- Education and Science
Fiat Currency: America's Ponzi Scheme
Why America and other fiat currencies, are just a Ponzi scheme.
A Ponzi scheme is a common word that we know now, but very few realize that America is the biggest one of them all. American currency used to be backed by gold, until Nixon changed that in 1971. The dollar at that time became a fiat currency, one not back by any intrinsic value. Meaning, the dollar is a dollar because the government deems it so.
Now the Ponzi scheme approach. A Ponzi scheme is pretty basic, it actually used to be called a pyramid scheme. In America, the Ponzi scheme goes as follow. Since gold no longer backs the dollar, the government just prints more when they need it.
When the government needs money, they borrow money from the treasury, promising to pay back the debt with interest. These loans are then taken over by individuals and foreign countries by way of United States Bonds. These bonds are then paid off by bigger loans from the treasury, that starts the viscous cycle again.
So then what happens when people stop taking over this un-payable loans? Well, the government makes more money to pay off the debt, causing larger debt. When there are no more people to “invest” in these loans, the scheme collapses. The reserve can only make so much money, right?
When there are no more investors in to this Ponzi scheme, then what? As we can all see now with crazy inflation, the dollar becomes worth less and less. Every percentage of inflation, makes the buying power of a dollar less and less. This phenomenon has been seen over the course of the last forty years.
After Nixon took away gold from the money equation, American women were entering the work force by the late 70’s to make up for the lack of buying power. By the early 90’s, savings had almost vanished all together. Still the buying power became less and less, until by the beginning of the century, Americans were then borrowing to make ends meet. Then as we all know, came the melt-down. So then America papered over the situation, making more money that was worth even less.
So what is the end of this Ponzi scheme? We all know what happens. No more investors and the scheme collapses. So one must ask themselves what will happen when all these foreign countries do not hold faith in the American currency? What will happen when this delicate system collapses? And what will happen to all hose involve in this Ponzi scheme, those that hold U S Savings bonds, thought to have little risk?
If Britain is an example like when the Pound was no longer the world norm, we could see loss of buying power of 40-60% over night. The only way to get out of this scheme may be to go bankrupt, the biggest buying power in the world is on their last leg. Gold prices are soaring as people grapple for investments with true value. Rapid inflation is coming and those fiat currencies, these papers that everyone has put such faith in, will come to an end. When people lose faith, everyone will drop our paper money and a true depression will come, that cannot be papered over by the government. All will grapple to get tangible items out of useless money, driving inflation higher quicker and the crumble is inevitable. Then with so many investing in our economy, it stands to reason, the whole world will feel it. Trillions of dollars in debt is held by other countries; Canada 88 billion, Brazil 206 billion, United Kingdom 429 billion, China 1.13 trillion, Japan 1.04 trillion and the list goes on. It will not affect just us, it will affect the whole world. There has been dozens of currency collapses since the second World War and I wonder, are we next, or more accurately when? Every country that has tried to run their economy on fiat currency have crumbled, and we are no different.