Let’s look at the “serious” fiat currencies:
- USD: United States Dollar
- EUR: European Union Euro
- JPY: Japanese Yen
- GBP: British Pound
- AUD: Australian Dollar
- CAD: Canadian Dollar
- CHF: Swiss Franc
- SEK: Swedish Crown
- DKK: Danish Crown
- NZD: New Zealand Dollar
- TWD: New Taiwan Dollar
- KRW: South Korean Won
Most of these currencies could lose some of their value, but they will most likely not suddenly become worthless, with the exception of the USD and the EUR.
With the USD and the EUR, there is another problem. There are gigantic holdings in USD and EUR that could suddenly seek to flee in commodities, catapulting their prices through the roof. Therefore, with these currencies there is a sudden death scenario possible. If a loaf of bread goes from 1 dollar to 100 dollars in a matter of weeks, the fiat currency system would start hyper-inflating and go on its face in a matter of months, globally. All that is required for this to happen, is a flight from bonds or stock or even cash into commodities. Inflation gets exported and imported through international trade prices all across the globe. The event would engulf the entire globe in a matter of weeks.
The volume of the other ten “serious” currencies is too small to be able to do this.
All other fiat currencies on the globe are not “serious”. They are effectively Mickey Mouse money. In fact, all fiat money is Mickey Mouse money, but the “serious” currencies are able to slow down the relentless execution of the Theorem of Voltaire:
Theorem of Voltaire: Paper money eventually returns to its intrinsic value – zero.
We can transliterate the Voltaire process as following:
The fiat-emitting government will fund its expenses by emitting additional fiat money but will ultimately fail to collect enough taxes, or borrow back enough fiat money, to offset the continuous increase in money supply.
The Voltaire process is ultimately powered by the Laffer process:
The taxation base keeps adjusting to the existence of taxation rules in such a way that it keeps undoing the effect of taxation.
The difference between “serious” fiat currencies and Mickey Mouse currencies is the substantially lower taxation elasticity faced by the “serious” currencies. Even though on the long run the results will invariably be the same, you can say that the US dollar and the Euro are kept afloat by the ability to keep increasing the taxes and extract these increased taxes out of the population in the US and Europe. The Laffer and Voltaire processes will ultimately still kick in, because you can only temporarily increase taxes beyond 100% by supplementing tax revenue with increased borrowing.
Therefore, “serious” fiat currencies are only seemingly “serious”. On the long run, they are not “serious” either. The question there is: Should we face the truth now (“unserious” currencies) or is it ok to face it only later, in the long run (“serious” currencies)? The canonical answer by John Maynard Keynes, is:
In the long run we are all dead.
Keynes wrote this in 1923. And yes, Keynes is dead now. It’s 2015 now, 92 years later, but we are here, alive and kicking, and a bit puzzled because the same question seems to resurface again. Indeed, we could not care less what people should be doing in 92 years, that is, in the year 2107. That is not our problem. We will all be dead by then.
The Voltaire process guarantees that fiat system automatically degenerates. Therefore, the next fiat crisis is unavoidable. Governments will do whatever it takes to keep the fiat system afloat during the next fiat crisis. That is why you can expect a massive tax increase. They will also proceed by forcibly borrowing the population’s savings. You can correctly call it a confiscation. In order to support their ambitious taxation efforts, they will need to implement a fully-fledged surveillance state. The US and Europe will turn into nazi police states.
All this can happen any time now, because the volumes of the USD and the EUR are large enough to cause a rapid systemic collapse that will drag along all other fiat currencies. The Voltaire/Laffer processes unabatedly keep pushing in that direction.
When that happens, you will literally have to run for your life. You can run in two directions: Gold or bitcoin. But then again, it is not that simple, because you can reasonably expect the new police state to start searching for both. When push comes to shove, they will not just confiscate your now worthless fiat money, but also your gold and your bitcoins.
You will need to conceal your money, and quickly. The only safe place to store your money is your own mind.
This is a 12-word BIP39 mnemonic controlling 5 million dollars of your assets:
busy health matrix harbor quiz project bean deer coffee nasty afraid biology
It translates into the following BIP32 private key:
Your money will be sitting somewhere at the start of the following unbounded sequence of bitcoin addresses:
The global bitcoin miner collective recognizes only your signature for money in these addresses and no one else’s. They will not listen to anybody else concerning your money. Either you can sign, because you know the private key, or else you get ignored.
Memorize your BIP39 mnemonic and then destroy all evidence that it exists.