How Money Became a Grand Deception: The Evolution of Currency and the Reality of Capitalism
The Origins of Currency and Its Meaning
The earliest recorded form of currency dates back to around 2100 BCE in the Mesopotamian region, where shells were used as a medium of exchange. This is noted in the Code of Ur-Nammu, making it the first documented attempt by humans to assign value for the sake of trade. Later, in the 6th–7th century BCE, the Kingdom of Lydia—located in what is now Turkey—introduced a coin made from a gold and silver alloy called "electrum." The coin had an amber hue, leading to the Greek name "elektron," which also gives us the modern word “electric,” derived from the static electricity observed when amber is rubbed.
The Birth of Paper Money and the Erosion of Gold Standards
The first paper currency appeared in 11th-century China during the Southern Song Dynasty, known as “jiaozi.” Later, under Kublai Khan, the Mongol Empire enforced the deposit of gold, silver, and copper into state vaults and issued paper notes as proof. Initially, the public trusted this currency, but its unchecked issuance led to inflation and the erosion of public confidence. Eventually, the Mongol Empire was expelled from China within just 90 years.
Europe caught up in the 17th century when goldsmiths in Italy issued deposit certificates in exchange for gold. These certificates gradually gained public trust and circulated as money, laying the groundwork for modern banking. Interestingly, the English word “bank” originates from the Italian “banco,” referring to the desks used by Jewish moneylenders.
Currency vs. Money: A Subtle but Crucial Distinction
Though often used interchangeably, currency and money are fundamentally different. Historically, currency had intrinsic value, typically backed by gold or silver. Today, it’s no longer tied to any physical asset, relying instead on public trust and government authority. This shift underscores the uncomfortable reality that today’s money can become worthless at any time.
The Dollar, the Gold Standard, and the Beginning of a Deception
Following World Wars I and II, the United States emerged as a global superpower by supplying massive amounts of war materials. This resulted in a significant inflow of gold into the U.S., giving it control over two-thirds of the world’s gold reserves. In 1944, the Bretton Woods Agreement established the U.S. dollar as the global reserve currency, backed by gold.
Under this system, the U.S. pledged to redeem dollars for gold upon demand. However, it printed more dollars than its gold reserves could support. French President Charles de Gaulle caught on and began demanding gold in exchange for dollars, prompting other nations to do the same. With its gold reserves depleting, the U.S. under President Nixon unilaterally suspended the dollar’s convertibility to gold in 1971—an unprecedented act many view as a historic fraud.
The Federal Reserve and the Illusion of Control
The U.S. Federal Reserve, which issues U.S. currency, is not a government institution but a private corporation. Major shareholders include financial giants like JP Morgan and Rockefeller, many of whom are tied to Jewish capital. These stakeholders receive a 6% annual dividend from the Fed’s operations. The U.S. government issues bonds, which the Fed monetizes by printing dollars at a negligible cost. This modern fiat system mirrors the 17th-century goldsmith model.
Such mechanisms exacerbate America’s fiscal deficit and export inflation worldwide. Countries like China have responded by stockpiling gold and promoting the internationalization of the yuan. But a multipolar reserve currency system—comprising the dollar, euro, and yuan—will not resolve the underlying issue: fiat currencies are essentially just paper.
Banking Practices and the Mechanics of Inflation
Modern banks operate on a fractional reserve system, holding only a fraction of their deposits while lending out the rest. If the reserve ratio is 10%, banks can theoretically lend out 10 times the amount of physical currency held. This increases the money supply and, eventually, triggers inflation. The U.S., as the issuer of the global reserve currency, can export this inflation—a unique economic privilege.
Inflation quietly erodes public wealth. Prices rise while wages lag, reducing real purchasing power. In his book "Capital in the Twenty-First Century," French economist Thomas Piketty argues that capital income growth outpaces labor income growth. However, when adjusted for inflation, real wages may have actually declined over time.
Capitalism and Its Fragile Equilibrium
Capitalism thrives on free markets but often teeters on collapse. After the Great Depression of 1929, Keynesian economics gained traction, advocating for government intervention. President Roosevelt’s New Deal is a classic application of Keynesian principles. However, from the 1970s onward, neoliberalism resurged under Friedrich Hayek’s influence, emphasizing minimal state intervention.
South Korea adopted neoliberalism following the IMF crisis, and inequality worsened. In contrast, Northern European countries embraced welfare capitalism, achieving a balance between growth and redistribution.
The Great Deception and Life’s Rhythmic Cycles
Modern financial systems are so complex and opaque that most people cannot fully grasp them. Yet they are designed to concentrate wealth and power among a few. Understanding and questioning these systems is essential to becoming an informed citizen.
Everything moves in cycles—economies, politics, human relationships. Just as Earth’s rotation and orbit are not perfectly constant, our lives too follow patterns of change. Real transformation begins not in distant revolutions but in our understanding of where we stand and what we choose to see.
