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Deviation of Finance System from Natural Law

Updated: Dec 1, 2023


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The first law of thermodynamics states Energy is neither created nor destroyed, however it can be transformed. Implicitly there must be a certain amount of pre matter/energy from which every form of energy is derived. Much of finance/accounting was based on the same principle. Over thousands of years humanity settled on a fixed asset which cannot be artificially produced, a natural element, which is scarce, divisible, fungible, durable and portable that later formed the properties of Money.

We know that early civilizations used many things as money, such as feathers and sea shells, and artworks such as "wampum belts" or huge stoneworks as Yap islanders created where they lacked access to gold or silver, and eventually various metals (bronze, copper, nickel, silver and gold), over time finally settling on gold and silver because their elemental properties made them best forms of money. Two sea shells may differ, but one ounce of gold is as good as another, or completely fungible. Other metals could work, but are not rare enough. No one can haul around a ton of iron to settle a debt, and no one wants a medium of wealth storage that will turn to rust.

Whenever empires expand, the respective leaders tried to expand money supply to support their gigantic empires. Rome famously made the effort to gradually dilute the amount of precious metal present in their silver Denarius, and replaced it with base metals. As people realized the true value of such coins they saved the true silver coins for later use leaving least valuable slugs as a value exchange. We now know this as Gresham's law, where 'bad money drives out good'. Eastern cultures also used to hide wealth from all sorts of adversaries by storing precious metals underground, even though there could be options available to store such precious metals with a third party. This pattern could be easily explained as they might have trust issues in those third parties. This was a truly decentralized system, a financial system where failure of a few parts or families does not affect the entire system.


Our current monetary situation is very similar if not the same. Banks have replaced money in the form of precious metals with fiat paper and even electronic currencies which are not backed by anything, and it takes an ever larger amount of this fiat to buy a unit of precious metal. They literally make up money from nothing, then use it to buy properties that are real thus causing inflation. Any central authority can become a single point of failure, and the inevitable failure of bad policies leads to gigantic collapses, causing people lose their wealth, if they try to save it in paper currency. Historically, this happens often enough it is a pattern or theme seen in almost all countries. Central banks working with corrupt or failing governments not only play with current supply of money but they expanded the money supply in the form of future debt thus enslaving societies. Also an interest based economy is created to further this cause. An interest which is charged on currency created out of thin air. Governments borrow currency from a bank and the currency eventually must be paid back with interest. But, if they were to pay back all of the currency, they would have to borrow more currency to pay the interest! That's the entire scheme in a nutshell. In this way, the debt grows endlessly, and eventually the central bank owns everything real, and the people are left with useless pieces of paper or slug coins. If energy is constant how can there be interest on fiat money? This perpetual debt mechanism has been created to harness the entire nation as a slave to banking concerns.


Because of this perpetual printing of money citizens are forced to invest in stock market. Majority of citizens do not know how these work and just invest because of momentary unrealised gains. Anyone who are in stock market for decent period will end up losing money. In some other countries banking industry provide interest rates like in India. However, because of very high inflation these interests on the fixed deposit does not provide much income to the citizens.


Management and educational courses perpetuate the idea that precious metals are just barbaric relics of an unsophisticated past, and economic growth is not achieved by giving currency a constant value measured in a weight of precious metals. Instead, in our system, our currency is constantly losing value, in a preplanned collapse. As such instead of stable vehicles where people used to invest their wealth, an idea of a debt economy is perpetuated. But people connected to the central banking cartel can become rich in short time, by borrowing billions for near zero interest, and buying whatever they can find that is profitable, and then as inflation makes money less valuable, they still pay the same number of dollars back, but each dollar is worth less, so in the end they pay back less wealth than they borrowed, AND, they have grabbed up a valuable property, that produces real wealth in the process. If one looks at current socioeconomic zeitgeist, everyone wants to become rich as soon as possible without realizing the consequences of their actions. This debt economy and people’s greediness has formed a symbiotic relationship, and as a result these economies have collapsed very badly.


As an example one can look at US economy pre and post 1971, when the country's dollar was removed from gold standard pegging. Since every country now using fiat currencies instead of real money like gold, a durable store of value, is at the brink of collapse, people are starting to realize, just as in previous empires, that the real store of wealth is in something tangible, such as precious metals or or other physical commodities, and even virtual items like Bitcoin, in fine works of art, which exhibit similar properties to real money as stated above. Even stored food preserves wealth since one can of beans is like another, and if it's purchased today, you can eat it later when the price has doubled. Although it can't yet be seen, the closer we float toward the waterfall, the louder the roar of the waters.



A new technology has emerged in the form of bitcoin which is based on mimicking the same properties of Money aka scarce, divisible, fungible, durable and portable , obeying the laws of nature that is energy is neither created or destroyed and there is a fixed amount where every asset can be valued against. The disadvantage of precious metals is portability. Gold is super valuable, and a few ounces may go a long way. Currently $100,000 worth is about 4 pounds. But imagine you had a million dollars to preserve. Now we're talking 40 pounds to carry around. And for every ounce of gold you would need around 70 or more ounces of silver to represent the same wealth. For bitcoin the weakness is electricity. Whichever medium has a faster and surer means of transfer will eventually win; however, there is a need for both.


Solution:

A normal citizen do not understand much of the stock market nor the banking system however, they can follow the general patterns. It's better to save move in Gold, bitcoin, buy some agricultural land and invest in small local business or start their own. This way citizens are better off from market manipulations by central banks and governments. Also its better to have very less percentage of overall wealth in the banking system as its prone for corruption and lose its value.


Humanity has repeatedly made the same financial mistakes, kept ignorant and deliberately being preyed upon by knowing criminal banking interests. The record is clear, so let’s learn from it and not repeat yesterday’s failures by accepting fiat currencies from central banks in the future.





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