The money is not broken; it is working as designed.
It is tempting to look at a chart of soup prices holding steady for seventy years, then exploding after 1971, and think, “Ah, money was working, then it broke.”
But that framing misses the essence.
When Nixon severed the dollar’s tether to gold, he removed central banking’s last constraint: reality itself.
As a store of value, fiat did not spring a leak; an extractive siphon was built into every dollar by design.
If the problem were merely a leak, if the money were simply broken, then we could fix it by tightening policy.
But the seeming “leak” is the design; the extraction is mechanical.
Fiat money must expand to survive because it is lent into existence at interest.
If the supply ever stopped growing, the system would implode: every debt chasing the same fixed pool of dollars.
That is why @Lyn Alden is exactly right: “Nothing stops this train.”
Monetary expansion is not a policy error; it is a mathematical necessity of debt-based money.
So when soup prices soar after 1971, it is not because something broke; it is because the mask came off.
For decades before that, central banks had been quietly issuing more paper claims to gold than gold existed.
When foreign nations called the bluff, the United States simply stopped pretending.
We were playing a gold-backed paper game with the world, and when the truth was about to surface, we flipped the table and said, “What are you going to do about it?”
Tragically, the world, to include the American people, answered, “Nothing.”
Gold’s physicality gives it a natural centralizing gravity, and centralization requires trust.
To store and exchange value at scale, we had to trust that the bankers’ gold-backed IOUs were fully redeemable for real gold in the vaults.
To think fallible men could perfectly resist the temptation to paper over short-term economic pain is laughable.
1971 proved, beyond question, that claims on gold exceeded the gold itself.
Otherwise, there would have been no need to flip the table.
Fiat merely formalized the fraud that was already underway, and necessitated constant debasement.
Since that day, productivity and wages have parted ways because the creation of money was no longer tied to the creation of value.
This is what @Daniel Prince 's chart shows:
Working hard, producing more value in the world, was no longer a viable strategy for accumulating wealth.
Under fiat, the best strategy is to print the money, or fight for proximity to those who do.
This is where @Lyn Alden is wrong; the money is not broken.
It is doing the only thing it was built to do: expand endlessly, extract silently, and transfer the fruits of human work to those nearest the source of issuance.
We all want relief from the pain of debasement, but “repairing” fiat is impossible.
The only way to solve debasement is to solve the problem of trusting fallible men.
That is what Satoshi solved for, in his own words.
That is why Bitcoin matters.
In summary:
The dollar did not “break” in 1971; fiat revealed central banking.
Fiat is not leaking value; its design necessitates debasement.
Money lent into existence at interest must either expand or collapse.
Gold hid the fraud behind trust; fiat ended the pretense and made it explicit.
The monetary system is not broken; it functions exactly as designed.
It works too well, and that is the moral problem.
It is tempting to look at a chart of soup prices holding steady for seventy years, then exploding after 1971, and think, “Ah, money was working, then it broke.”
But that framing misses the essence.
When Nixon severed the dollar’s tether to gold, he removed central banking’s last constraint: reality itself.
As a store of value, fiat did not spring a leak; an extractive siphon was built into every dollar by design.
If the problem were merely a leak, if the money were simply broken, then we could fix it by tightening policy.
But the seeming “leak” is the design; the extraction is mechanical.
Fiat money must expand to survive because it is lent into existence at interest.
If the supply ever stopped growing, the system would implode: every debt chasing the same fixed pool of dollars.
That is why @Lyn Alden is exactly right: “Nothing stops this train.”
Monetary expansion is not a policy error; it is a mathematical necessity of debt-based money.
So when soup prices soar after 1971, it is not because something broke; it is because the mask came off.
For decades before that, central banks had been quietly issuing more paper claims to gold than gold existed.
When foreign nations called the bluff, the United States simply stopped pretending.
We were playing a gold-backed paper game with the world, and when the truth was about to surface, we flipped the table and said, “What are you going to do about it?”
Tragically, the world, to include the American people, answered, “Nothing.”
Gold’s physicality gives it a natural centralizing gravity, and centralization requires trust.
To store and exchange value at scale, we had to trust that the bankers’ gold-backed IOUs were fully redeemable for real gold in the vaults.
To think fallible men could perfectly resist the temptation to paper over short-term economic pain is laughable.
1971 proved, beyond question, that claims on gold exceeded the gold itself.
Otherwise, there would have been no need to flip the table.
Fiat merely formalized the fraud that was already underway, and necessitated constant debasement.
Since that day, productivity and wages have parted ways because the creation of money was no longer tied to the creation of value.
This is what @Daniel Prince 's chart shows:
Working hard, producing more value in the world, was no longer a viable strategy for accumulating wealth.
Under fiat, the best strategy is to print the money, or fight for proximity to those who do.
This is where @Lyn Alden is wrong; the money is not broken.
It is doing the only thing it was built to do: expand endlessly, extract silently, and transfer the fruits of human work to those nearest the source of issuance.
We all want relief from the pain of debasement, but “repairing” fiat is impossible.
The only way to solve debasement is to solve the problem of trusting fallible men.
That is what Satoshi solved for, in his own words.
That is why Bitcoin matters.
In summary:
The dollar did not “break” in 1971; fiat revealed central banking.
Fiat is not leaking value; its design necessitates debasement.
Money lent into existence at interest must either expand or collapse.
Gold hid the fraud behind trust; fiat ended the pretense and made it explicit.
The monetary system is not broken; it functions exactly as designed.
It works too well, and that is the moral problem.
