Part 2: Monetary Debasement

Introduction:

In Part 1, we laid out the systemic challenges crippling the global economy. Here, we turn our attention to monetary debasement—a policy response by central banks that deepens inequality, erodes real wages, and fuels financial irresponsibility. If you missed Part 1, catch up here.

The Consequences of Monetary Inflation

Central banks’ response to slowing growth is consistent: print more money to buy, rollover and grow the outstanding debt while suppressing interest rates to keep the debt from imploding the entire financial system. This approach, while temporarily effective, perpetuates a fundamentally broken system.

1. Real Wages Decline:

Between 2009 and 2024, U.S. real wages grew by only 0.6% annually, while the money supply expanded by over 6%. However, this modest real wage growth is actually a mirage. Government measures of inflation (like CPI) are abstracted and manipulated, failing to reflect what most of us experience in our daily lives. As a result, real incomes are declining.

This disconnect isn't just a statistical anomaly—it's a harsh reality for most working households. As inflation consistently outpaces wage growth, purchasing power erodes year after year.

2. The Wealth Gap Widens:

When central banks, commercial banks, and governments that deficit spend, create more money (monetary inflation), asset prices naturally rise. The wealthy—banks, corporations, and high-net-worth individuals who already own assets—benefit disproportionately. Meanwhile, ordinary citizens in lower to middle income brackets and people entering the workforce face stagnant wages. This system isn't capitalism; it's cronyism.

3. Assets vs. Monetary Inflation:

However, not all assets manage to outperform the increase in the money supply.

In the table above, the numbers in green show outperformance relative to money supply growth (far right). The money supply serves as our minimum hurdle rate—what we must achieve just to maintain purchasing power. Yet this is a gross underestimation, as we must also account for the everyday inflation we experience.

Since Bitcoin's inception, the global money supply has grown at 7.4% annually. When combined with price inflation, the real hurdle rate reaches double digits.

Even traditional assets like Australian real estate, arguably one of the largest and most inflated markets, struggle to keep pace with money supply growth. Bonds, the cornerstone of the global financial system, have become "dead money," delivering deeply negative real returns.

Conclusion:

Monetary debasement serves as a temporary patch for systemic issues but at the cost of rising inequality and financial instability. In Part 3, we’ll explore a new growth paradigm driven by AI, blockchain, and Bitcoin as potential solutions.

Real Vision

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