The post-1971 buck was cut off from the reality of time, resources, skills, and output. It was a credit-backed dollar, not an asset-backed dollar …

The post-1971 buck was cut off from the reality of time, resources, skills, and output. It was a credit-backed dollar, not an asset-backed dollar …

— Bill Bonner Letter October 2016

The post-1971 buck was cut off from the reality of time, resources, skills, and output. It was a credit-backed dollar, not an asset-backed dollar. The pre-1971 dollar represented real wealth – it was tied to the real economy (which produced real wealth) by gold. And dollars tended to end up in the pockets of people who added real value.
The post-1971 dollar was different. It represented wealth that had not yet been produced. It was a claim on future wealth… not actual, existing wealth. And it ended up in the pockets of politically favored industries – especially Wall Street.
Since it was not connected to gold or to the real economy, the quantity of these new dollars could be increased easily. The quality could not. Every new dollar increased the amount of debt in the system. Thus did the claims on future wealth multiply far faster than actual wealth output.”

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