The currency game: are we all just collecting points?

When money loses its value, it becomes a matter of point collection.

Just like a video game, the better you play, the more coins you collect.

Have you ever questioned why money loses its value?

I did.

My view is that money is money.

How could such a thing lose value?

When it's the tool to buy everything you want if you have the money.

Money has become a product, not a fixed-value asset.

Economic and political events can impact its value.

I have always tinkered with:

• Why today’s dollar won’t buy me tomorrow’s coffee

• Why currency loses its purchasing power year over year

• Who decides to depreciate currency and why

Before getting to the answers, let's talk about the impact and history of money and how it's a tool to tame societies.

The history of money

Life before civilization was different. We were hunter-gatherers. You hunt for your food and create your own shelter.

A direct exchange of effort for food.

While we have become civilized, we still need to secure food and shelter. However, instead of directly hunting, we exchange our efforts for money, which we use to buy food and shelter.

So, it's an exchange of effort for a coin.

Money has taken different forms between prehistoric times and civilized societies.

The first form of value was the barter system, where two people exchanged goods—such as trading an apple for a loaf of bread.

The system worked well, but problems eventually arose.

For example, you can't exchange a piece of meat for a piece of bread. As meat has more nutritional value than bread.

People began to understand the concept of value. So, this led to the use of commodities with intrinsic value as a form of money for better trading, such as:

• Shells, beads, and other decorative items

• Salt, for its value for food preservation

• Livestock and grain

As societies and economies became more complex, precious metals like gold and silver became currency due to their durability, portability, and inherent value.

The concept of first paper money developed in China during the Tang Dynasty (618-907 AD).

And medieval banking in Europe gave rise to representative money (paper for precious metals).

Today, currencies are 'fiat,' meaning their value comes from government backing rather than physical resources.

Money as a tool of control

Money has become a foundational aspect of life. It's the reason you wake up every morning, especially if you're not well-off or rich

You can't navigate life without means. To get what you need and want, you have to provide value.

In the early stages of life, you work to cover the essentials. Later, you work to earn enough money to acquire assets and experience different things.

Money is the enabler to learn about life.

The greater the value you provide, the higher the return, giving you access to many things in life.

The stronger the currency, the better the quality of your life.

But over the years, slowly but surely, currency depreciates.

If today’s coffee costs one dollar, next year it might cost $1.10.

When one dollar can’t buy a loaf of bread, it indicates a problem with governance or economic policy.

Some rulers would ensure that the price of bread is capped to secure their monarchy and prevent social unrest.

In modern life, it is becoming increasingly difficult to access many of the things people desire. Year after year, you slowly but surely have to give up.

Restructuring societies hierarchy

Over the years, you work to afford the basics and necessities.

When you have no purchasing power, societies become weaker and more vulnerable to the rulers.

Depreciating currency is a major tool for controlling modern economic conditions and contribute to modern slavery.

It's called monetary policy for a reason. The explicit purpose is to manage the economy, while the implicit effect to control and constrain societies.

Governments generally do not want 80-90% of their population to be pioneers, as this would undermine their monopolistic control.

So, those who succeed—typically 10-20% of the population—are considered sufficient by rulers to drive the development of the country in various aspects.

If you own a business, you wouldn't want to lose market share. You wouldn't want competition.

Among those who succeed, they have two choices. Since wealth brings power, you can either align with the government or stay in your own lane and enjoy your wealth.

Raising the bar for a comfortable life by increasing the prices of basic necessities disturbs your peace of mind. It becomes harder to break free from modern economic slavery.

Monetary policy as a soft power

When some societies enjoyed freedom of speech and prosperity, it created challenges for governments dealing with public dissent. Recognizing this, states are trying to revert to more controlled or restrictive practices, reminiscent of ancient times.

They can only achieve this through soft power, by designing and implementing monetary policies.

Now, why and how currency lose its value?

• One of the primary reasons for currency depreciation is inflation.

• Central banks implement expansionary monetary policies,

• If an economy underperforms relative to others, its currency may depreciate

• When a country imports more than exports, there is a demand for foreign currencies, which weaken the domestic currency

• Political instability erode confidence in a country's currency, leading to depreciation over time

• Some countries deliberately devalue their currency to gain advantage in international trade by making their exports cheaper

Some factors are by design, while others are due to circumstances.

Since inflation is the primary reason for currency depreciation, why do prices inflate when there is an increase in the money supply?

Why do prices also inflate when there is an increase in interest rates?

Because when you lower interest rates, borrowing costs go down, which increases the money supply. As a result, prices tend to inflate.

When you increase interest rates, money loses value, and prices become inflated

Regardless of the mechanism, monetary policy is designed to influence value of money and raise costs.

Imagine your coffee now costs $1.10.

Then the price went up to $1.40 because of inflation. After that, they adjust interest to manage inflation.

So now your coffee costs $1.25, which is the new fixed price. You accept this new price, thinking it has decreased. But this is not a decrease compared to the original price. The cycle repeats in a few years.

I can understand price spikes for rare raw materials, but not for an abundance of goods. Supply and demand should impact a particular product, not the entire economy.

Impacts of lowering value of money

Losing purchasing power affects quality of life, especially when a large number of people lack access to education, health, wellness, and other essentials.

So, the intellectual and behavioral levels become poor. Remember, rulers only need 15-20% of the population to lead a country.

Money becomes like points people collect in a game, similar to Super Mario.

Instead of being measured by value, it is measured by points.

Raise the quality of your value to collect higher points

Thanks to the internet, which has opened up unlimited opportunities for businesses of any kind and for building new ideas.

where you can connect with and market your products to millions of people worldwide. This allows you to accumulate more points than if you were working for someone else.

Learn the skills of the future. think what is the new relevance or create a new relevance. Nurture your creative abilities and your ideas. To reach the life you desire.

Will money take on a new form? Will we see cryptocurrencies become a standard form of digital money? I don't know.

Are we going to rely on gold and silver as money?

Is this the final form of money as we know it today?

Everything is possible; nothing stays the same. Just look at the history of money and how it began.

Who knows? The answer requires a futuring exercise

value is a realization comes with time by group of people.

Money provides peace of mind, much like car insurance. We should establish rules for pricing necessities such as food, shelter, transportation, energy, and health.

Thanks for reading!

See in the next letter.

Ahmed

PS two things I can help you with:

1. Run a business design discovery

Exploring and defining the strategic direction, objectives, and key elements to achieve market relevance. uncover opportunities, understand user needs, and design solutions that align with business goals.

2. Guiding and advising

Guide you and help you on a project you’re working on; need help to set direction to reach desired outcomes.