The Story of the Dollar

Long, long ago, there was a boy named Sam. At that time, he was quite young. He had always been a very disciplined young person and worked very hard, establishing many very successful careers. He became exceptionally wealthy and hoarded more than anyone else in the worldgold. However, as Sam began to age, he began to forget the values of his youth. He began to make some very bad decisions, and some of his relatives also began to take advantage of him. A particularly cunning relative is a nephew named Fred. One day, Fred took his banker friend to visit his Uncle Sam. And what happened next forever changed Sam's life trajectory.

Although Sam is still the wealthiest person in the world, Fred convinced him that issuing some debt could further improve his standard of living. Fred will exchange the IOU signed by Uncle Sam for the paper currency he prints using a printing machine. Because these banknotes are backed by the gold held by Sam, everyone will consider them valuable. In this way, Sam can hold these banknotes and buy anything he likes. After Uncle Sam started doing this, he gradually became addicted and hoped to buy everything beautiful with paper money.


Fred held the IOU he had exchanged from his uncle and auctioned it off to the banker. But there is a problem here. The IOU signed by Uncle Sam is to be returned with interest. When the time comes to repay the IOU, Uncle Sam is not able to repay the principal and interest, which will prevent him from purchasing things he likes anymore. So Uncle Sam signed more IOUs than before, so he may have enough paper money to repay his debt. As time goes by, this pattern just repeats itself - Uncle Sam constantly borrows more new debt to pay off his old debts.


Meanwhile, because Uncle Sam's banknotes were backed with gold, the rest of the world decided to use Uncle Sam's banknotes for bilateral trade. This makes Uncle Sam the biggest beneficiary, as the rest of the world has become very willing to exchange oil, household appliances, plastic products, and anything else for the gold backed banknotes in Uncle Sam's hands.


However, in the end, people around the world began to suspect that the number of gold backed banknotes issued by Uncle Sam may have far exceeded the amount of gold held by him. So, the world began to sell its paper currency and buy gold.


At this point, Uncle Sam really doesn't have enough gold to support his banknotes. Realizing that this mechanism was starting to collapse, one day Uncle Sam finally announced that his banknotes were no longer backed by gold. But he insisted that the world should continue to use his banknotes, because he is still the wealthiest person in the world, and everyone should believe his promise.


As a result, people in the world really continue to trust Uncle Sam, even though he uses different banknotes than before.


As Uncle Sam became increasingly greedy, he began to send promissory notes indiscriminately, and the speed at which he spent money was unimaginable. Uncle Sam's great career, which he established when he was young, began to decline, but at the same time, Uncle Sam also began to buy more and more things from all over the world, buying much more than he sold. People around the world are happy to receive Uncle Sam's banknotes because they can use them for bilateral transactions, but their pile of Uncle Sam's banknotes has actually exceeded the needs of the transaction.


Due to uncertainty about how these piled up banknotes should be used, people around the world began lending these banknotes to Uncle Sam again. The ultimate situation is that Uncle Sam owes the world trillions of banknotes. Even if the value of these banknotes increases every year10%Uncle Sam can still persuade the whole world to depreciate at a rate lower than3%The interest is borrowed from it.


One day, Uncle Sam woke up to find that the amount of debt he owed had expanded compared to when Fred first came into contact with him and proposed this terrible plan5000Times. Uncle Sam now owes his creditors16Trillion dollar bills, while also contributing value to the future202The payment promise of trillions of banknotes - this promise seems to never be fulfilled.


On the other hand, the value of the notes issued by Fred has always been lower than that of Uncle Sam's IOU5%. But Uncle Sam became increasingly worried because some other relatives were warning him that the entire mechanism was about to collapse.


Tragically, Uncle Sam did not listen to them. He knew that if he admitted how fraudulent the current financial arrangements were, the whole world would refuse to supply him with goods in exchange for paper currency, and the whole world would not provide him with financing at such low interest rates.


If the whole world loses confidence in Uncle Sam's banknotes and no longer uses them, his standard of living will significantly decline. This is a blow that Uncle Sam cannot bear.


2008The financial crisis in almost caused the collapse of the financial system on which Uncle Sam relied for survival, and desperate Uncle Sam could only seek help from Fred. Then, Fred began issuing unprecedented sized banknotes out of thin air. Fred hopes that the whole world won't notice what he's doing.


This seems to have had a short-term effect until a more severe financial crisis arrives. Uncle Sam once again began issuing a large number of IOUs, and Fred also began printing huge amounts of paper currency in an attempt to repair the system, but their desperate attempt to keep the system running will ultimately be in vain. The whole world is beginning to realize that they have been caught up in a huge Ponzi scheme, and they will begin to lose confidence in the paper money used by Uncle Sam. Suddenly, no one wanted to lend money to Uncle Sam at such low interest rates again, and people began to demand that Uncle Sam pay more paper money in exchange for the goods he wanted.


Uncle Sam's living standards will significantly decline. Because he no longer has the ability to circulate his banknotes around the world, Uncle Sam cannot consume as excessively as before - the amount consumed far exceeds the quantity of products he manufactures. Uncle Sam was deeply depressed because he saw the system he had established constantly crumbling.


Uncle Sam used to be the wealthiest person in the world, but now he has become a bankrupt and exhausted old man, burdened with huge debts. Unfortunately, if Uncle Sam falls, the world will not sympathize with him. In fact, many people in the world celebrate Uncle Sam's fall.


Is this little story crazy for you? Actually, it's not the case. Actually, you are currently in this Ponzi scheme. Uncle Sam is the United States, paper money is the US dollar, and Fred is the Federal Reserve.

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