Not too long ago, a $100 bill could cover a full evening of dinner, a movie, and drinks. Today, that same amount often isn’t enough even for one meal. In the coming decade, its purchasing power will likely diminish further. This decline is not just bad luck; it’s a direct outcome of built-in inflation in current monetary systems.
A recent Coinstelegram video delves into why money systematically loses value over time and explains why governments prefer it that way.
The story starts in 1944 with the Bretton Woods agreement, which pegged the US dollar to gold at $35 per ounce. This gold standard ended in 1971 during the ‘Nixon Shock,’ transforming the dollar—and other major currencies worldwide—into fiat money, which is not backed by a physical commodity but solely by government trust.
Since that shift, the purchasing power of currency has steadily decreased. A dollar from 1971 now has the buying power equivalent to over seven dollars. Inflation drivers include not just money printing but also energy price shocks, supply chain hurdles, and rising wages.
Central banks often claim that an inflation rate of about 2% is healthy for the economy. However, sustained inflation ultimately erodes fiat currency value. This raises critical questions for savers and investors: what is the long-term impact, and are there viable alternatives to fiat money?
Some experts argue that assets like gold or Bitcoin provide protection against inflation since they have a limited supply, unlike paper money. Others caution that eliminating flexible money supply could destabilize economies burdened with debt.
The full Coinstelegram video offers a comprehensive analysis of this monetary history, discusses the risks of uncontrolled inflation, and explores strategies individuals can use to safeguard their wealth. Watch the entire video on the Coinstelegram YouTube channel to gain deeper understanding.
