141. Navigating inflation in an age of rampant monetary theft, with Robert Breedlove

Origins

The origins of central banks trace back to their role as custodians of money, primarily gold. Robert Breedlove explains that gold was once the standard due to its intrinsic value, but its lack of portability led to the centralization of its custody, paving the way for central banks 1. This centralization was necessary for a globalized economy, where the cumbersome nature of gold was impractical for frequent transactions.

Gold is heavy, it's expensive to secure and move. So if you're going to build a globalized economy with a lot of transactions happening all the time, gold is far from ideal.

--- Robert Breedlove

Thus, central banks emerged as a solution to manage the economies of scale associated with gold, transitioning from physical to paper money.

   

Federal Reserve

The establishment of the US Federal Reserve in 1913 marked a significant shift in global finance. Breedlove highlights how the Federal Reserve initially operated on a gold standard, but post-World War adjustments led to the US dollar becoming the global reserve currency 2. This allowed the US to print dollars freely, creating an asymmetric advantage in global capital.

We got this weird asymmetric call option on global capital through our monetary system.

--- Robert Breedlove

The eventual abandonment of the gold standard in 1971 by President Nixon initiated the era of fiat currency, fundamentally altering the monetary landscape.

   

Monetary Policies

Central bank policies have profound effects on inflation and the perceived value of money. Breedlove argues that inflation is essentially legalized counterfeiting, where the dilution of currency value is masked by rising prices of goods and assets 3. This illusion of inflation deceives many into believing in its normalcy, despite its detrimental impact on purchasing power.

Inflation is legalized counterfeiting. Counterfeiting is criminalized inflation. They're the same thing.

--- Robert Breedlove

Understanding inflation requires recognizing it as a form of economic theft, where the central bank's ability to print money dilutes the value of existing currency, impacting everyone holding it 4.