•Inflation isn't an accident—it's built into the system by design.
•Protection from inflation is also built into the system, through "assets."
•To understand both, we need to trace the history of money.
Inflation steadily erodes purchasing power, quietly undermining peace of mind and turning life into a perpetual race to keep up.
Money = Information that coordinates trade and exchange value
Money emerges from people's trust in key properties:
Scarcity
Durability
Divisibility
Portability
Verifiability
Fungibility
Like language or the internet, money works because we agree to use it. It's a tool that only exists through shared trust.
Sound Money: A standard for money that holds value across time and space.
Direct trade of goods/services
Limitations:
Portable and durable, but collapsed when Europeans imported them in bulk.
Strong social trust, but scarcity was undermined by technology.
Key Insight: Early monies worked until external forces broke their scarcity.
•Gold and Silver were used as base layers: durable, divisible, and scarce.
•Gold used as a store of value, silver for smaller transactions.
•Inflation tied to mining output – slow, predictable, costly to increase.
Societies converged on precious metals due to their unique characteristics.
Gold-backed paper money: easier to carry, but dependent on trust.
A private, unelected institution with full control of the money supply.
A global agreement where currencies were tied to USD → USD redeemable in gold.
Fractional reserve banking weakened trust (printing more dollars than gold in reserves).
•1971: Nixon ends Bretton Woods, USD no longer redeemable in gold.
•New system: debt-backed currency through credit expansion.
•Governments issue bonds, businesses and individuals use credit → perpetual inflation.
Wealth transfers from savers to asset holders.
| Money Type | Scarcity | Durability | Portability | Divisibility | Verifiability | Fungibility |
|---|---|---|---|---|---|---|
| Barter | low | high | medium | low | medium | low |
| Rai Stones | medium | high | low | low | medium | low |
| Cowrie Shells | medium | medium | medium | medium | medium | medium |
| Gold | high | high | medium | medium | high | high |
| Gold-backed Fiat | medium | medium | high | high | medium | medium |
| Debt Fiat | low | low | very high | very high | medium | medium |
Key Observations: Barter had low portability and scalability. Rai Stones and Shells had high local trust but were weak globally. Gold provided a strong store of value but poor portability (centralized). Gold-backed fiat was convenient but trust-dependent. Debt fiat has maximum portability but the weakest store of value.
Fixed supply – absolute scarcity (21 million cap)
Borderless portability – send anywhere, instantly
Infinite divisibility – down to 100 millionth (satoshi)
Instantly verifiable – by math, not trust
Resistant to debasement – no arbitrary control
| Money Type | Scarcity | Durability | Portability | Divisibility | Verifiability | Fungibility |
|---|---|---|---|---|---|---|
| Gold | high | high | low | medium | high | high |
| Fiat | low | low | very high | very high | medium | medium |
| Bitcoin | highest | high | very high | very high | highest | highest |
Primary Function: Preserve wealth across time
Most Critical Traits:
Primary Function: Facilitate daily trade
Most Critical Traits:
•The history of money is the history of human trust.
•Inflation is not random. It's designed.
•Each shift in money's design shifts who gains and who loses.
•The future of money is a choice we make — not one imposed on us.
If we view the concept of money as a social technology, which assets check the boxes necessary for you to store your economic output?