Do you know why in the United States after 1971 labor productivity continued to grow at a constant rate, but at the same time real incomes of people abruptly stopped following the growth of productivity and remained virtually unchanged? Or why after 1971, over 50 years, the consumer price index soared 7-fold (what cost 1 dollar in 1971 now costs 7 dollars), although before 1971 it took almost 200 years for an approximately similar price increase? Or perhaps why the share of US residents living with their parents until age 29 gradually decreased until 1971, but began to grow again after? Or why the cost of housing relative to workers’ incomes in the US has only increased several times during this period?
The answer is extremely simple – on August 15, 1971, US President Richard Nixon finally liquidated the gold exchange standard, canceling the fixed conversion of the US dollar into gold. After this, the US dollar turned into paper that was effectively backed by nothing. It was after this decision that the impoverishment of Americans, who had previously only grown wealthier, began.
This rather simple fact clearly confirms the absolute failure of paper money as a means of exchanging goods between people and accumulating wealth. The use of paper money is merely a reliable way to become poor. After all, what else can be expected from money that can be printed in unlimited quantities, thereby devaluing people’s savings, while enriching officials, government structures, subsidized oligarchs, and banks, who received the new money supply first and realized it at the old prices. Or what else can be expected if money is distributed boundlessly at an artificially low interest rate for the development of businesses that would be absolutely unprofitable and failing at a rate formed under free market conditions. Indeed, the theory of the Austrian School of Economics does not call unlimited money emission and credit expansion the main causes of economic crises for nothing.
People will only grow poorer until we abandon government paper currencies in favor of money that is not controlled by any centralized governing bodies and has a strictly limited issuance of new coins. Precious metals demonstrated their reliability as a means of exchange and wealth accumulation in the past. But in today’s digital world, where information technologies play a key role in all types of activity and relationships, cryptocurrencies can serve as a reliable means of exchange.
