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Previously

In the previous article of this opening series, here, we took a brief look back throughout history to understand the role that money has played in both propelling and dethroning hegemonic powers throughout the ages.
Now, we’ll conduct an examination of what happens during that transition from golden age to gold-plated.

Governments Always Corrupt The Money

You’ll notice that in the three historical graphs from the previous article, here, it took decades (sometimes centuries) for the money system to be corrupted.

Fortunately for us, we have the advantage of being able to see the trends which those in the past probably could not notice because they were in the midst of these mega-trends.  From their point of view, nothing was changing (like a person standing on the surface of the Earth, their view is that the world is flat, not an oblate spheroid). Thus, it is necessary for us to have a long time horizon in order to digest the idea of corrupting money.

In contrast, we have two good examples of governments not corrupting their money supplies for extended periods of time:

• The Eastern Roman Empire / The Byzantine Empire for ~800 years ^[1]
• Europe during the Renaissance Period for ~400 years ^[2]

Even the vaunted U.S. has its own history of corrupting the money supply. In fact, the U.S. has defaulted on its monetary obligations at least four times:

• The Federal Reserve Act of 1913
• President Roosevelt’s Executive Order 6102 in 1933
• The Gold Reserve Act of 1934
• President Nixon take the U.S. off of the Gold Standard on August 15, 1971

Historical Note: While the U.S. did have a hard money standard from 1871 to 1913 (and for some decades prior to that period), that seemed to be the exception rather than the rule. Interestingly enough, during that period of 1871 – 1913, we had the invention of four major technologies within the U.S. which are still used today: the internal combustion engine, the automobile, the telephone, the airplane. ^[3] I think this is a reasonable demonstration of the power of a hard money standard.

Historical Note: Some of the above events in U.S. history were covered here.

The Governing Class vs. The Governed Class^[4]

Governmental power and citizens’ rights are naturally adversarial: whenever the state’s powers increase then it must come at the cost of the rights of the people.

If we consider that the only legitimate role of government is to defend individual liberties and to defend contracts (voluntary formal agreements between people), then any action and power taken by the state beyond that will always manifest as a curtailment of its citizens’ rights.

Civic Note: I have been challenged by many on my assertion that the only proper role of government is the to defend individual liberties and to defend contracts. Conversely, I have challenged my detractors to justify one governmental role beyond the two which I have identified. To date, I have yet to receive a single justification for any moral state powers beyond the two which I called out. I welcome rational disagreements and challenges.

As long as government only has enough budget (actual funds) to enforce these two roles then the citizenry’s rights are preserved. Limited funds directly translated to limited government.

In previous centuries, governments were compelled to live within their means by not spending more money than they had. Those which did not “live within their means” inevitably failed in their proper roles by engaging in authoritarian practices.

Let’s take a look at an example of nations needing to live within their means. Wars were costly and states on a hard money standard had every incentive to keep wars from becoming protracted events.  In fact, they had every motivation to avoid wars altogether or, at a minimum, find ways to sue for peace (negotiate peaceful resolutions) as quickly as possible should they find themselves in a disadvantaged position. ^[5]

But, when the state is able to secure funds that are excessive (when on a soft money standard) then that is when it takes on a life of its own which seeks to impose its will on its people by bending their behaviors to the will of the state. ^[6] We have seen that the only surefire way to restrain the state to its proper role is to restrain its budget, its spending.

So, how does government go beyond its budget?  There are only three mechanisms – taxation, monetary inflation, and debt.  Of these, inflation and debt are actually hidden taxes (which few are aware of as such). We will discuss this in greater detail in future articles.

Historical Note: One could say that a nation can continue to fund its operations via conquest and direct theft of another nation’s assets (much as the Roman Empire did). While I am neither casting moral aspersion nor justifying it, I am deliberately excluding this method as it definitely falls within the “don’t violate the rights of others” category and it is not a sustainable means of governing (as the Roman Empire demonstrated).

While debts are always a possibility, in a sound monetary system, they are limited in both duration and magnitude due to the fact that they must be paid back eventually or default (and a ruined reputation in the credit markets) will result.  It is inflation of the money supply which enables governments to continue its debts for such extended periods without detection and oversight.

Ever since the broad implementation of currency (credit-based money, “soft money”) in 1914, states around the world have had the exact opposite incentive; ^[7] they have become motivated to commence wars and to sustain them.  Case in point, for the U.S., World War I, World War II, Afghanistan, and Iraq come to mind as multi-year conflicts which squandered treasuries and ruined lives (on all sides).

Next Up

All throughout this series, we have been using the term “money” generously without making real attempts to define it.

In the next article, here, I make good faith efforts to define money, including its purpose, qualities, attributes, characteristics, functions, and underlying philosophy.

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End Notes, References, & Citations

[1] The Byzantine Empire’s monetary system

Brave search engine summary: “the byzantine monetary system“

“Byzantine Monetary System

The Byzantine monetary system was a complex and evolving framework that played a crucial role in the economic and administrative structure of the Eastern Roman Empire. It was primarily based on gold, silver, and bronze coins, with the gold solidus being the most significant and enduring currency. The solidus, introduced by Emperor Constantine the Great in the 4th century, was a gold coin that maintained its value and purity for centuries, serving as a standard for international trade. The solidus was divided into smaller units such as the semissis (half) and tremissis (third), which were used for smaller transactions.

The monetary system also included silver coins, such as the miliaresion, which was minted in varying fineness and became more common in the 7th to 9th centuries. However, silver coins were less frequently used compared to gold and bronze. Bronze coins, including the nummus and the follis, were used for everyday transactions. The nummus was a small bronze coin, while the follis was a larger bronze coin, often used for local trade. Over time, the weight and value of these bronze coins decreased, leading to issues of inflation and debasement.

The Byzantine monetary system underwent several reforms to address economic challenges. One significant reform was the introduction of the hyperpyron by Emperor Alexius I Komnenos in the 11th century. The hyperpyron was a gold coin with a higher fineness than the solidus and was intended to stabilize the economy. This reform marked a shift from the solidus, which had been the dominant currency for centuries.

The system also included various other denominations, such as the basilikon, a silver coin introduced in the 13th century, and the stavraton, a heavy silver coin that became prominent in the 12th century. These coins reflected the changing economic and political landscape of the Byzantine Empire, as well as the influence of foreign currencies like the Venetian ducat.

Throughout its history, the Byzantine monetary system was characterized by its flexibility and adaptability. It allowed for complex financial transactions, tax collection, and wealth storage, contributing to the economic development of the empire. However, by the 14th century, the system began to decline, with increasing economic instability and territorial losses leading to the gradual replacement of Byzantine coinage by foreign currencies.

In summary, the Byzantine monetary system was a sophisticated and enduring framework that included gold, silver, and bronze coins, with the solidus being the most significant. It evolved over time through various reforms and adaptations, reflecting the economic and political changes of the empire.“

Historical Note: In the Byzantine Empire, the penalty for monetary forgery was death. That’s how seriously the Byzantines took their responsibility for a sound monetary system.

Brave search engine summary: “the byzantine empire penalty for forging money“

“Byzantine Money Penalty

The Byzantine Empire imposed severe penalties for forging money, reflecting the importance of maintaining the integrity of its currency. According to historical records, the penalty for refusing or reducing a gold solidus of good weight was death, as stated in Novel 16 of Valentinian III. Additionally, the empire faced issues with debased coinage, such as when Emperor Nikephoros II violated the public faith by adulterating the coin and issuing a debased coin called the tetarteron, which led to a loss of faith in public dealings with the empire. The empire’s efforts to maintain the value of its currency included the introduction of the hyperpyron by Alexios I Komnenos, which helped restore a gold coinage of high fineness.“

[2] The European Renaissance Period’s monetary system

Florence started the trend of a sound money with the creation of the florens, 3.5 grams of gold. From there many European city-states copied Florence’s move by creating their own version of the florens. These gold coins were also 3.5 grams with the only difference being dimensions and the stamping.

If you’ve read any of my opening series, you’ll know how much I think that a hard money system causes governments to be limited in scope and countries to flourish.

Saifedean Ammous did a great job of describing the monetary systems of the European Renaissance Period in his book “The Bitcoin Standard“

Brave search engine summary: “gold coins during the renaissance”

“Renaissance Gold Coins

During the Renaissance, gold coins played a significant role in trade and commerce, with several notable examples emerging from Italy. The Florentine florin, introduced in 1252, was one of the first major gold coins in Europe since the Roman Empire and became widely accepted across the continent. It was known for its stability and precision, containing 3.5 grams of gold and serving as a reliable medium of exchange. The design of the florin remained largely unchanged for centuries, featuring the fleur-de-lis and the patron saint of Florence, John the Baptist.

Another important gold coin was the Venetian ducat, which was modeled after the florin but had a slightly higher weight due to differences in the weight systems of the two cities. The Venetian ducat contained 3.545 grams of 99.47% fine gold and was renowned for its high purity. The design of the ducat depicted the Doge of Venice kneeling before St. Mark, the patron saint of Venice, and it remained in circulation for over 500 years.

In addition to the florin and ducat, other gold coins such as the Hungarian forint and the Rheingulden also emerged during this period. The Hungarian forint, first introduced in 1325, was named after the florin and became an important currency in the Kingdom of Hungary. The Rheingulden, minted by several German states, was initially very similar to the Florentine florin in terms of weight and gold content.

These gold coins not only facilitated trade but also reflected the artistic and economic achievements of the Renaissance. They were often adorned with intricate designs and served as symbols of the power and wealth of the cities that issued them. The use of gold coins during the Renaissance marked a significant advancement in the monetary systems of Europe, contributing to the growth of international trade and the development of banking systems.“

Brave search engine summary: “florin gold coin“

“Florin Coin

The Florentine florin, often referred to as the “florin,” was a gold coin first struck in Florence in 1252. It was made of pure 24-carat gold and weighed approximately 3.536 grams. The coin featured the Florentine lily on one side and the figure of St. John the Baptist, the patron saint of Florence, on the other. The florin became a significant currency in Europe, serving as a standard for international trade and maintaining a stable weight and purity for over four centuries.

The florin’s design and value made it highly regarded, and it was used as a reference for comparing values between late medieval currencies.
The coin’s name is derived from the Italian word “fiorino,” meaning “little flower,” which refers to the lily on the coin’s design. The florin’s influence extended beyond Florence, with many European states and local coin issuing authorities creating their own copies of the florin.

In addition to its historical significance, the florin has also been used in modern times as a symbol of good luck and prosperity. For example, the gold florin was traditionally given as a gift on the birth of a baby and was believed to bring protection and good fortune.
Today, replicas of the florin are still produced and are popular among collectors and enthusiasts.“

[3] “The Bitcoin Standard” by Saifedean Ammous, 04/2018

[4] “America’s Ruling Class: And The Perils Of Revolution” by Angelo Codevilla, July 16, 2010

Author’s Note: This article is really well done and brings a cogent perspective to the table. Overall, Mr. Codevilla demonstrates that an antagonistic environment has developed over the past few decade between what he calls “the ruling class and the country class”. It is this antagonism which has defined our culture and politics in the U.S. (and much of the West in general).

[5] “The Sovereign Individual” by by James Dale Davidson and William Rees-Mogg

“The Sovereign Individual” is a great book. It was first published in 1999 (around the same time as “The Fourth Turning” in 1997, another great book. The authors cemented several ideas which had been swirling around in my head but I had not been able to formalize in any way. They did a good job of examining the proper role of government and how individuals can unplug from authoritarian regimes. For anyone who loves individual liberty, I recommend giving this book a careful read. The authors made several predictions which have come true over recent years, including the advent of bitcoin.

[6] Mussolini’s epigram about fascism: “All within the state, nothing outside the state, nothing against the state.“

[7] Countries switching to fiat in 1914

Author and Austrian school economist, Saifedean Ammous documents the transition from a hard money standard (gold) to a soft money standard (fiat) in his book “The Fiat Standard“. Within two years (1913 – 1914), several major countries (including the hegemonic power of the time, Great Britain) switched from a gold standard to a fiat standard. Not long afterwards, we had two world wars resulting in protracted conflicts, the death of tens of millions of people, and a decades-long bipolar world caught between two superpowers during the Cold War.

Previously

In the previous article, here, we looked at mega-politics and psychotechnologies in the context of the long arc of history and their influences on the logic of violence.

In today’s article, we continue to peer into history but from the perspective of how money has shaped the development of countries.

A Broad Look Back

History has consistently demonstrated to us that governments will always corrupt their monetary systems to the benefit of those in and around government at the expense of the citizenry.

If we take a broad look of history in the below graph, we can see that there have been a variety of successful sound moneys going all the way back to ~100 BCE (covering ~2,100 years).

This is a very simplistic timeline but I’m sure that you recognize most of the countries and maybe even some of their respective monetary coins as well.

But, this graph is very high-level and doesn’t provide much in the way of detail and discernment. Let’s see if we can change that by zooming in a little.

A (Relatively) Recent Look Back

Here, we can zoom in to a time period going back to circa 1400 AD (~700 years).

In this graph, we can see that various countries had periods of roughly one century where they had “apex predator” status as the hegemonic ^[1] power of the world.  During this time, these top countries enjoyed their greatest periods of risk-taking, innovation, and growth.  Consequently, they had the greatest impact on the rest of the world.  Their money was the preferred currency (“medium of exchange”) for much of the world.

Let’s zoom in a little more to capture even more detail.

Gresham’s Law

Before we zoom in, though, let’s introduce an important economic concept concerning how markets (people) value their “medium of exchange”. The concept is “Gresham’s Law“. ^[2]

In short, Gresham’s Law states, “Bad money drives out good money.“

This means that when soft money (fiat currencies) are arbitrarily created out of thin air and have no tie to reality and then injected into a market (by government decree or fiat), market participants will pull back their hard money (i.e. gold or silver) that has great monetary value. In the process, they trade the expedient “medium of exchange” function for the long-term “storehouse of value” function (which we talked about in Part 1 of this opening series which you can read here).

As an example, let’s say that a country had initially used gold as the base for their monetary system (i.e. for gold coins) but at some time in the future, they chose to use less valuable materials for their coins (i.e. copper, tin, nickel, steel, zinc). That same government would also demanded that its citizenry use these debased coins as legal tender (currency). As a result, people, companies, and institutions will avoid using the truly valuable gold coins and pull them back as their storehouse of value. No one had to tell them to do this; they would all make the rational decision to do this on their own as a grassroots effort.

Nerd Note: This is called a “Schelling Point” or a “focal point” ^[3], terms from game theory. ^[4]

Digging Into The Details

Now, with Gresham’s Law in our scope, let’s zoom in.

Historical Note:  For the nerds, I recommend taking a closer look at the above graph.  The overall timeline and average time spans are fascinating.  One could argue that much of this is driven by the same forces discussed in the book “The Fourth Turning” (which I recommend reading). ^[5]

This graph does a good job of providing finer details around the hegemonic years and their respective durations. In addition, mega-political ^[6] events are shown in the background (i.e. the First Industrial Revolution, worldwide human mortality rate).

What I find particularly intriguing are the red boxes labeled “Build-Up Period“. From the positioning of these red boxes, we can glean from this graph that there is always another country waiting in the wings and ready to take the top spot from the top dog. It is my speculation that the little red boxes are probably mega-political events unfolding (the building of great navies, new communications technologies, discovering of vast gold supplies, genius military commanders, etc.).

I contend that what kicks the old hegemon from its apex status is that they forget that what enables the success of a nation – the civil society pillars of written language, civics, rule of law, and hard money. These four pillar foster risk-taking, innovation, growth, and expansion.  In other words, the people need to know that their government will provide a relatively stable and unbiased foundation upon which they can plan, invest, develop, and build for the future.

Eventually, though, these institutions, these governments, transform from serving their countries and citizenry to being purely self-serving, attempting to preserve their power.    The old hegemon becomes sclerotic ^[7], creating an old and rotted order which is obsolete. Consequently, a massive portion of the country is oriented towards working for the government, not free markets.  In effect, the state has crowded out the free market.

Eventually, these empires become too big for their britches (institutionalized), forget what got them to the dance in the first place, and made them such a success – a hard money standard. Eventually, these corrupted governments have to switch over to fiat currencies, soft money, in order to try to keep the bloated bureaucracies afloat. By their very nature, fiat currencies, soft money, are effectively lies told by government which they impose on their citizenry. This results in corrupted philosophies and distorted market signals. Ultimately, this leads to the apex country losing the top spot to the next country which takes monetary policy seriously.

What Is Happening In These Cycles?

As shown by the graphs, the above cycles are repeated over and over. Let’s break these cycles this down into greater detail with causes and effects:

• Birth Of A Hegemoninc Power: A young nation-state adopts a hard money standard. As a consequence, the government is naturally constrained by its treasury coffers: a full treasury can spend money and an empty one cannot. A restrained government respects the four pillars of society – written language, civics, the rule of law, and hard money. An emergent property of these four pillars are property rights, free markets, and individual freedom. ^{[8] [9]}
• The Golden Age: The people are free to engage in saving, investing, risk-taking, innovation, growth, and wealth building which takes the country to the top tier (empire). The “pie” (the economy) gets bigger. This country enters a golden age where it is considered the preeminent world power, the hegemon of its time. This global “apex predator” can project power unlike any other. Their monetary standard is the envy of the world because their medium of exchange (typically gold and silver coins) is used throughout much of the world. The government grows fat, dumb, and happy.
• The Beginning Of The End – Gresham’s Law Takes Hold: In a bid to preserve power, the state became self-serving which always leads to a sclerotic condition. As a result, the state defaults on the monetary system by debasing the money and corrupting the values which that monetary system represented.  The rule of law breaks down because the very institutions which were created to foster stability and order instead focus more on the preservation of the state’s power rather than servicing its constituency. As a result of the corrupted monetary standard, the values and philosophies of the people became subordinate to the will of the government. A consequence of the state using a fiat currency is that rational actors start to pull their hard money out of the system (i.e. gold and silver) in an effort to create a storehouse of value. This is Gresham’s Law in effect. This greatly limits people’s ability and motivation to invest in the future. Ultimately, the governments obtrusive and authoritarian condition stifles the very risk-taking, innovation, growth, and wealth building which took them to the top tier in the first place.
• The Bottoming: The bureaucracy has become a leviathan, a consumer of resources and a source of nihilism. ^[10] The state takes more and more resources merely to maintain its bloated size. Businesses cannot innovate and compete, thus decreasing their revenues and taxes to the government. Costs of maintaining the empire exceeded revenue generation (via taxes). Business institutions devote more efforts at grabbing greater resources via government monopolies than actually engaging in legitimate business because the “pie” (the economy) is a fixed size and one can only become wealthy by taking, no producing. The government fails in its fundamental duties of defending the rights of its citizenry and defending contracts. More bureaucracy is installed to “make up for the loss“. The debt-death spiral is overwhelming and inevitable. On the world’s stage, the government’s credit is a shambles. Quite often, the country loses its ability to maintain self-sovereignty and must submit to one or more antagonists. The cycle of decline repeats until the country is a shell of its former self.
• Birth Of A Hegemonic Power: In the meantime, the next hungry country is waiting in the wings (the red box) to adopt a hard money standard and to propel its people into greatness. And, the grand cycle repeats.

Historical Note: These four phases roughly follow the same “four turnings” identified by William Strauss and Neil Howe in their seminal book “The Fourth Turning“. ^[5]

In future posts, we will focus on the how’s and why’s of the state “losing the message” by corrupting their money and devaluing it to the detriment of the people and the state’s sovereignty.

What consistently leads to this corruption of the monetary system is government (specifically, its politicians) forgetting that what enables people to store their hours worked, what is known as a “storehouse of value”, is a hard money standard where all people can freeze their work in time (a virtual work savings account) so that it can be drawn upon at some time in the future. The citizenry are counting on those work hours to be available to them in full and whenever they want. Unfortunately for the people, the state corrupts these virtual savings accounts and ruins the citizenry’s ability to plan, save, and invest in the future.

The state demolishes the people’s lives by demolishing the money.

Next Up

In the next article, here, we will dig a little deeper into the above three graphs to discuss how hard money is a natural regulator and limiter on state power. Parallel to that, we’ll take a look at the proper role of government and its relation to the citizenry.

Donations

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End Notes, References, & Citations

[1] hegemon, hegemony, hegemonic

hegemony

/hɪˈɡɛm.ə.ni/

noun

1. (formal) Domination, influence, or authority over another, especially by one political group over a society or by one nation over others.
2. Dominance of one social group over another, such that the ruling group or hegemon acquires some degree of consent from the subordinate, as opposed to dominance purely by force.

[2] Gresham’s Law

Brave search engine summary: “Gresham’s Law”

“Gresham’s Law

(monetary principle on circulating currency; ‘bad money drives out good‘)

Gresham’s Law is an economic principle stating that “bad money drives out good” when both are in circulation and have the same face value. This means that if two forms of money are circulating, the one with lower intrinsic value will be used for transactions, while the one with higher intrinsic value will be hoarded or melted down for its metal value. The law is named after Sir Thomas Gresham, an English financier who lived during the Tudor dynasty, although the concept was noted earlier by Nicolaus Copernicus and even referenced by Aristophanes in ancient Greece.

In modern contexts, the principle is often applied metaphorically to situations where inferior products or practices tend to displace superior ones in a market or organization. This can occur when there is a lack of regulation or when short-term incentives favor the inferior option over the superior one.”

“Why Gresham’s Law is Important For You (2024 Update)“

“Bitcoin’s legal status as commodity money brings to light Gresham’s Law, an economic principle stating “bad money drives out good.” We explore how to apply Gresham’s Law to the Bitcoin Standard.”

“Gresham’s Law“

“Gresham’s law, observation in economics that ‘bad money drives out good.‘ More exactly, if coins containing metal of different value have the same value as legal tender, the coins composed of the cheaper metal will be used for payment, while those made of more expensive metal will be hoarded or exported and thus tend to disappear from circulation. Sir Thomas Gresham, financial agent of Queen Elizabeth I, was not the first to recognize this monetary principle, but his elucidation of it in 1558 prompted the economist H.D. Macleod to suggest the term Gresham’s law in the 19th century.”

[3] “Schelling Point” and “focal point”

“Schelling point

A Schelling Point, also known as a focal point, is a concept in game theory where individuals tend to choose a particular solution by default in the absence of communication to avoid coordination failure. This idea was introduced by the American economist Thomas Schelling in his book “The Strategy of Conflict” (1960). Schelling suggested that people can coordinate their actions if they know that others are also trying to do the same, leading them to converge on a solution that stands out in the environment. An example of this is the question of where to meet a stranger in New York City without prior communication, where people might naturally choose a prominent location like Grand Central Station.“

“Focal point (game theory)“

“In game theory, a focal point (or Schelling point) is a solution that people tend to choose by default in the absence of communication in order to avoid coordination failure. The concept was introduced by the American economist Thomas Schelling in his book The Strategy of Conflict (1960). Schelling states that “[p]eople can often concert their intentions or expectations with others if each knows that the other is trying to do the same” in a cooperative situation (p. 57), so their action would converge on a focal point which has some kind of prominence compared with the environment. However, the conspicuousness of the focal point depends on time, place and people themselves. It may not be a definite solution.“

[4] game theory

“Game Theory“

“Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed two-person zero-sum games, in which a participant’s gains or losses are exactly balanced by the losses and gains of the other participant. In the 1950s, it was extended to the study of non zero-sum games, and was eventually applied to a wide range of behavioral relations. It is now an umbrella term for the science of rational decision making in humans, animals, and computers.”

[5] “The Fourth Turning” by William Strauss and Neil Howe

Writer’s Note: I cannot recommend this book enough for its general framework. Like all models or frameworks, they are incomplete, incorrect, or both but, ideally, useful in some fashion. I place “The Fourth Turning” in the “useful” category.

“The Fourth Turning: An American Prophecy – What the Cycles of History Tell Us About America’s Next Rendezvous with Destiny“

“First comes a High, a period of confident expansion. Next comes an Awakening, a time of spiritual exploration and rebellion. Then comes an Unraveling, in which individualism triumphs over crumbling institutions. Last comes a Crisis—the Fourth Turning—when society passes through a great and perilous gate in history.“

“William Strauss and Neil Howe will change the way you see the world—and your place in it. With blazing originality, The Fourth Turning illuminates the past, explains the present, and reimagines the future. Most remarkably, it offers an utterly persuasive prophecy about how America’s past will predict what comes next.“

[6] “mega-politics” from the book “The Sovereign Individual: Mastering the Transition to the Information Age“

Brave search engine summary: “mega-politics the sovereign individual”

“The Sovereign Individual Mega-Politics

The concept of ‘mega-politics‘ in ‘The Sovereign Individual‘ refers to the large-scale structural patterns and forces that shape human societies and political systems over time. The book, written by James Dale Davidson and William Rees-Mogg, explores how factors such as topography, climate, microbes, and technology influence the distribution of power and the evolution of governance.

These megapolitical forces determine the ability of individuals and groups to project power and shape their destinies.

According to the authors, megapolitics operates outside the realm of conscious direction and is driven by underlying structural changes in society. For example, topography has historically influenced the development of agricultural societies, with access to water determining the power dynamics between farmers and those in control of resources. Similarly, climate changes can lead to political instability, especially in societies already facing fragility. Microbes, such as diseases, have also played a role in shaping history, as seen in the impact of European diseases on Native American populations.

Technology, however, is described as the most significant driver of megapolitical change. The accessibility of technology, particularly in terms of cost, organization, and distribution, determines whether power is centralized or decentralized. For instance, the shift from heavy cavalry to rifles allowed individuals to gain more autonomy, while the complexity of missile technology requires large-scale organization, reinforcing centralized power. The authors argue that the information revolution, driven by advancements in computing and microprocessors, is accelerating these changes, leading to a future where individuals have greater control over their lives and economic destinies.

The book predicts that the rise of the information age will lead to the decline of traditional political institutions and the emergence of a new form of governance where individuals, or “sovereign individuals,” have more autonomy. This shift is compared to historical transitions, such as the move from feudal societies to industrial ones, and is expected to be even more rapid due to technological advancements. The authors suggest that the balance of power will increasingly favor individuals, as technology enables greater financial independence and reduces the influence of the state.

In the context of modern developments, the book’s ideas have been linked to the rise of cryptocurrencies like Bitcoin, which are seen as tools that empower individuals by providing financial sovereignty and reducing reliance on traditional institutions. The authors’ vision of a future where individuals can operate outside political boundaries is increasingly relevant in the digital age, where cyberspace and decentralized technologies are redefining the relationship between individuals and the state.“

[7] sclerotic

/sklə-rŏt′ĭk/

adjective

1. Hard; firm; indurated; — applied especially in anatomy to the firm outer coat of the eyeball, which is often cartilaginous and sometimes bony.
2. (Anat.) Of or pertaining to the sclerotic coat of the eye; sclerotical.
3. (Med.) Affected with sclerosis; sclerosed.

[8] Ludwig von Mises and “Pillars Of Society“

Brave search engine summary: “von mises pillars of society”

“Ludwig von Mises Pillars of Society

Ludwig von Mises outlined several key pillars that he believed were essential for a prosperous and free society:

• Limited Government Intervention: Von Mises advocated for minimal government involvement in the economy, emphasizing the importance of free markets and individual liberties.
• Property Rights: He stressed the significance of secure property rights as a foundation for economic stability and individual freedom.
• Free Markets: Von Mises believed that free markets, where individuals engage in voluntary exchange, are the most efficient means of allocating resources and generating wealth.
• Individual Freedom: He argued that individual freedom is crucial for personal development and societal progress, allowing individuals to pursue their goals and interests.

These principles form the basis of von Mises’ classical liberal philosophy and are central to his critique of socialism and interventionist policies.“

[9] “written language, civics, the rule of law, and hard money“

Writer’s Note: I freely admit that the “four pillars” of written language, civics, the rule of law, and hard money will be very different from country to country and time to time. What I consider most important is that there are earnest attempts by governments to implement these four principles. Doing that naturally restrains the state and allows for individual freedom to flourish.

[10] Books on economics or civics which contain the word “leviathan” in the title

Brave search engine summary: “economics book leviathan“

“Leviathan Economics Book

Thomas Hobbes’ “Leviathan“, published in 1651, touches upon economic themes within its broader political philosophy. Hobbes argued that equal justice includes the equal imposition of taxes, emphasizing that the equality of taxes does not depend on equality of wealth but on the equality of the debt every man owes to the commonwealth for his defense and the maintenance of the rule of law. He also supported public support for those unable to maintain themselves through labor, presumably funded by taxation, and advocated for public encouragement of works like navigation to employ the poor who could work.

In a different context, the term “Leviathan” has been used in economic literature to describe models of government behavior. Geoffrey Brennan and James Buchanan developed the Leviathan model of government in their 1980 book The Power to Tax, where government is assumed to act as a monopolist that maximizes tax revenues.

Additionally, there is a book titled Living with “Leviathan: Public Spending, Taxes, and Economic Performance“, which explores the implications of government spending and taxation on economic performance. This book is available for purchase online, including in India.”

Previously

In Part 1 of this opening series, here, we examined the pernicious effects of governments stealing your purchasing power, ruining your ability to save for the future, corrupting your value system, intruding into huge swaths of your lives, and fostering rot in our nation’s federal finances.

The singular mechanism for all of this is fiat currencies (soft money). Soft money has allowed states to operate with impunity and a complete lack of accountability to the citizenry.

Now, in Part 2 of this opening series, we begin to look at the fundamentals of money in order to answer that most basic question, “What is money?” If we can understand the philosophy of money and just how crucial good money is to the stability and prosperity of any civilization then we can understand how and why governments steer societies away from hard money into fiat currencies for the purpose of power acquisition.

Mega-Politics & The Long Arc Of History

Before we get into a high level examination of money throughout history, let’s set the stage for looking at the impact of technology throughout the long arc of history.

Let’s take a look back through history, specifically, a very brief look at the relationships between mega-trends, money, and government.

We can examine history from the point of view of “mega-politics” (a term I have borrowed from the book “The Sovereign Individual” ^[1].  As I have interpreted them, mega-politics are ubiquitous events or technological implementations that are orthogonal to (independent of) politics and, thus, change the “logic of violence” ^[2], which results in the destruction of the status quo of an old (and usually rotted) order and enables the establishment of a new political or functional order.  What makes mega-politics so unique is that no amount of legislation, regulation, nor pontification ever stops a mega-political event from happening.  Hence, why they are orthogonal to politics.

Some mega-political events take days, weeks, months, years, even centuries to unfold. They can be natural (such as earthquakes and tsunamis) or man-made (i.e. warfare). Some are readily identifiable in the moment (i.e. a highly virulent and deadly disease) while others have effects which are almost entirely unseen and unrecognized or simply taken for granted (such as written language).

Psychotechnology As A Type Of Mega-Politics

Not all mega-politics are physical. Some are intangible. “Psychotechnology” is an intangible form of mega-politics.

In short, psychotechnologies are mental models (frameworks) or ways in which we think about the world around us which provide coherent methods of expressing certain ideas as representations of reality. Examples of psychotechnologies are:

• the double entry accounting system
• spoken language
• written language
• numbers

As with all technologies, older psychotechnologies can be made obsolete and supplanted by newer and more complete psychotechnologies. As an example, both Roman numerals and Arabic numerals, which are psychotechnologies, express quantities of things yet Arabic numerals replaced Roman numerals due to the fact that they made mathematical operations (i.e. addition, multiplication, division, exponentiation, etc.) easier and faster than the previous psychotechnology of Roman numerals. As a result, the proliferation of Arabic numerals readily spread throughout the world and quickly benefited those who adopted it.

Another example of a psychotechnology is the double-entry accounting system with its balanced equations of assets, liabilities, and equities. Those who adopted this psychotechnology were able to track their business activities and express how efficiently they were deploying their capital.

As we develop this series on “Monetary Revolutions“, we will see that, not only is money a type of mega-politics, it is, more specifically, a psychotechnology.

Mega-Politics Via Technological Revolutions

Below, I created a very brief list of man-made mega-political events:

• Agriculture
• Written Language
• Kingdoms & Empires
• Gold as a Monetary Standard
• The Fall of the Ancient Roman Empire
• The Riding Stirrup ^[3]
• The Religious State
• The Gunpowder Revolution ^[4]
• The Gutenberg Press ^[5]
• The Scientific Method ^[6]
• The Nation State
• Age of Enlightenment ^[7]
• The Industrial Revolution ^[8]
• The Fiat Currency Standard
• The Information Age ^[9]
• The De-Centralization Revolution(?)
  • Beginning with Napster

Mega-politics might take seconds (i.e. the first deployment of an atomic weapon) to centuries (i.e. gunpowder) to develop, deploy, and come to fruition. In many cases, their effects can only be identified, studied, and understood centuries later.

Written language is my personal favorite because it allows for the accurate transmission of ideas over both space and time. The Gunpowder Revolution is my second favorite because it provides self-defensive capability to all and levels the playing field, thus permanently changing the “logic of violence”. The Gutenberg Press is my third favorite as this is the amplification of the written language mega-politics.

The reason why these are my favorites is because they helped to push power back to where they belong – with the individual because it decentralizes power and changes the logic of violence. It makes the cost of committing violence much greater than the benefit of committing violence, thus becoming completely disproportionate. Consequently, this allows the average person more readily to defend his right to property from theft (from common thieves and oppressive states alike).

Let’s take the Gutenberg Press as a prime example of the changing of the logic of violence. Prior to its invention, had a nation-state wished to stymie the spread of ideas via written word, then it merely had to arrest the author and seize copies of the author’s works. With concerted efforts, this could be done relatively quickly with minimal cost and effort. The efficacy of this approach comes from the fact that, prior to the Gutenberg press, books could only be recreated by hand, which was a long, laborious, expensive, and error-prone process.

With the advent of the printing press, though, ideas could propagate faster and further than any government or institution could conceive of. The resources necessary to curtail the spread of printed literature would be greater than anything that any of these institutions could muster. In fact, if only one copy of an author’s works survived any sort of purge, then that person’s thesis could be reprinted en masse in short order, both quickly and easily. Hence, the Gutenberg press forever changed the logic of violence because states could no longer easily control the flow of information and ideas; the costs of engaging in violence significantly outweighed the benefits. In future articles, we will see how bitcoin has become the embodiment of shifting the logic of violence in the favor of property rights and individual liberties.

The Decentralization Revolution

In the long list of mega-politics, I think the “Decentralization Revolution” is where we are now.

Nerd Note: I’m am using the phrase “Decentralization Revolution” for lack of a better term. As far as I know, I have coined this term but this is probably due to ignorance on my part.

This revolution started with Napster, ^[10] the first peer-to-peer network (“P2P”) which allowed the ubiquitous distribution of valued information (typically songs) without a central party needed to clear these transfers. ^[11]

Overall, this decentralization revolution moves power out of the hands of centralized institutions and back into the places where it belongs – with the common person.

Historical Note: Decentralization removes power from the hands of our federal executives, legislators, and regulators, many who were born during the Great Depression and World War II. These individuals have absolutely no conception of modern technologies and their implications on the citizenry’s ability to act orthogonally to governmental power. If we play our card correctly, we can leverage this fact to our advantage, not by defeating centralized power… but by transcending it.

Next Up

In the next article, here, we’ll take a very brief and high level look at the history of money going back about 2,100 years. Within that historical view, we’ll examine why hard money is the key to success, prosperity, and liberty of a nation’s citizenry.

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End Notes, References, & Citations

[1] “The Sovereign Individual“

Literary Note:  For anyone who has an interest in mega-trends (sometimes spanning millennia), I highly recommend the book “The Sovereign Individual:  Mastering The Transition To The Information Age” by James Dale Davidson and Lord William Rees-Mogg.

[2] Logic of violence

This is my over-simplification (and, thus, incomplete) explanation of “logic of violence” from “The Sovereign Individual“. The logic of violence is the estimation (calculation) that anyone performs to weigh the costs of committing violence (to take something that isn’t the perpetrator’s) versus the benefits of committing that violence. If the benefits sharply outweigh the costs, then a perpetrator will commit resources to commit violence (unethical taking). If the costs are greater than the benefits then the perpetrator will not dedicate the resources because of the high risks. I encourage everyone to delve deeper into this topic in “The Sovereign Individual“.

Note: With regards to the “logic of violence”, “violence” does not necessarily mean causing physical harm via assault. In the context of this article, logic of violence can simply mean the de facto taking of something for gain even if threats or physical assaults are never used as the means of acquisition. For example, in regards to fiat currencies, governments can “print” more currency and take (steal) your purchasing power by de facto and de jure (by law) with minimal effort on the government’s part but with great benefit to those in government.

[3] The riding stirrup

Brave search engine summary “the riding stirrup changes warfare“

“Stirrup and Warfare

The riding stirrup significantly changed warfare by providing riders with greater stability and control, which allowed for more effective combat from horseback. This innovation enabled riders to stay in the saddle during intense fighting, making it possible to use weapons such as lances and swords more effectively. The stirrup also allowed for better balance, which was crucial in delivering powerful blows and maintaining control during charges.

The introduction of the stirrup is often credited with revolutionizing mounted warfare, as it made cavalry charges more effective and formidable. This change had a profound impact on military tactics and the structure of societies, particularly in Europe, where it is linked to the rise of heavy cavalry and the feudal system. The stirrup allowed for the development of new fighting techniques, such as the use of lances and bows while riding, which gave mounted warriors a significant advantage over infantry.

However, the extent of the stirrup’s impact is debated among historians. Some argue that while the stirrup was an important innovation, it was not the sole factor in the changes in warfare and society. Others suggest that the stirrup’s role in the rise of feudalism and heavy cavalry is overstated, and that other factors, such as political and economic changes, played a more significant role.

In summary, the stirrup changed warfare by enhancing the effectiveness of cavalry, influencing military tactics, and contributing to the development of new social structures, although the degree of its impact remains a subject of academic debate.”

[4] The Gunpowder Revolution

Brave search engine summary: “the gunpowder revolution summary“

“Gunpowder Revolution Summary

The gunpowder revolution refers to the significant changes in military technology and warfare practices brought about by the development and use of gunpowder. First developed in China, gunpowder was first used militarily in the Middle East before arriving in Europe in the fourteenth century. By the fifteenth century, it became increasingly widespread in war, leading to a shift in how battles were fought. Early gunpowder weapons were inaccurate and dangerous, but they were still lethal and relatively easy to use, making them a game-changer in warfare. The introduction of gunpowder weapons reduced the effectiveness of traditional cavalry charges and changed the dynamics of medieval warfare. The impact of gunpowder extended beyond the battlefield, influencing various aspects of society, including literature and historical events such as the Gunpowder Plot of 1605. The use of gunpowder also had a significant impact on infrastructure, such as railway construction, where it was used extensively for excavations and tunneling.“

[5] The Gutenberg Press

Brave search engine summary: “The Gutenberg Press“

“Gutenberg Press

The Gutenberg Press is a revolutionary invention attributed to Johannes Gutenberg, a German goldsmith, around 1440 AD. It marked the beginning of the Printing Revolution in the western world, significantly impacting the history of information and learning. The press combined the use of molded movable metal type, a press, and printer’s ink, allowing for the mass production of texts.

Gutenberg’s press was built around the traditional screw press, a precursor to today’s drill press, with an added matrix on which individually-cast letters and symbols could be arranged to form the desired text.
This moveable type design allowed pages of text to be quickly assembled from a pre-cast selection of letters and symbols rather than laboriously carved from a block of wood as in the block printing method.

Despite its significance, Gutenberg’s actual press, the very first printing press, has been lost to history. The earliest surviving press is from the mid-16th century, and the earliest illustration of a press is the work “La Grant Danse Macabre,” which was made in 1499.

A replica of the Gutenberg Press is displayed at the International Printing Museum. This replica was created specifically for the Museum in the 1990s, based on woodcuts from the 15th and 16th Century, such as the ‘Danse Macabre‘. The Lindner Gutenberg measures 7 by 5 feet and is over 8 feet tall, made of ten different hardwoods.

The invention of the printing press by Gutenberg had a profound impact on society, leading to the rapid dissemination of information and ideas, which transcended borders and challenged the power of political and religious authorities. It also led to the rise of literacy and the middle class, and it accelerated the development of European vernaculars.

However, it is important to note that the concept of movable type existed prior to 15th century Europe, with the first known application dating back to the Phaistos disc. The first movable type was invented by Chinese engineer Bi Sheng in the 11th century during the Song dynasty, and a book dating to 1193 recorded the first copper movable type.“

[6] The Scientific Method

Brave search engine summary “The Scientific Method”

“Scientific Method Summary

The scientific method is an empirical method for acquiring knowledge that has been used in science since at least the 17th century. It involves careful observation coupled with rigorous skepticism, as cognitive assumptions can distort the interpretation of observations. The scientific method includes creating a testable hypothesis through inductive reasoning, testing it through experiments and statistical analysis, and adjusting or discarding the hypothesis based on the results.

Although it is often presented as a fixed sequence of steps, it actually represents a set of general principles. Not all steps take place in every scientific inquiry, and they are not always in the same order. The process involves making conjectures (hypothetical explanations), predicting the logical consequences of hypotheses, then carrying out experiments or empirical observations based on those predictions. The scientific method is critical to the development of scientific theories, which explain empirical laws in a scientifically rational manner. In a typical application of the scientific method, a researcher develops a hypothesis, tests it through various means, and then modifies the hypothesis based on the outcome of the tests and experiments. The scientific method is a systematic way of conducting experiments or studies so that you can explore the things you observe in the world and answer questions about them.“

[7] The Age of Enlightenment

Brave search engine summary: “The Age Of Enlightenment“

“Enlightenment Summary

The Age Of Enlightenment, also known as the Age of Reason, was a European intellectual and philosophical movement that spanned from the late 17th to the early 19th century. It emphasized the use of reason to advance understanding of the universe and to improve the human condition, with goals of knowledge, freedom, and happiness. The movement was centered around the idea that reason is the primary source of authority and legitimacy, advocating for ideals such as liberty, progress, tolerance, fraternity, constitutional government, and the separation of church and state.

The Enlightenment was influenced by the ideas of ancient Greek philosophers, the Renaissance, and the Scientific Revolution, which began in the 16th century. Key figures included thinkers such as John Locke, René Descartes, and Immanuel Kant, whose works spurred new ideas and fresh thinking throughout Europe. The movement also saw the publication of significant works like the Encyclopédie, a multivolume work by Denis Diderot and Jean Le Rond d’Alembert, which aimed to compile and disseminate knowledge.

Enlightenment thinkers sought to curtail the political power of organized religion, promoting the concept of separating church and state. They introduced novel ideas such as Deism, which involved a belief in God as the Creator without reference to the Bible or other miraculous sources. The movement also influenced political theories, contributing to the development of natural rights and the social contract theory, which addressed the origins of society and the legitimacy of state authority over the individual.

The Enlightenment had a profound impact on the American and French Revolutions, as well as on the development of modern political and social institutions. It encouraged a shift from tradition and authority to exploration, individualism, and advancements in industry and politics. The ideas of the Enlightenment continue to influence human societies today, despite the challenges posed by events such as the Reign of Terror during the French Revolution.“

[8] The Industrial Revolution

“Industrial Revolution

The Industrial Revolution was a period of significant transformation from an agrarian and handicraft economy to one dominated by industry and machine manufacturing, beginning in Britain in the 18th century and spreading to other parts of the world. It marked a shift from small-scale, largely agricultural economies to more industry-intensive ones, driven by technological advances that enabled more efficient production. This period saw the rise of mechanized textile production, canal construction, steam engines, and the factory system, among other key developments.

The Industrial Revolution began in Britain around 1760 and spread to continental Europe and the United States by about 1840.
It was characterized by the transition from hand production methods to machines, new chemical manufacturing and iron production processes, and the increasing use of water power and steam power. The textile industry was the first to adopt modern production methods, becoming the dominant industry in terms of employment, value of output, and capital invested.

Technological innovations such as the steam engine, the water frame, and the spinning jenny played a crucial role in this transformation.
The adoption of coal as an energy source was also significant, as it provided three times more energy than wood and was abundant in Britain. The Industrial Revolution led to increased productivity, economic growth, and the rise of capitalist economies, although it also brought about challenges such as pollution, poor working conditions, and child labor.

The effects of the Industrial Revolution were far-reaching, influencing almost every aspect of life and leading to sustained growth in average income and population. It is considered one of the most important events in human history, comparable only to the adoption of agriculture in terms of material advancement. The term “Industrial Revolution” was first used in 1799 by French envoy Louis-Guillaume Otto, and it became more common by the 1830s.“

[9] The Information Age

Brave search engine summary: “The Information Age“

“Information Age Summary

The Information Age refers to a historical period that began in the mid-20th century, marked by a rapid shift from traditional industries to an economy centered on information technology. This era is characterized by the development of the transistor in 1947, which significantly impacted information processing and transmission. The Information Age is also known as the Third Industrial Revolution, distinguished by the digital revolution, which converted technology from analog to digital formats, enabling the easy copying and transfer of information.

Manuel Castells’ work, “The Information Age: Economy, Society, and Culture” is a trilogy that includes “The Rise of the Network Society” (1996), “The Power of Identity” (1997), and “End of Millennium” (1998). Castells describes the shift from an industrial society to an informational society, which started in the 1970s, and emphasizes the interrelationship of social, economic, and political features of society, with the ‘network’ being the defining feature of the current epoch.

The Information Age has been marked by the adoption of fiber optic cable, which uses light to convey data, significantly accelerating the pace of information exchange compared to previous eras. The Information Age is also characterized by the increasing importance and availability of information, especially through computers, as opposed to previous eras like the Industrial Age. The Information Age has transformed various aspects of life, including entertainment, commerce, research, work, and communication, with the Internet playing a central role.“

[10] Napster

Brave search engine summary: “Napster”

“Napster summary

Napster was an American proprietary peer-to-peer (P2P) file sharing application primarily associated with digital audio file distribution. Founded by Shawn Fanning and Sean Parker, the platform originally launched on June 1, 1999. Audio shared on the service was typically encoded in the MP3 format. As the software became popular, the company encountered legal difficulties over copyright infringement. Napster shut down in 2001 following a series of lawsuits and subsequently filed for bankruptcy in June 2002. The P2P model employed by Napster involved a centralized database that indexed a complete list of all songs being shared from connected clients. While effective, the service could not function without the central database, which was hosted by Napster and eventually forced to shut down. Following Napster’s demise, alternative decentralized methods of P2P file-sharing emerged. Napster still exists despite its colorful history of being shut down by the RIAA to rising from the ashes and being acquired by Rhapsody International. In 2011, the streaming music service Rhapsody inked a deal with Best Buy to acquire Napster subscribers and “certain other assets.” The financial details of the acquisition were not disclosed, but the agreement enabled Best Buy to retain a minority stake in Rhapsody. Napster is a legal, online music service currently operating in selected countries. The Napster brand has seen many changes over the years. The first was Best Buy’s takeover deal, which was worth $121 million. At that time, the struggling Napster digital music service reportedly had 700,000 subscribing customers. In 2011, the streaming music service Rhapsody inked a deal with Best Buy to acquire Napster subscribers and “certain other assets.”. Even though the iconic Napster name disappeared in the U.S. for many years, the service was still available under the Napster name in the United Kingdom and Germany. The Most Underrated Wired Earbuds That Deserve Your Attention · Rhapsody continued to develop the product and focused on reinforcing the brand in Europe. In 2013, it announced that it would be rolling out the Napster service in 14 additional countries. In 2016, Rhapsody rebranded its service internationally as Napster. As of 2022, Napster continues to expand as a source for music-on-demand for other services, including iHeartRadio. That same year MelodyVR, parent company of Rhapsody, was planning to sell Rhapsody to the U.S.-based NM Inc. In 2023, the company acquired Mint Songs, a Web3 startup. The goal is to take the company private again and later relist it on the U.S. stock exchange. Napster, music file-sharing computer service created by American college student Shawn Fanning in 1999. The file sharing that resulted set in motion a legal battle over digital rights and the development of digital rights management software to prevent computer copyright piracy. When Napster emerged on the internet 25 years ago, many knew it represented the future. The record labels and artists pushed back. Napster’s legacy: 4 ways the software changed the music industry, from streaming to how artists make money · After Napster shut down in July 2001, the company went into bankruptcy and reemerged as a subscription service in 2003 after being purchased by software maker Roxio. By then Apple had opened its iTunes Store for consumers willing to pay for tracks and albums. Record industry attorneys were left fighting newer, harder-to-shut-down illegal networks for sharing music freely. But none captured the zeitgeist to the extent as the original Napster, which reset consumer expectations for music – and, eventually, movies and video games. … Digital downloads and music streaming services – from Amazon Music and Apple Music to Deezer, Pandora, Spotify and Tidal – were all foreshadowed by Napster, says Ken Pohlmann, professor emeritus at the University of Miami, an electrical engineer and author of “Principles of Digital Audio”. Napster didn’t exactly sound like something that would cause consternation in the boardrooms of record companies. But within a few short years it would spell the end of the gold rush record companies had enjoyed in the age of the CD, and change how music is consumed and even written. Napster was the brainchild of Shawn Fanning, a 19-year-old US computer hacker who had worked out a way to share music for free. It was, essentially, a cataloguing system that searched your hard-drive, listed all the MP3 music files contained in it, and allowed those to be shared with and played by anyone else using the software. Together with Sean Parker, Fanning created a service that made music discovery almost instant and without cost. “It was something that provided a better, more reliable and fun way for people to share music and see each other’s music collection,” Fanning told the BBC World Service.“

[11] Moral Note:  I am neither justifying nor condemning Napster nor any other peer-to-peer (P2P) file-sharing platform (which allow for the free flow of massive quantities of data with logarithmically lowered costs across legal jurisdictions which have almost zero ability to enforce intellectual property laws). My aim is to point out that P2P technology is a mega-political event in its own right due to the fact that it can operate (mostly) without any real governmental oversight and interference. As of the publishing of this article, BitTorrent (“torrents”), which you can read about here, is the most successful and ubiquitous P2P protocol. This is a fascinating topic that I recommend anyone take five minutes to research.

Previously

In the previous article, here, we looked at the vast and pernicious cultural, financial, health, demographic, and criminal effects of using a fiat currency (soft money) here in the U.S. The detrimental effects of Keynesianism (Keynesian economics) have been permanent and far reaching because it has allowed the state to control huge swaths of our lives at the cost of our lives, our work, our culture, and our individual liberties.

Now, let’s delve a little deeper into one specific section of our nation’s finances which are mostly hidden but a true nation-killer – current debts and future unfunded liabilities. At the outset, I know this isn’t the most exciting topic but I promise you that if you stick with it then you’ll be just as concerned and outraged as I am at the fact that our great country’s future has been sold off for bobbles and bubblegum.

“We’re Sorry But You Have Insufficient Funds.”

Can we be brutally honest about our U.S. federal debt? ^[1]

We will never be able to repay our federal debt.

And, if we cannot ever repay our current and future liabilities (as they grow exponentially) then they are, by definition, a Ponzi scheme. ^{[2] [3] [4]}

I think any reasonable person can conclude that the U.S. has created a de facto Ponzi scheme via its debts.  There is no possible way that the U.S. can ever repay its creditors and continue its normal governmental functions, operations, and duties.  Consequently, every citizen in the U.S. has been placed in a precarious financial position by being partially obligated for these nonredeemable debts.  In other words:

It’s a great big excrement sandwich…

and we’re all going to have to take a bite.

Breaking Down Our Federal Debt

You’re probably wondering how I can be so certain that we cannot pay off our federal debts.  Let’s take a closer look at the top-level debt & liability numbers.

As it stands now, every single U.S. citizen is responsible for $107K of our federal debt and $656K for our future unfunded liabilities. ^[5] This is a combined obligation of $763K per citizen.  Using the USDebtClock data, even if we take the entire “Household Assets” ($175.T) and subtract “Total Personal Debt” ($25.7T) and then divide that by the entire U.S. population (~340M), that is only a net $443K of positive equity per citizen.  Counting only our federal debts, that leave each individual in a $352K shortfall (negative equity).  That doesn’t count our state, county, and municipal debts.

“What about economic growth?” you might ask.  “Can’t we just grow our way out of the problem?“, “Isn’t it as simple as just growing our tax basis and tax revenues faster than our debts & liabilities?“

Let’s do some basic, top-level analysis to answer that question.

According to the Federal Reserve Bank of St. Louis, our federal debt is projected to rise by 4.5% per year from 2024 to 2035. ^[6]

Current projections show our GDP (“gross domestic product“) ^[7] economic growth to be around 2%.  By definition, we’re looking at our debts growing 2.5% faster than our economy (4.5% – 2%).  And, that doesn’t include the future unfunded liabilities (which are ~$220T) ^{[8] [9]}

So, to grow our economy (GDP) faster than our debts (and liabilities), we would have to have years of economic growth greater than 4.5%.  In the entire history of our country, we have never had sustained (multiple decades) GDP growth rates greater than 4.5% in real terms (where “real” means “adjusted for inflation“).  In fact, no country has ever had sustained real GDP growth rates greater than 4.5%.

So, “No, we cannot grow our way out of the problem.“

And, even if we could, it would require a sustained multi-decade austerity program which no politician will ever agree to.  Politically and culturally speaking, asking the American people to reduce their entitlements while continuing to pay taxes is political suicide.

The Wolf Is At Our Backs… And Getting Ever-Closer

“So what?  What’s the big deal if we cannot pay our federal debts?” you might ask with incredulity.

Without going into a long and detailed explanation (but will be covered in future articles), not paying our debts (which are in the form of U.S. federal bonds) means that our credit, along with the rest of the world’s credit, will be demolished.

As an analogy, let’s take a household which has a take-home pay of $50,000 per year (after taxes and fees are taken out).  Now, let’s add $70,000 in annual spending.  That’s $20,000 in deficit or additional debt that is taken on by the end of the year.  So, not only are we not saving money for a rainy day, we’re actually taking on additional debt year after year.

Now, let’s add the fact that this debt has 2.5% in interest.  That is $500 in interest being added to the debt on top of what we already owe.  And, next year, we’ll repeat that.

In order to service the debt, our hypothetical household will have to pay $500 just in interest alone to keep from defaulting on the debt.

“What’s the big deal??  What if we just keep paying the interest on the debt?  Wouldn’t that be enough to keep our household finances going?“

That sounds good, in theory…  But, the next year, the debts will rise from $20K to $40K.  And, the interest on the debt will go from $500 to $1,000.  If we thought paying $500 in interest payments was difficult, then paying $1,000 will be impossible.  This happens year after year until the total amount owed to the creditors (the credit card company) is $360K which means interest payments of $10K per year.

Eventually, the credit card companies will simply tell this virtual household that they’ve reached their credit limit because one of three things has happened:

• The home owner has skipped paying for the interest on the credit cards.
• The credit card company knows that the home owner will not be able to take on more debt safely.
• The credit card company has run out of money to lend.

Thus, no more credit for you!

If this household were already running its finances on credit cards and they have their credit cards cutoff (and no one will issue you a new one) then they’re sunk.  They will no longer be able to operate (pay their basic bills) nor will they be able to secure a new credit card.

Let’s breakdown the analogy in relation to our federal government:

• The take home pay ($50K) is like U.S. Federal Revenues (~$5T)
• The annual spending ($70K) is like U.S. Federal Spending (~$7T)
• The household deficit ($20K) is similar to the U.S. Federal Deficit (~$2T)
• Household debt ($360K) is analogous to U.S. National Debt (~$36T)
• The interest on the credit cards ($10K) is just like the Interest On Debt (~$1T)

In short, the debt is represented by our U.S. federal bonds and the interest on the debt is the interest payments on the bonds to the bond holders.

Eventually, just like our household analogy, the overall bond market (where we fund our debts) will simply tell us, “No more credit for you!” because:

• The federal government cannot keep up with the interest payments.
• The lenders know the gov’t will not be able to keep up with the interest payments in the future.
• They just don’t have any more money to lend!

Not only are millions of American households facing this but our federal government has been running in this exact same fashion for decades.  For those who are interested, this is called “deficit spending“. ^[10]

In the cases of both our theoretical household and federal government, we’re facing the dual threat of rising debts and rising interest payments.  The only difference is scale (magnitude).  In both cases, there is no easy way out, there is no “silver bullet” to remedy the situation.

Eventually, much like the credit card companies in our hypothetical situation, the world will stop buying our bonds and no longer extend credit our way.  The wolf is at our backs… and getting ever-closer.

Fiscal Note:  For as bad as our finances are, the U.S. has some of the relatively strongest finances in the world. There are other countries which are actually much worse than us.  They will fail sooner than we will and their debt failures will affect us badly, too.

Centrally Controlled

Some of you may not believe that the U.S. federal government truly has central control of the money supply (both in its quantity and use) and creation of federal debt.  So, let’s take a brief look at two key areas:  The U.S. Treasury Department ^[11] and federal law 26 USC Section 6011 ^[12]

As you can see from the summary in the end notes, the Treasury Department can greatly affect our money supply, finances, and interest rates, both in changing the money supply ad hoc as well as working directly with the Federal Reserve to bail out institutions (but not private citizens) capriciously.  Even the additional powers of implementing economic policies have given the Treasury Dept. wide latitude in dictating how the American economy should operate (including how private citizens may and may not use their own money).  Most importantly, erratically increasing the money supply (which always results in harmful inflation for the citizenry) and issuing debt (which the people are responsible for repaying, not the state).

As for the USC 26, Section 6011, this makes the IRS the enforcement arm of the Treasury Department and Congress.  It allows the IRS the ability to peer directly into your private financial lives and force you to be fully accountable to the state.  Ironically, there is zero financial accountability by the politicians, bureaucrats, and administrators to the citizenry. ^{[13] [14]}

This unaccountable central control has allowed the state to operate with impunity for decades (and, some would say centuries).

Can We Agree…?

Based on what we’ve looked above (and in the previous articles), I think it’s completely reasonable to ask these fundamental questions, “Can we agree that…?“:

• The federal government has completely mismanaged its finances
• Our federal government is broken
• Our monetary system is broken
• Centralization of our money is a recipe for disaster
• Inflation is legalized theft

After all of this evidence and analysis, if we agree on the above, then I’d like to present a salient and possibly earth-shaking question:

Have we allowed money, that ultimate tool for transmitting economic and metaphysical value, to be centrally controlled for too long?

Prompting The Question…

From all of the poking, prodding, and pontificating, I think we can finally ask the most important question:

Is it time for the separation of… state and money?

Said another way:

Should the creation, control, composition, classification, characteristics, and quality of money be permanently taken out of the hands of the state?

The rest of this series (in fact, the entirety of this blog) will deal with this fundamental and decisive question. 

I realize that this seems a little vague, maybe even Pollyanna ^[15] to ask this question, but I think we can only solve these sorts of questions by asking fundamental questions which push ourselves to challenge established orders. You would be completely justified in thinking that I am a little off my rocker for even asking the question!

Thus, my off-the-wall question to you, “In the entirety of human history, when has there ever been a time when the state consistently had to maintain a solid monetary standard, to live within its means, respect its citizens’ time and work, and do all of this in perpetuity for the entire lifetime of the nation?“

I think we can all comfortably and resoundingly answer, “Never.“

And, that’s the whole point.  Governments always corrupt the money.  Governments always cut corners.  Governments always subordinate the philosophy, the values, and the will of the people to the will of (those within) the state.

Next Steps

Let’s take a look at instances of governments corrupting the money throughout history in Part 2 of the series, “Monetary Revolutions“, found < here >.

Donations

If you found value in this article please feel free to donate via the following payment methods:

CashApp: $JohnYoung357

Bitcoin: bc1qgqz25xxdwrauv8r8eqxtsvjygwwk5695kty7lk

End Notes, References, & Citations

[1] Federal debt levels

www.USDebtClock.org

Fiscal Note: As of early 2025, the federal debt is ~$36.5T

[2] Ponzi Scheme

“Ponzi Scheme“

• “A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.[1] Named after Italian businessman Charles Ponzi, this type of scheme misleads investors by either falsely suggesting that profits are derived from legitimate business activities (whereas the business activities are non-existent), or by exaggerating the extent and profitability of the legitimate business activities, leveraging new investments to fabricate or supplement these profits. A Ponzi scheme can maintain the illusion of a sustainable business as long as investors continue to contribute new funds, and as long as most of the investors do not demand full repayment or lose faith in the non-existent assets they are purported to own.“

“Ponzi Scheme“

• “A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.“
• “With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.“
• “Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp speculation scheme.“

[3] Future unfunded liabilities

Brave search engine summary “future unfunded liabilities”

“Future Unfunded Liabilities

Based on the provided search results, here is a comprehensive answer to the query “future unfunded liabilities”:

Definition: Unfunded liabilities refer to debt or obligations that a government, corporation, or individual has promised to pay in the future, but lacks the necessary funds to fulfill those commitments. In the context of pension plans, unfunded liabilities arise when the present value of promised benefits exceeds the current value of assets set aside to fund those benefits.

Scale of the Problem: The search results highlight the enormity of future unfunded liabilities in the United States:

• $210 trillion: According to some estimates, the US federal government’s unfunded liabilities in net present value exceed $210 trillion, equivalent to about 10 times the country’s annual GDP.
• $93.1 trillion: The federal government’s unfunded liabilities, including Social Security and Medicare, amount to $93.1 trillion, or nearly 400% of annual GDP.
• $1.3 trillion: State and local pension plans in the US face a cumulative funding gap of approximately $1.3 trillion.

Causes: The growth of unfunded liabilities can be attributed to various factors, including:

• Deferred contributions: Many states and local governments have delayed contributions to pension systems during economic downturns, exacerbating the funding gap.
• Lower-than-expected investment returns: Pension funds have struggled to achieve projected investment returns, leading to reduced asset values and increased unfunded liabilities.
• Expanded but unfinanced benefits: Some pension plans have increased benefits without corresponding increases in contributions or investments, widening the funding gap.
• Demographic changes: The retirement of baby boomers and declining birth rates have contributed to increased pension liabilities.

Consequences: The accumulation of unfunded liabilities poses significant risks to governments, corporations, and individuals, including:

• Increased taxes: Future generations may face higher taxes to fund these liabilities.
• Reduced benefits: Pension recipients may face reduced benefits or delayed payments.
• Default or debt restructuring: Governments or corporations may default on their obligations or restructure debt to alleviate the burden.
• Economic instability: The strain on government finances and the potential for debt crises can undermine economic stability and growth.

Mitigation Strategies: To address future unfunded liabilities, governments, corporations, and individuals can consider:

• Increased contributions: Regularly increasing contributions to pension funds can help reduce the funding gap.
• Investment strategies: Implementing more conservative investment strategies or diversifying portfolios can improve returns and reduce risk.
• Benefit adjustments: Adjusting benefit formulas or increasing the retirement age can help reduce liabilities.
• Structural reforms: Implementing pension reform legislation or transitioning to hybrid pension plans can help address the funding gap.

In conclusion, future unfunded liabilities pose a significant challenge for governments, corporations, and individuals. Understanding the scale and causes of these liabilities is crucial for developing effective mitigation strategies to ensure long-term financial sustainability.“

“Federal Unfunded Liabilities Are Growing More Rapidly Than Public Debt“

• “The financial hole is actually deeper than these numbers reveal because they exclude the dramatic effects of Social Security and Medicare, which is regrettable because American workers fully expect the government to honor the benefits they are earning with their payroll taxes. Indeed, a major reason reforming these programs is so challenging is that political leaders mostly agree with workers that these programs represent a social contract that deserves a special and protected status in the political process. While Congress retains the right to adjust benefits under these programs at any time, the reality is that voters enforce a more restricted view of what elected leaders can change.“

“What Are Unfunded Liabilities?“

• “Unfunded liabilities are debt obligations that do not have sufficient funds set aside to pay them. These liabilities generally refer to the U.S. government’s debts or pension plans and their impact on savings and investment securities. Unfunded liabilities can have a significant negative impact on the general economic health of a nation or corporation.“

[4] The Strategic Bitcoin Reserve

Financial Note:  I acknowledge (and greatly appreciate!) that President Trump has a plan to use bitcoin both as a strategic reserve asset (much like our “Strategic Petroleum Reserve“, or “SPR“) to strengthen our federal finances and as a means for paying down the debt.  In my humble opinion, both of them cannot happen simultaneously because our “future unfunded liabilities” ^{[3] [1]} will become “current debts” faster than our ability to pay them with federal revenues.

Add to that the fact that the only way that the federal government will only be able to purchase bitcoin on the open market is through the issuance of more debt and / or more printed dollars, both of which are now debt instruments. 

This is due to the fact that we have non-discretionary budget line items that legally require that we spend particular amounts of money (which we call “future unfunded liabilities“).  This includes Medicaid, Medicare, Social Security, government pension plans and retirement plans, and a slew of other entitlement programs.  The future unfunded liabilities are a type of liability where we have not spent the money already but we know we will have to pay money out sometime in the future (when it will then become a debt) and we do not have any assets (especially cash) to cover those expenditures.  The reason why this is important is because there is essentially no ability to cover those future payouts.  Hence the term “unfunded“.  The people who are owed those future funds will not receive their money.  For anyone who has paid into a federal pension plan then there is a very high probability that it will go broke and they will not receive their full benefits and payouts because it is a Ponzi scheme.

The seemingly banal topic of “discretionary versus non-discretionary” (also called “discretionary vs. mandatory“) spending in our federal government is actually fascinating.  I would encourage anyone who has even a tiny amount of interest in it to look into it.  There are quite a few articles and videos which explain what they are and why understanding them are so important to the health of our nation.  (The U.S. Debt Clock (www.USDebtClock.org) is a great resource and I encourage everyone to refer to it throughout the year.)  In summary, we have legislated our way into mandatory bankruptcy.

[5] Debt per citizen

Note & Disclaimer:  All metrics in USDebtClock are good-faith approximations that are subject to change as updated information becomes available.  I have attempted to use the most up-to-date numbers as a fair and accurate representation of our nation’s financial situation.

• “DEBT PER CITIZEN” metric in the upper-left section of the page near “US NATIONAL DEBT“
• “LIABILITY PER CITIZEN” metric in the lower-right section of the page near “US UNFUNDED LIABILITIES“
• “HOUSEHOLD ASSETS” metric in the lower-left section of the page
• “TOTAL PERSONAL DEBT” metric is near the middle of the page
• “US POPULATION” metric near the middle of the page

Calculations:

• Total Federal Obligation Per Citizen = Debt Per Citizen + Liability Per Citizen
• Total Federal Obligation Per Citizen = $107K + $665K = $763K
• Personal Equity Per Citizen = (Household Assets – Personal Debts) / US Population
• Personal Equity Per Citizen = ($175.T – $25.7T) / 340M = + $411K
• Net Federal Equity Per Citizen = Personal Equity Per Citizen – Total Federal Obligations Per Citizen
• Net Federal Equity Per Citizen = $411K – $763K = $352K

[6] Federal debt growth rate

Brave search engine summary “federal debt growth percentage per year us“

“US Federal Debt Growth Rate

“Based on the provided search results, here are some key findings on federal debt growth percentage per year in the United States:

• Debt-to-GDP ratio: According to the Federal Reserve Bank of St. Louis, the federal debt held by the public as a percentage of GDP is projected to rise from 99% in 2024 to 116% in 2034, and potentially reach 172% by 2054 (Source: Congressional Budget Office, February 2024).
• Annual growth rate: The Congressional Budget Office (CBO) estimates that the federal debt held by the public will grow at an average annual rate of 4.5% from 2024 to 2034, driven by increasing interest costs and mandatory spending (Source: CBO, February 2024).
• Historical context: The CBO reports that the federal debt held by the public increased from 34.7% of GDP in 2000 to 67.7% in 2011, and has continued to rise since then (Source: CBO).
• Long-term projections: The CBO’s Long-Term Budget Outlook (2019) projects that the federal debt held by the public will reach 144% of GDP by 2049, assuming current laws remain unchanged (Source: CBO, 2019).
• Interest costs: The CBO estimates that interest costs on the federal debt will increase from 8.5% of GDP in 2024 to 12.5% in 2034, and potentially reach 15.5% by 2054 (Source: CBO, February 2024).

To summarize, the federal debt growth percentage per year in the United States is projected to:

• Rise from 99% of GDP in 2024 to 116% in 2034
• Grow at an average annual rate of 4.5% from 2024 to 2034
• Reach 144% of GDP by 2049, assuming current laws remain unchanged
• Increase interest costs from 8.5% of GDP in 2024 to 12.5% in 2034 and potentially 15.5% by 2054

Please note that these projections are subject to changes based on various factors, including economic conditions, policy decisions, and demographic trends.“

“U.S. National Debt by Year“

“U.S. National Debt by Year“

[7] U.S. GDP projected growth rate

Brave search engine summery “us gdp projected growth rate“

“US GDP Projected Growth Rate

US GDP Projected Growth Rate: The United States’ GDP growth rate is a key indicator of the country’s economic performance.

Short-term projection: The GDP Growth Rate in the United States is expected to be 1.70 percent by the end of this quarter.

Long-term projection: In the long-term, the United States GDP Growth Rate is projected to trend around 2.00 percent in 2025.

Alternative projection: Another source projects the US GDP growth rate to be around 2.8 percent in 2024.

Forecast range: The forecasted GDP growth rate ranges from 1.9% to 2.1% between 2027 and 2029.“

“Real gross domestic product (GDP) growth rate in the United States from 2019 to 2029“

“The Economic Outlook for 2023 to 2033 in 16 Charts“

[8] U.S. federal future unfunded liabilities trackers

“Our Debt Clock“

“Unfunded Liabilities: Are We Borrowing From Future Generations?“

Brave search engine summary “federal future unfunded liabilities tracker“

“Federal Unfunded Liabilities

The U.S. federal government faces significant future unfunded liabilities, primarily stemming from Social Security, Medicare, and Medicaid obligations. According to recent reports, the present value of these unfunded liabilities has grown substantially over the past two decades. In 2021, the combined unfunded liabilities for Social Security and Medicare were estimated at $93.1 trillion, or nearly 400% of annual GDP, compared to $11.1 trillion (105% of GDP) in 2001.

Specifically, Social Security alone faces a long-term unfunded liability of approximately $63 trillion as of the 2024 Old-Age, Survivors, Disability Insurance (OASDI) trustees report.

For Medicare, the unfunded liability is estimated at around $38.2 trillion.

These figures reflect the gap between projected future benefits and the dedicated tax revenues expected to fund these programs.

The Government Accountability Office (GAO) and the Treasury Department have consistently warned about the growing fiscal pressures from these unfunded obligations, noting that without policy changes, future taxpayers will face increased burdens through higher taxes or reduced benefits.”

Historical Note: www.USDebtClock.org used to have a metric for “Future Unfunded Liabilities”.  As of late (06/2025), I cannot find that tracked on that website anymore. I have reached out to owners / operators of the site to ask if that metric will be put back onto the site. I have not heard anything back, yet, other than an acknowledgement of receipt of my email.

[9] Unfunded liabilities are growing faster than our public debt

“Federal Unfunded Liabilities Are Growing More Rapidly Than Public Debt“

[10] deficit spending

Brave search engine summary “what is deficit spending“

• “Deficit spending refers to the situation where a government, business, or individual spends more than it earns, leading to a financial shortfall. In governmental contexts, this occurs when expenditures on public services—such as education, healthcare, and defense—outstrip revenues from taxes and other sources. The deficit is the annual difference between government spending and government revenue. Within the budgetary process, deficit spending is the amount by which spending exceeds revenue over a particular period of time, also called simply deficit, or budget deficit. Deficit spending occurs whenever a government’s expenditures exceed its revenues over a fiscal period.”

“Deficit Spending: Overview“

“Debt vs. Deficits: What’s the Difference?“

“Deficit Spending“

[11] U.S. Treasury Department

Brave search engine summary: “what does the u.s. treasury do“

“U.S. Treasury Function

Based on the provided search results, here is a comprehensive overview of what the U.S. Treasury does:

Primary Functions:

• Managing Federal Finances: The U.S. Treasury is responsible for collecting taxes, paying bills, and managing the government’s cash flow.
• Issuing Securities: The Treasury issues Treasury bonds, notes, and bills to finance the government’s activities and refinance existing debt.
• Regulating and Supervising Financial Institutions: The Treasury enforces finance and tax laws, and works with other agencies to ensure the stability and integrity of the financial system.

Additional Responsibilities:

• Minting Coins and Printing Currency: The Treasury’s Bureau of Engraving and Printing produces U.S. currency, and the U.S. Mint produces coins.
• Fort Knox Management: The Treasury is responsible for the management and security of the Fort Knox gold reserves.
• Community Development and Engagement: The Treasurer serves as a senior advisor to the Secretary on community development and engagement, and coordinates Tribal relations across the Department.
• Economic Policy Formulation: The Treasury advises the President on domestic and international economic issues and implements the administration’s economic policies.

Collaboration with the Federal Reserve:

• Overlapping Responsibilities: The Treasury and Federal Reserve work together to provide a stable U.S. economy, borrowing money when the government needs to raise cash, and fighting recessions and bailing out institutions when necessary.
• Gold Storage: The Treasury stores most of the nation’s gold supply in a vault at the New York Fed, demonstrating the overlap between the two institutions.

Historical Context:

• Establishment: The U.S. Treasury was formally established as an executive department in 1789, with Alexander Hamilton as its first Secretary.
• Evolution: Over time, the Treasury’s responsibilities have expanded to include managing government revenue, regulating financial institutions, and implementing economic policies.

In summary, the U.S. Treasury plays a critical role in managing federal finances, issuing securities, regulating financial institutions, and implementing economic policies, while also collaborating with the Federal Reserve to maintain a stable economy.”  [emphasis added by Brave search engine]

[12] Federal law Title 16, Section 6011

Brave search engine summary:  “federal law title 26 6011“

“26 U.S. Code Section 6011

Federal Law Title 26 Section 6011: General Requirement of Return, Statement, or List

According to the Internal Revenue Code (IRC), Title 26, Section 6011, the general requirement of return, statement, or list is as follows:

• (a) In General: Every person made liable for any tax imposed by this title, or with respect to the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary.
• (b) Information Required: Every person required to make a return or statement shall include therein the information required by such forms or regulations.
• (c) Returns, etc., of DISCS and former DISCS and former FSC’s: For taxable years beginning after December 31, 1986, a DISC (Domestic International Sales Corporation), former DISC, or former FSC (Foreign Sales Corporation) shall make a return for the first taxable year in which it is required to deduct and withhold tax under section 3402(q) and for each subsequent taxable year, whether or not income is derived from sources without the United States.
• (d) Returns, etc., of Employers: Every employer required to deduct and withhold tax under section 3402 shall make a return for the first calendar quarter in which it is required to deduct and withhold such tax and for each subsequent calendar quarter, whether or not wages are paid therein.
• (e) Final Returns: Every person required to make a return under this section shall file a final return when the person ceases to be liable for any tax imposed by this title.
• (f) Penalty for Failure to File: Any person required to make a return under this section who fails to file such return at the time and in the manner prescribed by regulations shall be liable for a penalty.
• (g) Regulations: The Secretary shall prescribe regulations under this section, including the forms and information required to be included in returns and statements.

In summary, Section 6011 of the Internal Revenue Code requires individuals and businesses to file returns, statements, or lists with the Internal Revenue Service (IRS) when they are liable for taxes or have withholding obligations. The section outlines the general requirements for filing, including the information to be included, the timing, and the penalties for non-compliance.”  [emphasis added by Brave search engine]

[13] Nancy Pelosi’s portfolio performance

Brave search engine summary “nancy pelosi insider trading“

“Nancy Pelosi Insider Trading

Nancy Pelosi, as a member of Congress, is subject to the STOCK Act of 2012, which prohibits trading based on nonpublic information derived from her position.

Despite this, there have been discussions and debates regarding her stock trades. Some argue that her trades may appear suspicious but are likely vetted by legal counsel to ensure compliance with the law.

Recent disclosures show that Pelosi has engaged in various stock transactions. For example, she bought shares in companies like Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), and TEMPUS AI INC (TEM) on January 14, 2025, and sold shares in Apple Inc. (AAPL) and NVIDIA Corporation (NVDA) in late December 2024.

These trades were reported within the required time frames, which can sometimes lead to delays in public disclosure.

Critics and supporters have debated the implications of these trades. Some argue that even if legal, such trading creates an appearance of impropriety and that members of Congress should be prohibited from trading stocks altogether.

Others point out that proving insider trading requires demonstrating that the information used was nonpublic and directly linked to her official duties, which is a high bar to meet.

In summary, while there have been allegations and discussions surrounding Nancy Pelosi’s stock trades, there is no concrete evidence presented in the provided context that she has violated the law. The debate continues over whether the current regulations are sufficient or if a complete ban on stock trading by members of Congress is necessary.“

List of trackers of Nancy Pelosi’s trading activities:

• https://www.quiverquant.com/congresstrading/politician/Nancy%20Pelosi-P000197
• https://valueinvesting.io/nancy-pelosi-stock-trades-tracker
• https://twitter.com/NancyTrackerz
• https://twitter.com/congresstrading

[14] Book: “Throw Them All Out”

“Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of us to Prison“

“THE BOOK WASHINGTON DOES NOT WANT YOU TO READ

How is it that politicians often enter office with relatively modest assets, but then, as investors, regularly beat the stock market and sometimes beat the most rapacious hedge funds? How did some members of Congress know to dump their stock holdings just in time to escape the effects of the 2008 financial meltdown? And how is it that billionaires and hedge fund managers often make well-timed investment decisions that anticipate events in Washington?

In this powerfully argued book, Peter Schweizer blows the lid off Washington’s epidemic of ‘honest graft.’ He exposes a secret world where members of Congress insert earmarks into bills to improve their own real-estate holdings, and campaign contributors receive billions in federal grants. Nobody goes to jail. Throw Them All Out casts light into the darkest corners of the political system — and offers ways to clean house.

“Throw Them All Out is filled with stories of petty theft and so-called ‘honest graft‘ . . . Unsparingly bipartisan in [its] criticism of Washington . . . Mr. Schweizer has performed a valuable service to his country.” — Washington Times

[15] Pollyanna

Brave search engine summary: “Pollyanna meaning“

“Pollyanna meaning

According to various sources, a Pollyanna is a person characterized by:

• Irrepressible optimism
• A tendency to find good in everything
• Blindly or excessively optimistic

This term originates from Eleanor H. Porter’s 1913 novel “Pollyanna,” which tells the story of an orphan with an unjustifiably optimistic attitude. Over time, the term has evolved to describe individuals who consistently expect good outcomes and focus on the positive aspects of situations, even when faced with adversity.

Examples

• “I’m no Pollyanna, but I do think some good will come out of this.” (Merriam-Webster)
• “Pollyanna meaning: someone who thinks good things will always happen and finds something good in everything.” (Various dictionaries)

Key Takeaways

• A Pollyanna is someone who maintains an unwaveringly optimistic outlook, often to the point of being perceived as excessively or blindly optimistic.
• This trait can be both a strength, inspiring positivity and hope in others, and a weakness, potentially leading to unrealistic expectations or a lack of preparedness for potential challenges.
• The term Pollyanna is often used to describe someone who is overly optimistic, but it can also be seen as a compliment, acknowledging their ability to find the silver lining in difficult situations.“

“Pollyanna“

• “Pollyanna is a 1913 novel by American author Eleanor H. Porter, considered a classic of children’s literature. The book’s success led to Porter soon writing a sequel, Pollyanna Grows Up (1915). Eleven more Pollyanna sequels, known as “Glad Books”, were later published, most of them written by Elizabeth Borton or Harriet Lummis Smith. Further sequels followed, including Pollyanna Plays the Game by Colleen L. Reece, published in 1997. Due to the book’s fame, “Pollyanna” has become a byword for someone who, like the title character, has an unfailingly optimistic outlook;[1] a subconscious bias towards the positive is often described as the Pollyanna principle. Despite the current common use of the term to mean “excessively cheerful”, Pollyanna and her father played the glad game as a method of coping with the real difficulties and sorrows that, along with luck and joy, shape every life.“

Previously

In the previous articles (here), we examine what the eroding power of inflation has done to our wallets as individuals.  In addition, we’ve looked at the areas where the state has stepped into legislate, regulate, and dominate our lives in every single sector possible.

Why All The Fuss?

So, we must ask ourselves:

• Why go to all of this trouble?
• What is in it for the government?
• Why do people tolerate it?
• What happens when people see it?

Much of the effects and allure of monetary inflation come from a pernicious psychological trick that was popularized by Keynesian economics. ^[1]  Without going into any detail about Keynesianism, suffice it to say that these three causes & effects occur because of it:

• Running the “printing presses”
  • Government (and the commercial banks) run the virtual (cyber) printing presses to add more currency to the existing supply.
• Increasing your paycheck
  • That newly printed currency eventually makes its way into your paycheck, which increases the number which you see (whether it be on a physical check or your direct deposits).
  • This increase creates a dopamine rush ^[2] when we see that new and bigger paycheck causing us to think that we are earning more money and that our buying power has gone up.
• Decrease your purchasing power and savings
  • This increase in the paychecks has happened to just about everyone who earns money.  So, most everyone has more money to spend.
  • If everyone has more currency, then this drives prices up against the same limited supply of goods and services.  Then, increases in the prices of goods and services actually goes up faster than your paycheck can go up.
  • In addition, your savings account loses purchasing power (as we demonstrated in the first few articles of this series).

Nerd Note:  The above is slightly over-simplified but the cycle is basically the same as described.  For the nerds out there, consider tackling the book “The Theory of Money and Credit” by Ludwig von Mises.

What is going on here??  If increasing the money supply keeps decreasing our purchasing power then why do it??  Why accept it??

“Number Go Up“

In modern parlance, we call this phenomenon, “Number Go Up” (NGU), which is the ability to make something seem better just because there are more units in existence.  In the worlds of economics and behavior science, we call this “unit bias“. ^[4]

In this instance, we think that we are getting more purchasing power (from more dollar units) while the value of each unit has gone down.  Overall, the shift is so small, so subtle, and so widely accepted that it eludes the eye.  The unconscious assumption is that the new dollars that we are receiving are of the exact same value as the dollars that we previously received and owned.

I remember a funny story that my “Algebra 1” (and “Algebra 2“) teacher told us years ago to illustrate the concept of unit bias:

“A customer called his local pizza shop to order a pizza. The restaurant owner asked the customer, ‘Do you want me to cut the pie into six pieces or eight?’ Without hesitating, the customer replied, ‘Better cut it into six; I don’t think I can eat eight.‘ “

We all understand the joke but we might not be able to articulate it in exact terms.  That is the same theme with regards to our paychecks and food prices going up; we understand the joke being played on us but might not be able to explain what’s happening.

In essence, like the individual slices of pizza, the value of our old dollars of yesterday are more valuable than the new dollars of today (our purchasing power goes down).  Yet, just like all of the slices of pizza (whether they be 6 or 8) in total make 100% of a pizza pie, all of the US dollars (whether they be 6 trillion or 8 trillion) in total make 100% of the entire money supply.  If we as individuals make 20% more in our paychecks that doesn’t mean that the money supply is now 120%; the money supply is always just… 100%.  Therein lies the mental trick; every single person receiving a higher paycheck thinks that they are getting a bigger slice of the pie.  In essence, this is the “Lake Wobegon Effect” ^[3] where, “all the children are above the average“.  Sure, every person is getting more “units” (which we call “dollars“) but every new unit in that moment is smaller than the previous measure.  This logically fallacious way of thinking actually has a name – “unit bias“. ^[4]

In the next two sections, we examine how NGU and unit bias affect us directly and our culture overall.

Real Returns

We see the effects of unit bias in people’s investment portfolios.  Let’s take a look at those effects in a simple example of a hypothetical investment portfolio that any of use might have.

Let’s say that you have a portfolio that has consistently gone up by an average of 5% per year over 40 years (for a total return of 604%) ^[5].  Should you be happy?

Normally, the average person would be quite satisfied with that average rate of return.  But, let’s use our “erosion rate” of -5.6% (which we calculated the first article, here).

Due to the fact that inflation is actually outpacing the return on our example portfolio, our true average annual rate of return is actually… -0.6%.  We call that true return our “real return” because it takes inflation (but not taxes) into account. ^[6]   In essence, it means that inflation is eating up our buying power even though it looks like our portfolio is doing quite nicely!

On paper, our portfolio has gone up by 604%.  In actuality (in inflation-adjusted “real” terms), our portfolio has actually decreased by 21% ^[7] leaving us with only 79% of our original purchasing power.  That is unit bias working against us because we think we have more buying power on paper when in reality we actually have less.

Cultural Impacts

This act of running the (cyber) money printers is the modern “bread and circuses” ^[8] equivalent of the ancient Roman circus where the emperor threw bread to the masses to appease them for the moment, giving them a “dopamine rush” and manipulating them into forgetting government induced problems. 

When artificially and haphazardly induced, the dopamine rush can become an addiction.  Much like all addictions, in the moment, issuing more money (“running the printing presses“) looks and feels good on the surface yet causes so much corruption of reason, rationality, and moderation.

In the context of money printing (increasing the money supply), what is that dopamine rush?  How can it be so effective yet so harmful?  What are the effects of inflating the money supply on our culture?

To start, let’s rewind the clock to August 15, 1971.  This is the infamous day when President Richard Nixon officially and finally took the U.S. off of the “Gold Standard“. ^{[9] [10]}  This was the third and final step in removing the Gold Standard as the basis for the U.S.’s monetary system.  After that, all ties to reality were severed from the U.S. Dollar.  From there the cultural health of our country began its true plummet.

To scratch the surface on this broader look at the effects on our culture, let’s take a look at this website www.WTFHappenedIn1971.com. ^[11]   We see the pernicious effects of using “money” which does not have any basis in reality.  Below is a series of five graphs which measure various aspects of our lives (real estate, personal finance, prison incarceration, demographics, and obesity).

“How Long Does It Take To Save For A House?“

“Working Hours To Buy The S&P 500 (1860 – 2020)“

“Incarceration rate of inmates incarcerated under state and federal jurisdiction per 100,000 population 1925 – 2014“

“Children per woman“

“Trends in obesity among children and adolescents aged 2 – 19 years by age: United States, 1963 – 2016“

As you can see from the above graphs, a corrupted money most probably leads to corruption in real estate, investing, law enforcement, families, and health & wellness.  All of these charts show just how pernicious the effects are of the state corrupting our money and subordinating the philosophy and values of the citizenry to those in the bureaucracy.  The state is hoovering up value that the people create and using it for its own nefarious purposes outside of the well-defined role of the U.S. Constitution.

While it is beyond the scope this opening series of posts to go into the how and why a corrupted money always corrupts the culture, I think even a cursory glance at the charts from “WTF Happened In 1971” show us that there is strong evidence for that corrupting influence across dozens of different sectors and metrics.  In short, my explanation for why this happens is because makes the will and philosophy of the people subordinate to the will and philosophy of the state.  When this happens, the priorities of the citizenry become distorted, twisted, and, ultimately, corrupted.  Eventually, these corrupted philosophies manifest themselves in the ways that we see in www.WTFHappenedIn1971.com.  This long term corruption of the nation has happened for millennia.  We will cover this effect in future posts here in www.BitcoinInPeace.com.

Next Steps

In the next article in this series, here, we will take a hard look at the final results of using soft money (fiat currency) that has no basis in reality.  As seen above, these results have affected everything from physical health to financial health to cultural health.

Ultimately, we must ask that fundamental question, “Is it time for a separation of state and money?“

Donations

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End Notes, References, & Citations

[1] Keynesian economics

“Keynesian economics (/ˈkeɪnziən/ KAYN-zee-ən; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and inflation.  In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy.  It is influenced by a host of factors that sometimes behave erratically and impact production, employment, and inflation.“

“Keynesian economists generally argue that aggregate demand is volatile and unstable and that, consequently, a market economy often experiences inefficient macroeconomic outcomes, including recessions when demand is too low and inflation when demand is too high.  Further, they argue that these economic fluctuations can be mitigated by economic policy responses coordinated between government and central bank.  In particular, fiscal policy actions taken by the government and monetary policy actions taken by the central bank, can help stabilize economic output, inflation, and unemployment over the business cycle.  Keynesian economists generally advocate a regulated market economy – predominantly private sector, but with an active role for government intervention during recessions and depressions.” [emphasis added by BitcoinInPeace.com] (Ref.: “Keynesian Economics“)

[2] Dopamine rush

“What Is Dopamine?“

“Dopamine is a hormone and a type of neurotransmitter, or chemical messenger, made in your brain. Your nervous system uses it to send messages between nerve cells. These messages also travel between your brain and the rest of your body.

This unique neurotransmitter affects your body, brain, and behavior. Dopamine plays a role in how we feel pleasure and rewards. It’s a big part of our unique human ability to think and plan. It helps us focus, work towards goals, and find things interesting.

Like most other systems in the body, you don’t notice it (or maybe even know about it) until there’s a problem.

Too much or too little dopamine can lead to many different health issues. Some are serious, like Parkinson’s disease. Others are less severe.“

“How Can Dopamine Affect the Body?“

“Dopamine is a neurotransmitter in your brain that contributes to feelings of alertness, focus, motivation, and happiness. A flood of dopamine can make you feel euphoric.“

“Dopamine is involved in neurological and physiological functioning. It’s a contributing factor in motor function, mood, and even our decision making. It’s also associated with some movement and psychiatric disorders.“

[3] Lake Wobegon Effect

“The Lake Wobegon Effect“

Brave search engine summary “lake wobegone every child is above the rest“

“Lake Wobegon Effect

The Lake Wobegon Effect is a psychological phenomenon where individuals tend to overestimate their own abilities, achievements, and performance in relation to others. This bias was coined by Garrison Keillor, an American author and radio personality, who described the fictional town of Lake Wobegon as “where all the women are strong, all the men are good-looking, and all the children are above average.”

Real-Life Examples

• Self-Assessment: In a study, 94% of college professors reported doing above-average work, despite objective measures suggesting otherwise.
• Driving Skills: A survey found that 80% of respondents rated themselves in the top 30% of all drivers, despite objective data indicating that most drivers are average or below average.
• Student Test Scores: A study reported that all states claimed average student test scores above the national norm, a statistically impossible finding.
• Personal Traits: A College Board survey found that only 1% of high school seniors rated themselves as below average in getting along with others, while 60% rated themselves in the top 10% and 25% in the top 1%.

Why Does This Happen?

• Confirmation Bias: People tend to seek out information that confirms their positive self-image and ignore contradictory evidence.
• Lack of Objectivity: Individuals often lack a clear understanding of objective standards and criteria, leading to inflated self-assessments.
• Social Comparison: People compare themselves to others who are not representative of the average, leading to an exaggerated sense of superiority.

Consequences

• Misaligned Expectations: Overestimating one’s abilities can lead to disappointment and frustration when reality fails to meet expectations.
• Poor Decision-Making: Biased self-assessments can influence decisions, such as career choices or investments, leading to sub-optimal outcomes.
• Impaired Feedback: Resistance to constructive feedback and criticism can hinder personal growth and development.

Mitigating the Lake Wobegon Effect

• Seek Objective Feedback: Regularly solicit feedback from trusted sources, such as mentors, peers, or supervisors, to gain a more accurate understanding of one’s performance.
• Use Data and Metrics: Leverage objective data and metrics to evaluate performance and identify areas for improvement.
• Practice Humility: Recognize the limitations of one’s abilities and be open to learning from others and acknowledging mistakes.

By acknowledging and addressing the Lake Wobegon Effect, individuals can develop a more realistic and accurate self-image, leading to better decision-making, improved relationships, and greater personal growth.“

[4] Unit Bias

Brave search engine summary:  “unit bias“

“Unit Bias

Unit bias is a cognitive bias where individuals perceive a single unit of an item as the appropriate amount to consume or use, regardless of the size or quantity of the unit. This bias can influence consumption behaviors, such as eating an entire serving of food even if it is large, leading to over-consumption. It also affects decision-making in various contexts, like choosing to buy a whole unit of a cryptocurrency instead of a fractional amount, which might not be the best financial decision. Understanding and recognizing unit bias can help in making more rational choices and managing consumption more effectively.

Examples:

• Food consumption: People tend to finish a whole serving of food, even if it’s larger than they intended to eat, due to the perceived need to complete the unit.
• Candy consumption: Research has shown that individuals consume more candy when served with a large spoon than with a small spoon, despite having no limits on the amount they can take.
• Resource consumption: Unit bias can also apply to non-food items, such as water or energy usage, leading people to use more resources than necessary because they perceive a single unit as the standard amount.

Implications:

• Over-consumption: Unit bias contributes to over-consumption of food, leading to negative health consequences, such as obesity and related health issues.
• Marketing strategies: Businesses often leverage unit bias by packaging products in larger sizes, encouraging consumers to complete the unit and potentially leading to over-consumption.
• Environmental impact: Unit bias can also contribute to wastefulness and over-consumption of resources, such as water and energy, with negative environmental consequences.

Research and theories:

• Unit segmentation: Researchers have demonstrated that dividing food into smaller units (e.g., smaller portions) can reduce consumption and promote healthier eating habits.
• Consumption norms: The unit bias may be influenced by cultural and social norms around consumption, with individuals conforming to perceived standards of appropriate consumption.
• Heuristics: The unit bias can be seen as a mental shortcut or heuristic, where individuals rely on the perceived completeness of a unit rather than considering their actual needs or preferences.

Strategies to overcome unit bias:

• Portion control: Encourage individuals to consume smaller, more manageable portions to reduce over-consumption.
• Labeling and education: Provide clear labeling of serving sizes and educate consumers about the unit bias to promote more mindful consumption.
• Alternative packaging: Design packaging that encourages more flexible or adjustable consumption, such as refillable containers or portion-controlled packaging.

By understanding the unit bias and its implications, we can develop strategies to promote healthier and more sustainable consumption habits.“

What Is Unit Bias In Behavioral Economics? “What Is Unit Bias?“

“Unit bias is a psychological heuristic in behavioral economics, suggesting that individuals perceive a single unit of an item, regardless of its size, as the appropriate amount to consume or use. It is an inclination towards thinking of things in discrete, indivisible units, leading people to believe that a unit is a representative amount, optimal serving size, or appropriate action quantity.“

“Unit bias. A new heuristic that helps explain the effect of portion size on food intake“

“Abstract

People seem to think that a unit of some entity (with certain constraints) is the appropriate and optimal amount. We refer to this heuristic as unit bias. We illustrate unit bias by demonstrating large effects of unit segmentation, a form of portion control, on food intake. Thus, people choose, and presumably eat, much greater weights of Tootsie Rolls and pretzels when offered a large as opposed to a small unit size (and given the option of taking as many units as they choose at no monetary cost). Additionally, they consume substantially more M&M’s when the candies are offered with a large as opposed to a small spoon (again with no limits as to the number of spoonfuls to be taken). We propose that unit bias explains why small portion sizes are effective in controlling consumption; in some cases, people served small portions would simply eat additional portions if it were not for unit bias. We argue that unit bias is a general feature in human choice and discuss possible origins of this bias, including consumption norms.“

“What is Unit Bias In Behavioral Economics?“

“At the heart of unit bias is the notion of what is perceived as a ‘normal’ or ‘standard’ amount. This bias influences people to view a single unit as an appropriate, acceptable, or normal amount, regardless of the unit’s size or quantity.“

“Unit bias. A new heuristic that helps explain the effect of portion size on food intake“

“What is Unit Bias?“

“Unit Bias a cognitive bias that causes our misguided brains to constantly oversimplify the world. It causes our overworked brains to group things into big general categories and to ignore the subtle differences.“

[5] Portfolio returns calculations

Calculating the Total Returns of our hypothetical portfolio:

Inputs:

• Compounding Periods = 40 years
• Average Annual Rate of Return = 5% = 0.05

Total Returns:

• ((1 + Ave. Annual Rate of Return) ^ Compounding Periods) – 1) = Total Returns
• ((1 + 0.05) ^ 40) – 1) = 6.04 = 604%

[6] Real returns / inflation adjusted

Brave search engine summary:  “real returns”

“Real Returns

Real returns refer to the actual rate of return on an investment after adjusting for inflation. In other words, it measures the increase in purchasing power of an investment over time. Nominal returns, on the other hand, do not account for inflation and may overstate the true return on investment.

Calculating Real Returns

To calculate real returns, you need to subtract the inflation rate from the nominal return. The formula is:

• Real Return = (1 + Nominal Return) / (1 + Inflation Rate) – 1

For example, if the nominal return is 5% and the inflation rate is 3%, the real return would be:

• Real Return = (1 + 0.05) / (1 + 0.03) – 1 ≈ 2%

This means that the investment’s actual purchasing power has increased by 2% over the period.

Why Real Returns Matter

Real returns are crucial for investors because they help:

• Preserve Purchasing Power: Inflation can erode the value of money over time. Real returns ensure that investments keep pace with inflation, maintaining purchasing power.
• Accurately Evaluate Performance: Nominal returns can be misleading, as they don’t account for inflation. Real returns provide a more accurate picture of an investment’s performance.
• Make Informed Decisions: By focusing on real returns, investors can make more informed decisions about their investments, portfolio allocation, and long-term financial goals.

Real Returns in Different Asset Classes

• Bonds: Real returns on bonds are particularly important, as inflation can significantly impact their value. Historically, bonds have offered lower real returns than other asset classes, such as stocks.
• Stocks: Equities have historically provided higher real returns than bonds, but their returns can be more volatile.
• Real Estate: Real estate investments, such as rental properties or real estate investment trusts (REITs), can provide higher real returns than bonds, but are often subject to local market conditions and property-specific risks.

Conclusion

Real returns are a critical consideration for investors, as they help preserve purchasing power, accurately evaluate investment performance, and inform decision-making. By understanding real returns, investors can make more informed choices about their investments and achieve their long-term financial goals.“

“Real Return“

“Real return is what is earned on an investment after accounting for taxes and inflation. Real returns are lower than nominal returns, which do not subtract taxes and inflation.“

“Real Rate of Return: Definition, How It’s Used, and Example“

“The real rate of return is the annual percentage of profit earned on an investment, adjusted for inflation. Therefore, the real rate of return accurately indicates the actual purchasing power of a given amount of money over time.

Adjusting the nominal return to compensate for inflation allows the investor to determine how much of a nominal return is real return.“

[7] 40 year erosion calculation

Inputs:

• Compounding Period = 40 years
• Erosion Rate = –5.6%
• S&P500 Rate of Return = 5%

Calculation:

• Real (Inflation Adjusted) Rate of Return =
  • S&P500 Rate of Return + Erosion Rate
  • 5% + (-5.6%) = –0.6% = –0.006
• Net (Inflation Adjusted) Principle =
  • (1 + Real Rate of Return) ^ Compounding Period
  • (1 + –0.006) ^ 40 = 0.7861 = ~79%
  • ~79% principle remaining (on an inflation adjusted basis)

[8] “bread and circuses”

Brave search engine summary “bread and circuses“

“Bread and Circuses Meaning

The phrase ‘bread and circuses’ originates from ancient Rome, specifically from the Roman satirist Juvenal’s 10th Satire, written around 100 AD. In this context, Juvenal lamented the decline of civic virtue among the Roman populace, who were more concerned with basic sustenance (bread) and entertainment (circuses) than with participating in the democratic process and upholding their civic duties.

Ancient Rome’s Bread and Circuses

During the Roman Empire, the government used a combination of food handouts (bread) and public spectacles (circuses) to pacify the population and distract them from political unrest and civic responsibilities. This strategy allowed the ruling elite to maintain control and stability, albeit at the cost of democratic freedoms.

Modern Relevance

The concept of “bread and circuses” has transcended its ancient roots, becoming a metaphor for governments and institutions using short-term solutions to appease the masses, rather than addressing deeper issues and promoting civic engagement. This phenomenon is evident in various forms of modern entertainment, propaganda, and political manipulation.

Examples

Ancient Rome’s Colosseum: A symbol of bread and circuses, where gladiatorial combat and other spectacles entertained the masses, diverting attention from political and social issues.

Modern Politics: Governments using populist measures, such as handouts or symbolic gestures, to maintain public approval and deflect attention from more pressing concerns.

Media and Entertainment: The proliferation of reality TV, social media, and other forms of distraction, which can pacify the public and reduce their willingness to engage with complex political issues.

Conclusion

The phrase ‘bread and circuses’ remains a powerful reminder of the enduring struggle between civic virtue and political manipulation. As we navigate modern societies, it is essential to recognize the ongoing relevance of this ancient concept and strive for a balance between short-term appeasement and long-term civic engagement.“

“Bread and Circuses“

” ‘Bread and circuses‘ (or “bread and games“; from Latin: panem et circenses) is a metonymic phrase referring to superficial appeasement. It is attributed to Juvenal (Satires, Satire X), a Roman poet active in the late first and early second century AD, and is used commonly in cultural, particularly political, contexts.

In a political context, the phrase means to generate public approval, not by excellence in public service or public policy, but by diversion, distraction, or by satisfying the most immediate or base requirements of a populace, by offering a palliative: for example food (bread) or entertainment (circuses). Juvenal originally used it to decry the “selfishness” of common people and their neglect of wider concerns. The phrase implies a population’s erosion or ignorance of civic duty as a priority. “

[9] August 15, 1971 – Richard Nixon Closes the Gold Window

The Challenge of Peace – President Nixon’s Address to the Nation on A New Economic Policy

[10] Gold standard

Brave search engine summary:  “what is the gold standard“

“What is the Gold Standard

The gold standard is a monetary system where a country’s currency value is directly linked to gold. Under this system, the government sets a fixed price for gold and agrees to convert paper money into gold at that price. For instance, if the price of gold is set at $500 per ounce, the value of the currency would be 1/500th of an ounce of gold. This system was used historically but was abandoned by most countries by the 1970s, with the United States ending its use in 1971. Today, currencies are typically fiat money, which means their value is not backed by physical commodities but is established by government decree.“

“What Is the Gold Standard? History and Collapse“

[Note: Excerpts specifically chosen by BitcoinInPeace.com]

“The gold standard is a monetary system in which the value of a country’s currency is directly linked to gold. With the gold standard, countries agree to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a price for gold, and it buys and sells gold at that price.“

“That fixed price is in turn used to determine the value of its currency. For example, if the U.S. hypothetically set the price of gold at $500 an ounce, the value of the dollar would be 1/500th of an ounce of gold.“

“The appeal of a gold standard is that it arrests control of the issuance of money out of the hands of imperfect human beings. With the physical quantity of gold acting as a limit to issuance, a society can potentially avoid the perils of inflation.“

“Gold Standard“

“The gold standard was also an international standard determining the value of a country’s currency in terms of other countries’ currencies. Because adherents to the standard maintained a fixed price for gold, rates of exchange between currencies tied to gold were necessarily fixed. For example, the United States fixed the price of gold at $20.67 per ounce, and Britain fixed the price at £3 17s. 10½ per ounce. Therefore, the exchange rate between dollars and pounds—the “par exchange rate”—necessarily equaled $4.867 per pound.

Because exchange rates were fixed, the gold standard caused price levels around the world to move together. This co-movement occurred mainly through an automatic balance-of-payments adjustment process called the price-specie-flow mechanism. Here is how the mechanism worked. Suppose that a technological innovation brought about faster real economic growth in the United States. Because the supply of money (gold) essentially was fixed in the short run, U.S. prices fell. Prices of U.S. exports then fell relative to the prices of imports. This caused the British to demand more U.S. exports and Americans to demand fewer imports. A U.S. balance-of-payments surplus was created, causing gold (specie) to flow from the United Kingdom to the United States. The gold inflow increased the U.S. money supply, reversing the initial fall in prices. In the United Kingdom, the gold outflow reduced the money supply and, hence, lowered the price level. The net result was balanced prices among countries.“

“Gold Standard“

“A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the late 1920s to 1932 as well as from 1944 until 1971 when the United States unilaterally terminated convertibility of the US dollar to gold, effectively ending the Bretton Woods system. Many states nonetheless hold substantial gold reserves.“

[11] www.WTFHappenedIn1971.com

Historical Note:  There are over 80 charts on this website which show that inflating the money supply and disconnecting our monetary system from reality damages our country and culture so broadly.  I recommend everyone take a serious look at the site and try to comprehend just how broad and pernicious the effects are when the state interferes with our lives.

The Breakdown

Let’s take a look at how the U.S. federal government has (mis-)managed the country’s finances using inflation and debt as its primary means of being so involved with our lives and see if we can come to any reasonable conclusions.

Financial Note: Many of the numbers below have come from a great website, www.USDebtClock.org^[1]. I highly recommend periodically taking a look at it to gain a better understanding and context for our nation’s fiscal peril.

High Level Breakdown Of The Federal Government’s Finances (11/10/2024)

Financial Note: I deliberately did not make mention of state, county, and municipal figures. Details around state, county, and municipal debts can be found in the end note^[4].

Peace & Prosperity?

The above numbers are scary.

And, they are peacetime numbers.

By comparison, take a look at the U.S.’s history in regards to debts during war time (i.e. The American Revolution, The U.S. Civil War, World War 1, World War 2).

Summary View^[5]

Detailed View^[6]

You’ll see that our debt-to-GDP ratios skyrocket during times of war.  While I don’t excuse the use of debt, I do understand the arguments for why the debts needed to be incurred at the time.  And, in fairness the federal government, after all of these wars (up to and including World War 2), it always brought the debt-to-GDP ratio back down to very reasonable levels by paying back the debts and retiring the bonds.

Historical Note:  Prior to 1913 and the creation of the Federal Reserve, the U.S. did a decent job of trying to bring its debts back down close to zero percent.  After 1913… not so much.

So, when taken within the context of wartime debt numbers, the fact that we have a peacetime debt-to-GDP that is greater than 100% (currently 123%) should be alarming to every single citizen (and the majority of the people of Earth).

This means that we realistically have no means of paying back our federal debt (not to mention our state and local debts)^[4] in peace, yet, financially speaking, in a time of peace, we are operating on a war-time footing, typically a period of time that is considered an emergency.

While one could make an entire college course just on analyzing governmental revenues, spending, budgeting, and debts, this is completely outside of the scope of this opening series.  Suffice it to say that our debts are actually systemic; we are legally required to spend money… even if we don’t have the funds.^[7]

Think about that for a moment – we are in debt because our laws required it (a la entitlement programs such as Medicaid, Medicare, and Social Security), not because we have some intense armed conflict with another nation.  This has moved our culture so deeply that we are actually addicted to spending and debt.  In other words, a country which is supposed to cover all of its capital expenditures (“CapEx”, think “infrastructure“) and operating expenses (“OpEx”, think “day-to-day activities“) with incoming revenues has completely lost control of its spending and will eventually, by definition, go broke.  When that happens, our credibility with the rest of the world will be completely shattered. Consequently, the entire bond market will be in a state of panic and the global credit markets will freeze over.

Speaking of laws which require spending money (and incurring massive debts), let’s take a look at the above line item “Future Unfunded Liabilities“.^[8]   As of the writing of this article (~early 2025), our future unfunded liabilities are $220T.  This is 6X our current debts (~$36T).  And, it’s growing.

In this context, future unfunded liabilities are essentially legal requirements for us to spend money that we don’t have in the future (called “non-discretionary” or “mandatory” spending).^[7] In accounting terms, we don’t have the assets to offset the corresponding liabilities.  As mentioned above, this spending is for future entitlement payments to recipients for programs such as Medicaid, Medicare, and Social Security.  Every second of every day, some of the Future Unfunded Liabilities “column” moves over to the “Federal Debt” column.  This means that theoretical liabilities of tomorrow become very real debts today.  And, this doesn’t include debts that are incurred from expenditures for the rest of the federal government’s operations and programs (i.e. law enforcement, infrastructure, defense, diplomacy, etc.).

Taking An Interest In Interest

Recently, we passed the point where it takes over one trillion dollars just to service the federal debt (paying the interest).  That is just to keep the wolf off our backs.  That doesn’t buy us any steel, concrete, infrastructure, electricity, health care, education, retirement funding, or defensive capability.

In fact, if we take a look at the top five federal budget line items, the interest on our federal debt has actually exceeded our defense spending^[9], Medicare^[10], and Medicaid^[11].  That means that Social Security^[12] is our #1 line item and the interest on our federal debt is #2.  That is as absurd as saying that, after our mortgage, merely the interest on our credit cards (not the principle) is our second largest household cost.

Financial Note: One could argue that Medicare and Medicaid should be combined into a singular accounting “bucket”. If we go with that grouping, then Medicare / Medicaid is the largest line item in our federal budget. This would be consistent with the USDebtClock display.

Taken a step further, the interest on the debt is growing so rapidly that, in the not-to-distant future, the interest on our debts will become our largest federal budget line item.

For those who feel that it would be decades before anything like that happens, let’s take a look at the interest rates associated with our federal debt.  As it stands right now, our “blended rate” of all of our bonds is ~2.75% ($1.0T interest payments ÷ $36.3T federal debt).  From a historical point of view, 2.75% is a very low interest rate which we have experienced for several years.  It is very uncommon for such low rates to be sustained for extended periods of time.  If our interest rates (via the federal bonds) were to double to 5.5%, this would still be a relatively low rate in the context of mankind’s history.  But, here is the rub – that doubling of interest rates would mean that our interest payments would also double… to $2T.  That would make our interest payments the #1 budget line item.  That would also make our interest payments 40% of our revenues ($2T interest ÷ $5.0T federal revenues).  In other words, before dollar one is spent on anything, the bond holders get their cut first. And, many of our bond holders are international, not domestic.

Going back to the financial breakdown above, the “Debt-to-GDP” metric is a common proxy for the health of an economy (similar to the health of a company looking at fundamental numbers the way Warren Buffet would look at a company for value investing).  While Debt-to-GDP is not a bad metric, a better measure of the health of a country (or company) is the “Federal Revenues-to-Debt” ratio (which I created because I have never seen it used before).  That is because the incoming revenues are the only way that these debts can be repaid.  As it stands now, given that we have over $2T in annual deficits (spending is greater than revenues), it is actually mathematically impossible for us to pay down our federal debt because, by the end of the year, there is no money left over with which to pay off the federal debt.

Looking at this on a global scale, the Hirschman Group found that 98% of countries which have a debt-to-GDP greater than 130% eventually go broke and default on their debt obligations (defaulting on their bonds).^[4] Our debt-to-GDP is 123% with no possibility of reversing.  If you believe otherwise, can I interest you on some U.S. bonds?…

“Go For Broke” Is Taken Too Literally

How many times has the U.S. government defaulted on its money?

Historical Note:  In other words, “How many times has our federal government broken its promise to uphold the terms and conditions of the U.S. dollar?”  For example, the original condition of the U.S. dollar to allow any person to convert any amount of dollars into gold directly with the federal government (known as “convertibility“).

One could argue that every time that the federal government changed the terms and conditions of the U.S. dollar (which was supposed to be a contract between the issuer and its counter-party, the holder of the dollars) that it actually defaulted on its responsibilities and liabilities.  For historical specifics of when the feds changed the terms and conditions of the U.S. dollar (USD):

• Federal Reserve Act of 1913^[13]
• Executive Order 6102 (1933)^[14]
• Gold Reserve Act of 1934^[15]
• August 15, 1971 taking us off of the Gold Standard^[16]

This long line of violations of the terms and conditions of the USD has led us down a dark path of debt, spending, and economic calamity.

As alluded to above, one could even argue that, in general, our current federal debts are in default, too, because of the fact that we will never be able to repay our debts.  Our debts (and the interests on our debts) have completely eclipsed our ability to fulfill our financial obligations.  By definition, we have created a “Ponzi scheme“.^[17]

Anyone could rationalize our situation by claiming that these debts are “just numbers on paper“.  The problem with this dismissive argument is two-fold:

• The bonds that represent that debt are the means by which our federal government is funding something very real – our entitlement programs.  If our bonds are seen as worthless then our ability to fund these entitlement programs evaporates.
• Governments, institutions, and people all around the world have invested in our federal, state, county, and municipal bonds with the serious expectation that these debt instruments will be repaid along with the corresponding interest on the debts.  In fact, our entire global financial system is built upon these promises, promises that cannot, by mathematics, be fulfilled.  It has evolved into the proverbial house of cards that will negatively affect every single balance sheet, portfolio, government agency, institution, and person who uses money.

We are broke.  And, flying on fumes.

Broader Look

So far, we’ve been looking solely at the USD.  Now, let’s take a broader look to see how fiat currencies fair in general.

Monetary Note:  “Fiat currencies” (or “soft money”) are often considered to be a type of money which has no tie to any commodity, such as gold, and, thus, no basis in reality.  In short, fiat currencies are that medium of exchange which can be “wished into existence” without any tie to reality (unlike “good money” or “commodity money” such as gold which requires actual work to produce).

The average lifespan of fiat currencies is 27 years.^[18]

Historical Note:  One could argue that the “lifespan” of a currency is only as long as the terms and conditions of that currency are in effect, not necessarily for the lifetime of a country (which can be for centuries).  For example, as discussed above, over our 249 year history, the USD has actually had at least four different monetary systems (the founding of the country, the Federal Reserve Act of 1913, Executive Order 6102 of 1933 and the Gold Reserve Act of 1934, and President Nixon taking us off of the gold standard in 1971).  Thus, for the U.S. dollar, that comes to an average of 62 years per monetary regime.

Eventually, all governments which use “soft money” or fiat currencies go broke and bust their monetary systems because they always engage in deficit spending (spending more than they make within one year), debt, and borrowing (via bond issuance).

100% of the countries which use soft money have the exact same spending and debt problems that the U.S. has.  Going into detail on how this happened for all of these currencies is beyond the scope of this opening series but this is a topic which will be addressed in more detail in future articles.  Suffice it to say that the Hirschman Capital^[4] study mentioned above does a good job of providing the historical basis for the claim that fiat currencies are so toxic to the well-being of a nation and its citizenry.

Fortunately, we don’t need to know the details as long as we have the common factor to all of them – human nature.  It is human nature for some people (politicians and bureaucrats) to lie for their own benefit (to retain power and influence) and other people (the citizenry) to accept and rationalize the lie.  If we simply start from those first principles then we can derive what is going to happen from there.  And, 2,100 years of monetary history confirms this.  We will cover that 2,100 years of history in more detail in a future article in this opening series.

Historical Note: This quote comes to mind:  “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance…” — James Madison

As it stands right now (2025), all countries use a “fiat standard” (fiat currency, soft money, devoid of any tie to reality) and, like all addictions, fiat currencies are toxic to the constitution of our nations and their citizenry.

Thus, is it safe to assume that eventually, all countries will eventually go broke by their own hands from conditions of their own making?  I think that we will all arrive at the same answer by the end of this opening series.

Next Steps

In our next article, here, we will examine the reason why fiat currencies (soft money) are so effective at permeating the popular culture and financial systems even though they are so toxic and addictive.

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End Notes, References, & Citations

[1] The numbers I presented are from www.USDebtClock.org .  This site does a great job of providing good faith estimates on all of the metrics that it displays.  That said, getting exact numbers are impossible as many of them represent topics so massive (i.e. GDP, Federal Debt, Future Unfunded Liabilities, demographics, etc.) that merely defining what they are is a monumental task, not to mention measuring them with any sort of high precision (i.e. +/- 1%) is essentially unfeasible.

[2] “High Level Breakdown Of The Federal Government’s Finances”

Explanation of the metrics:

• Federal Debt: “The National Public Debt Outstanding represents the face amount or principal amount of marketable and non-marketable securities currently outstanding.” (Ref.: USDebtClock.org / U.S. Treasury Dept.)
• Federal Annual Deficit: “The difference between the total amount spent by Congress and the revenue received by The Internal Revenue Service.” (Ref.: USDebtClock.org / U.S. Treasury Dept.)
• Federal Interest on the Debt: “The interest on the debt includes U.S. treasury notes and bonds, Government Account Series (GAS),(SLG’s) and other special purpose securities.” (Ref.: USDebtClock.org / U.S. Treasury Dept.)
• Interest On The Debt ÷ Federal Revenues: Author’s Note: This is the amount of the U.S. federal revenues which are consumed by the interest payments on federal debts. The higher the number, the less net revenues which are available for other expenditures (i.e. Social Security, defense). (Ref.: blog author)
• Interest On The Debt ÷ Federal Spending: Author’s Note: The is the amount of the U.S. federal expenditures that the interest consumes. The higher the number, the more it contributes to the annual deficit and the more financial strain it creates. (Ref.: blog author)
• Future Unfunded Liabilities: “Future unfunded liabilities refer to the projected shortfall in funds needed to pay for promised benefits, such as pensions, retiree health care, and other post-employment benefits, in the United States.” (Ref.: Brave search engine summary) Author’s Note: The fact that our future unfunded liabilities are 6X is a death knell for the U.S. Bankruptcy and completely financial insolvency are guaranteed. (Ref.: blog author)
• Federal Debt-to-GDP: “The US national debt divided by the Gross Domestic Product” (Ref.: USDebtClock.org / U.S. Treasury Dept.) Author’s Note: This metric is a commonly used measure for the financial health of a nation. It is not a bad measure but it blatantly ignores a nations true ability to pay off its debts. Part of what makes this such an incomplete measure is that there is an unstated (and mistaken) assumption that 100% of a nation’s economic activity will go towards repaying its debts. (Ref. blog author)
• Federal Debt-to-Revenues: Author’s Note: Since federal revenues are the only means of paying down the debt, I devised this metric as a way of expressing just how dire the situation is since it shows how far its debts have outstripped its ability to repay those debts. While the above “Federal Debt-to-GDP” ratio is very commonly used and not a bad measure of the financial health of a country, I prefer to use this metric since the federal revenues are the only way that the debt can ever be paid. Hence, it is a more accurate measure of the financial health of a nation. In this case, the federal debts are 7X greater than federal revenues. In my humble opinion, this is a death knell of the U.S. (Ref.: blog author)
• Global Debt-to-GDP: Author’s Note: This metric is a globally extended ratio of the above “Federal Debt-to-GDP” ratio. As metrics go, it isn’t a bad measure of the health of the world’s nations’ finances. The 350% number in the chart should be concerning for everyone. (Ref.: Lausanne Movement)
• Countries which reach 130% Debt-to-GDP go broke: Author’s Note: This is the number of countries which have defaulted on their debts when they reach a debt-to-GDP ratio of 130%. I cover this metric in more detail below. [3X]

[3] A Hirschman Capital study looked at 52 countries over the timeline of 1821 to 2020. It found that any country which surpasses a debt-to-GDP ratio of 130% eventually goes broke and defaults on its debts. As of the publishing of this article, of the 52 countries which reached a debt-to-GDP ratio of 130%, 51 of them ended up defaulting on their debts. Due to our fiat currency and the complete mismanagement of our country and treasury, we are looking at the permanent financial insolvency of our country. As it stands now, Japan is the only outlier. But, if we look at Japan’s results they have had 30 years of stagflation and no real (inflation adjusted) GDP growth.

More details around the Hirschman Capital study can be found below:

• https://palisadesradio.ca/brian-hirschmann-the-most-dangerous-time-in-financial-history/
• https://www.reddit.com/r/CryptoCurrency/comments/nnwpl1/since_1821_98_of_countries_that_hit_130_debtgdp/
• https://www.bonnerprivateresearch.com/p/the-grand-finale

[4] States’ Debts: $1.33T; Counties’ & Municipalities’ Debts: $2.5T. (Ref.: USDebtClock.org)

[5] “US Federal Debt since the Founding“

[6] “The Long Story of U.S. Debt, From 1790 to 2011, in 1 Little Chart“

[7] Discretionary vs. Non-Discretionary Spending resources

• “Mandatory vs. discretionary spending in Congress“
• “ECO 2013 Macroeconomics — Chapter 10.02: Discretionary vs. Mandatory Spending“

[8] Future Unfunded Liabilities

Financial Note:  The seemingly banal topic of future unfunded liabilities (FUL) is actually quite fascinating and scary and every single American should be severely concerned.  At first glance, merely having a promise to spend money at some undefined time in the future might not seem like a big deal.  The real issue is that those promises to spend money are not offset by any assets which can be used to pay those moneys.  Hence, the term “future unfunded liabilities“.

My favorite example (if one can have a “favorite” future unfunded liability) is the California state employee’s pension plan, “California State Employee Pension” or “CalPERS”.  Currently, they have a FUL of >$1T (depending on the “discount rate” that one uses).  This means that the CalPERS pension plan does not have enough assets (cash, bonds, stocks, etc.) to cover the payout that they will inevitably have to cover when that state’s employees start to collect on their pension plans.  Of course, there are retirees who are already collecting on their pension.  The problem is that the pension liabilities (the promise to pay retired employees at some time in the future) have grown faster than the assets in the plan.  Add to that that the number of retirees who are collecting payments against the pension are growing faster than the incoming assets.  Those two factors are causing the FUL to accelerate.  Eventually, the whole system will go bankrupt or the federal government will have to cover the liabilities by printing money out of thin air and drive up inflation for everyone in the country (and the world at large). 

If anyone is interested, I recommend also looking into the topic of “expected growth rates” of pension plans.  In short, these pension plans promised lavish average annual growth rates (i.e. 7.5%) as a means of enticing people to work for the government.  But, having one slow year, i.e. 6.5%, means that the next year (or subsequent years) will have to compensate, i.e. 8.5%, which is exceedingly difficult given the fact that pension plans are supposed to be more conservative in their approach yet are (unreasonably) expected to generate these outsized returns.  The completely unreasonable expectations cause the FUL (via pension payouts) to grow faster than the actual market returns.

This isn’t just limited to the federal government and CA.  Nearly every single state, county, and municipality is facing the exact same issue.  Finding a responsible (and ethical) government agency is quite rare. I asked the Brave search engine to provide a summary of “future unfunded liabilities“. Its results are below:

Brave search engine summary “future unfunded liabilities”:

“Future Unfunded Liabilities

Future unfunded liabilities refer to the projected shortfall in funds needed to pay for promised benefits, such as pensions, retiree health care, and other post-employment benefits, in the United States. These liabilities are a significant concern for governments, pension funds, and taxpayers alike.

Key Statistics:

• Federal Government: The federal government’s unfunded liabilities for Social Security and Medicare have grown to $93.1 trillion, or nearly 400% of annual GDP, as of 2021. (Source: James C. Capretta, “Federal Unfunded Liabilities Are Growing More Rapidly Than Public Debt”)
• State and Local Governments: Many state and local governments face significant unfunded pension liabilities, with some estimates exceeding $1 trillion. (Source: “Pension Basics: Unfunded Liabilities (aka Pension Debt)” by Equable)
• Corporate Pensions: Unfunded corporate pension liabilities can also be substantial, with some companies facing billions of dollars in unfunded obligations. (Source: “What Are Unfunded Liabilities?” by various sources)

Causes and Consequences:

• Demographic Changes: Aging populations and declining birth rates contribute to increased unfunded liabilities, as there are fewer workers to support retirees.
• Inadequate Funding: Insufficient contributions to pension funds and inadequate investment returns exacerbate the problem.
• Rising Healthcare Costs: Increasing healthcare expenses for retirees strain pension funds and contribute to unfunded liabilities.
• Tax Revenue Shortfalls: Decreased tax revenue or reduced economic growth can limit the ability to fund promised benefits.
• Impact on Taxpayers: Unfunded liabilities may lead to future tax increases, reduced government services, or even default on obligations.

Mitigation Strategies:

• Increase Funding: Governments and corporations can increase contributions to pension funds or adjust investment strategies to better match liabilities.
• Reform Benefits: Modifying benefit structures or increasing the retirement age can help reduce unfunded liabilities.
• Investment Strategies: Pension funds can adopt more conservative investment approaches or diversify portfolios to minimize risk.
• Private Sector Solutions: Encouraging private sector solutions, such as annuities or defined contribution plans, can help reduce reliance on government-funded pensions.
• Transparency and Accountability: Improving transparency and accountability in pension fund management can help identify and address unfunded liabilities earlier.

Conclusion:

Future unfunded liabilities pose a significant challenge for governments, pension funds, and taxpayers. Understanding the causes and consequences of these liabilities is crucial for developing effective mitigation strategies. By increasing funding, reforming benefits, adopting prudent investment strategies, and promoting private sector solutions, we can work towards a more sustainable retirement system and reduce the burden on future generations.” <End of Summary>

“Federal Unfunded Liabilities Are Growing More Rapidly Than Public Debt“

“Debt and Unfunded Liabilities“

• “Unfunded liabilities stress state and local budgets and signal painful future tax increases just as much as bond obligations. Government debt is growing rapidly at all levels.” — Tom Savidge

“States’ Unfunded Pension Liabilities Persist as Major Long-Term Challenge“

• “States owed a total of $1.25 trillion in unfunded pension benefits in fiscal 2019, the final year before the pandemic. Despite a quick but deep economic downturn triggered by COVID-19, Pew projections in September 2021 indicated that pension debt had decreased below $1 trillion by the end of fiscal 2021, and state pension plans reached the highest-funded level since the Great Recession.“

“Unfunded Liabilities for State Pension Plans in 2023“

[9] Defense Spending (Brave search engine summary: “defense federal expenditures 2024“)

“US Defense Expenditures 2024

The Department of Defense’s fiscal year 2024 budget was signed into law on December 22, 2023, at $841.4 billion, which is slightly less than the initial request of $849.8 billion. This budget reflects a 2.6% increase from the previous year. The budget includes funding for military operations, personnel, research, development, and procurement of new items.” <End of Summary>

“How much does the US spend on the military?“

• “Since 1980, defense spending has risen by 62%, climbing from $506 billion to $820 billion by 2023, after adjusting for inflation.“

“Military budget of the United States“

• “Budget for FY2024:  As of 10 March 2023 the fiscal year 2024 (FY2024) presidential budget request was $842 billion.“

[10] Medicare Federal Expenditures

Brave search engine summary: “Medicare federal expenditures“

“Medicare Federal Expenditures

Medicare federal expenditures in fiscal year 2024 are projected to be $858 billion, according to the Congressional Budget Office (CBO). In 2023, Medicare expenditures, net of offsetting receipts, totaled $839 billion, representing 14 percent of total federal spending. Medicare is the second largest program in the federal budget and is expected to grow significantly in the coming years due to the retirement of the baby-boom generation and the rapid growth of per capita healthcare costs. By fiscal year 2053, Medicare spending is projected to rise from 3.1 percent of gross domestic product (GDP) in fiscal year 2023 to 5.4 percent of GDP.” <End of Summary>

Brave search engine summary:  “when will the interest on federal debt exceed medicaid“

“Interest on Federal Debt Exceeds Medicaid

According to the Congressional Budget Office (CBO) projections, interest on the federal debt already exceeded Medicaid spending in 2024, surpassing both defense and Medicare spending. By the end of Fiscal Year 2024, net interest payments are projected to total $870 billion, which is more than the estimated $851 billion for Medicare and likely exceeds Medicaid spending as well.” <End of Summary>

“Budget Basics: Medicare“

• “Medicare is the second largest program in the federal budget: 2023 Medicare expenditures, net of offsetting receipts, totaled $839 billion — representing 14 percent of total federal spending.“

[11] Medicaid Federal Expenditures

Brave search engine summary:  “Medicaid federal expenditures“

“Medicaid Federal Expenditures

Medicaid federal expenditures have been increasing over the years, reflecting the growing costs associated with the program. Here are some key points about Medicaid federal expenditures:

2022: The total Medicaid expenditure reached $824 billion, with federal expenditures accounting for a significant portion of this amount.” <End of Summary>

[12] Social Security Federal Expenditures

Brave search engine summary: “social security federal expenditures 2024“

“Social Security Federal Expenditures 2024

In 2023, the federal government spent $1.35 trillion on Social Security, which accounted for 22% of the total federal budget. This expenditure is projected to support nearly 68 million people monthly in 2024. Here are the details of Social Security expenditures:

• Total Expenditure in 2023: The federal government spent $1.35 trillion on Social Security.” <End of Summary>

“How much does the US spend on Social Security? Is it sustainable?“

• “The largest public program in the US is supporting nearly 68 million people per month in 2024.“
• “The federal government spent $1.35 trillion on Social Security in fiscal year 2023. This accounted for 22% of the total federal budget.“

“Policy Basics: Where Do Our Federal Tax Dollars Go?“

• “In 2023, 21 percent of the budget, or $1.4 trillion, was spent on Social Security, which provided monthly retirement benefits in March 2023 averaging $1,833 to 49.1 million retired workers.“

Financial Note:  The Social Security program is expected to become insolvent (bankrupt) by 2033 – 2035

Brave search engine summary:  “when will social security become insolvent“

“When Will Social Security Become Insolvent

According to the latest projections, Social Security’s combined trust funds are expected to be depleted by 2035, leading to insolvency. However, even after this date, Social Security could still pay approximately 83% of scheduled benefits using its tax income if no further actions are taken to shore up the program.” < End of Summary >

“Social Security and Medicare Continue on Path to Insolvency, Trustees Confirm“

“CBO: Social Security is Ten Years from Insolvency“

[13] The Federal Reserve Act Of 1913

• This placed a quasi-public agency in charge of our money supply (instead of Congress or the Treasury Dept.) and began the path of severing the link between our gold certificates and silver certificates (“green backs“) and the corresponding backing assets, gold and silver.
• https://www.federalreserve.gov/aboutthefed/fract.htm
• https://en.wikipedia.org/wiki/Federal_Reserve_Act

[14] Executive Order 6102

• President Roosevelt’s violation of the 4th Amendment of the Constitution by mandating by fiat (by capricious decree) that personal ownership of gold (in the form and shape of gold coins and bullion) to be illegal and requiring all owners to sell their gold to the government without permission.  This EO even went as far as to mandate that anyone who went to open their safe deposit box in a bank vault had to have a bank official there to observe if there were any gold in the safe deposit box and confiscate it immediately without the customer’s permission.
• An interesting case:  “Frederick Barber Campbell (who was actually convicted under the Gold Reserve Act’s predecessor, Executive Order 6102), was convicted of hoarding gold when he tried to withdraw 5,000 troy ounces of gold he had at Chase National Bank. Gus Farber, a diamond and jewelry merchant was arrested with his father and 12 others for illegally selling $20 gold coins without a license. The Baraban family was arrested for operating a gold scrap business under a false license. Foreign companies even had their gold confiscated. The Uebersee Finanz-Korporation, a Swiss banking company, had $1,250,000 in gold coins that were being held in the United States.” (https://en.wikipedia.org/wiki/Gold_Reserve_Act)

[15] The Gold Reserve Act Of 1934

• This congressional legislation was the legislative version of Executive Order 6102.
• Beyond making Executive Order 6102 law, this legislation made it illegal for companies to use “Gold Clauses“, whereas previously companies could price their contracts in gold, not dollars, so as to preserve the financial value of the goods and services being sold.
• Roosevelt justified the Gold Reserve Act of 1934 by saying “Since there was not enough gold to pay all holders of gold obligations, … the Government should in the interest of justice allow none to be paid in gold.“

Brave search engine summary “gold reserve act of 1934 contracts“:

“Gold Reserve Act of 1934

The Gold Reserve Act of 1934 had significant implications for contracts containing gold clauses.  Prior to the Act, many contracts, including bonds, loans, and other financial instruments, included provisions that tied payments or values to the gold standard.  With the Act’s passage, the government’s power to regulate contracts with gold clauses was established.

Key Provisions:

Suspension of Gold Standard: The Act suspended the gold standard, effectively ending the convertibility of the US dollar to gold at a fixed rate.

Regulation of Gold Clauses: The government was empowered to regulate contracts containing gold clauses, which had previously been considered sacrosanct.

Devaluation of Gold: The Act allowed the President to devalue the gold dollar by up to 40%, which was exercised shortly after its passage.

Impact on Contracts:

Invalidation of Gold Clauses: The Supreme Court, in cases such as Norman v. Baltimore & Ohio Railroad (1935) and United States v. Bankers Trust Co. (1935), ruled that contracts containing gold clauses were invalid, as they conflicted with the government’s new monetary policy.

Repricing of Debt: The devaluation of gold led to a significant increase in the value of outstanding debt obligations, as the fixed gold-based payments became much more valuable.

Modification of Contract Terms: Many contracts were renegotiated or restructured to reflect the new monetary reality, with parties agreeing to new payment terms or interest rates.

Examples of Contracts Affected:

Bonds: Government and corporate bonds with gold clauses were revalued or repaid in new currency, with interest rates adjusted accordingly.

Loans: Commercial loans with gold-based interest rates or repayment terms were renegotiated or restructured to reflect the changed monetary environment.

International Trade Agreements: Trade agreements and treaties that relied on the gold standard were revised or renegotiated to accommodate the new monetary system.

Legacy:

The Gold Reserve Act of 1934 marked a significant shift in the US monetary system, from a gold-based standard to a fiat currency system. The Act’s impact on contracts containing gold clauses had far-reaching consequences, including the invalidation of such clauses, repricing of debt, and modification of contract terms. The legacy of the Act continues to influence US monetary policy and contract law to this day.” < End of Summary >

[16] President Nixon taking the U.S. off of the Gold Standard on Aug. 15, 1971:

This removed the final tie between the USD and gold as well as completely broke the Bretton Woods Agreement (which all major countries were dependent upon us maintaining a connection to gold). This unilateral decision by one man affected the entire planet, including all debt denominated in dollars, the entire bond market, and the entire global banking system.  That one person has that much power should concern everyone.

• The Bretton Woods System
• https://en.wikipedia.org/wiki/Nixon_shock
• “45 Years Ago Today Richard Nixon Killed The Gold Standard – 08/15/1971“
• August 15, 1971 – Richard Nixon Closes the Gold Window
• The Challenge of Peace – President Nixon’s Address to the Nation on A New Economic Policy

Brave search engine summary “August 15 1971”:

“August 15 1971

On this day, President Richard Nixon announced a series of economic measures, collectively known as the “Nixon Shock,” which significantly altered the international monetary system. The key actions were:

• Closure of the Gold Window: Nixon suspended the convertibility of the US dollar to gold, effectively ending the Bretton Woods system. Foreign governments could no longer exchange their dollars for gold at a fixed rate of $35 per ounce.
• Wage and Price Freeze: Nixon imposed a 90-day freeze on wages and prices to combat inflation, which was rising at 5.84% in 1971.
• Import Surcharges: The US imposed surcharges on imports to reduce the trade deficit and protect domestic industries.

These measures had far-reaching consequences:

• The Bretton Woods system, established in 1944, was effectively dismantled, marking the end of the dollar’s peg to gold.
• The US dollar began to float freely on foreign exchange markets, leading to significant fluctuations in its value.
• The Nixon Shock triggered a global economic crisis, with widespread currency devaluations, trade disruptions, and inflationary pressures.
• The event paved the way for the development of fiat currencies and the rise of floating exchange rates as the new norm in international finance.

In the years that followed, the global economy underwent significant changes, including:

• The collapse of the Bretton Woods system and the emergence of a new international monetary order.
• The rise of floating exchange rates and the increasing importance of central banks in managing currency markets.
• The growth of international trade and investment, as countries adapted to the new economic landscape.
• The development of new economic theories and policies, such as monetarism and supply-side economics, which sought to address the challenges posed by the Nixon Shock.

Overall, August 15, 1971, marked a pivotal moment in economic history, as the world transitioned from a fixed-exchange-rate system to a more flexible and decentralized international monetary order.” <End of Summary>

[17] Ponzi Scheme

“Ponzi Scheme“: “A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.[1] Named after Italian businessman Charles Ponzi, this type of scheme misleads investors by either falsely suggesting that profits are derived from legitimate business activities (whereas the business activities are non-existent), or by exaggerating the extent and profitability of the legitimate business activities, leveraging new investments to fabricate or supplement these profits. A Ponzi scheme can maintain the illusion of a sustainable business as long as investors continue to contribute new funds, and as long as most of the investors do not demand full repayment or lose faith in the non-existent assets they are purported to own.“

“Ponzi Scheme“: “A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.

With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.

Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp speculation scheme.“

[18] Average Life Span Of Fiat Currencies

Historical Note: There is a range on the average lifetime of fiat currencies of 27 – 80 years.  In the broader context of global history, this is tiny compared to those countries which had a hard money standard (most of which survived for centuries while they maintained their true monetary standards). In a future post, we will make the distinction between “soft money” (fiat currency) and “hard money” (a.k.a. “good money“).

Brave search engine summary “what is the average life span of fiat currencies“:

“Average Fiat Currency Lifespan

Based on the search results, there is no single definitive answer to this question. However, here are some estimates and ranges mentioned in the search results:

• 27 years: A study by DollarDaze.org (debunked by others) claimed that the average lifespan of a fiat currency is 27 years.
• 35 years: The article “Fiat Currency Graveyard: A History of Monetary Folly” suggests that the average lifespan of a fiat currency is about 35 years.
• 40 years: Another source mentions that the mean average lifetime of a paper currency is 40 years before it fails.
• 25 years (median): The same source mentions that the median average lifespan of a paper currency is about 25 years.
• 80 years (at 3% interest rate): One Quora answer suggests that the average lifespan of a fiat currency depends on the interest rate charged from the issuer, and at a 3% interest rate, it would be approximately 80 years.

It’s essential to note that these estimates vary, and the actual average lifespan of fiat currencies might be different. The complexity of monetary systems, economic factors, and political decisions can influence the longevity of a fiat currency. Additionally, the search results highlight the importance of considering the historical context, sample sizes, and methodologies used to calculate these estimates.

In summary, while there is no consensus on a single average lifespan for fiat currencies, the search results provide a range of estimates between 25-80 years, with some sources suggesting a median or mean average lifespan around 25-40 years.” <End of Summary>

Previously

In the previous article (here), we looked at the magnitude of the state’s erosion of your life’s work and how that affects your ability to secure your future.

Let’s take a break from the numbers and look instead at where government is stepping into your lives (rarely doing it with your explicit permission and often completely without your knowledge).

(The title of this article comes from this clip.)

A Complex Of Complexes

Wikipedia provides a good working definition of “industrial complex”:

“The industrial complex is a socioeconomic concept wherein businesses become entwined in social or political systems or institutions, creating or bolstering a profit economy from these systems. Such a complex is said to pursue its own interests regardless of, and often at the expense of, the best interests of society and individuals. Businesses within an industrial complex may have been created to advance a social or political goal, but mostly profit when the goal is not reached. The industrial complex may profit financially, or ideologically, from maintaining socially detrimental or inefficient systems.” ^[3]  [emphasis added by me]

But, why stop there with the military?  If we go with the general idea of industrial complex, then we can actually apply this to a multitude of sectors, not just our military (the Department Of Defense).  So, let’s do just that.

Below, I have identified what I consider to be thirty two different industrial complexes in the U.S.:

This list probably covers more than 95% of total political, civic, economic, social, and cultural activities in the U.S.

Note: By the way, if you think of any others, then please feel free to reach out to me to let me know. It’s important to be comprehensive.

A Timeless Tumor

I think it is incumbent for all of us to ask how our federal government has gone from a mere four (rather large) pages of The Constitution of the United States of America ^[4] to legislating, regulating, and codifying well over 95% of our lives with hundreds of thousands of pages of laws, regulations, rules, codes, and ordinances.

Let us consider for a moment if any industrial complex could ever manifest and endure without the active participation and command by the state.  No industrial complex could exist, much less persist, without the state.  In fact, the above thirty two industrial complexes are merely extensions of the will of the state.  Benito Mussolini would be proud.

Funding Fascism

Mussolini had a famous quote, his epigram, “Everything within the state, nothing against the state, nothing outside the state,” ^[5] which summarized quite well the prevailing thought at the time of the proper role of government in a fascist state.  His ideology rejected liberal democracy, communism, and socialism, and emphasized the supremacy of the state and the nation over individual rights and freedoms.

Note:  I recommend looking into the history and implementation of fascism which I have summarized in the end notes below.  ^[6]

Given this perspective, we can ask more detailed and critical questions:

• Have we not entered a multi-generational paradigm whereby government continues to infiltrate more and more of our lives at the expense of the people?
• As a consequence of government having preempted our ability to control our own lives, have our critical thinking skills, moral compasses, and sense of self-responsibility atrophied, causing us to become rudderless as we attempt to “[navigate] by the stars under cloudy skies“? ^[7]
• Is it possible that the path towards tyranny doesn’t need a leader but is, instead, an emergent outcome, the result of decades of the state acting as a black hole wherein all resources naturally accrete and tyranny arises over time?

“How Did I Get Here??” ^[8]

Much like David Byrne, from the progressive rock group, “The Talking Heads“, singing “Once In A Lifetime“^[8], we can paraphrase his key question, “How did we get here??“

Much like a previous article (here), where we examined first principle questions regarding how our federal government has managed to grow without constraint and accountability to the people, let’s ask a few more first principle questions to inquire how we got here:

• What is the mechanism that has allowed our governments (federal, state, county, and local) to deploy and maintain such vast legions of legislative, regulatory, administrative, bureaucratic, auditing, and enforcement personnel which use and consume facilities, equipment, and supplies on a scale previously unknown?
• How are these legions able to grow like cancers year after year, without fail or interruption?
• How are our governments able to fund these massive authorities in so many sectors of our lives?
• What is the one thing that, if it were stripped away from the control by the federal government, would completely remove the state’s ability to operate on a grand scale?

I think such fundamental thinking is critical to getting to the root of our problems here in the U.S. ^[9]

Evaporating The State

Pivoting from the previous section, I think any reasonable person who values freedom and individual liberty would ask these questions:

• What is the natural check on this virtual leviathan of command and control?
• How do we break out of this multi-generational cycle of tending towards tyranny?
• Is there a single root cause which has been corrupted and which enables government to grow unchecked which we can remedy?

As before in my previous article (here), by the end of this opening series, I hope that we all arrive at the same conclusion.

A common refrain that I hear is the defeatist’s stance, “It’s too late; the state already has too much power.  There is no way to fight back.  We’ve already lost.“

Before adopting such a submissive posture, I’d like to propose an alternative way of looking at things.

What if the government couldn’t…?

• … pay their vast army of employees?
• … fund abusive law enforcement?
• … pay for the bloated bureaucrats?
• … buy the surveillance state’s ubiquitously deployed equipment?
• … pay for the electricity to run that surveillance equipment?
• … hire the legions of vendors, contractors, and suppliers?
• … go into perpetual debt, ad hoc, ad infinitum, ad nauseum?
• … abuse the money printers anymore??

If the government doesn’t have the means to pay to legislate, regulate, control, and micromanage the above thirty two sectors then the state as we know it simply…

…evaporates.

Next Steps

In our next article, here, we quantify how badly the U.S. federal government has mismanaged its finances and what it means for all of us.

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End Notes, References, & Citations

[1] “Joker Harvey Dent Two Face Hospital Scene The Dark Knight“

[2] “Dwight D. Eisenhower – Farewell Speech – Address to the Nation – Military Industrial Complex Warning“

[3] “industrial complex”

[4] U.S. Constitution

https://www.archives.gov/founding-docs/downloads

https://constitutioncenter.org/media/files/constitution.pdf

https://uscode.house.gov/static/constitution.pdf

[5] Mussolini’s Epigrame “Everything Within The State“:

Mussolini had a quote, “Everything Within the State, Nothing Against the State, Nothing Outside the State,” which summarized quite well the prevailing thought at the time of the role of government in a fascist state.

Ultimately, the point of a fascistic state was total control of everything within a nation, totalitarianism.  The purpose of this totalitarian state was to engage in social engineering on a mass scale. A more detailed explanation can be found here.

The Brave search engine does a fine job of summarizing Mussolini’s intentions. (Brave search engine:  “Mussolini everything in the state“)

Mussolini’s State Ideology

Mussolini’s Totalitarian Vision: “Everything within the State, nothing outside the State, nothing against the State”

Benito Mussolini, the Italian dictator, famously declared that “Everything within the State, nothing outside the State, nothing against the State” (“Tutto dentro lo Stato, nulla fuori lo Stato, nulla contro lo Stato.“). This phrase encapsulates his totalitarian ideology, which aimed to subsume all aspects of Italian life under the authority of the state.

Imperfect Totalitarianism

Fascist Italy, under Mussolini’s leadership, was an imperfect totalitarian society. While it sought to eliminate competition for power and control, it was unable to fully eliminate the influence of the Catholic Church, as evident in the 1929 Lateran Pacts. Additionally, Mussolini’s own deposition by King Vittorio Emmanuele III in 1943 demonstrates that even the dictator himself was not above the state.

Nazi Germany: The Archetypal Totalitarian State

In contrast, Nazi Germany under Adolf Hitler is often regarded as the archetypal totalitarian state. Its powerful propaganda and political police (Gestapo) effectively controlled all aspects of thought and behavior within the regime.

Mussolini’s Epigram

Mussolini’s epigram, “Everything within the State, nothing outside the State, nothing against the State,” summarized his vision for a society where the state dominated every aspect of life. This ideology aimed to politicize human existence, rendering individuals subservient to the state.

Everyday Life in Fascist Italy

Historians have explored the ways in which everyday life in Fascist Italy was shaped by the regime’s totalitarian project. From social encounters and relationships to gestures, clothing, and comportment, Italians negotiated, resisted, and exploited the dictates of Mussolini’s regime. The state’s engagement with Italians involved coercion and persuasion, leisure and recreational practices, food consumption, and intimate networks.

Limits of Totalitarianism

Despite Mussolini’s ambitions, his regime’s totalitarian project had limits. Opportunities for agency and resistance existed, particularly in the ways Italians adapted to and subverted the regime’s rules. The complexity of everyday life in Fascist Italy highlights the difficulties of achieving a truly totalitarian society.

In Conclusion

Mussolini’s phrase, “Everything within the State, nothing outside the State, nothing against the State,” represents a totalitarian ideology that aimed to dominate every aspect of Italian life. While Fascist Italy was an imperfect totalitarian society, it serves as a significant example of the regime’s attempts to shape and control the daily lives of its citizens.

Fascism definitions:

• “A populist political philosophy, movement, or regime (such as that of the Fascisti) that exalts nation and often race above the individual, that is associated with a centralized autocratic government headed by a dictatorial leader, and that is characterized by severe economic and social regimentation and by forcible suppression of opposition.” (Ref. here)
• “Corporatism because it is a merger of state and corporate power” ― Benito Mussolini (Ref. here)

[6] Fascism (Brave search engine “fascism mussolini definition“)

Mussolini’s Definition of Fascism

Based on the provided search results, here is a comprehensive definition of fascism and its relation to Benito Mussolini:

Fascism: A political ideology and mass movement that emphasizes:

• Autocratic government: A centralized, authoritarian state with a dictator or leader holding absolute power.
• Militarism: A strong emphasis on military power, nationalism, and the glorification of war.
• Supremacy of the nation: The belief that the nation is superior to the individual, with the state prioritizing national interests over individual rights and freedoms.
• Contempt for democracy: A rejection of liberal democracy, parliamentary systems, and representative government.
• Hatred of communism and socialism: A strong opposition to Marxist ideologies and labor movements.
• Natural social hierarchy: A belief in a natural order of society, with elites and authority figures dominating the masses.

Mussolini’s Fascism: Mussolini’s fascist ideology, as outlined in his 1932 entry for the Italian Encyclopedia, emphasizes:

• The State as an absolute: The fascist state is conceived as a directing force, guiding the development of society, with the individual’s freedom and autonomy limited.
• National unity: The goal of fascism is to create a unified, disciplined nation, with citizens subordinating their individual interests to the state’s authority.
• Economic corporatism: The merger of state and corporate power, with the state controlling the economy through corporative organizations and regulating industries.
• Authoritarianism: Mussolini’s regime was characterized by heavy-handed repression, censorship, and surveillance, with opposition parties and individuals silenced or persecuted.

Key quotes:

• “The Fascist accepts life and loves it, knowing nothing of and despising suicide: he rather conceives of life as duty and struggle and conquest, but above all for others—those who are at hand and those who are far distant, contemporaries, and those who will come after.” (Mussolini, 1932)
• “Fascism denies that the majority, by the simple fact that it is a majority, can direct human society; it denies that numbers alone can govern by means of a periodical consultation, and it affirms the immutable, beneficial, and fruitful inequality of mankind, which can never be permanently leveled through the mere operation of a mechanical process such as universal suffrage.” (Mussolini, 1932)

In summary, Mussolini’s fascism was a unique blend of authoritarianism, militarism, and corporatism, aimed at creating a unified, disciplined nation under his absolute leadership. His ideology rejected liberal democracy, communism, and socialism, and emphasized the supremacy of the state and the nation over individual rights and freedoms.

[7] “We Are Navigating by the Stars Under Cloudy Skies Jerome Powell“

Brave search:  “We Are Navigating by the Stars Under Cloudy Skies Jerome Powell“

• https://www.fxempire.com/forecasts/article/we-are-navigating-by-the-stars-under-cloudy-skies-jerome-powell-1370512
• https://www.tker.co/p/fed-chair-jerome-powell-jackson-hole-2023

[8] “Once In A Lifetime” song and video by The Talking Heads

[9] Root Cause Analysis (Brave search engine “what is root cause analysis”)

Root Cause Analysis

“Root Cause Analysis is a structured method used to analyze serious adverse events, particularly in healthcare, but also in other fields such as manufacturing, IT operations, and engineering. It aims to identify the underlying causes of problems rather than just addressing their symptoms. RCA uses a systems approach to uncover both active errors (errors occurring at the interface between humans and a complex system) and latent errors (hidden problems within systems that contribute to adverse events). Common tools used in RCA include the Fishbone diagram, the 5 Whys, and Failure Mode and Effects Analysis (FMEA). The goal of RCA is to prevent problems from recurring by addressing their root causes through process improvements.“

Are You Tired Of… Your Life’s Work Eroding Right Before Your Eyes?

Previously

In the very first posting of this series (here), we looked at the declining value of your dollar over the course of nearly a century. I realize that a century is essentially an impossible time horizon for most people. So, let’s make that more approachable by looking at a shorter time span.

Eroding Your Wealth By A Mere -2% Over Your Career

Note: “2%” is a common “target inflation rate” by many economists and central banks. If you’re feeling particularly motivated, ask any economist, government official, or central banker to justify that 2% inflation. You might be surprised by what you hear. Hint: It’s not good…

At the end of your career, after forty years of honest work, you’ll notice that the initial $1,000 has less than half (45%) of its original purchasing power.

What happened?? Wasn’t that $1,000 supposed to help sustain you in your golden years?? Wasn’t it supposed to be there for you in case of an emergency?? And, what happens to the value of that $1,000 for the next 15 – 20 years of your retirement??

To add insult to injury, you already paid income tax on the original $1,000 to the government. Now, the state is taking an additional 55% on top of that! That is a hidden tax.

Eroding Your Wealth By A Mere -2% Over Your Lifetime

Well, this has gotten noticeably worse…

After a lifetime, what your grandparents left you has one-fifth of the original purchasing power. And, that is with a mere -2% annual “erosion rate“.

How about we turn up the heat a little, hmm?

Let’s Get Real About The Eroding Power Of Inflation: -5.6% Erosion Rate

Now, let’s make the above scenario match reality. Let’s use our original -5.6% average annual reduction in value of the USD (what we called”Compound Average Growth Rate” or “CAGR” previously).

Note: You can read the original post here and see how the numbers played out when the U.S. dollar is valued in gold.

That’s right. Even though we’re not looking at the same 90 year time span as in the original article (here), the end result is essentially the same. We’re left with a paltry 1% of purchasing value. The inter-generational gift that your grandparents left you with can buy… a couple of loaves of bread.

Compounding Consequences

We are so accustomed to prices of goods and services and our paychecks moving up over time. But, do they move up at the same rates? And, what is happening to our savings in the meantime? On the surface, a 5.6% increase in prices (relative to what you’re earning) might not seem like much.

I bet you would be to be pretty irritated. And, you would be justified in feeling irritated. The state is eroding your savings. It is stealing your life’s work. It is stealing… your life. Most people don’t think of it this way but inflation is a tax. It’s a tax that you never voted on. It is a tax that saps your wallet and fills the government’s coffers. And, you rarely see it coming.

Normally, compound interest would work to the benefit of the individual employing it. In this case, though, the compounding effect of inflation is working against you and for the state. The state gets to extract 5.6% of value out of your wallet every year.

We’ve all heard the personal financial managers touting the wonders of compound interest. We can hear them touting a core principle of personal finance, “Just a few extra dollars invested at the beginning of a person’s working years has a huge payout by the time they reach retirement!“

Well, if, after four decades of hard word, the government is taking 90% of those dollars, then where does that leave you? It leaves you with 1/10th. From your point of view, is it worth the extra effort, volatility, and sacrifice if the state is taking 9/10th of what you’ve earned?

“You’re Working For The Man“

Let’s take a look at a different area of personal finance – investing. Specifically, investing and creating a portfolio for the purpose of generating greater purchasing power over the decades.

How many people would be satisfied with earning 5.6% on their portfolios over forty years? I know I would be! I would find four decades of increasing wealth and purchasing power to be of great comfort.

Thus, if you want an effective return (“inflation adjusted“) of 5.6% (an increase of purchasing power) then your portfolio has to earn… 11.2% (5.6% + 5.6%)! And, you have to do it year in and year out for four decades!

By the end of your career, you would only be able to buy one-tenth the food or gasoline with your savings. That’s exactly what happens to your hard work; it simply evaporates. And, the state is quite happy for you to work for them. So, unless you’re Warren Buffet or Charlie Munger, you just have to take it. And, all the while, “you’re working for the man“, the state.

Zugzwang ^[2]

Look at what the state has done; it has forced you into the unenviable situation of having to choose between two bad options:

1. Keep your money in a savings account to take the “safe” route and allow the government to erode your savings into oblivion or…
2. Try to retain your purchasing power by taking on more risk and volatility by investing in stocks, bonds, and real estate (or other riskier assets)… and hope that your portfolio doesn’t crash right before you retire.
   • (2008, anyone?)

All of this is money mischief ^[3]; our government injecting their politics into your money.

Social Engineering

Let’s take a look at what all of money mischief means for society at large.

In fact, given the fact that our federal government is corrupting your personal finances, you would be making a completely rational decision to spend the money now instead of trying to save it.

Next Steps

In the next article, here, we’ll take a look at the loss of value of the U.S. Dollar and how it is impacting your ability to store your life’s hard work and dedication.

Donations

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End Notes, References, & Citations

[1] “Animal House (8/10) Movie CLIP – Finished at Faber (1978) HD“

[2] Zugzwang

Brave search engine: “zugzwang“

Forcing the Opponent to Choose Between Two Bad Options in Chess

“In chess, a common tactic is to create a situation where your opponent is forced to choose between two unfavorable options. This is often referred to as a ‘zugzwang‘ situation, coined from German ‘Zugzwang,‘ meaning “compulsion to move.” In such cases, any move the opponent makes will worsen their position, leaving them with a difficult decision.”

[3] “Money Mischief: Episodes In Monetary History” by Milton Friedman

About the book: “ ‘A lively, enlightening introduction to monetary history…from monetarism’s most articulate apostle.‘—Kirkus Reviews ‘The Oliver Stone of economics‘ (Chicago Tribune), Nobel Prize laureate Milton Friedman makes clear once and for all that no one, from the local corner merchant to the Wall Street banker to the president of the United States, is immune from monetary economics. In Money Mischief, Friedman discusses the creation of value: from stones to feathers to gold. He outlines the central role of monetary theory and shows how it can act to ignite or deepen inflation. Through colorful historical episodes, he demonstrates the mischief that can result from a misunderstanding of monetary economics — how, for example, the work of two obscure Scottish chemists destroyed the presidential prospects of William Jennings Bryan and how Franklin D. Roosevelt’s decision to appease a few senators from the American West helped communism triumph in China. And he explains, in plain English, what the present monetary system in the United States means for your paycheck and your savings as well as for the global economy.“

Previously

In the previous article, here, we posed three first principle questions regarding the fundamental nature of all governments and the means by which they engage in long-term authoritarianism and tyranny.

Running Interference

“Are You Tired Of…? “

…One set of humans (those in government) telling another set of humans (you) how they should and should not live their lives?

…The Federal Reserve Chairman saying he is “declaring a war on workers” and that he wants to “get wages down“?^[1]

…The violation of your 4th Amendment rights known as “Civil Asset Forfeiture“^[2]

…”Their” politics in your money?^[3]

…Being told that inflation is “transient”… after four years?^[4]

…Feeling like your take home pay, savings, and investments never beat inflation?^[5]

…Endless hot wars and cold wars since 1913 which sacrifice our fighting men and woman as well as deplete our treasuries?^[6]

…Upcoming central bank digital currencies, CBDC’s, which can control where you can spend your money, when you can spend your money, and on what you can spend your money?^[7]

…Feeling like a criminal taking your money out of your bank account?^[8]

…The big commercial banks having special access to the Treasury’s and The Federal Reserve’s virtual money printers that you will never have access to?^[9]

…Your country’s credit rating getting downgraded because of all of the government’s money mischief?^[10]

No Plans For The Future

Next Steps

In the next article, here, we’ll take a more personal look at your personal purchasing power eroding over the course of your career and lifetime.

Donations

If you found value in this article please feel free to donate via the following payment methods:

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End Notes, References, & Citations

[1] “…The Fed Chairman of that saying he’s “declaring a war on workers” and to “get wages down?“

• “declaring a war on workers“: “Transcript: Fed Chief Powell’s Postmeeting Press Conference” 05/04/2022
• “get wages down“: “To Fight Inflation, The Fed Declares War On Workers – By leaving the problem of inflation to the central bank, Democrats are accepting an attack on labor power.” 06/13/2022

[2] “…The violation of your 4th Amendment rights known as “Civil Asset Forfeiture“

Let’s set the proper context by citing the 4th Amendment to the U.S. Constitution:

• Amendment 4: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” here and here

Brave search engine: “what is civil asset forfeiture“

• “CAF allows the government to seize your assets without any warrants nor probable cause nor formal charges of a crime.” (Ref. here and here)

Here are some examples of governments violating the 4th Amendment via CAF:

• “Civil forfeiture in the United States” (Ref. here)
  • Go to the “Traffic Stops” and “Other cash seizures” sections for more specific examples
• “They fought the law. Who won?: Many drivers faced a long ordeal in court to try to get their money back from police” (Ref. here)
  • “Mandrel Stuart was not charged with a crime and there was no evidence of illegal activity but police seized his money because they assumed it was drug-related.“
• “Asset Forfeiture Gets a Close Look in Nevada: Official Review Follows Allegations of Unlawful Seizure of Thousands of Dollars“, Zusha Elinson, 03/16/2014 (Ref. here)
  • “Tan Nguyen. In 2008, a federal judge ordered $50,000 returned to a man after police seized the money during a traffic stop in Nebraska, after reviewing a recording of the seizure in which a sheriff’s deputy suggested that we “take his money and, um, count it as a drug seizure”.[15] Tan Nguyen’s $50,000 was confiscated by police during a traffic stop, and the county agreed to return the funds after a legal challenge.“
• “Gothamist on Asset Forfeiture Abuse in NYC “, Radley Balko, 01/15/2014, (Ref. here)

[3] “…’their’ politics in your money?“

We have seen a massive movement to restrict your ability to exercise your 1st Amendment rights: (Brave search engine: “get money out of politics“)

• “The Super-Wealthy Have Outsize Influence in Politics. Here’s How We Can Change That“, Tom Udall, 08/14/2019 (Ref. here)
• “Getting Big Money Out of Politics“, “Warren For Senate” political website (Ref. here)
• “How to Counter Big Money in Politics: Amplifying small donations combats the influence of megadonors.“, Chisun Lee, 04/17/2023 (Ref. here)
• “House Democrats just passed a slate of significant reforms to get money out of politics: Democrats passed their sweeping anti-corruption bill known as HR 1. It’s already doomed in the Senate.”, Ella Nilsen, 03/08/2019 (Ref. here)

[4] “…Being told that inflation is ‘transient‘… after four years?“

Brave search engine: “transient inflation“

• “Transitory Inflation: A Short History“, Kat Tretina, 08/22/2022, (Ref. here):
  • “Transitory inflation is a term that was widely used in 2021 by Federal Reserve and Biden administration officials to describe higher-than-normal prices that emerged during the Covid-19 economic crisis.“
• “Federal Reserve calls inflation “transitory” as it keeps interest rates near zero“, 04/28/2021, “Ref. here)
• “Why U.S. officials say inflation is no longer ‘transitory’ “, Megan Leonhardt, 12/03/2021 (Ref. here)

[5] “…Feeling like your take home pay, savings, and investments never beat inflation?“

This is a great website that I recommend everyone peruse. The deleterious effects of cutting the tie to gold and creating a corrupted monetary system are obvious to anyone who is honest: www.WTFHappenedIn1971.com.

From that website. I have included a series of graphs which clearly demonstrate that something significant and pernicious happened in on August 15, 1971 (with Pres. Nixon greatly affecting our monetary system by taking us off of the gold standard) and how that decision has affected our economy, personal finances, careers, culture, politics, civics, and physical health. This is just a small handful of charts. Take a few minutes to go to the website to see the broader effects of a corrupted monetary system.

• “Growth in productivity and hourly compensation since 1948”
  • 
• “Real GDP, Real Wages and Trade Policies in the U.S. (1947-2014)”
  • 
• “Income Gains Widely Shared in Early Postwar Decades – But Not Since Then”
  • 
• “Shares of gross domestic income: Compensation of employees, paid: Wage and salary accruals: Disbursements: To persons”
  • 

[6] “…Endless hot wars and cold wars since 1913 which sacrifice our fighting men and woman as well as deplete our treasuries?“

I have specifically called out the Federal Reserve Act of 1913 as the starting point for when our federal government delinked from a gold and moved away from a hard money standard. For context, here are a few articles which provide more depth and detail around the origins and establishment of The Federal Reserve:

• https://www.federalreserve.gov/aboutthefed/fract.htm
• https://www.federalreservehistory.org/essays/federal-reserve-act-signed
• https://en.wikipedia.org/wiki/Federal_Reserve_Act

For the purpose of this discussion, I have defined “hot war” as any major military conflict (declared wars, operations, or “kinetic actions“) that lasts for longer than one year (independent of a formal declaration of war). Below, I have provided a listing of hot wars.

• “List of Wars Involving the United States – 20th Century Wars” (Ref. here)
• “List of Wars Involving the United States – 21st Century Wars” (Ref. here)
• “Mexican Border War” (1910 – 1919) (Ref. here)
• “United States Occupation Of Nicaragua” (1912 – 1933) (Ref. here)
• “United States Occupation Of Haiti” (1915 – 1934) (Ref. here)
• “United States Occupation Of The Dominican Republic” (1916 – 1924) (Ref. here)
• “World War 1” (1914 – 1918, direct U.S. involvement in 1917 – 1918) (Ref. here)
• “Russian Civil War” (1917 – 1923, direct U.S. involvement in 1918 – 1920) (Ref. here)
• “World War 2” (1939 – 1945, direct U.S. involvement in 1941 – 1945) (Ref. here)
• “Operation Beleaguer” (1945 – 1949) (Ref. here)
• “Korean War / Korean Conflict” (1950 – 1953) (Ref. here)
• “Vietnam War / Vietnam Conflict” (1955 – 1964, 1965 – 1973, 1974 – 1975) (Ref. here)
• “Laotian Civil War” (1959 – 1975) (Ref. here)
• “Permesta Rebellion” (1958 – 1961) (Ref. here)
• “Korean DMZ Conflict” (1966 – 1969) (Ref. here)
• “Cambodian Civil War” (1967 – 1975) (Ref. here)
• “Multinational Intervention In Lebanon” (1982 – 1984) (Ref. here)
• “Gulf War (Desert Storm 1)” (1990 – 1991 with resulting occupation, below) (Ref. here)
• “Iraqi No-Fly Zone Enforcement Operations” (1991 – 2003, a result of the “Gulf War” above) (Ref. here)
• “First U.S. Intervention In The Somali Civil War” (1992 – 1995) (Ref. here)
• “Bosnian War and Croatian War” (1992 – 1995) (Ref. here and here)
• “Intervention In Haiti” (1994 – 1995) (Ref. here)
• “Kosovo War” (1998 – 1999) (Ref. here)
• “American War In Afghanistan” (2001 – 2021) (Ref. here)
• “U.S. Intervention In Yemen” (2002 – Present, as of 2024) (Ref. here)
• “Iraq War (Desert Storm 2)” (2003 – 2011) (Ref. here)
• “U.S. Intervention In The War In North-West Pakistan” (2004 – 2018) (Ref. here)
• “Second U.S. Intervention In The Somali Civil War” (2007 – Present, as of 2024) (Ref. here)
• “Operation Ocean Shield” (2009 – 2016) (Ref. here)
• “Operation Observant Compass” (2011 – 2017) (Ref. here)
• “U.S. Military Intervention in Niger” (2013 – 2024) (Ref. here)
• “U.S.-Led Intervention In Iraq” (2014 – 2021) (Ref. here)
• “U.S. Intervention In The Syrian Civil War” (2014 – Present, as of 2024) (Ref. here)
• “U.S. Intervention In Libya” (2015 – 2019) (Ref. here)
• “Operation Prosperity Guardian” (2023 – Present, as of 2024) (Ref. here)
• “Soviet Afghan War” (1979 – 1989) (Ref. here)
  • NOTE: I am aware that this was not a conflict initiate by the U.S. but, in effect, it was a proxy war between the U.S.S.R. and the U.S. For the Soviet Union, this was a decade-long conflict.

In addition to military wars, were several political wars which the U.S. conducted:

• “War On Poverty”
  • https://en.wikipedia.org/wiki/War_on_poverty
  • https://www.britannica.com/topic/War-on-Poverty
  • https://www.pewresearch.org/short-reads/2014/01/13/whos-poor-in-america-50-years-into-the-war-on-poverty-a-data-portrait/
• “War On Drugs”
  • https://en.wikipedia.org/wiki/War_on_drugs
  • https://www.britannica.com/topic/war-on-drugs
  • https://www.vera.org/news/fifty-years-ago-today-president-nixon-declared-the-war-on-drugs
  • https://www.history.com/topics/crime/the-war-on-drugs
• “Global War On Terror (GWOT)”
  • https://en.wikipedia.org/wiki/War_on_terror
  • https://www.brookings.edu/articles/nasty-brutish-and-long-americas-war-on-terrorism/
  • https://www.britannica.com/topic/war-on-terrorism
• “The Cold War”
  • https://en.wikipedia.org/wiki/Cold_War
  • https://www.britannica.com/event/Cold-War
  • https://www.history.com/topics/cold-war

[7] “• …Upcoming central bank digital currencies, CBDC’s, which can control where you can spend your money, when you can spend your money, and on what you can spend your money?“

Brave search engine: “What is a central bank digital currency“

https://www.CBDCTracker.HRF.org

• https://cbdctracker.hrf.org/cbdc-101
• “A central bank digital currency, or CBDC, is a digital national currency that is a direct liability of a country’s central bank. Unlike Bitcoin and some cryptocurrencies, which are decentralized and operate independently of central banks, CBDCs are issued and maintained by governments.“
• “Central bankers, policymakers, and government contractors are working around the world to launch CBDCs. From democracies to authoritarian regimes, most governments have embraced the concept of CBDCs, reportedly as a means to promote financial inclusion, spur faster payments, gain a first-mover advantage in global finance, improve cross-border payments, and create new ways to administer monetary policy.“
• “However, it is a fundamental mistake to think that a CBDC is simply a digital or electronic form of cash. While a CBDC would be a liability of the central bank like cash, it would be unlikely to offer the privacy protections or the finality that cash provides. By creating a direct connection between the government and an individual’s financial activity, CBDCs grant governments new powers to conduct sweeping surveillance, restrict financial activity, disrupt the economy, and engage in corruption.“

https://www.CBDCTracker.org

• "Numerous countries are investigating and implementing their own versions of central bank digital currencies (CBDC’s). CBDC’s represent a new form of electronic money that, unlike well-known cryptocurrencies, are issued by central banks of certain countries.“

Atlantic Council

• https://www.atlanticcouncil.org/cbdctracker/
• “A Central Bank Digital Currency (CBDC) is the digital form of a country’s fiat currency that is also a claim on the central bank. Instead of printing money, the central bank issues electronic coins or accounts backed by the full faith and credit of the government.“

[8] “…Feeling like a criminal taking your money out of your bank account?”

Brave search engine: “withdrawing a lot of money from the bank“

“7 Things You Should Know If You Withdraw More Than $5,000 From Your Checking Account“

• “ ‘First and foremost, you should always be aware of the daily withdrawal limits that your bank or specific checking account has,’ said Carter Seuthe, CEO, Credit Summit Debt Consolidation. ‘Most will allow more than $5,000 to be withdrawn at once, but not all will, so it’s important to learn the limits of your account before attempting a transaction this large. You should also understand that large transactions have the potential to be reported. In most cases, a $5,000 withdrawal won’t be instantly reported, however it may be analyzed for suspicious activity,’ he said.“
• ‘$5,000 is okay, but if you withdraw more than $10,000, the transaction will be reported to the IRS and at least one other government agency,’ Bakke said. ‘You will also normally be required to fill out Form 8300.’ “
• “It Could Trigger Audits From the IRS: According to Philip Wentworth, Jr., co-founder of Rockerbox Tax Solutions, when considering withdrawing more than $5,000 from your checking account, one often overlooked aspect he observes is the potential signal it sends to your bank and, possibly, to the IRS.“
• “Can I withdraw $20,000 from my bank?: Yes, you can withdraw $20,0000 from your bank account, as long as you have it. But depending on the nature of your account and your relationship with your bank, you’re likely to have to wait a few business days to receive that amount in cash.“
• “How much cash can you withdraw without getting reported to the IRS?: Withdrawal requests of $10,000 or more must be reported to the IRS for safety reasons. Banks also look for staggered withdrawals, so even two withdrawals of $5,000 over a few days may trigger a safety protocol.“

“Here’s What Happens When You Withdraw a Lot of Money From Your Bank Account”

• “Banks may impose limits on how much you can withdraw per day or per month. Excessive withdrawals or certain types of withdrawals may incur fees. Banks are required to report transactions of $10,000 or more to the IRS.“

Brave search engine: “black panther director arrested“

• Bodycam Video Shows ‘Black Panther’ Director Detained By Police

[9] “…The big commercial banks having special access to the Treasury’s and The Federal Reserve’s virtual money printers that you will never have access to?“

Brave search engine: “banks access to the treasury’s money printers“

• “Is the Federal Reserve Printing Money?”
  • “People say the Fed is “printing money” because it adds credit to accounts of federal member banks or lowers the federal funds rate.“
  • “When people say the Federal Reserve “prints money,” they mean it’s adding credit to its member banks’ deposits.“
  • “The Federal Open Market Committee (FOMC) is the Fed’s operational arm, guiding monetary policy. It engages in expansive monetary policy when the Fed expands credit. It increases the money supply available to borrow, spend, or invest.“
  • “The FOMC allows banks to pay less for borrowed fed funds when it lowers the target for the fed funds rate.“
• “US is `printing’ money to help save the economy from the COVID-19 crisis, but some wonder how far it can go”
  • “It works like magic. With a few strokes on a computer, the Federal Reserve can create dollars out of nothing, virtually ‘printing’ money and injecting it into the commercial banking system, much like an electronic deposit.“
  • “But an unstated, practical result of the Fed’s bond purchases is that it creates money to finance the gigantic debt run up by Congress. The very idea of it tends to explode the heads of those who say dollars should come from work, savings and investment instead of thin air. In the age of a nearly $25 trillion national debt, such “sound money” concepts seem outdated – relics of a bygone era in which the value of a dollar once was based on a fixed amount of gold.“
  • “In this case, the federal government’s bank isn’t just creating massive amounts of dollars from scratch. The government also is, in effect, using those newly created dollars to pay down its own debt, this time at an unprecedented scale because of the economy’s massive shutdown triggered by the pandemic. This might sound like a financial fantasy: You mean we can pay our credit card bills by simply pressing a button? Yes, the government can, unlike people and businesses,…“
  • “The Fed, however, doesn’t buy securities directly from the U.S. Treasury. Instead, it purchases previously issued Treasury securities through commercial banks.“

[10] “…Your country’s credit rating getting downgraded because of all of the government’s money mischief?”

Brave search engine: “credit downgrade usa“

• U.S. federal government credit downgrades by the major credit rating agencies:
  • https://en.wikipedia.org/wiki/United_States_federal_government_credit-rating_downgrades
  • Fitch Ratings: “Fitch Downgrades the United States’ Long-Term Ratings to ‘AA+’ from ‘AAA’; Outlook Stable“
  • Moody’s: “Moody’s Lowers U.S. Credit Rating to Negative, Citing Large Federal Deficits“
  • S&P: “US loses AAA credit rating after S&P downgrade“
  • S&P: “United States of America Long-Term Rating Lowered to ‘AA+’ Due to Political Risks, Rising Debt Burden; Outlook Negative”. Standard & Poor’s.“
  • Dagong Global Credit Ratings: “DAGONG DOWNGRADES US TO A- FROM A“
  • U.S. House Of Representatives: “U.S. Debt Credit Rating Downgraded, Only Second Time In Nation’s History“

Previously

Audio

< audio link here >

The Fundamental Nature Of All Governments

Before digging into the nature of the relationship between the governing and the governed, I would like to ask you three first principle ^[1] questions regarding the fundamental nature of government itself:

• What is the lifeblood of the U.S. government which allows it to operate far beyond its Constitutionally mandated scope and powers?
• What enables modern governments ^[2] the ability to engage in all long-term tyranny and authoritarianism?
• What empowers the state to operate with complete impunity and a total lack of accountability to the people?
  • 

We will revisit these questions near the end of this opening series. I believe that one answer addresses all three questions.

By the end of this series, I hope that we all arrive at the same answer. Concomitant to that, I think that we will arrive at the same solution to the problem of government perpetually extracting value from you.

Next Steps

Let’s take a look at the relationship between government and the governed and how the state consistently interferes with the lives of its citizens < link here > .

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End Notes, References, & Citations

[1] First Principles: First principles thinking is a problem-solving approach that involves breaking down complex issues into their most fundamental components, ignoring assumptions and preconceptions, and rebuilding solutions from scratch. This method encourages critical thinking, creativity, and innovation by focusing on the underlying principles and laws that govern a system or phenomenon.

Key Characteristics:

• Starting From Scratch: First principles thinking begins with a blank slate, untainted by prior knowledge or assumptions.
• Fundamental Components: It identifies the essential building blocks of a problem or system, disregarding secondary or superficial aspects.
• Rebuilding From Scratch: Solutions are constructed anew, using the fundamental components and principles, rather than relying on analogies or existing solutions.
• Critical Thinking: First principles thinking requires rigorous analysis and evaluation of assumptions, leading to a deeper understanding of the underlying principles.
• The Brave search engine has a good primer on first principles that I recommend to everyone (search for “first principles”).

Other sources

• “First Principles: The Building Blocks of True Knowledge” here
• “First Principle” here
• “The First Principles Method Explained by Elon Musk” video here

[2] “modern government“:

• “modern’ being within the past 2,000 years.
• Any state which is able to operate with vast scope and scale across a relatively large land mass for multiple centuries.
• Any nation-state which has established the four pillars of a civil society – written language, civics, the rule of law, and money