How money became worthless after the gold standard
Have you ever heard the term: “The Gold Standard”?
A few decades ago, almost every country in the world adhered to the “gold standard” which meant that countries couldn’t print more money than the gold that was in circulation.
So basically each unit of currency was worth a specific weight in gold. You could essentially go to the bank and exchange your paper money for gold bullion or coins – so in other words, your money was linked to something tangible, something of value and it was stable!
Why is this important to know?
- It’s the last time your money was worth something
- It’s the last time your money was linked to something physical
- It provided a stable economy
- If you wanted to add more money, you had to add more gold
- It was difficult for governments to inflate prices
So to sum it all up – being on the gold standard insured the value of your money!
Tomorrow we are going to show you why your money is worth nothing now and why inflation is causing your money to be one of the riskiest investments.
How money became worthless…
When countries abandoned the gold standard, this meant that your paper money wasn’t linked to anything physical anymore but it was linked to… nothing!
So now you might be asking yourself if the gold standard insured the value of our currency, why did countries abandon it?
Well, it’s very simple – the gold standard limited the governments. It kept overspending and inflation in check and they obviously didn’t like the idea very much since there was no room for manipulation.
So what does this have to do with inflation?
When countries abandoned the gold standard, they started printing money, which meant that there was now an oversupply of money and thus, inflation started happening. With inflation, your money buying power actually decreases every year.
So for example: Let’s say John has $100 today and inflation is 6% this year. Next year, John’s $100 will only be worth $94. So John then lost $6 of his money, just due to inflation.
What’s the point of all of this?
The point is – our entire lives we are taught that our money is linked to something tangible. You are taught to save and hoard money because it represents something physical. But it doesn’t! What it does represent is what it can buy and what it can do for you.
Let’s take Venezuela and Zimbabwe for instance. If you followed the advice you grew up with, saved a ton of money and even if you became a billionaire (that’s with a B btw) – today, your fortune would be worth nothing!
What do you do now?
You need to ensure that you invest your money in something physical. Something that works for you and generates money for you. In other words, you need to invest your money on assets because having money in cash is a very risky move.
In our course the $MONEYSECRET we talk about the different kinds of assets and what you should do to generate true wealth.