets. The Federal Reserve influences these factors through monetary policy, but it doesn't have a "devalue currency" button it can press whenever it wants.
Let me be clear about what actually happens. The Fed controls tools, not outcomes. The Federal Reserve can:
Set interest rates (making borrowing more/less attractive)
Conduct open market operations (buying/selling securities)
Adjust reserve requirements
Implement quantitative easing/tightening
These actions influence economic conditions, which then affect currency value through market mechanisms. If the Fed raises rates, it typically strengthens the dollar because foreign investors want higher yields. If the Fed lowers rates, the dollar often weakens. But "often" isn't "always"—market reactions depend on expectations, global conditions, and countless other factors. This is my pet peeve where people equate one to all, or some to all.
The dollar strengthened significantly in 2022-2023 even as the Fed was dealing with inflation, because other economies were in worse shape and global investors fled to dollar safety. The government didn't "decide" to strengthen the dollar—market forces did.
Now, let's talk about Bitcoin as a monetary base. This is economically messed up for several reasons:
1. Bitcoin is absurdly volatile. In the last five years or so, Bitcoin has ranged from under $4,000 to over $100,000. Imagine trying to run an economy where the currency value swings 90% in months. How do you sign contracts? Price goods? Plan investments? You can't. Bitcoin is a speculative asset, not a functional currency.
2. Fixed supply creates deflationary death spirals. Bitcoin's 21 million cap means the money supply can't grow with the economy. As productivity increases and population grows, each Bitcoin becomes more valuable. This incentivizes hoarding, not spending. Why buy anything today when your Bitcoin buys more tomorrow? Why invest in business when you have to repay loans with more valuable currency? Economic activity collapses.
3. You lose all monetary policy flexibility. In 2008, the Fed flooded the system with liquidity to prevent total financial collapse. In 2020, the Fed responded to COVID by supporting markets and preventing deflation. Under a Bitcoin standard, you can't do this. You're locked into a fixed supply regardless of economic conditions. Every recession becomes a potential depression because you can't adjust money supply to match economic reality.
4. Transaction limitations. Bitcoin processes about 7 transactions per second. Visa alone processes about 65,000. The Bitcoin network literally cannot handle the transaction volume of a modern economy. You'd need to build layers on top of Bitcoin—at which point you've just recreated the traditional banking system with extra steps.
5. Energy consumption is insane. Bitcoin mining currently uses more electricity than entire countries. Scaling that to run a major economy's monetary system would be an environmental and economic catastrophe.
Here's the fundamental question you're not asking: Why would losing the ability to adjust monetary policy be a good thing?
You're treating monetary flexibility as if it's purely a tool for government mischief. But it's also the tool that:
Prevented the 2008 financial crisis from becoming Great Depression 2.0
Stabilized markets during COVID
Allows response to economic shocks
Enables counter-cyclical policy to smooth business cycles
Yes, this flexibility can be abused. Yes, it can lead to inflation if mismanaged. But the alternative—rigid monetary constraints that turn every shock into a crisis—is demonstrably worse. We tried commodity-backed currencies for centuries. They produced: bank runs, financial panics, deflationary depressions, and economic instability that made the modern era look placid by comparison.
"But the government won't be able to devalue my savings!"
Under Bitcoin, your savings deflate along with the economy. Your Bitcoin becomes more valuable, but there's no economy left to spend it in because nobody can borrow, invest, or do business when currency value is constantly rising. Congratulations—you're rich in a collapsed economy. Enjoy your worthless "wealth."
The actual choice isn't between "sound money" and "government manipulation." It's between a flexible monetary policy that can respond to changing conditions versus rigid constraints that amplify economic shocks. One system produced the Great Depression. The other, despite its flaws, has produced 80+ years of unprecedented growth and prosperity.
If you think Bitcoin fixes this, you should spend some time learning monetary economics; otherwise, you're just chasing a different speculative asset and calling it "freedom."
Thanks for sharing your thoughts, I always enjoy reading the opinions of those who are champions of Fiat Currency. When you look at the fact that the US fiat dollar has lost 97% of its purchasing power since 1900, it is a wonder to me that the current fiat system has any fans at all. Everybody has a point of view and it was interesting reading yours. It is going to be fascinating to watch how things unfold over the next decade or so. Thanks for taking the time to share your point of view. Very interesting perspective.
I'm curious about your claim that the dollar has lost 97% of its purchasing power since 1900. The issue is you're calling it a "fiat dollar" across that entire timeframe, when in fact:
1900-1933: Full gold standard ($20.67/oz)
1933-1971: Bretton Woods partial gold backing ($35/oz for foreign central banks)
1971-present: Pure fiat
So if your 97% debasement argument holds, most of that loss occurred while the dollar was backed by gold. The 1900-1971 period saw massive erosion of purchasing power under the gold standard—hardly an endorsement of gold as a preserver of purchasing power.
There's always a fan of fiat because money is fundamentally arbitrary regardless of form. A piece of paper with a number on it gets people to build skyscrapers and cure diseases. Gold is equally inanimate—its "value" is just a collective agreement with marginally more scarcity. Both require trust in the system; gold adds logistical friction and deflationary bias.
The real question isn't fiat vs. gold, but whether the monetary system enables productive economic activity or constrains it. The Great Depression provides a pretty clear answer to what happens when you can't expand the money supply during demand shocks.
It should be interesting to watch how things unfold, indeed.
Yes you bring up a valid and obvious point i.e. what is the effect on a fiat currency when fully backed, partially backed, or not backed at all by some form of back up value such as Gold, or perhaps Bitcoin or some other form of back up. In this case we compare to Gold. Let's look at the data then.
1) When fiat currency was fully backed by Gold from 1900-1933 the loss in purchasing power during that period was 24%
2) When fiat currency was partially backed by Gold under Bretton-Woods between 1933-1971 the loss in purchasing power during that period was 69%/
3) When fiat currency was not backed by Gold at all from 1971-2025 the loss in purchasing power during that period was 88%.
So it would appear that the loss of purchasing power increases somewhat proportionally to how much that fiat currency is backed by Gold. The more it is backed by Gold, the more purchasing power it retains.
Now I think the question is, if we replace a limited resource like Gold, with a limited resource like Bitcoin, would that be as effective at minimizing loss of purchasing power of a fiat currency?
As we both agree, it will be interesting to see. I think it is clear that the least optimal choice is a fiat currency backed by nothing.
There is a fatal flaw in your analysis. :) You're ignoring TIME. These periods are wildly different lengths:
20 vs 38 vs 54 years
Annual inflation rates matter more than cumulative loss
Annualized inflation rates:
Gold standard (1913-1933): ~1.4%/year
Bretton Woods (1933-1971): ~3.1%/year
Pure fiat (1971-2025): ~3.9%/year
So yes, inflation accelerated slightly post-1971, but the difference between partial gold backing (3.1%) and pure fiat (3.9%) is marginal compared to the difference you're claiming.
This is what you're missing, imo:
1. The Great Depression happened DURING the gold standard
1929-1933: Severe deflation under gold backing
Prices fell 27.4% from 1929-1933
Unemployment hit 25%
The gold standard prevented monetary expansion to fight depression
2. Most inflation occurred during gold-backed periods:
WWI inflation (1914-1920): Massive price increases while on gold standard
1940s inflation (WWII): Under Bretton Woods gold backing
1970s oil shocks: External supply shock, not monetary policy
3. Confounding variables you ignore:
Wars (WWI, WWII, Vietnam, Korea) - all required deficit spending
Oil shocks (1973, 1979) - OPEC supply cuts
Population growth - money supply must expand with productive capacity
Global trade expansion - Bretton Woods broke because other economies recovered
The Bitcoin question:
Bitcoin as backing would be catastrophic because:
Fixed supply = deflationary spiral
Population grows, economy grows, Bitcoin doesn't
Encourages hoarding, punishes spending
The Great Depression under gold standard teaches us what happens here.
Volatility
Bitcoin has had swings 20-50% in weeks
Imagine your mortgage payment changing that much
No countercyclical policy
Can't expand money supply during recessions
Can't contract during booms
You get 1930s-style depressions
The actual correlation:
Economic growth correlates with flexible monetary systems, not hard money:
US GDP per capita 1913-2025: Up ~700% (inflation-adjusted)
Real wages: Up significantly despite dollar "debasement"
Household net worth: Highest in world
The purchasing power loss you cite is only relevant if you hold cash under a mattress. No one does that. People:
Earn inflation-adjusted wages
Invest in assets (stocks up 30,000%+ since 1971)
Hold debt that inflates away
The dollar lost 97% purchasing power since 1913, yet Americans are ~7x wealthier in real terms. That's the actual data.
Your analysis conflates correlation with causation and ignores that the worst economic outcomes happened under gold backing (1930s depression, pre-1913 banking panics).
Thanks for your efforts at justifying your position. Isn’t it fascinating how two group's of people can look at the same information and arrive at polar opposite conclusions which they both believe are correct? Half the people say the world is flat. The other half say it is round. Time proves one side right eventually. Such will be the case here methinks. Let’s agree to meet here in say 10 years. You do the best you can with your fiat dollars. I will do the best I can with gold and bitcoin. Then we’ll see who is happy and who wishes they adopted a different perspective. As we said earlier time will tell. And one thing is for sure. It will be interesting. Best of luck to you sincerely.
Now you are adding humor. I love it. See you in 10 years and we’ll see which point of view ends up being the assumption right? Invest wisely. I am already way ahead of you. Go! And best of luck to you.
Thanks for your take on things. So interesting how people view data and determine ‘fatal flaws’ :-). Well I admire your effort to support your theory that unbacked fiat currency is the best way forward. I am sure you are not alone in your point of view. Likewise my point of view being the opposite of yours also has supporters. Half of us might believe the world is flat. The other half that it is round. Now, as then, as we both have said, time will tell and it will be interesting. You hang on to your dollars. I’ll hang on to my bitcoin and Gold. Lets check back in say 10 years and see which of us is sorry shall we?
“Let me control the money of the nation, and I care not who makes the laws.”
-Mayer Amschel Rothchild
While monetary policy certainly affects inflation, the role of productivity deserves greater consideration. Environmental regulations, excessive taxation, bureaucratic red tape all increase manufacturing cost, reduce productivity and drive manufacturing offshore. All this reduces productivity, increases cost and reduces supply. All inflationary.
True. But why did inflation run rampant under Carter & Biden?
Jeff, I agree with your point (mainly), but I do think that you are leaving out another thing . . . capitalism.
If my costs are $100 per unit and the other person's are $70 per unit, I will need a compelling reason for the consumer to buy my product over the other provider's. If I cannot get a reason why the consumer will pay more for mine, I will be out of business. Thus, regardless of regulations, taxation, or red tape, a company will seek the ability to compete. If that means chasing labor that is 10% of the labor cost here, then so be it.
And, no, it is not inflationary. It has everything to do with buying power. An example I gave was around 1995, I spent $1000 on a portable DVD player from Panasonic. That DVD player had value to me. It meant that when I had a long road trip with my child, I could go 3 hours without stopping. Before that, I would have to stop for every hour to ninety minutes. Now, you can find a portable DVD player for $50. My dollar today buys more than it did when goods were made in the US.
It is easily arguable that tariffs are inflationary.
Decent article.
There are a few things that you left out and I believe are misled on.
You need to look a little higher up in the chain to see where the real power is. The real power is in the banking system. SWIFT came about because America was becoming too powerful in the global banking system. FNCB was the issue. Decent article, but it misses the forest for the trees and gets some fundamentals backwards.
You're right to focus on government spending and the dollar system, but you need to look higher up the chain. The real power isn't in Washington—it's in the global banking infrastructure. SWIFT exists precisely because America was becoming too dominant in international banking through FNCB and similar institutions. SWIFT, headquartered in Belgium, was meant to distribute control. Yet despite this nominal internationalization, the US still effectively controls SWIFT—which is exactly why BRICS nations are working to build alternatives.
Here's what you're missing: undermining SWIFT wouldn't just hurt the US economy—it would collapse the entire power structure that allows dollar hegemony. This is the real game, not your neighbor's credit card debt.
Your debt analogy fundamentally misunderstands how sovereign debt and productive borrowing work. The old banking joke goes: if you owe the bank $100, that's your problem; if you owe the bank $1 billion, that's their problem. The US currently owes tens of trillions, which makes it the world's problem—and paradoxically, the world's investment opportunity.
Foreign investment in US Treasuries doesn't just "keep us afloat"—it's a mutual dependency. China, Japan, and other major holders need a stable dollar as much as we need their capital. This isn't weakness; it's structural power. When everyone needs your system to work, you control the system.
Not all debt is created equal. A family going into debt for designer clothes is wasteful. A business borrowing to expand capacity is investment. A nation borrowing to build infrastructure, fund research, or stabilize during crisis is strategic. Your article conflates consumer debt with sovereign debt, which is like confusing a home mortgage with a payday loan.
Senator Kennedy's quote—"Washington doesn't make money. It takes it, and borrows the rest"—is catchy but misleading. Washington doesn't need to "make" money in the production sense. It creates the framework, infrastructure, legal system, and stability that allows everyone else to make money.
Does Washington "make" the internet? No—but DARPA funded its development. Does Washington "make" pharmaceutical innovations? No—but NIH grants fund the basic research. Does Washington "make" the GPS satellites that enable billions in commerce? Actually, yes—but private industry couldn't have done it alone.
The government's role isn't to compete with private enterprise in making widgets. It's to provide the foundation that makes private wealth creation possible. Roads, courts, patent systems, national defense, basic research—these aren't "taking" money, they're investing in the infrastructure of prosperity.
Your article notes that currency in circulation increased 400% since 1997 while paychecks didn't. But you're comparing apples to oranges. If population grows, if the economy grows, if productivity increases, the money supply must grow proportionally—or you get deflation, which is far worse than moderate inflation.
The real question isn't whether money supply grew, but whether it grew faster than the productive capacity of the economy. Some inflation occurred, yes. But your 400% figure ignores that real GDP roughly doubled in that period, population grew, and global dollar demand increased. The money supply expansion wasn't pure dilution—much of it represented real economic growth requiring more monetary units to facilitate.
Here's what your article gets exactly backwards: a country where everyone saves and nobody spends creates economic stagnation. This is the paradox of thrift. If everyone hoards money, businesses have no customers, workers get laid off, and the economy contracts. Your savings become worthless when the economy collapses around them.
A healthy economy requires money velocity—spending, investing, borrowing, and yes, some inflation to encourage using money rather than burying it. The alternative isn't stability; it's deflation spirals like Japan's lost decades or the Great Depression.
You're free to believe that BRICS should undermine US power, that the petrodollar system is purely extractive, that we should return to gold standard constraints. But understand what you're advocating for: a world where US influence declines, where the dollar loses reserve currency status, where we face the same capital constraints as any other nation.
Maybe that's preferable to you. But it means giving up the "exorbitant privilege" that lets us borrow in our own currency, that keeps US Treasury rates low, that allows us to finance deficits other nations couldn't dream of. It means accepting that when crisis hits, we won't be able to print our way to stability—we'll be subject to the same external constraints as everyone else.
Is the current system perfect? No. Does it create dependencies and distortions? Absolutely. But the alternative isn't some idyllic return to "sound money" and balanced budgets—it's a multipolar world where US power contracts and other nations fill the vacuum.
You can't have it both ways: condemning the system that maintains US dominance while presumably wanting America to remain the global superpower. Pick one. SWIFT controls the movement of money between countries and is headquartered in Belgium. BUT SWIFT is still mainly controlled by the US. BRICS looks to undermine SWIFT. Undermining SWIFT would decimate the US economy and its power structure worldwide.
Debt is not always a bad thing. Debt is a bad thing when you can not repay it. The running joke is that if you owe the bank $100, that is your problem. If you owe the bank $1bn, that is their problem. Right now, foreign investment in the US Treasury keeps the US afloat. It also keeps the US in power in the world.
If you do not want the US to be in power in the world, that is your choice. I'd disagree with it.
David: Debt is a bad thing when there’s massive waste and fraud that supports a spoils system and politician enrichment. Our country has major problems. When it cannot print more money — create it— we are increasingly taxed. You address macro big picture economics in your post: global power positions and inter-dependencies. Americans live and vote micro which this article addresses within word count limitations.
What’s troubling voters struggling for answers? Waste, fraud, ever increasing taxation and bond fees, the continued erosion of the standard of living of the majority of American citizens.
Ah yes, the infamous cliché: "waste, fraud, and abuse." When asked to quantify it, people fall silent. So let's get specific—what exactly is this waste, fraud, and abuse? Give me dollar amounts per category.
Let me save you the trouble and address what you're likely to say:
"Waste" is subjective. You might think the military is underfunded and undermanned. I'll point out that the Department of Defense is the largest employer in the world with approximately 3 million people—roughly 1% of the US population. Sound small? Consider this: India employs about 2.5 million in their military with nearly 5 times our population. China has similar numbers with similar population. They're both at roughly 0.15% of their population while we're at 1%. One person's "bloated military budget" is another's "essential deterrent." Waste is in the eye of the beholder.
Fraud is human nature. It exists everywhere, always has, always will. What disturbs me is the misplaced focus. The media loves to spotlight the welfare recipient with six kids from four fathers getting $500 a month—"How dare she!" Over 18 years, that's $108,000. Meanwhile, Senator Rick Scott oversaw fraud at HCA that resulted in a $1.7 billion settlement. Let that sink in: it would take 16,000 welfare recipients defrauding the system for 18 years each to equal what Scott's company paid in one settlement.
We're outraged by someone stealing a bag of chips while someone else robs the bank. The focus is deliberately misdirected.
The US must print more money. This isn't optional; it's mathematical necessity. In 1970, the US population was about 200 million. Let's say hypothetically there were $100 billion in currency. Today there are 350 million people. If you kept that same $100 billion, money becomes scarcer. Scarcity drives up value—that's deflation. Prices would have to fall by 75% for the same economic activity to occur. That's not stability; that's economic collapse.
Money supply must scale with population and economic activity. The alternative is deflationary death spiral.
Americans are taxed because we demand services. We run deficits because the services we demand cost more than the revenue we generate. It's that simple. You want lower taxes? Fine—tell me which services you want eliminated. Social Security? Medicare? Defense? Interstate highways?
We could balance this by raising revenue, but that means higher taxes—which you just complained about. Or we could cut services—which voters consistently reject when specific cuts are proposed.
The deficit isn't a bug; it's a feature. As I said before, that debt structure gives us power in the global system. You can't have it both ways: demanding low taxes, expansive services, and global dominance while complaining about the debt that makes it all possible.
So again: quantify the waste, fraud, and abuse. Give me numbers. Show me what you'd cut. Because vague complaints about "waste" while enjoying the benefits of the system is just intellectual laziness.
Great article by Brian, I thank him for expressing his thoughts and the research time and effort that it took to write it.
Most importantly to me, the article promoted a great response from David. Before you tear the system down you need to fully understand how it works.
THAT was a very informative response, David. You should be teaching at one of our crappy institutes of learning. Maybe then the kids would learn a thing or two. I learned more about world finance in your “semi“ article then I did during four years at university. Well, I agreed with the authors premise that Washington needs more fiscal control, I see that it must be blended with more of a worldwide nuance than I ever imagined. Thank you for the lesson. Happy new year.
Hope that you have a happy holiday season as well.
Chance Gardener meets ChatGPT
https://www.youtube.com/watch?v=YgGvd1UPZ88
Aww. How cute.
Since you are trying to find out about me, why not check out some of the economics teachers I had? One was David Denslow. I was awake during these classes.
You look well rested, very well rested.
Always a cheap and easy retort... "ChatGPT" Come on, Jeff - you're better than that.
The comment is hilarious if you know who Chance Gardener is.
https://www.youtube.com/watch?v=YgGvd1UPZ88
Ah, sorry that popular reference was before my time. Or I was probably watching Star Wars... Looks like it's worth a watch.
Try running Bergerstons comment through an AI bullshit detector and see what you come up with.
For Bergersons comment run though CPTZero I got...
Lightly edited by AI
We are highly confident this text was originally human writtenand polished by AI
Probability breakdown
6% AI generated
94% Mixed
0% Human
For the piece Brain wrote today that Bergerton was commenting on I got -
We are moderately confident this text was AI generated
Probability breakdown
78% AI generated
22% Mixed
0% Human
I think it's the sign of the times (for better or worse) that most folks are running most of the serious stuff they publish through some sort of AI. Aren't spell checks some kind of rudimentary form of AI?
Yup. You busted me.
Damn MS Word.
How dare it correct my typos and my constant spelling of record as recrod.
Since you keep trying so hard to ignore the message and attack the person, perhaps you should use AI to help you.
Thank you for articulating the realities that he missed. It is a very complicated web.
Very insightful article
If you cannot control the local government and spending what have you?
The County of Santa Barbara was told it basically is broke in August. To use a phrase it was robbing Peter to pay Paul.
The City of Santa Barbara, City of Goleta and others have been doing this for decades. Spending dependent on beggars handouts. (e.g. pass through from a broken State of Calif. that depended on in-sustainable Federal funding and inflation.)
Think about the increased taxes locally and then contemplate this quote from Mr. Campbell (In 1997 there were about $475 billion in U.S. currency in circulation. Today there are around $2.4 trillion, a 400% increase. ) All political parties own a part of this but which is mostly responsible?
The bike boys stated spending $10 of millions on bike paths would improve and strengthen the economy? Where did that money come from? The anti car Visionless Zero groups said shut down the streets, spend money on failed bulbouts, and make driving miserable, so the economy would flourish? Where did that money come from?
Sacramento stated High Speed Rail is the answer. That was sold by false advertising and dependency on magic tax dollars. You were sold the proverbial bill of goods. The HSRA laughable statement to justify their failure by stating we have more bike paths and side walks now. Huh? That is High Speed Rail. Where did that money come from after the lies about cost and return? The demanded Sacramento Social Programs are decades of failures and spending the people into debt.
Has the Cities and County of Santa Barbara depended and designed projects based upon dollar stability or has it and does it continue to waste your taxes and efforts based upon inflation? Quote Mr. Campbell "Inflation is created in the printing press, not the checkout line."
Faced with deficit the City of Santa Barbara is on a spending frenzy spending for trees, and plants. At a time when it cannot cover its own debt! What makes it so ridiculous, is the reoccurring multi year droughts have proven this one sector of government is basically planting uncontrolled water faucets 24/7. The water table of the area has already shown it is bad planning and long term trees die for lack of ground water.
Focusing on local government and questionable spending makes the point of this article.
I'll finish with this. If you cannot control the local government and spending what have you?
Interesting and thought provoking article Mr. Campbell
The City of SB has been broke a couple of times. See Grand Jury reports, circa 2015
Appreciate the reminder Brian that we’re controlled and held captive by our rulers; increasingly taxed to pay for their reckless, self-serving bad behavior. Who can keep up besides those making big money in real estate, tech, finance, or tax payer funded government jobs?
What’s the solution? A mass tax-payer rebellion? Some of us are sinking in quick sand. Don’t we have a right to our money?
Good Article…reminds me of an old adage…
Gold is the money of kings, Silver the money of gentlemen, Barter the money of peasants, and Debt the money of slaves…
We are debt slaves, BUT, Team Trump is working on elimination of the Federal Reserve Bank (which is not a bank, has no reserves, and is not part of the federal government), along with the illegal IRS…the plan is to transition to a new money system, with sound money…constitutional dollars, back primarily by gold and silver, plus a basket of other commodities (see BRICS model).
PS…we have the gold…
https://x.com/realdonaldtrump/status/314771578850275329?s=61
https://x.com/fnowisthetime/status/1384879287015182347?s=61
This is another one of those absurd "return to gold" fantasies. Let me dismantle this quickly:
Gold has NO intrinsic value. It's worth exactly what someone is willing to pay for it—nothing more, nothing less. Sitting in the ground, it has zero value. We assign value to it because of scarcity and collective agreement, just like we do with currency. Gold has some industrial applications, like diamonds, but for the vast majority of humanity it's useless metal. You can't eat it, burn it for warmth, or build a house with it.
You're arguing you want something "tangible" in exchange for your dollars because gold has "real value." But you're just replacing faith in a government with faith in a shiny rock. What's the functional difference? Both require collective agreement that the thing has value. At least a functioning government can enforce contracts, maintain stability, and adjust monetary policy. Your gold bar just sits there.
Now let's talk mathematics. The US holds approximately 8,133 metric tons of gold—roughly 261 million troy ounces. At current prices (~$2,650/oz), that's about $690 billion in gold.
The NYSE has a market capitalization of approximately $28-30 trillion. Nasdaq adds another $20-22 trillion. Combined, we're looking at roughly $50 trillion in just publicly traded equities—and that's before counting bonds, real estate, private equity, or any other assets.
So you want to back a $50 trillion stock market (not to mention the rest of the economy) with $690 billion in gold? That's a ratio of roughly 70:1. The math doesn't work. You'd need to either acquire 70 times more gold or accept that asset values would have to collapse by 98.5% to match gold reserves. Is that your plan? Economic apocalypse?
Deflation is a feature, not a bug—and it's catastrophic. Gold is finite. If I recall correctly, all the gold ever mined would fit in a cube about 75 feet on each side. It doesn't grow. World population grows. Economic productivity grows. Under a gold standard, as the economy expands and population increases, the money supply stays fixed. That means each unit of currency becomes more valuable over time—deflation.
Sounds good, right? Your savings grow automatically! Except deflation destroys economies. Why would anyone borrow money to start a business if they have to pay back more valuable dollars later? Why would anyone spend today when their money buys more tomorrow? Consumption collapses. Investment freezes. The economy spirals downward. Ask Japan how their deflationary decades went.
"But we'll use a basket of commodities like BRICS!" Fine—same problem, different rocks. Commodity supply doesn't scale with economic activity. You're still creating artificial scarcity that forces deflation. The BRICS nations aren't proposing this because it's economically superior—they're proposing it because they want to undermine dollar dominance. It's geopolitical positioning, not sound monetary policy.
And the Federal Reserve conspiracy? The Fed isn't perfect, but "eliminating" it means what exactly? Going back to the financial panics and bank runs of the pre-Fed era? The 1907 panic that nearly collapsed the banking system? The wildly unstable currency supply of the National Banking Era? You want stability, but you're advocating for the system that produced maximum instability.
The current system allows monetary flexibility to respond to economic shocks. The gold standard removes that flexibility and turns every recession into a potential depression because you can't adjust money supply to match economic conditions.
You're not a "debt slave." You're a participant in the most prosperous economic system in human history. Your standard of living—even with inflation—vastly exceeds what 99% of humans throughout history experienced. You have options, mobility, and opportunity that a gold standard would strangle.
But sure, let's crash the economy chasing a 19th-century monetary theory that failed repeatedly. I'm sure that'll work out great this time.
Hmmm…gold and silver have been real money within cultural systems for thousands of years. Paper money (fiat currency), have life spans of 50 to 70 years on average. Why? because the governments that you trust are not trustworthy.
The US has far more than 8000 tons of gold, as you’ve been taught to believe…10 times if not much more. The Grand Canyon is loaded with gold…thus the reason why Roosevelt tied it up and made it off-limits in the early 1900s.
Huh?
Barley was used as currency for more years of human civilization than gold or silver ever were. Mesopotamian shekels were literally defined as weights of barley.
I'll be visiting the Lydian kingdom (modern Turkey) next month—where coins were actually invented around 600 BCE. The Lydians chose gold/silver not because it had intrinsic "value," but because it doesn't rust. It was a pragmatic engineering choice for standardization, not some mystical store of wealth.
Your "50-70 year average lifespan for fiat currencies" claim is statistically meaningless when over half the countries in the world didn't exist 70 years ago. You're measuring currency longevity against the age of nation-states themselves—most of which were created in the 1960s decolonization wave. Of course their currencies are "young."
As for the Grand Canyon gold conspiracy: Roosevelt designated it a national park in 1919, not the early 1900s, and it was Teddy Roosevelt in 1908 who made it a national monument—21 years before FDR took office. If there were commercially viable gold deposits there, mining companies would've exploited them in the 1800s before any federal restrictions existed.
The "US has 10x more gold than reported" claim is unfalsifiable conspiracy thinking. Fort Knox is audited. If you have evidence, present it. Otherwise, you're just asserting things without data.
Hmmm… The Lydians’ choice of electrum (a natural gold-silver alloy) for the world’s first coins around 600 BCE wasn’t primarily because gold/silver “doesn’t rust” (though that’s a key practical advantage) or solely for portability over commodities like barley. It was a mix of factors rooted in availability, economics, and the metal’s properties.
Primary Reasons
• Local abundance — Electrum was plentiful in Lydian rivers (especially the Pactolus near Sardis), making it a ready resource for a wealthy trading kingdom. Lydia had legendary deposits of this alloy, which fueled their economy and made it practical to standardize into stamped pieces rather than import or use scarcer materials.
• Pre-existing use as bullion — Precious metals (gold, silver, electrum) were already valued and used in trade as weighed ingots or dust long before coins. Stamping them with a royal mark (like the famous lion head) guaranteed weight and purity, speeding up transactions without constant weighing or testing— a huge efficiency boost for merchants.
Thanks for making my point on the base currency’s lasting 50 to 70 years on average, our petrodollar has been detached from gold backing for over 50 years, it’s now nearly dead. It’s on death doorstep. Look for the new constitutional dollars back by gold and silver (+++). No intrinsic value? Have you been tracking Silver? It’s many uses within industry? Just designated national strategic resource? Is the silver market rigged by the banksters?
Have a good trip.
PS…It was Roosevelt, Teddy, who set aside 800,000 acres (off limits) in the Grand Canyon in 1908. The question remains why?
There will always be a bottom 10%. It's impressive how math works.
The same thing that you are saying was said to my generation. But to prove my point, I bought my first house at 22, paid it off by 26, and retired at 28.
Amazingly, most of Gen Z's issues can be resolved through legislation to rein in capitalism.
You can not have equality because humans are not equal.
You can have narrower gaps between the top and the bottom.
My point is still the same. Every generation supposedly does not have it as good as the prior generations. That is false. Some do, and some do not. One means one, and some means some, and all means all. Gen Z is doing fine. Some are doing horrendously. That is the distribution of life.
I brought my life up as an example. I was told the same thing in my generation. I did fine.
No one who is poor cares if I retired at 28 or even if I am poor. They care about the next meal and surviving. But, there will always be that bottom 10%.
Great article, Brian, you quote: “Washington Doesn’t Make Money. It Takes It, and Borrows the Rest.” Senator John Kennedy (R-LA). I would modify Kennedy's quotes to: "Washington Doesn't Make Money, It Steals It, Prints It and Wastes most of It. The term "borrowing" money is simply a prettier term for stealing. Government steals what they so-call "borrow." Since the Feds "man" the printing presses, they can print all they want and bully their way into raising taxes.
A good example of waste is by the Feds watching over us. I've concluded the Fed's FBI is likely filled with special agents' family members which these relatives in turn are given safe and wasteful work. They watch me, such as in a restaurant and the FBI guy next door hacking into my computer. In the restaurant, a round table sat about six FBI guys about twenty feet from me and my wife. They all sat quietly looking at their cellphones. As I quietly spoke to my wife, I said a word that got the attention of one of the six and he said out loud exactly what I said except he added the word "not" to what I said. We have a local FBI office in town. The FBI now monitors me because they know they did a lot of illegal stuff to me and my wife in Dem SB with a Dem FBI ... in other words, I can get them (City and FBI) into serious legal trouble for big bucks. With all the crime out there, we are paying FBI probably millions of dollars to harass me and others. More tons of money waste of just another dead end trail the FBI created.
Thank you for illuminating this huge problem. I have often mentally debated: Does the American experience really work if it takes massive borrowing and inflation to keep status quo; is the model viable? It could was and could be if restraint was exercised, but it is not.
Brilliant piece on the paycheck-to-paycheck couple masquerading as successful. That parallel to government spending realy cuts through the noise better than any economics textbook I've read. I've seen this firsthand with friends who kept upgrading homes every few years, each time convincing themselves they "needed" the space, until 2008 wiped them out. The printing press observation is spot on becuase it shifts blame away from regular people and puts it exactly where it belongs.
For those who dismiss the California dumpster fire, losing billions in fraud, waste, corruption and incompetence, blaming “mean ol’ Republicans” and Trump; California’s own Auditor has given FAILING ratings.
https://nypost.com/2025/12/22/opinion/newsoms-california-and-the-failing-eight/
Exceptional article, leading us back to the basics of life, history and wise counsel. I opened my bible and reviewed the verses mentioned. Thank you, and bless you for your work and gift of giving.
Not sure how I got on this list, but it seems from the comments this is nothing but a right wing echo chamber.
What ever happened to supporting government of, by and for the people? Can you show me a country that has a better system that you would like to emulate?
To you, government is a leech that saps the lifeblood of our economy. I think you have it backwards.
Good government invests in the science and technology of the future. Then private industry uses those public investments to make private profits. Show me private profits and I will show you public investment that made it possible.
The real issue is corruption: Is government investing in the public interest? Or in the interest of those who buy the elected officials?
The current administration has taken this corruption to new levels:
Literally selling pardons for cash.
Setting up crypto money laundering schemes to accept bribes.
Directly accepting multimillion dollar "gifts" like an airplane.
I don't expect anyone here to give my comment a moment's thought. After all, there are dozens more that can safely keep you in your familiar world where you are right and everyone else is wrong.
Thoughtful reply David. Interested in how you feel our system would be affected if the government could no longer devalue the dollar at will as it currently can, and our economy was instead based in part or in whole on a system such as bitcoin where the government can still use that ‘currency’ to spend, lend and borrow, but loses its ability to unilaterally devalue the currency the economy would then be based on?
Your premise is incorrect from the start. The government doesn't "devalue the dollar at will." The dollar's value is determined by market forces—supply, demand, interest rate differentials, economic growth expectations, trade balances, and global confidence in US assets. The Federal Reserve influences these factors through monetary policy, but it doesn't have a "devalue currency" button it can press whenever it wants.
Let me be clear about what actually happens. The Fed controls tools, not outcomes. The Federal Reserve can:
Set interest rates (making borrowing more/less attractive)
Conduct open market operations (buying/selling securities)
Adjust reserve requirements
Implement quantitative easing/tightening
These actions influence economic conditions, which then affect currency value through market mechanisms. If the Fed raises rates, it typically strengthens the dollar because foreign investors want higher yields. If the Fed lowers rates, the dollar often weakens. But "often" isn't "always"—market reactions depend on expectations, global conditions, and countless other factors. This is my pet peeve where people equate one to all, or some to all.
The dollar strengthened significantly in 2022-2023 even as the Fed was dealing with inflation, because other economies were in worse shape and global investors fled to dollar safety. The government didn't "decide" to strengthen the dollar—market forces did.
Now, let's talk about Bitcoin as a monetary base. This is economically messed up for several reasons:
1. Bitcoin is absurdly volatile. In the last five years or so, Bitcoin has ranged from under $4,000 to over $100,000. Imagine trying to run an economy where the currency value swings 90% in months. How do you sign contracts? Price goods? Plan investments? You can't. Bitcoin is a speculative asset, not a functional currency.
2. Fixed supply creates deflationary death spirals. Bitcoin's 21 million cap means the money supply can't grow with the economy. As productivity increases and population grows, each Bitcoin becomes more valuable. This incentivizes hoarding, not spending. Why buy anything today when your Bitcoin buys more tomorrow? Why invest in business when you have to repay loans with more valuable currency? Economic activity collapses.
3. You lose all monetary policy flexibility. In 2008, the Fed flooded the system with liquidity to prevent total financial collapse. In 2020, the Fed responded to COVID by supporting markets and preventing deflation. Under a Bitcoin standard, you can't do this. You're locked into a fixed supply regardless of economic conditions. Every recession becomes a potential depression because you can't adjust money supply to match economic reality.
4. Transaction limitations. Bitcoin processes about 7 transactions per second. Visa alone processes about 65,000. The Bitcoin network literally cannot handle the transaction volume of a modern economy. You'd need to build layers on top of Bitcoin—at which point you've just recreated the traditional banking system with extra steps.
5. Energy consumption is insane. Bitcoin mining currently uses more electricity than entire countries. Scaling that to run a major economy's monetary system would be an environmental and economic catastrophe.
Here's the fundamental question you're not asking: Why would losing the ability to adjust monetary policy be a good thing?
You're treating monetary flexibility as if it's purely a tool for government mischief. But it's also the tool that:
Prevented the 2008 financial crisis from becoming Great Depression 2.0
Stabilized markets during COVID
Allows response to economic shocks
Enables counter-cyclical policy to smooth business cycles
Yes, this flexibility can be abused. Yes, it can lead to inflation if mismanaged. But the alternative—rigid monetary constraints that turn every shock into a crisis—is demonstrably worse. We tried commodity-backed currencies for centuries. They produced: bank runs, financial panics, deflationary depressions, and economic instability that made the modern era look placid by comparison.
"But the government won't be able to devalue my savings!"
Under Bitcoin, your savings deflate along with the economy. Your Bitcoin becomes more valuable, but there's no economy left to spend it in because nobody can borrow, invest, or do business when currency value is constantly rising. Congratulations—you're rich in a collapsed economy. Enjoy your worthless "wealth."
The actual choice isn't between "sound money" and "government manipulation." It's between a flexible monetary policy that can respond to changing conditions versus rigid constraints that amplify economic shocks. One system produced the Great Depression. The other, despite its flaws, has produced 80+ years of unprecedented growth and prosperity.
If you think Bitcoin fixes this, you should spend some time learning monetary economics; otherwise, you're just chasing a different speculative asset and calling it "freedom."
Thanks for sharing your thoughts, I always enjoy reading the opinions of those who are champions of Fiat Currency. When you look at the fact that the US fiat dollar has lost 97% of its purchasing power since 1900, it is a wonder to me that the current fiat system has any fans at all. Everybody has a point of view and it was interesting reading yours. It is going to be fascinating to watch how things unfold over the next decade or so. Thanks for taking the time to share your point of view. Very interesting perspective.
George, thanks for the kind response.
I'm curious about your claim that the dollar has lost 97% of its purchasing power since 1900. The issue is you're calling it a "fiat dollar" across that entire timeframe, when in fact:
1900-1933: Full gold standard ($20.67/oz)
1933-1971: Bretton Woods partial gold backing ($35/oz for foreign central banks)
1971-present: Pure fiat
So if your 97% debasement argument holds, most of that loss occurred while the dollar was backed by gold. The 1900-1971 period saw massive erosion of purchasing power under the gold standard—hardly an endorsement of gold as a preserver of purchasing power.
There's always a fan of fiat because money is fundamentally arbitrary regardless of form. A piece of paper with a number on it gets people to build skyscrapers and cure diseases. Gold is equally inanimate—its "value" is just a collective agreement with marginally more scarcity. Both require trust in the system; gold adds logistical friction and deflationary bias.
The real question isn't fiat vs. gold, but whether the monetary system enables productive economic activity or constrains it. The Great Depression provides a pretty clear answer to what happens when you can't expand the money supply during demand shocks.
It should be interesting to watch how things unfold, indeed.
Yes you bring up a valid and obvious point i.e. what is the effect on a fiat currency when fully backed, partially backed, or not backed at all by some form of back up value such as Gold, or perhaps Bitcoin or some other form of back up. In this case we compare to Gold. Let's look at the data then.
1) When fiat currency was fully backed by Gold from 1900-1933 the loss in purchasing power during that period was 24%
2) When fiat currency was partially backed by Gold under Bretton-Woods between 1933-1971 the loss in purchasing power during that period was 69%/
3) When fiat currency was not backed by Gold at all from 1971-2025 the loss in purchasing power during that period was 88%.
So it would appear that the loss of purchasing power increases somewhat proportionally to how much that fiat currency is backed by Gold. The more it is backed by Gold, the more purchasing power it retains.
Now I think the question is, if we replace a limited resource like Gold, with a limited resource like Bitcoin, would that be as effective at minimizing loss of purchasing power of a fiat currency?
As we both agree, it will be interesting to see. I think it is clear that the least optimal choice is a fiat currency backed by nothing.
George,
There is a fatal flaw in your analysis. :) You're ignoring TIME. These periods are wildly different lengths:
20 vs 38 vs 54 years
Annual inflation rates matter more than cumulative loss
Annualized inflation rates:
Gold standard (1913-1933): ~1.4%/year
Bretton Woods (1933-1971): ~3.1%/year
Pure fiat (1971-2025): ~3.9%/year
So yes, inflation accelerated slightly post-1971, but the difference between partial gold backing (3.1%) and pure fiat (3.9%) is marginal compared to the difference you're claiming.
This is what you're missing, imo:
1. The Great Depression happened DURING the gold standard
1929-1933: Severe deflation under gold backing
Prices fell 27.4% from 1929-1933
Unemployment hit 25%
The gold standard prevented monetary expansion to fight depression
2. Most inflation occurred during gold-backed periods:
WWI inflation (1914-1920): Massive price increases while on gold standard
1940s inflation (WWII): Under Bretton Woods gold backing
1970s oil shocks: External supply shock, not monetary policy
3. Confounding variables you ignore:
Wars (WWI, WWII, Vietnam, Korea) - all required deficit spending
Oil shocks (1973, 1979) - OPEC supply cuts
Population growth - money supply must expand with productive capacity
Global trade expansion - Bretton Woods broke because other economies recovered
The Bitcoin question:
Bitcoin as backing would be catastrophic because:
Fixed supply = deflationary spiral
Population grows, economy grows, Bitcoin doesn't
Encourages hoarding, punishes spending
The Great Depression under gold standard teaches us what happens here.
Volatility
Bitcoin has had swings 20-50% in weeks
Imagine your mortgage payment changing that much
No countercyclical policy
Can't expand money supply during recessions
Can't contract during booms
You get 1930s-style depressions
The actual correlation:
Economic growth correlates with flexible monetary systems, not hard money:
US GDP per capita 1913-2025: Up ~700% (inflation-adjusted)
Real wages: Up significantly despite dollar "debasement"
Household net worth: Highest in world
The purchasing power loss you cite is only relevant if you hold cash under a mattress. No one does that. People:
Earn inflation-adjusted wages
Invest in assets (stocks up 30,000%+ since 1971)
Hold debt that inflates away
The dollar lost 97% purchasing power since 1913, yet Americans are ~7x wealthier in real terms. That's the actual data.
Your analysis conflates correlation with causation and ignores that the worst economic outcomes happened under gold backing (1930s depression, pre-1913 banking panics).
Thanks for your efforts at justifying your position. Isn’t it fascinating how two group's of people can look at the same information and arrive at polar opposite conclusions which they both believe are correct? Half the people say the world is flat. The other half say it is round. Time proves one side right eventually. Such will be the case here methinks. Let’s agree to meet here in say 10 years. You do the best you can with your fiat dollars. I will do the best I can with gold and bitcoin. Then we’ll see who is happy and who wishes they adopted a different perspective. As we said earlier time will tell. And one thing is for sure. It will be interesting. Best of luck to you sincerely.
Now you are adding humor. I love it. See you in 10 years and we’ll see which point of view ends up being the assumption right? Invest wisely. I am already way ahead of you. Go! And best of luck to you.
Thanks for your take on things. So interesting how people view data and determine ‘fatal flaws’ :-). Well I admire your effort to support your theory that unbacked fiat currency is the best way forward. I am sure you are not alone in your point of view. Likewise my point of view being the opposite of yours also has supporters. Half of us might believe the world is flat. The other half that it is round. Now, as then, as we both have said, time will tell and it will be interesting. You hang on to your dollars. I’ll hang on to my bitcoin and Gold. Lets check back in say 10 years and see which of us is sorry shall we?