In my last article, we talked about how money itself doesn’t have any real value—it’s just a piece of colored paper. Much like Heisenberg’s uncertainty principle, what gives money value is perception—it’s the belief in it that matters. In the case of fiat currency, it’s our faith in the government that backs it.

Now, let’s talk about value versus price. Take, for example, the infamous Jackson Pollock paintings. Why is a splatter of paint on canvas worth millions? Well, it wasn’t always seen that way. It’s a lesser-known fact that the CIA, during the Cold War, played a role in promoting Pollock and other abstract expressionists as symbols of free expression and American cultural superiority. By manipulating cultural perception, they inflated the "value" of these works, even though their intrinsic worth—paint on canvas—remained the same.

This brings us back to Bitcoin. Right now, 1 #BTC is worth around $58,000 USD. But why? Much like Pollock’s paintings, its price is determined by what people believe it’s worth. As long as people have faith in its potential, it holds value. But if tomorrow that belief wavers, the price could plummet.

Now imagine if the U.S. government printed $3 trillion and bought up Bitcoin. At first, the price would skyrocket due to demand. But then, inflation would take hold, and the value of the dollar would collapse. The price tag on Bitcoin might still read $58,000, but its real-world value would be diminished, much like how a piece of art's price doesn’t always reflect its true worth.

After Bitcoin’s price surges due to the influx of $3 trillion, hyperinflation kicks in. You’ll see price tags changing several times a day as the dollar loses value rapidly. While Bitcoin’s price might still be $58,000, the purchasing power behind that value plummets—it can no longer buy what it once could.

This is where the key problem lies: Bitcoin, or any currency for that matter, cannot be truly independent as long as it’s tethered to fiat currencies like the dollar. To break free, Bitcoin needs to be tied directly to production, similar to how gold was once linked to the value of money. For any currency to hold real value, it must be backed—or at least indexed—by some tangible system.

The U.S. dollar, for example, is backed by the government’s ability to generate revenue from taxes. The government essentially takes a portion of the country’s production (in the form of taxes) and redistributes it into the economy. But when too much of the economy is taxed, production slows down, leading to public and private debt. People and governments take out loans to stay afloat, and without proper capital management, that debt snowballs out of control, creating the very inflation Bitcoin aims to escape from.

Here’s the real issue with loaned money: most of it isn’t even real. Banks use a system called fractional reserve banking, which means they only have to keep a small portion of deposits on hand. Back in the day, that could be as low as 10%. So, if a bank had $300,000 in reserves, it could lend out up to $3 million. The money they loan It’s basically created out of thin air.

The problem is, this loaned money isn’t tied to anything real—there’s no actual production behind it. It’s just numbers in a system, which lead to inflation because there’s more money chasing the same goods. When the money supply increases without a corresponding increase in production, prices go up, and your purchasing power goes down.

This wasn’t always the case. Before the 20th century, currencies were backed by the gold standard. If the government wanted to print money, they had to back it with gold, which acted as a natural limit on how much money could circulate. This system kept inflation in check because governments couldn’t just print money whenever they wanted—they had to buy gold first. It was like a safeguard.

But in the 1920s, things started to change. Governments realized that using tax money to buy gold was slowing down their ability to spend on things like public projects or services. It was easier to print money without worrying about having gold to back it up. So, they moved away from the gold standard, and by 1929, things came to a head. The stock market crash wasn’t just about printing money—it was a combination of factors like over-speculation and credit—but abandoning the gold standard allowed more unchecked money to flow, which ignited the chaos.

Once the gold standard was gone for good, there was no stopping governments from printing more and more money. And that’s when inflation became a bigger problem, one we’re still dealing with today.

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