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Money: Humanity's Biggest Illusion - YouTube
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if i asked you the question
[2]
what is man's greatest invention
[4]
what would your answer be
[7]
there's a lot of options
[9]
would it be fire
[11]
because it gives us warmth protection
[13]
and the ability to cook our meals
[15]
or perhaps you would pick the wheel
[17]
because it's the driving force behind
[18]
the beginnings of trade commerce and
[21]
travel
[22]
while both of these are excellent
[23]
choices
[24]
most of the time when we think about the
[26]
greatest inventions of mankind
[28]
we tend to forget one of the most
[29]
important ones of all
[31]
money
[33]
but unlike man's other great inventions
[36]
money is immaterial
[38]
maybe that's why we don't often think of
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it in the same breath as some of the
[41]
other great inventions
[42]
things like fire in the wheel are
[44]
tangible
[45]
but not money
[47]
money is merely an idea an illusion
[50]
whose value is non-existent only
[52]
determined by the importance we place on
[54]
it
[55]
or at least money as we know it today
[58]
however the fact that money is an
[61]
illusion does not in any way undermine
[62]
its importance
[64]
before we created money we were forced
[66]
to trade goods and services directly in
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what we refer to as the barter system
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people exchanging goods and services for
[73]
other goods and services in return
[75]
because there was no arbitrary value
[77]
placed on these items every single trade
[79]
was determined by what each party was
[81]
willing to give up for something that
[82]
they wanted
[83]
it was kind of like a game if i wanted
[86]
some of your vegetables for dinner but i
[88]
only reared cattle i would have to give
[90]
you one of my animals in exchange for a
[91]
bag of vegetables
[93]
if i wanted shoes to wear but i only
[95]
made tents i would have had to give you
[96]
an entire tent in exchange for a pair of
[98]
shoes
[99]
and immediately you can already see one
[101]
of the major problems with the system of
[103]
trade
[104]
it's the asymmetry
[106]
as a tent maker there's no way i
[108]
wouldn't feel cheated having to exchange
[109]
an entire living space for simple
[111]
footwear
[112]
because there was no standardized medium
[114]
of exchange it was very difficult to get
[116]
two people who needed things from each
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other to come to an agreement
[120]
having to wait until a double
[121]
coincidence of once where two people
[123]
need the exact opposite thing at the
[125]
same time was also very difficult and
[127]
inefficient
[128]
and that wasn't all
[130]
you see
[131]
our money is not only a medium of
[133]
exchange it's also considered a store of
[136]
value
[137]
and before the invention of money some
[139]
people could never store their wealth
[140]
for no fault of their own
[147]
think about the farmer who sells
[148]
tomatoes and the man who makes tents
[151]
the man who makes tents can create an
[152]
entire village of real estate and barter
[154]
it out with anyone who needs a place to
[156]
rest their head all year long and he
[157]
would probably cash out on that
[159]
but the farmer who sells tomatoes can
[161]
only barter when tomatoes are in season
[164]
and because tomatoes are perishable
[165]
goods you cannot keep them for a long
[167]
period of time
[169]
so although he would be putting in the
[171]
same effort into his business as the
[172]
tent maker there's absolutely no way for
[174]
him to remain wealthy all year long
[177]
there's also the problem of having
[178]
something that only very few people want
[181]
nowadays when starting a business you're
[184]
often told to find a niche a small group
[186]
of people who are very interested in
[188]
what you have to offer
[189]
before money was a thing that advice
[192]
would have you left with nothing worth
[193]
bartering
[194]
the people who had the most were those
[196]
who own things that everyone wanted
[198]
things like weapons animal skin and salt
[201]
but then since everyone knew that
[203]
everyone wanted these things they
[205]
started buying them even if they didn't
[206]
need them at the time just so they could
[208]
trade with them later
[209]
and so commodity money became a thing
[212]
people would exchange goods and services
[214]
for the most common items like salt or
[216]
weapons and just use that to trade for
[218]
what they want from someone else
[220]
from salt and weapons to tiny
[222]
collectibles like shells and bees
[224]
humanity had found a better way to trade
[226]
and transact
[227]
instead of exchanging goods and services
[229]
for goods and services you may not need
[231]
at the time you can exchange your goods
[233]
and services for arbitrary objects to
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act as placeholders of value in iou
[238]
or i owe you
[241]
after that you can use these
[242]
placeholders to get goods and services
[244]
you actually want from someone else
[246]
the idea was brilliant so brilliant that
[248]
the entire world slowly moved away from
[250]
the barter system to the money trading
[252]
system
[253]
but there was still one problem with
[254]
this medium of exchange
[256]
you see for money to be worth anything
[259]
it needs to be scarce
[261]
the more available something is the
[263]
lesser its implied value that's basic
[266]
economics
[267]
if everyone can get their hands on
[269]
something it can't be worth that much
[271]
right
[272]
so things like sand or shells that you
[274]
could easily pick up on any beach
[276]
weren't really a good measure of value
[280]
as a result around the year 770 bc the
[283]
first metal coins were created in china
[286]
as a sort of homage the chinese made
[288]
miniature versions of the tools that
[290]
were once regarded as currency
[292]
they made the coins circular so that it
[293]
was easy to reach into your pocket and
[295]
take them out without hurting your
[296]
fingers
[297]
then they cast the coins in bronze
[300]
this was it
[302]
money was finally worth something
[304]
you couldn't just go to a beach
[305]
somewhere and pick up bronze it was
[308]
scarce it had value
[310]
at this time
[311]
money wasn't yet an illusion the value
[314]
of a coin was determined by the value of
[315]
the metal the coin was made out of
[317]
if you had a coin that was made from 1
[319]
gram of gold it was worth 1 gram of gold
[322]
you could easily measure it and see for
[324]
yourself that it is
[325]
in fact one gram of gold
[328]
however
[329]
kings and rulers quickly discovered the
[331]
power of money
[332]
they realized that the more of these
[334]
tiny precious metals you had the more
[336]
power you could control and so in 600 bc
[340]
aliati's king of lydia created the first
[343]
official money mint
[345]
he created the coins using a mix of
[346]
silver and gold and stamped an image on
[349]
the coin to act as denominations
[351]
now people could easily tell the value
[353]
of the piece of metal they were holding
[354]
simply by looking at the picture on its
[356]
face
[357]
but the kinks of the world wanted more
[358]
money and precious metals were too
[360]
expensive
[362]
to produce more money they started
[364]
slimming down the coins
[365]
then mixing the more expensive metals
[367]
with cheaper metals
[369]
soon all the coins in circulation were
[371]
worth less than what the image on their
[372]
face said they were worth and so the
[374]
illusion of money was born
[377]
the value of the coin was no longer
[379]
determined by the value of the metal
[381]
the value of the coin was now simply
[382]
what the rulers in the bank said it was
[385]
so one british pound sterling
[386]
represented one pound of sterling silver
[389]
however when international trade became
[391]
a thing people realized that metal coins
[394]
were too heavy to log around and so
[396]
kings around the world started issuing
[397]
iou certificates for long distance
[399]
trading
[400]
because these pieces of paper were
[402]
stamped by the king
[403]
people trusted its value and believed
[405]
that they could use it to get back
[406]
whatever it was worth in coins
[408]
and that was true for the time being
[411]
as more of these iou certificates
[412]
flooded the market people needed coins
[415]
less and less
[417]
until finally the paper was worth what
[419]
we believed it was worth even if we no
[421]
longer exchanged it for physical pieces
[423]
of gold and silver
[425]
from ancient kings to modern day
[427]
governments and central banks
[429]
money has remained an illusion
[431]
a mere representation whose value was
[433]
determined by the importance people
[435]
place on it
[436]
the most valuable bank note in
[437]
circulation today is the 10 000
[439]
singapore dollars note
[441]
although not being produced anymore
[443]
this single piece of paper worth 7
[446]
345 us dollars at the moment is still
[448]
regarded as a legal tender so you can
[451]
still use it to buy things valuable
[453]
things like houses cars and even metals
[456]
like gold
[457]
the banknote itself costs less than 20
[459]
cents to produce
[460]
but the illusion of the fiat currency
[462]
system means it's as valuable as 120
[464]
grams of gold
[466]
fiat is the fancy word we use to
[468]
describe the modern day illusion
[470]
it's a latin word that translates to let
[472]
it be done
[474]
it's a decree by the government that in
[476]
the case of money determines what its
[478]
value is and enforces it as legal tender
[482]
the illusion of money is one that we
[483]
never really think about but just like
[485]
the kings of old the governments of
[487]
today understand the power of money and
[490]
as always
[491]
want more of it
[493]
they know that the more of these pieces
[494]
of paper you have the more power you
[496]
have
[497]
so what do they do
[503]
well they can simply create more pieces
[505]
of paper out of thin air
[507]
yes if for example the united states
[509]
government wanted 340 million dollars
[511]
for
[512]
i don't know maybe another f-22 jet
[516]
they can simply print the money to do so
[518]
but there's one problem with this
[521]
inflation
[522]
the thing about money is that primarily
[525]
it needs to be a means of exchange to be
[526]
considered valuable
[528]
so the amount of money in circulation
[530]
needs to reflect the output of the goods
[531]
and services that are being produced
[533]
when more money is printed than there
[535]
are goods and services
[536]
all other things being equal the prices
[539]
of these goods and services increase and
[541]
the value of the money itself drops
[544]
this is why many economists and even
[546]
everyday people like you and me are
[548]
worried about the current global reserve
[549]
currency
[550]
the united states dollar
[552]
2020 was a terrible year for the entire
[554]
world
[555]
in the wake of the pandemic most
[557]
economies had to be shut down the goods
[560]
and services available in the general
[561]
output of the economy was reduced to
[563]
mere trickles
[564]
and the world kind of came to a halt for
[566]
a while
[568]
because there wasn't as much money
[569]
flowing around to keep the economy from
[571]
going under and basically our world
[573]
falling apart the us government started
[575]
printing money at a rate faster than has
[577]
ever been printed before in its entire
[578]
existence
[580]
right now
[581]
40 of the us dollars in existence today
[584]
were printed in the last 18 months alone
[587]
that's
[588]
outrageous and because the output of the
[591]
country hasn't really increased by that
[593]
much
[594]
eventually the prices of the goods and
[596]
services might start to skyrocket
[599]
you can see this taking place in the
[600]
price of commodities such as lumber
[602]
which had as much as tripled in price
[604]
from just a year ago
[606]
if you haven't noticed
[607]
some of the prices of the things that
[609]
your favorite restaurants are now
[610]
slightly higher than they were last year
[613]
it's an ever so small increase maybe the
[615]
guac at chipotle is 20 cents higher but
[618]
it's happening right there under your
[619]
nose
[620]
on the surface it seems like a good
[622]
thing that governments decided to send
[624]
out stimulus and unemployment checks to
[626]
their citizens
[627]
but the reality is it's a double-edged
[629]
sword
[630]
of course it helps those most in need
[633]
and that's a good thing
[634]
we're at the point where because of
[636]
inflation in a slowed economy people
[638]
really aren't able to get the right jobs
[640]
at the right times
[642]
sometimes it's not even because they
[644]
don't want them but because it's simply
[646]
worse than the alternative
[648]
for example in the united states at
[650]
least if you're a waiter or waitress you
[653]
aren't required by law to be paid even
[655]
minimum wage
[656]
some are literally paid two to three
[658]
dollars an hour with the rest of their
[660]
income coming from tips
[661]
but with a lot of restrictions and rules
[663]
in place around the country and not as
[665]
many people going out there's less
[667]
customers
[669]
less customers with less money means
[671]
less tips
[672]
if your employees aren't making enough
[674]
money
[675]
they're going to quit simple as that
[678]
if your business doesn't have employees
[679]
to help you run it you're going to go
[681]
under
[682]
it's a domino effect
[684]
but what can you even do
[686]
when you can earn more money from
[688]
unemployment and stimulus checks than
[689]
you would from being employed
[691]
why even look for a job in the first
[693]
place
[694]
you see
[695]
the federal reserve of the united states
[697]
is a very sneaky way for the government
[698]
to essentially create money out of thin
[700]
air and pump it into the economy without
[702]
people thinking too much about it
[704]
before 2020 the united states was 29
[707]
trillion dollars in debt
[709]
it's an unbelievable and inconceivable
[711]
amount of money to even begin with
[713]
this debt is obtained in the form of
[714]
bonds and treasury notes which are
[716]
basically just pieces of paper that say
[718]
the government will pay you so and so
[719]
amount plus interest
[721]
right now a 10-year us treasury bond
[724]
will return you about 1.23 on your
[726]
investment at expiry so if you put in a
[728]
thousand dollars today you'll have made
[730]
12 dollars and 30 cents by 2031.
[734]
that sounds terrible already but to add
[736]
icing onto the cake
[738]
it doesn't even keep up with inflation
[740]
which is targeted to stay around 2 a
[742]
year
[743]
it's a lot higher than that but that's
[745]
for another time
[746]
by investing in government notes of your
[748]
own country which issues the currency
[750]
you use every single day
[752]
you actually lose buying power over a
[754]
decade
[755]
it is weakened by the day
[757]
but regardless banks businesses and
[760]
individuals around the world buy these
[762]
bonds and treasury notes and the
[763]
government uses all that money it gets
[765]
back how it sees fit
[766]
however when it's time for the
[768]
government to pay its debt all the money
[770]
they made has already been spent
[773]
so they buy back all the treasuries and
[774]
bonds but only from the big financial
[776]
institutions and then pay them back with
[779]
new money
[780]
created out of thin air
[784]
since march 2020 the federal reserve has
[786]
bought back over one trillion dollars in
[788]
bonds and is planning to continue to do
[790]
so for the foreseeable future
[792]
with all the new money pumped into them
[794]
by the government banks can now give out
[796]
more loans to people earn more interest
[798]
and help grow the economy but this
[800]
increases the total amount of money in
[802]
circulation
[803]
reducing the value of each dollar
[805]
with multi-trillion dollar stimulus
[807]
payments and infrastructure packages it
[810]
makes you wonder how long the stuff can
[811]
go on for
[813]
new money steals value from old money
[816]
the amount in your bank account doesn't
[817]
change but because of the new money the
[819]
government has just printed out of thin
[821]
air your money is no longer valuable as
[823]
it once was
[825]
basically
[826]
every second you store your wealth in
[828]
any fiat currency such as the us dollar
[831]
it is being devalued
[832]
you could stare at your bank balance and
[834]
day by day
[836]
you'll be able to buy less and less
[837]
things with whatever you have left
[840]
the reality that money is nothing but an
[841]
illusion is one that we must all embrace
[844]
because only then will the path to
[845]
financial freedom become clear
[848]
it's all a game a game that never truly
[851]
ends
[852]
understanding that money does not have
[853]
any intrinsic value in itself but
[855]
instead only inherits the value we give
[857]
to it will prevent you from trying to
[859]
store up your wealth in currency
[861]
instead
[862]
using that money to acquire assets that
[864]
will appreciate faster than inflation is
[866]
the only way to win the game
[869]
and it's not really winning it's
[871]
avoiding total loss
[873]
as more and more money is printed each
[875]
and every day the value of each dollar
[877]
in your pocket will continue to decrease
[880]
but the dollar value of the assets
[881]
around the globe will continue to
[883]
appreciate in value
[885]
but it's all a mirage it's smoke and
[887]
mirrors
[888]
a stock market that is literally in up
[890]
only mode may make it seem like it's all
[892]
okay
[893]
but it isn't
[894]
it's all denominated in the same
[896]
currency that is slowly dying each and
[898]
every day
[899]
for example if you were to denominate
[902]
the dow jones which is just a
[903]
performance measurement of 30 large
[905]
united states companies in terms of gold
[907]
instead of usd you'll see that we're
[909]
basically at the same place we were in
[911]
1997
[914]
smoke and mirrors
[916]
but what's the end goal of all of this
[919]
with fiat and an unlimited supply of
[921]
money will the value of each currency
[922]
just continue to decrease until the end
[924]
of time
[925]
will the gap between the rich and poor
[927]
just continue to grow wider and wider
[929]
or are we finally going to fix a problem
[931]
as old as man itself and stop placing
[933]
our financial success in the hands of
[935]
those who are destroying it day by day
[938]
only time will tell
[940]
but just know
[942]
there is a way out
[950]
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[Music]
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