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The Perils of Fiat Currency and the Need for Honest Money

We’re currently on a precarious economic path due to our continued reliance on fiat currency, which isn’t backed by tangible assets like gold or silver. This system allows the federal government to produce large sums of this currency, causing its purchasing power to decrease. Consequently, the prices of goods and services rise, signaling inflation.

Historically, the U.S. adhered to a system based on gold and silver, limiting the amount of money produced. This was constitutional money and acted as a safeguard against reckless government spending and inflation. Gold and silver’s scarcity ensured monetary stability. But over the past century, we’ve strayed from this foundation, adopting a fiat system without any tangible backing, resulting in governments having the temptation and ability to create excessive currency.

This overproduction is not without consequences. Beyond the evident economic ramifications, there’s a significant connection between liberty and sound money. When you break away from a system based on tangible assets like gold and silver, you compromise individual freedoms. Simply put, we’re on the brink of an economic precipice.

However, there’s a silver lining (pun intended). Gold and silver prices have shown resilience and growth. In eight years, gold’s value has nearly doubled since its low in December 2015. Similarly, silver’s value has nearly doubled since March 2020. Their performance is a testament to their enduring purchasing power, even as fiat currencies wane.

The lesson here is the importance of physical assets. While the temptation may exist to invest in electronic or paper representations of these metals, such as ETFs or futures, the real value lies in physical gold and silver. These tangible assets can protect against potential economic downturns and currency devaluations.

Historical comparisons, like the Roman empire’s currency collapse, offer eerie parallels to our situation. The Federal Reserve, established in 1913, has overseen our monetary system for over 100 years. This system’s sustainability is in question, given the massive debt and the inability to generate the wealth needed to offset it.

The crux of the issue boils down to supply and demand. When global demand for a currency decreases, its value follows suit. The U.S. dollar’s strength is misleading, a consequence of current interest rate policies and a banking system hesitant to create new loans. We can’t inflate our way out of the current predicament without causing currency devaluation.

Our global monetary standing is also at risk. Once the pillar of global finance, the U.S. dollar’s dominance is waning. The ramifications of losing this status are monumental, potentially sidelining the U.S. as a leading world power.

The solution? A return to sound, honest money backed by tangible assets. With the right political leadership and collective willpower, we can steer our economy back on the right track. While challenges lie ahead, with the correct leadership, a return to economic stability and individual liberty is possible.

 

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Wealthfargo
Wealthfargo

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