One World Currency
One World Currency: Utopia or Nightmare?
In this video, the speaker discusses the possibility of a one-world currency and whether it should be feared or not. The speaker explains the different types of monetary systems that have existed throughout history.
Types of Monetary Systems
- Four potential types of monetary systems exist:
- Commodity money
- Representative money
- Fiat money
- Cryptocurrency
Commodity Money
- Commodity money involves a physical commodity, such as gold, being used as currency.
- The total supply of money is relatively stable under commodity money because new money can only be obtained by selling something someone wants or by mining more gold.
- The cost of mining gold keeps a lid on the expansion of the money supply.
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Conclusion
- A one-world currency is inevitable but does not need to be feared depending on its type.
- Different types of monetary systems have existed throughout history, including commodity money, representative money, fiat money, and cryptocurrency.
The Evolution of Monetary Systems
In this section, the speaker discusses the evolution of monetary systems from commodity money to ledger money.
Commodity Backed Money
- Deflation made gold too valuable and smaller denominations were needed.
- Banking was invented to solve the problem of transacting across large distances without physically moving gold.
- Banking allowed for greater global commerce and more efficient transactions.
- Bankers routinely issued more paper than they had gold to back it up, leading to bank runs.
Fiat Monetary System
- In 1971, the US went off the gold standard, leaving us with a fiat monetary system.
Ledger Money
- Today's monetary system is a distributed private ledger monetary system where every bank has its own ledger.
- A public ledger is like Bitcoin where everyone can see all accounts and transactions.
Private and Public Ledgers
In this section, the speaker discusses the history of monetary systems and how they have evolved over time.
Centralizing and Scaling Up Risk
- The trend in monetary systems has been to centralize and scale up risk.
- People centralized with banks when transacting with gold coins, which scaled up risk.
- When bank runs and fraudulent reserve banking became a problem, people scaled that up with central banks.
- After World War II, the world decided to scale up again and go with one Central Bank for the entire world.
Distributed Ledger System
- When the dollar exchange standard backing failed, the United States and the rest of the world decided to scale up one more time and go to a distributed Ledger system where there was no commodity anchoring it.
- Today we have a decentralized distributed Ledger private Ledger monetary system.
One Private Ledger
- The next step will likely be one private ledger instead of each bank maintaining its own ledger.
- This introduces solutions for governments faced with skyrocketing debt loads but also presents another problem as it increases incentive for real wealth to leave.
Benefits of One Central Bank Digital Currency
In this section, the speaker discusses how having one central bank digital currency can solve problems faced by governments today.
Skyrocketing Debt Loads
- Governments are faced with skyrocketing debt loads, interest rates, deficits, and eroded tax bases.
Spending Power
- If spending power is centralized through a central bank digital currency then governments can issue new spending power.
- This increases the incentive for real wealth to leave and go somewhere else.
One Central Bank Digital Currency
- Having one central bank digital currency for all nations solves the problem of fleeing because there's nowhere else to go.
- Money is always a winner take all game, so economically speaking it benefits everybody to start using the same money.
Dollar as Global Reserve Currency
In this section, the speaker discusses why the dollar has been used as the global reserve currency for international trade for so long.
Momentum Built into Money
- There's a lot of momentum built into whatever's being used as money.
- This is why gold reigned supreme for so long because if there were so many other people using gold even if I didn't want to, I had to get gold just because I knew they would accept it.
Using Dollars
- The dollar has been used as the global reserve currency for international trade because everyone else was using dollars.
- If someone wants wheat or oil or wants to import stuff from other countries, they have to use dollars because everyone else is only accepting dollars.
The Future of Money
In this section, the speaker discusses the different types of money that can exist and their potential for success in the future.
Types of Money
- Commodity money is unlikely to come back due to technological advancements.
- Commodity-backed money is being talked about as a competitor to fiat currency. Central banks are purchasing gold at a pace not seen in 70 years.
- Bitcoin is a public ledger monetary system that has existed before in history. Countries like El Salvador and people all over Africa are trying to move towards using it.
- Money is a winner-takes-all game, so when the current system fails, there will be new systems that pop up in its place. It's just a matter of which one people decide to use.
Potential for Success
- There's a high chance that commodity-backed money will succeed over a One World Private Ledger because governments that want the private ledger as money are going to want it because they want to abuse it and all their wealth is going to be fleeing as a result.
- As history has always shown, money is a winner take all game so when this system fails there will be few more systems that pop up in its place and from there it's just a matter of which one the people decide to use because at the end of the day every government is subject to the will of the people regardless of the type of government.