What is money today? Only gold bugs, Bitcoin maximalists, and Wall Street insiders know the true answer to this question.

The truth is, money today (in America) is debt. And it's also a scam.

Those who buy worthless debt by working for it or saving in it are the losers. The bagholders. You own an empty promise which, at this point, will never be paid back in real terms. There is simply too much debt in the system for all of it to be paid back in real terms. This was true since a loooong time ago. And eventually the world will wise up to this.

Those who spend worthless debt to buy real goods, services, and assets are the winners, so long as they never have to actually pay back that debt themselves. They could do this by:

• Repeatedly taking on cheaper debt to pay back their existing debt. Which really just amounts to stealing from the public at this point because none of that debt is ever getting paid back in real terms
• Renting out the asset to pay for their debt service costs
• Defaulting on the debt

So long as the rate that debt is devalued is higher than the interest rate on the debt, it always makes sense to take on debt.

Rest assured that those in the know are taking COMPLETE advantage of the system by spending on the public's dime and acquiring all assets of real value, including sound money such as gold and Bitcoin.

Breaking down the different types of debt

In a world with sound money, the same money can be used both as a medium of exchange and a store of value.

But today, those functions have been broken down into different kinds of pseudo-government-debt. Dollars are used as a medium of exchange, but other forms of debt are used as stores of value. Generally, the more leverage or intrinsic value is in the debt, the more slowly it is devalued and the better it serves as a store of value. The rate at which debt is devalued is inflation.

Before I get into things, a note about inflation - there are different kinds of it. The average person typically thinks of CPI when they hear "inflation" but that's actually a very consumerist and noisy signal because CPI factors in different things like advances in technology, globalization, shrinkflation, etc. A more accurate gauge of inflation is monetary inflation, which is the rate of increase in the money supply. One could also use the price of scarce assets (ex: Miami beachfront property or blocks of land in Manhattan) as a measure.

I shall list the types of debt in increasing order of value preservation, and then elaborate on each:

• US dollars
• bonds
• stocks
• real estate

Debt 1: US Dollars

People typically think of US dollars as "cash" but in fact, US dollars are simply debt that doesn't have a yield. The reason I say dollars are debt is that US dollars used to be gold IOUs (a gold debt) until this backing was violated in 1971. Historically, humans have used gold as money, and only used paper as money when there was an explicit guarantee that the paper was backed by gold. Historians will look back at this time period from 1971 to now, during which humans accepted unbacked, easily counterfeitable green pieces of paper as payment for their scarce labor and resources, as a complete anomaly and very unfortunate period for the average, uninformed human.

I also consider US dollars as debts that have already been defaulted on a long time ago because we know the US empire will never be able to redeem creditors' dollars for gold at the original gold peg, much less any other actual good like commodities or rare metals. Unless the declining US empire somehow manages to colonize the entire world soon, the dollar is toast. The US empire is currently running on green paper fumes and its only a matter of time until it won't be able to do so anymore.

Obviously, no one with any meaningful amount of wealth holds their life savings in cash. This much is standard procedure, as inflation is a seminal part of public discourse. NEXT!

Debt 2: Bonds

Bonds, unlike cash, have a yield. These have typically been recommended as part of a "balanced portfolio", with the most common being US Treasuries.

The problem is that at this point, nominal bond yields are extremely low due to monetary easing policies of low interest rates. Compared to the rate of money creation and inflation, bonds today have a very negative real return.

Bonds are inherently leveraged because at this stage in the long-term debt cycle, they're all a carry trade. You lend money to someone at X% and they'll borrow at Y% (where Y < X) to pay you back. The alternative, of course, is default, because with the amount of debt that's in the system, the only way to pay off all this debt is with even more debt.

Debt 3: Stocks

Stocks are often recommended together with bonds as part of a "balanced portfolio" although they are becoming much more preferred than bonds in recent years.

Stocks have had exceptionally good returns in recent times. This is due to stocks becoming increasingly monetized as a store of value, which is a result of people choosing to invest their savings in the stock market. However, such monetization-based gains can't go on forever because there is a limit to how many people can redirect their savings to the stock market.

I consider the stock market to be a pseudo-debt of the US government, in the sense that it is a savings vehicle for people and institutions all around the world, "backed-up" by the US economy. The American public uses it like a retirement fund in the form of a dollar piggy bank, which follows a "dollars in vs dollars out" dynamic. The scary thing is that there's absolutely no way everyone will be able to withdraw their dollars from the stock market piggy bank at today's valuations because the stock market cap is insanely high. Were a dollar bank run to ever occur, people would be in for a large surprise.

The reason why I consider the S&P 500 to be highly leveraged stems from the fact that the US economy is entirely based on debt. Essentially, most of the demand in the US economy stems from debt, such as consumer debt, government debt, and corporate debt. This debt is then leveraged up through lagging daisy chains of spending (one man's spending is another man's income) and accounting magic (PE ratios, growth estimates, etc) to eventually result in the extremely leveraged stock prices we see today.

Obviously the S&P 500 does have some intrinsic value. I contend that this well-understood fact is what has led so many to invest their savings in it as inflation has pushed everyone out of cash. However, I believe the MAJORITY of the stock market valuation today is based on debt and monetization.

Debt 4: Real estate

Real estate is a little complex but among the 4 forms of debt I'm describing, it's the best form of debt to save in because it's HIGHLY levered, and a necessity of life for all people.

It's quite sad that housing has become so unaffordable for the average American. I believe this is a function of:

• the average American being quite poor
• housing being scarce in desirable areas

There is a tradition of taking out extremely long-duration debt at low interest rates to purchase housing. Despite the debt being collateralized with actual real estate, it is still a debt bubble, and can only be paid back through ever-increasing debt subsidized by the American public. In contrast, in a world of sound money, such debt would be unavailable, or at least only available at much shorter durations and higher real interest rates.

In today's debt-driven economy, cheap debt and low down payments enable real estate to be used as an extremely leveraged savings vehicle. You can put down a small down payment, leverage it up and collateralize a house with debt, and eventually sell the house to someone else for a greater amount of even cheaper leveraged debt. The high leverage enabled by a small down payment and cheap debt has historically allowed one to outperform inflation and earn a positive real return in the environment of cheaper and ever-increasing debt over the last four decades.

What confuses people from understanding that real estate is a bubble is that real estate has a lot of intrinsic value (land and structure). Since everyone needs housing, everyone is forced into the housing market, bootstrapping a lot of demand. However, that doesn't change the fact that practically everyone is a leveraged bidder out of choice or necessity, creating a debt bubble in the housing market.

Without government-subsidized demand in the form of cheap debt, here's what would happen to the housing market:

• The most immediate and obvious effect is that net demand would collapse, since one would only be able to bid for a house with cash or expensive debt, not cheap debt
• This would result in a collapse in house prices. It would also result in a collapse in housing production. The reason for this stems from the fact that the cost of building a home is actually quite high today. Without demand that sufficiently exceeds the costs of production, production would stop
• The truth is, most Americans today can't afford to own a house without debt and without government-subsidized housing demand, are living far above their means. To house everyone without debt, there would have to be a lot of cheaper housing created, such as multifamily homes or apartment homes
• Ideally, renting would only be done by poor families with little savings, with any middle class person being able to own their own house outright, much like most people own their own cars outright today. This would shrink the rental market and greatly reduce the incentive to use real estate as an investment tool. In highly desirable areas, only extremely affluent people would be able to live since housing would be limited, or people would have to live in smaller dwellings. However, this kind of world isn't coming back until the world goes back to sound money and invests in savings and production

Closing thoughts

This is just a high-level peek into some of the most ubiquitous forms of debt in the US economy. One form of debt that I haven't covered is financial derivatives.

If you understand that the belief that debt bubbles can go on forever is a belief that has a positive reflexive feedback loop, you'll know that at some point, this bubble will come to an end. I hope you are prepared for when that time eventually comes.