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  • Governments ALWAYS Tend Towards Corruption & Tyranny, Part 1.2 – “…Now You Don’t”

    Previously

    In the previous post, here , we examined how your U.S. Dollars have devalued greatly over time because of government malfeasance. Now, let’s take a look at what that means for you.

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    A Leaking Bucket Of Value

    All of us who hold U.S. Dollars have a “leaking bucket of value” which is perpetually frittering away value.

    The primary economic function of good money is to be a “store of value“ (or “storehouse of value“). A storehouse of value is any asset, commodity, or currency that maintains its value without depreciating. [1] [2] [3]

    In the case of “good money” (as compared to “soft money” or “currency” which we will cover in a later post), it is supposed to be a place where we can virtually freeze our hard work in time, amass and accumulate our savings, defer our gratifications, invest for the future, and, eventually, to be a virtual stockpile from which we can draw upon in times of need, emergencies, enjoyment, and retirement.

    In the end, as we demonstrated in the last article here, the savings of all Americans have been eroded over time by >99%. Ultimately, in less than a century, this is leaving you with less than 1% of your initial value. Thus, the U.S. dollar has utterly failed at its primary function, that of store of value.

    Value is being extracted right out of your wallet in real time and without your consent. That’s called… theft. This is more than “just money“[4]; it is literally your life’s work being stolen from you, surreptitiously, repeatedly, and immorally.

    Now, your ability to leave something of significance to your progeny is almost nil. Said another way, that leaves all of us with a less than a 1% chance of familial, inter-generational, dynastic wealth.

    When In Doubt, Cash It Out

    Traditionally speaking, keeping our money “in cash” or “in savings” was considered to be risk-free, the most conservative choice in personal finance; cash was an option for people who did not want to take on the inherent risks and volatilities of stocks, bonds, real estate, or other unconventional investments. Cash was considered the safe bet.

    In fact, keeping one’s wealth in a savings account was considered a “risk-free return” because the saver could actually earn a small yet nominal interest in a savings account. In addition, keeping cash also allowed the individual to retain great purchasing optionality in the future. Hence, the maxim, “Cash is king.“

    “Cash Is Trash“

    Now, if you think you’re “earning money” by putting your hard-earned dollars into a savings account for 2.5% yield then I have some bad news for you – You’re still on the losing side of the deal. The erosion, the -5.6% loss of value, is happening faster than you can earn it (which we derived in the previous article here). In that instance, you would be losing 3.1% per year due to inflation. Consequently, we have, “Cash is trash.” (Thank you, Robert Kiyosaki!)[5]

    Thus, keeping any of your wealth in cash is not “risk-free return” but instead considered “return-free risk“! (Thank you, Greg Foss!)[6]. To add insult to injury, no longer can people get away from risk because choosing cash is inherently risky.

    Our “Who Done It? ” Mystery – Redux

    In the previous post, here, I asked three questions regarding how and who is actually eroding the value of our U.S. Dollars.

    As of now, since government is the sole entity which has ultimate control over the money supply as well as the movement of money, I’m going to put them at the top of our “Who Done It?” suspect list. I’m open to the possibility that someone or something else should be a suspect, though. So, let’s keep an open mind in our investigation.

    Next Steps

    In the next post, here, we will examine first principles regarding the primary means by which government engages in overreach, corruption, and tyranny.

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    End Notes, References, & Citations

    • [1] “Store of Value: Definition, How Assets Work, and Examples” by Lucas Downey, March 25, 2022
    • [2] “What is a Store of Value?” by CFI Team,
    • [3] “Store of Value” Wikipedia
    • [4] “What Is Money“: I highly recommend the “What Is Money” podcast by Robert Breedlove which you can find here and here. As the name implies, Mr. Breedlove examines the philosophical underpinnings of money, why it is so important, and why it is one of the most misunderstood concepts in society. He examines these and many other important concepts in long form interviews with a wide variety of guests ranging from philosophers, mathematicians, historians, economists, scientists, authors, and business leaders. They delve into the intricacies of monetary systems and their influence on society, aiming to shed light on the complexities of money and its role in shaping human history. Be forewarned: these long form interviews are very engaging and highly addicting!
    • [5] Robert Kiyosaki: “Robert Kiyosaki is a prominent financial educator and author, best known for his book “Rich Dad, Poor Dad” which has sold an estimated 40 million copies globally as of 2017. He is a vocal advocate for financial literacy, wealth creation, and the importance of investing in assets such as real estate, businesses, and commodities. Kiyosaki often shares his views on economic trends and financial strategies, including predictions about potential economic downturns and recommendations for protecting wealth.” (Ref. Brave search engine summary) I really appreciate Mr. Kiyosaki’s leadership in the areas of personal finance and personal accountability for the past three decades. I first heard the phrase, “Cash is trash,” from Mr. Kiyosaki a few years ago in the context of bitcoin versus fiat currencies (soft money). You can see his website here. You can read and learn more about Mr. Kiyosaki here, here, and here.
    • [6] Greg Foss: “Foss is known for his views on cryptocurrency, especially Bitcoin. In an interview, he suggested that Bitcoin could potentially reach a value of $2 million if it were to replace the US dollar in the petrodollar system and become a global reserve asset.” (Ref. Brave search engine results). Mr. Foss is a highly experienced bond trader from Canada. I first listened to him about five years ago in an interview and was very impressed with his understanding of both the bond markets and bitcoin. In fact, I have often referenced his valuation model for the future terminal price of bitcoin as an instrument of insurance against currency default. It was during several of his interviews that I heard his wise refrain, “return-free risk” in regards to the current bond market and their inability to generate real (inflation-adjusted) returns. His Twitter account is here and he makes frequent appearances on numerous YouTube channels, such as Natalie Brunell’s show here.

  • Governments ALWAYS Tend Towards Corruption & Tyranny, Part 1.1 – “Now You See It… “

    What Happens When Government Corrupts The Money?

    The Cheapening Of Your Dollars — GOLD

    To start this series off, I would like for us to examine some basic numbers regarding our money for illustrative context.

    The gold of today is exactly the same as the gold of 1933, 1 AD, 2,000 BC, and 5,000 BC. Looking at the change in the price of gold over time gives us an excellent way of comparing apples-to-apples because gold is always the same with an atomic number of 79[1] regardless of the year.

    So, let’s take a look at the price of gold over the past century:

    • In the early part of 1933, you could have purchased 1 troy ounce of gold for ~$20.[2][3][4]
    • In late 2024, that same 1 troy oz of gold could only be purchased with at least ~$2,750.[3][4]
    • That means it takes 133 times as many U.S. dollars to buy the exact same amount of gold.[5]

    The price of gold since the early 20th century

    Let’s flip the above example around:

    • In 1933, $1 would be able to buy you ~1/20th of a troy oz of gold.[6]
    • In 2024, that same $1 would only be able to buy you ~1/2,500 of a troy oz of gold.[7]

    As a result, our U.S. dollar is worth 133rd of what it used to be 90 years ago. Ultimately, our dollars have become cheaper, tarnished, and shameful even.

    That’s >99% reduction in your purchasing power. If we do the math, every year since 1933, the USD has lost an average of 5.6% of its buying power for the past nine decades.[8] [9] In financial terms that means a Compounded Average Growth Rate (CAGR) of negative 5.6%.

    (NOTE: If you’re interested in learning about what kicked off this trend then check out the end notes “Executive Order 6102“[10] and the “Gold Reserve Act of 1934“[11]

    The Cheapening Of Your Dollars — REAL ESTATE

    Let’s do the same comparison for something a little more common than gold – home prices:

    • An average home in 1930 could be purchased for ~$6,000[12]
    • An average home in 2020 could be purchase for ~$195,000[12]

    Over 90 years, that is a CAGR of negative 4% [13]

    In other words, when measured against home prices, your U.S. dollars are losing ~4% per year, every year, since 1930.
    Over the course of 90 years, when measured in terms of real estate, your dollars have lost 98% of their value.[14]

    You’re real estate purchasing power is decreasing.


    Over time, your dollars are becoming low-quality, tawdry, and toxic.

    A “Who Done It? ” Mystery

    So, three questions emerge from the above analysis of lost value:

    1. Compared to gold, where did the 99% of eroded value go?
    2. If you don’t have it, who stole it from you?
    3. What’s the result of the thief absconding with your money, your value?

    Over the next few posts, we will delve into these questions deeply. By the end of this opening series, I believe that you and I arrive will at the same conclusion.

    Next Steps

    We’ll take a more personal look at your personal purchasing power eroding over the course of your career and lifetime (~40 – 60 years).

    We’ll pick that topic up in the next article here.

    Donations

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

    • CashApp: $JohnYoung357
    • Venmo: @John-Young-359
    • Bitcoin: bc1q2hxmkvjtdymlw7ryes0udwvm5mw6juvxtjfnfn

    Footnotes, References, & Citations

    • [1] Gold’s nucleus is comprised of 79 protons, giving it an atomic number of 79. Ref. here.
    • [2] $20.67 to be exact. Ref. here.
    • [3] Bullion Vault’s gold price charts can be found here.
    • [4] MacroTrends: “Gold Prices – 100 Year Historical Chart” here.
    • [5] $2,750 ÷ $20.67 = ~133X
    • [6] 0.0484 oz of gold to be more precise.
    • [7] 0.0003636 oz of gold to be more precise
    • [8] Compounded Average Growth Rate formula (CAGR):
      • In order to calculate compounded average growth rate (CAGR), we need three inputs – the initial amount of principle (P), the final amount (F), and the number of compounding periods (N). In short, we can represent the interest that we gain (or lose) with this formula:
        • CAGR = ((F / P) ^ (1 / N)) – 1
      • This will give you a decimal value (positive for growth and negative for loss). To convert that to percent, simply multiply by “100”.
    • [9] CAGR for the USD when priced in gold
      • i.e. (($2,750 / $20.67) ^ (1 / 90)) – 1 ≈ 0.0558 ≈ positive 5.6%:
    • [10] Executive Order 6102
      • For anyone interested in the severing of the tie between the U.S. Dollar and gold as the “backing” as well as the reason for why gold started to move up in price so much, I recommend doing a little research into “Executive Order 6102”, which was signed by President Franklin Roosevelt in 1933. Wikipedia has a good article on it here. The Mises Institute has two good articles here and here.
      • In short, the President Franklin Roosevelt required all privately owned gold (coins and bullion) to be turned in and sold to the government for $20.67 per troy ounce. Prior to that, gold was bought and sold on the open market. In addition, any person had the right to exchange their U.S. Dollars for gold with the federal government at a fixed exchange rate of $20.67 for 1 troy ounce of gold (called “redemption”)
      • By enacting Executive Order 6102, President Roosevelt severed that tie of the exchange rate and engaged in illegal confiscation of private property (a violation of the 4th Amendment to the Constitution which can be viewed here)
    • [11] The “Gold Reserve Act of 1934” (here) was the legal codification of Executive Order 6102
      • As an extension of EO 6102, “The Gold Reserve Act of 1934 made contractual gold clauses unenforceable. Prior to this act, gold clauses in contracts allowed creditors the option to receive payment in gold or gold equivalent, protecting them from uncertainties regarding the future value of currency. However, the Joint Resolution of June 5, 1933 (Pub. Res. 73–10) and the Gold Reserve Act of 1934 invalidated the use of gold clauses in contracts in the United States. Congress later rendered gold clauses again enforceable for contracts issued after October 28, 1977, as codified in 31 U.S.C.” Ref. Brave search engine here
      • In effect, the Gold Reserve Act completely gutted any company’s ability to hedge against inflation by tying the value of the contract (and its goods and services) to a fixed amount of gold (as a “storehouse of value“).
    • [12] Home price comparisons for 1930 and 2020 here.
    • [13] Using the above formula for CAGR, this gives us an average home price CAGR of positive 3.9%.
      • Said another way, that could be interpreted that the US Dollar became negative 3.9% less valuable each year.
    • [14] Let’s acknowledge that there are several factors that affect homes such as technology, square footage, and population growth. Getting an exact comparison is difficult.

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