A better question would be "What is the value of the fiat currency in your wallet based on?"
I will answer the question if enough people are interested.
Here is my answer as to what you have in your wallet, and you may not like it.
Open your wallet and take out your paper money. It does not matter what country you are from. Whether you are in the U.S., Europe, Canada, Australia, Japan etc..
Take a long hard look at one of these bills, like a $20 bill. What does this represent? Take your time. Think long and hard. <I'll wait>
99% of you will say this $20 bill represents money.
And 99% of you would be wrong.
Your paper currency is not money. It is debt. Your government is still paying interest on that $20 bill that you hold in your hand. And this interest must be paid to the Central Bank that printed the $20 bill. Why? Because no country in the world (except around 3 or 4) are allowed to print their own currency. All other countries including your own, must borrow the money from your Central Bank. Your government provides bonds (U.S. treasury prints treasury bonds) and gives them to the Central Bank as collateral in exchange for the currency. Most people think this is OK because the government prints bonds (paper) and they get the equivalent paper in return in the form of currency, namely $20 bills. It is far from fair.
The bonds will come due, usually in 10 to 30 years and these bonds have interest owing on them. The government must pay the holder of these bonds their face value plus interest. If the government borrowed $10 billion and issued bonds with a 4% yield, after 30 years the government owes the principal, $10 billion, plus 224% interest which makes the total $32.4 billion (if I've done my math right). Where does the government get the money to pay off these bonds? Well, the treasury prints more government bonds and gives them to the Central Bank for more paper currency. And if the government's credit rating deteriorates, they will need to pay more interest, say 5% or 6% on these new bonds because the risk of default is higher. And after 30 years at 6% yield, the government will need to pay 474% interest which makes the total of $186 billion. So after 60 years, that original $10 Billion debt has ballooned to $186 Billion. And this is without incurring any new additional debt.
Ok, so most of you say, so what. They are exchanging paper for paper. What's the big deal?
When the country's credit rating fails, like Greece did, and the Central Bank (like the ECB - European Central Bank) is no longer willing to loan the government any more currency, the banks come in and will force the government to sell its public institutions for pennies on the dollar. The country will sell off its waste and water infrastructure to private corporations that are friends of the bank at deeply discounted prices. If the electrical grid is a public institution, it will be sold off to raise money to pay the interest on the debt. The government usually owns a very profitable lottery commission that makes billions of dollars for the government every year. Well, that gets sold for $30 million to more friends of the bank. The palms of the government officials are adequately greased so they do not put up much of a fuss. And the new super highways will become toll roads where the revenues are funneled to private corporations. Government land is sold to private interests so their resources can be plundered for pennies on the dollar. Every public corporation or utility that was bought and paid for by its citizens over the past 100 years, will eventually be turned over to private corporations at a pittance. These corporations will then turn around and double or even triple the cost of water, sewer, and electricity to the citizens of the country without lifting a finger to improve the existing infrastructure. The citizens will pay dearly in the end.
And if the government borrows more and more money for capital projects (which also increases its debt), inflation will increase because more money is put into circulation. There are more jobs, more wages and of course more money is needed to pay them. Anyone who has spent their life saving money will soon find their nest egg buys less and less every year because of inflation. Pension funds are never adequate to cover the high cost of living and this high cost of living is caused by more money in circulation that is driving up the prices.
But there is the other side of the equation that many of you never consider. What has the Central Bank put up in this transaction? (And here is the part you won't like.)
The Central Banks have put up the money for the paper and ink to print the currency. (Today it is just an electronic transfer so they don't even need to print money.) It costs the Central Bank around 15 cents to print a $100 bill and they charge the government the full $100 plus the interest that can never be paid back. The interest can never be paid back because only the Central Bank is allowed to print the currency. And the government can only borrow the currency at interest from the Central Bank to pay back the previous currency it borrowed years earlier. This cycle will continue until the debt gets so high the Central Bank calls in the loan and the private vultures come in to divvy up the goods. All countries will end up this way. If it hasn't yet happened to your country, then wait a few more years. With the massive amount of debt countries now owe, a small 3% to 4% rise in interest rates will make it impossible for your government to pay off the interest. 100% of the revenues the government collects in taxes and fees will go to the Central Bank just to pay the interest on the debt.
When a country gives up its right to print its own currency, its citizens become chattel for the banks. This happened in 1913 in the U.S. when the Federal Reserve was created, which in reality is a private bank owned by Wall Street along with a few foreign oligarchs. The Federal Reserve is neither Federal nor does it have any Reserves. Rather ironic, don't you think?
BitCoin and other crypto currencies (LiteCoin, Dash etc.), if allowed to flourish, will put an end to this Ponzi scheme by the banks because the currency will be created and controlled by the public. We will no longer need banks to issue currency or even loans. The banks cannot let this happen and will try their best to destroy Bitcoin and replace it with one of their own crypto currencies (Ripple?). If the banks are allowed to do so, then there will be no currency outside of the banks, and the banks will control every thing and own everything, including you and me.
This crypto currency war will affect everyone on the planet. We are headed to a cashless society whether we like it or not. The question is, who will control it?
I hope this has awoken some of you. If you want to know more how this bankster criminal organization operates, read "The Creature From Jekyll Island".
Oh, and don't forget to put your wallet away. In 10 to 15 years you probably won't need a wallet because there won't be a paper currency to put in it.
), then they will need a few more years than only 15.
