Due to inflation, a cup of coffee in Caracas today costs as many Bolivars as a small apartment in the same area did a mere fifteen years ago. The inflation rate in the country is expected to hit a staggering 13000% in less than a year. The phenomenon is called hyperinflation and it has happened many times before. After the First World War, which was largely financed by loans, Germany inflated its currency to pay off its national debt. By November 1923, one US dollar was worth 4,210,500,000,000 German marks. It has also happened in Austria, China, France, Greece, Hungary, North Korea, Poland, the Philippines, Yugoslavia, Zimbabwe and the Soviet Union. The fall of Ancient Rome was a result of failed geopolitics in which the devaluation of one of the empires currencies, the antoninianus, played a huge part.
So what’s the difference between hyperinflation and normal inflation? In theory, a well oiled national economy should have an inflation rate of about two to three percent per year. This is to ensure that the population is always incentivized to do something rather than nothing. Hoarding money is penalized while spending it is rewarded. This keeps citizens busy working and it keeps economies growing. Until you take a closer look, that is. You see, the newly minted, printed, or nowadays the out-of-thin-air-conjured-and-on-your-screen-hinted coins are not just handed out to the public randomly but rather come as loans, first form the central banks to the smaller banks and then from the smaller banks to the public. All to pay off earlier loans and keep us ducks in line. If you zoom out to a bigger time scale, inflation and hyperinflation looks exactly the same. Not because they’re similar but because they are the same phenomenon.
Inflation is theft. Make no mistake. Some call it a hidden tax but a tax that is obscured by those in power to manipulate their citizens into submission is also theft, no ends justify such insincere means. Take the example from Venezuela for instance. Someone stole all the money in the country during the last 15 years and replaced each apartments-worth of it with a cup-of-coffees-worth. In the case of a “healthy” 3% inflation the value of a nation’s currency will halve in less than 23 years. This is hyperinflation in slow motion, someone is still stealing from everyone. It makes me think of three quotes:
“The greatest shortcoming of the human race is our inability to understand the exponential function.” — Albert Allen Bartlett
“Permit me to issue and control the money of a nation, and I care not who makes its laws!” — Mayer Amschel Rothschild
“If you don’t believe it or don’t get it, I don’t have the time to try to convince you, sorry.” — Satoshi Nakamoto
Some people avoid Bitcoin because they admit to themselves that they don’t know enough about it and often rightly so. Invest in what you know. Just remember to ask yourself how much you know about what you already own. Do you really know how central banking works for instance? Are house prices really on the rise or is one house still worth one house while the monetary system around it changed? Bitcoin is the emergency stop button for the hamster wheel you’re in. The remedy for collective financial madness. It won’t make you rich overnight but it will change your perspective. You can’t understand Bitcoin without first understanding what’s wrong with the current monetary system.