Duhkha (Suffering)
It’s been said human beings invented language to complain about their suffering. The Buddhist monks I met in Laos commonly repeat the word Duhkha in their chants. Duhkha is the fundamental pain and suffering we all experience on a daily basis. Spend enough time at family gatherings and inevitably the topic of Duhkha will arise: “In my day I had to walk to school in the snow! Uphill! Both ways!” Spirited dinner conversations over “who’s got it the worst?” are ironically hilarious. Each generation uses language for its original purpose pouring out their Duhkha through stories. Like politicians, each candidate inevitably argues “I suffered the worst”. Ironically, the “winner” of the debate is also the loser — Duhkha.
Paying Homage
Before kicking things off, huge shoutout to the crew at WTF_1971. It’s not every day you discover simple answers to a lifetime of suffering. Without further ado I share with you this legendary website — WTFHappenedIn1971.com — containing 33 charts that put the kibosh on this generational debate once and for all. If you appreciate their work as much as I, here’s a way to give back in a currency that matters.
What a Dick
If your life sucks in 2020, chances are you can thank Richard “Dick” Nixon. This dick ended the Bretton-Woods Agreement of 1944 penning the fate of generations to come before their birth.
Under the Bretton Woods System, gold was the basis for the U.S. dollar and other currencies were pegged to the U.S. dollar’s value. The Bretton Woods System effectively came to an end in the early 1970s when President Richard M. Nixon announced that the U.S. would no longer exchange gold for U.S. currency.
In short, paper dollars pegged to gold made for a close derivative to sound money. The most important quality of gold is its scarcity. Scarcity is what keeps gold valuable. That vital connection between dollars and gold was completely circumcised circa 1971 with a single stroke of a pen.
Cheat Codes Entered
Once the bond was severed between currency and gold our fate was sealed. Any videogame playing stoner can tell you exactly what happens when they found the cheat codes. The game becomes unbelievably fun to play for 30 minutes then it ruins the game forever. We entered “God Mode” in 1971 and haven’t stopped using the cheat codes since then. Our 30 minutes are up. Now we are in the phase where America is ruined forever. The question we are asking now is how long do we have left?
Gradually, then Suddenly
Money’s center of gravity shifted beneath our feet when we moved off the gold standard. It’s a deceptively silent act because for the consumer, the dollar in their wallet yesterday still looks and feels like the same dollar today. But the backend system changed completely without their vote nor permission. Scarcity was exchanged for scout’s honor. From the charts, you can see the Federal Reserve tried to play it straight for a few years, wetting their beaks only a few times in the first 5 years. Then all hell broke loose. As we say in the crypto space, gradually then suddenly.
Once you digest these charts, you should have a clear explanation as to why you are drowning in either caviar or late payments. Money that can be easily reproduced breaks the first principle of sound money — scarcity. And then the Cantillon Effect kicks into gear.
To reproduce a phrase from the great Ari Gold,
“pack your sunscreen cause we’re going to hell.”
Magic Internet Money
Milton Friedman was a man ahead of his time. If Bretton-Woods was our undoing, then perhaps Friedman foreshadowed our great equalizer.
We all face difficult decisions during these strange times. Our reality has been warped by excessive inequality stemming from 1971. Now that you know how we got here, how do you plan to get out?
Bitcoin is Plan B
