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Overview

Do you remember the financial crisis of 2008? Do you think it’s over now and that we’re going to see a period of growth, prosperity, and happiness?

If so, you may be shocked to know that the current monetary system is fragile and will soon face a crisis. Governments and central banks are making money less valuable by printing more of it, which will result in another financial crisis. The next one could come from frozen turkeys or locomotives being traded for money. In these key points, you’ll discover how to protect your savings from losing their value through bad investments or government policies.

Big Idea #1: No modern currencies have any intrinsic worth – only the state guarantees they are worth something.

In the past, if you wanted to buy a loaf of bread from a baker, you had to pay with equal value in gold or silver. Nowadays, all you need is paper money that isn’t valuable on its own. The reason why this works is because the government gives it value by making laws and regulations for using it as currency.

Fiat money is a promise between the government and its people. The government promises to give you something of value in exchange for your banknote, like flour or salt. If everyone trusts the government, they don’t need gold coins anymore because their currency has intrinsic value, just like fiat money does.

Until 1972, the United States government had a fixed exchange rate with gold. The price of gold was $35 per ounce and other countries pegged their currencies to that price.

But after the 1973 financial crisis, governments lost confidence in the US’s ability to keep a fixed exchange rate between dollars and gold. As a result, they allowed their currencies to fluctuate freely whenever necessary.

After this point, all currencies are no longer backed by gold or silver. Therefore, their value is determined by the government’s monetary policy. But today many countries are under attack because of economic problems and other factors that affect their governments’ policies. We will see why in the next section.

Big Idea #2: Financial warfare could wreak havoc on the fragile global financial system.

When terrorists attacked the United States on September 11, 2001, they didn’t just kill people. They also targeted the American economy by making huge bets that would pay off when share prices of airlines dropped after 9/11. This is an example of financial warfare, which can be used offensively or defensively to gain an economic advantage over enemies and competitors. Offensive financial warfare could include hacking into a foreign country’s stock market to manipulate prices and make money for oneself while damaging their economy as well as defensive financial warfare, which are used to protect one’s capital markets from being damaged by another state’s offensive tactics.

Iran is a good example of how financial warfare can work. In the months before the US offensive, Iran bought up gold in bulk to keep trading even if it was cut off from international payment systems. Financial warfare is serious because it could cause huge economic losses as seen with the global financial crisis of 2008. Small terrorist or criminal groups could do major damage to society since our economy is so vulnerable and fragile.

After the financial crisis, we realized that it’s not just about military warfare. We need to develop financial weapons too, along with our traditional military forces.

Big Idea #3: Contained within the financial system are the seeds of future crisis.

It has been over five years since the financial crisis, and you might think that things are getting better. However, there may still be some potential crises lurking in the financial system. One such crisis stems from China’s economic growth over the last decade; although it was impressive, much of this growth was poorly planned and resulted from corruption in Chinese politics. For example, many ghost cities have sprung up all across China as a result of government policies that encourage investment into projects without regard for whether they will succeed or not. As a result of these policies, investors are pouring money into China to fund these empty cities with no return on their investments which could collapse at any time.