The Problem With The Value And Faith We Put In Paper And Electronic Currency

If you reach into wherever it is that you keep your on-hand cash and pull it out, there are four things that you should keep in mind:

• You have exchanged something of value to you in order to obtain that note, and you should have a good understanding at all times of just how much of that valuable thing you traded for that note
• From the time you exchanged that item of value for that note, there has been and will always be continual fluctuation in how much of that valuable thing each note is worth to you and others
• The actual note in your hand only has a perceived value, granted to you by others who also believe in that same perceived value, otherwise all you hold in your hand is a piece of paper
• Without an exchangeable value other than its perceived value, all of the value you put into that note could completely disappear instantly…yes, instantly!

No matter where you sit on the political spectrum, no matter how you earn your money/dollars/notes, and no matter your age, location in the world, or your socioeconomic conditions, these four things apply to you. Pretty scary, isn’t it, especially that part about the value of your notes disappearing instantly, right?

There was a time in history when all of the paper currency in the world, whether issued by a bank or a government, was exchangeable for, and therefor backed by, a stockpile of precious metals somewhere. The value of the paper money in your hand was tied to the value of gold, silver, or some other metal that was under lock and key somewhere, and any time you wanted, you could go and trade in your paper money for that tangible precious metal. Today, however, this is no longer the case. And that is why whenever we are dealing with paper currency, we need to remember those four things above.

But, how did we get here, and why? That’s the trillion-dollar bill question, isn’t it?

Sadly, the answer is very simple. It all boils down to the fact that governments need your value through either your labor or your money, in order to operate and exist. That means that governments need to provide a currency that can be used to perpetuate their economic system and provide the means to take value from you. But today, there are far too many people, there is far too much potential value, and there is far too little precious metal to have paper currency tied to actual tangible real-world assets any longer. In short, the world’s governments and their economic systems need far more value in paper money than all of the already-mined precious metals in the world can provide.

Following the chaos of World War II, the 44 Allied nations came together and agreed that in order to create economic stability, they would all peg their paper currency to a gold standard and that each of their gold standards would be tied to the U.S. dollar at an exchange rate of one ounce of gold for 35 U.S. dollars. This created a scenario in which these nations and their central banks could exchange U.S. dollars for gold on demand. This system worked well and helped fuel the economic growth that would ensue for the next 25 years.

But that amazing growth would yield a problem by the 1970s. The Allied nations’ populations and economies had grown so large that the amount of U.S. dollars in circulation had far surpassed the amount of gold the U.S. held in reserves. This meant that if the world’s governments cashed in their greenbacks, there would not be enough gold to pay everyone their stored value. Fearing that this would cause a run on U.S. gold and result in economic collapse, in 1971, the U.S. government removed the gold standard from U.S. currency, allowing the central bank to just print money that has no actual real-world, tangible value except for what we perceive in our minds as a collective. No longer could the world’s governments exchange U.S. currency for a fixed amount of gold. Instead, the value of each piece of currency would be tied to its perceived, or market value.

Let’s think about that for a second. When banks and the U.S. government first started printing paper money, the value of that paper money was tied to a precious metal like gold or silver, but that meant there could never have been more paper money out there in circulation than the amount of physical precious metal the bank or the government had on hand. That also meant that at any time, you could walk into the bank or the right government office and demand precious metal in exchange for the paper currency in your hand.

Do you see how this system of paper money based on a precious metal stockpile makes perfect sense? People no longer had to carry cold coins in a purse or large amounts of gold bars on a carriage, but instead, just had to carry light paper currency in their pocket.

But now, people can no longer walk into the bank or a government office and demand something of real-world value in exchange for the paper currency in their pocket. Today, all you can get for that paper money in your pocket is other forms of paper currency, or worse, a balance on the bank’s or government’s electronic ledger.

And, if the fact that paper currency is no longer tied to anything of actual real-world value is not scary enough, the next step, which is already well underway, is to transform that paper money into electronic numbers on an electronic balance sheet somewhere in the cloud.

Imagine a planet where the governments of the world convince us all that the cost of producing that actual paper currency is just too high, and even worse, completely unnecessary now that we have this beautiful digital world in which everything is stored on electronic ledgers and we can all carry around little plastic cards in our pockets instead of that costly-to-produce and now completely unnecessary paper money. Oh, and don’t even get them started on producing coins! It costs a nickel to make a penny now. How impractical is that? You humans don’t actually want to carry around coins any more, do you?

If you don’t believe this is where the governments of the world are taking us, think a little about how you transact now compared to ten or twenty years ago. How often are you using actual paper currency versus those plastic cards in your pocket? How many of your bills do you pay with a paper check, and how many do you simply pay online?

See how this is all progressing along nicely for the governments?

And what is the problem with the governments doing away with physical currency all together? Well, the biggest problem is that people will no longer have the ability to hold currency outside of the electronic system - meaning no one, ever, will be able to hide currency from the government's greedy hands.

Then, all it will take is for the government to sit at a keyboard and it can have complete access to the value of everything you own. Remember how earlier we talked about you exchanging the value of something for that currency? Well, once all currency is electronic and there is no way for you to hold that value in something tangible, then it can all be wiped out, entirely wiped out, with just a keystroke. That’s everything you have worked for your entire life – gone in an instant.

Couple this with a current movement to get everyone on the planet an electronic ID by 2040 and every single person on the planet and their electronic currency will be reachable by governments and global governing bodies like the UN at any moment, anywhere in the world.

Can't wait to see the black markets this creates for alternative currencies! We'll be using commodities as currencies to barter with each other outside the government's ever-watching eye like it was the Dark Ages again. How many chickens for a sword?

Think of what this will do to the price of precious metals. That is, if the governments even allow us to own precious metals any longer once they do away with all physical currency.

While we will have to see where governments and technology take us, unfortunately, there is very little we can do about the tangible real-world value in our paper money, other than exchanging some of it for precious metals while we’re still allowed. The main thing to remember each time you look at those paper notes in your hand is to ensure that your portfolio of assets is as diverse as possible.

Never keep all of your value in eggs, and never keep all of those eggs in one basket.

Photo by The Digital Way via Pexels

How I Come Up With What To Write

I once was asked how I come up with the topics for these musings which you have all been so gracious to take the time out of your day to read, and let me tell you, there is nothing particularly laborious about it, other than the fact that where I differ from you is that when I have some prevailing thought enter my brain while doing something like walking, riding my stationary bike, brushing my teeth, etc., while you may laugh a little at your interesting thought and move on with your day, I am forced with the chore of either having to find something to write with, grabbing the nearest laptop, or as happens most often, quickly pulling out my pocket screen and typing out the idea into a memo application or self-addressed email.

Case in point, just a few minutes go, I was riding my stationary bike and in popped to my head the idea that if one person is wondering how I come up with these topics, then maybe more people are wondering, and maybe I should write a musing that explains how I come up with all these ideas. Luckily for me I had just finished writing a musing that came into my head while reading a newsletter and still had the laptop nearby.

So, as you can see, it is a pretty easy process. I go about my day and while my mind is occupied doing something very routine, all of the sudden, an idea pops in my head and I record that idea via some means as quickly as I can. This is a must because nothing is worse than losing one of these ideas when I don’t react quickly enough. I am assuming that everyone out there has these ideas pop in their head, too, but because I write for a living, my first instinct is to turn those ideas into a written piece. If I were a painter or cartoonist, maybe I would turn these ideas into paintings or some funny drawing. Thank goodness I’m not a sculptor because the ideas just come too quickly for me to actually sculpt them all in a lifetime!

If I have the time right then and there, like on a night or a weekend or while watching TV, a lot of times I can just grab the laptop and belt out the entire article in one fell swoop. I write as far as the words take me and then will go back to beginning, read what I have written and repeat – read then write, read then write, read then write – until the piece is done. I then save it, set it aside and edit it a few days later until it is ready for you to read. Sometimes I have to revisit a piece multiple times for it to get there, and sometimes, like Mozart (just using him for reference, not comparing), I write one draft and it’s ready to go. If I’m on a walk, at an event, or doing something that does not allow me to actually write at that time, I usually will record the idea and them come back to it when I can. Sometimes it seems having to revisit the piece later to actually write it hinders the quality of the piece, but such is life, and other times it seems the exact opposite is true – some pieces are better after being revisited and rehashed multiple times. It really is a case-by-case basis.

Either way, I try to get these musings out of my head and down in words as quickly as I can. And like any artist who tries to keep up the appearance of a regular production pattern, I tend to store these and let them go a little at a time. The marketer in me wants to keep you looking for these pieces, not getting bored because I put one out every single day. And don’t be fooled, while sometimes I have an excess hoard of these pieces sitting, waiting to be let free, other times I am trying hard to think of an idea because it’s been a while and the reserves are running low. I can end up writing three musings on a single Saturday, and then, there will be none for a week or two. It definitely is very feast or famine at times.

Either way, I will say this: I can easily explain that the ideas come, but I cannot explain why or how they materialize. And while I can also explain how I keep my notes and how I manage producing, storing, and releasing these musings to you, I definitely cannot explain how each of these words appear on the screen in precisely the order I need them to explain my thoughts. I can only describe it as a flow – I have to sit down and type and try to keep up with the words that are appearing in my brain, especially when it is one of the pieces that flows all at once, just like this one did, in all of about ten minutes or so.

I believe how the words materialize and flow from my brain down on to the page are what scientists refer to as the spark of intelligence – not the smarts kind, but the ability to think and reason kind. And since we have been trying to explain how that works since the dawn of humans, I will save you from us trying to figure that out here and now. Just know that it is something magical, and regardless of its origins, we should all endeavor to cultivate this capability in all of us, all of the time, whatever that capability might be.

So, there you have it, loyal reader; an explanation of how I come up with the ideas for these musings. And yes, I have been peddling away on the bike this entire time. Now to shut down the laptop, close the lid, keep peddling, and wait for the next idea to materialize…

Photo by Nikolay Frolochkin via Pexels