I’ll tell you all about it in a second.
First, a quick history lesson …
In 1918, after World War I, Germany was in trouble.
The mark had tumbled sharply from 4.2 marks to the dollar – to 8 marks to the dollar.
Inflation was on the rise.
So, what did the government do to ‘fix’ the problem?
They did what all governments do – they began printing money.
Printing money floods the economy with cash, encouraging spending.
But, of course, it doesn’t help with inflation. In fact, it only makes the problem worse.
As Germany printed more and more money, hyperinflation kicked in.
In 1921 – the mark had fallen to 184 per dollar.
In 1922 … 7,350 per dollar.
And in 1923 … 4.2 trillion per dollar.
Farmers refused to take paper money in exchange for food. Grocery stores sat empty while the food rotted in the farmers’ warehouses.
People were starving and growing rebellious.
Germany had no choice but to go back to the gold standard.
The problem? They had no gold.
So, they did the next best thing …
They created the Rentenmark. The Rentenmark was secured by mortgages and other debt owned by the government. And it’s value was pegged to gold.
If the total value of Rentemark started to exceed what it should be worth in gold, they cut back supply of the currency.
The idea was that money should never be printed again – not unless the underlying wealth increased as well.
It worked …
Farmers happily accepted the Rentenmark, food began flowing, and the economy stabilized.
Germany’s hyperinflation problem was fixed in one week by putting strict controls on the money supply.
Austria, Poland, and Hungary all experienced hyper-inflation post World War I as well. And all went back to some form of gold standard to save themselves.
Here’s the point …
Pegging a country’s economy to something that can’t be debased – like gold – stabilizes inflation.
So, why do governments choose fiat money then?
Well, at best they’re lazy and uncreative. So the only way they know how to stop short-term bleeding is to print money.
Which is exactly what the Fed is doing now with wild abandon.
At worst, their motives could be much more sinister.
By debasing a currency, the government erodes your spending power. That’s because your savings don’t keep up with the inflation money printing causes.
So, you have to spend more today to get the same value you did yesterday.
Think of it as a hidden tax – because that’s exactly what it is.
You see, debasing a currency is about control.
Which is why governments are so scared of Bitcoin. They can’t control it. It can’t be debased. And so, they can’t use it to control you.
That’s exactly why the Fed is talking about a new cryptocurrency of their own.
And my guess is this CBDC (Central Bank Digital Currency) will have a very nasty feature. The Fed will give themselves the power to ‘print’ more of it at will.
In other words, they’ll be able to debase it anytime they want … eroding your savings and spending power … and keeping you under their thumb.
What’s even scarier is this money is programmable. Which means they can immediately decrease its value – even to zero – anytime they want. And they can do it to society as a whole – or individuals they don’t agree with.
Imagine the government having the power to erase all your money because of something you did – or something they think you did.
It’s not too late to save yourself and your family, though.
But you need to prepare now.