Lesson 1 of 10

What is Money?

Everyone feels the pain. Few understand what's causing it.

A Little Back Story on Me First

In 2020, my wife and I were expecting our first child. We owned a home. We were making more money combined than ever before. But for some reason, we just couldn't get ahead.

We'd been in our house since 2018 and hadn't built any real savings, nothing to prepare for a baby and everything that comes with one. I couldn't wrap my mind around why we were "just getting by."

So I checked the spending. We weren't going on trips. We ate out only a few nights a month (I actually like to cook at home). Amazon packages showed up from time to time, but nothing outrageous. I assumed it had to be indiscriminate spending. Nope. Checked the grocery bill: ouch. Checked the electric bill. Checked how much gas we were burning through.

It wasn't a lavish lifestyle draining our bank account. It was just living. And every year, living cost more. Not because we'd changed our habits, but because the money itself was changing. Becoming worth less.

That realization started me down a path to find out why. And that path led me to the question I had never thought to ask before: "What is money?"

The answer to that question ultimately led me to Bitcoin. But first, I needed to understand why the ruler we were using to measure the cost of living kept shrinking. You may have found yourself reading this because you're wondering the same thing, feeling the same squeeze. Or maybe everything seems fine for now, but you keep hearing about Bitcoin and how so many people believe it's important. Either way, my intent with this 10-part Beginner course is to show you why.

Something Doesn't Add Up

Think About This

Your grandparents raised a family of five on a factory worker's salary. Your parents bought a house on a single income. You have a college degree, two incomes, and you're still living paycheck to paycheck. Something changed. But what?

Start with the things you actually buy. In 1970, a gallon of gas cost 36 cents. At minimum wage, that was about 13 minutes of work. In 2024, gas is $3.50 a gallon. At today's federal minimum wage, that's 29 minutes of work, more than twice as much of your life for the same gallon.¹ A dozen eggs cost 61 cents in 1970 and $3.20 in 2024. During the 2023 spike, they hit $4.82, about 40 minutes of minimum-wage labor for a single carton.²

You're told the economy is growing. So why does it feel like you're falling behind?

Most people describe this feeling the same way: "Prices keep going up." That's what it looks like. But if you measure the last hundred years of American life in dollars, something doesn't add up.

The chart above is not a chart of rising prices. It is a chart of a shrinking dollar. A 1913 dollar buys about three cents' worth of what it bought when it was minted³, a ninety-seven percent loss of purchasing power, by the government's own official inflation measure. And the steepest part of the decline comes after 1971, a date we'll return to.

The Core Insight

When everything costs more, the problem isn't the goods; it's the unit of measurement. Imagine your ruler shrank by one percent every year for a hundred and eleven years. Everything built in years past would measure larger now, but nothing would have actually changed in size. Every measurement you take today is a lie.

That is what has happened to the dollar. The ruler has been shrinking for a century, and faster every decade. The prices didn't rise. The ruler shrank.

An Old Warning

"A false balance is an abomination to the Lord, but a just weight is his delight." (Proverbs 11:1)

Three thousand years ago, Scripture named the thing we're measuring in this chart. A false balance (a scale that has been tampered with) was considered not just dishonest but morally corrupting. It cheats the buyer, enriches the seller, and quietly corrodes every transaction in the marketplace. The people who wrote that verse did not have central banks. But they understood, in a way most of us have been trained to forget, that a measuring tool that lies is a weapon against the people who trust it.

Sources: ¹ US Energy Information Administration, retail gasoline prices; BLS minimum wage history. · ² Bureau of Labor Statistics, Average Retail Food Prices. · ³ Federal Reserve Economic Data (FRED), Consumer Price Index (CPIAUCSL).

Gold: A Better Ruler

Imagine This

You're building a house. You've created blueprints with every measurement, every inch meticulously planned. While building the house, every week, an inch becomes 10% shorter. By the time you finish building, what you have looks more like a fun house than somewhere to live. How can you plan to build a house under those conditions? How do you plan for your financial future when your money works the same way?

Here's where inflation becomes undeniable: compare prices in dollars to prices in gold. (All figures use 2024 annual averages (gold at ~$2,625/oz, oil at ~$77/barrel) to avoid distortion from the sharp gold rally and oil volatility in 2025–2026. Today, gold trades around $4,800 per ounce.¹ The dollar's decline is not getting better; it's accelerating. These numbers are conservative.)

Item	1913 (Dollars)	2024 (Dollars)	Dollar Change	1913 (Gold Oz)	2024 (Gold Oz)	Gold Change
Barrel of Oil	$0.95	$77	+8,005%	0.046 oz	0.029 oz	-36%
Median Home	$2,500	$420,400	+16,716%	121 oz	160 oz	+32%

Read those numbers again. Read them slowly.

Stop and Think

If a house costs roughly the same amount of gold today as it did in 1913 (over a hundred years of "price increases") then the house didn't get more expensive. So why does it take 168 times more dollars to buy it?

The answer isn't complicated. It's not supply chains, greed, or bad luck. It's the money itself. When governments print trillions of new dollars, every dollar already in your pocket buys less. Prices don't go up; the dollar goes down. That's inflation. And it's the single biggest reason your paycheck doesn't stretch like your grandparents' did.

Oil in Dollars (1913 ? 2024)

Oil in Gold (Decreased)

Dollar Value Lost in Gold Since 1913

The table tells the whole story. Oil is actually cheaper in gold today than it was in 1913. Housing barely moved; the modest increase reflects real factors like population growth, land scarcity, and zoning restrictions. Almost all of the sticker shock you see in dollars is the currency losing value, not the goods gaining it. In real terms (measured in gold) the world is more productive and most things cost about the same or less. They don't in dollars, because the dollar itself is worth less.

Why Gold Is the Better Ruler

Gold's supply grows by about 1.5–2 percent per year through mining², a rate set by physics and geology, not by committee. You can't print gold. You can't create forty percent more of it overnight. For thousands of years, gold served as money precisely because its supply was hard to manipulate. It was the ultimate honest ruler.

The Federal Reserve also targets roughly two percent inflation per year. That is not a coincidence of nature; it's an arbitrary number picked by the Reserve Bank of New Zealand in 1988 and adopted by central banks around the world in the decade that followed.³ It's the number bureaucrats decided you should lose each year so they could manage the economy. Gold's 2 percent is a constraint. The Fed's 2 percent is a policy. They look alike on paper. They are built from opposite principles.

The dollar, on the other hand, has no limit. The Federal Reserve can create as much as it wants, whenever it wants, for whatever reason it wants. And it does.

Two Schools of Thought

Keynesian economists argue moderate inflation is healthy. It encourages spending, prevents hoarding, and keeps the economy moving. From this view, the dollar losing value is a feature, not a bug, a tool for managing the economy.

Austrian economists say that narrative confuses cause and effect. They argue that inflation is an expansion of the money supply that transfers wealth: from savers to borrowers, from ordinary people to those closest to the money printer. From this view, the dollar losing 97% of its value is theft in slow motion.

It's worth asking why one school dominates. A fiat system gives government the ability to spend beyond its means (fund wars, bail out banks, run deficits) without directly raising taxes. A sound money standard constrains that power. So which economic school do you think gets more institutional support? The one that says the government should have less control over money, or the one that says it should have more? Keynesian economics dominates academia not because it won the debate, but because the institutions doing the teaching are funded by the system Keynesian policy sustains. That's not conspiracy; it's incentive alignment.

This course will present both perspectives. But we'll always check them against the data, because facts don't care about economic theories.

The 2% Lie

The Federal Reserve calls 2 percent inflation "healthy." James Lavish, a former Wall Street portfolio manager, does the math most people never see: at 2 percent per year, your purchasing power falls by 45 percent over a 30-year career and 64 percent over a 50-year lifetime.⁴ "That's not a target," he writes. "It's a sentence."

And the Fed has not even met its own target. Real inflation has averaged closer to 3.2 percent per year since 1913,⁵ which is how a clean 2 percent sentence turned into a 97 percent loss of the dollar's purchasing power over 111 years. Meanwhile gold, whose supply cannot be inflated by decree, held its value over the same stretch. The dollar didn't come close. Which of those two rulers looks healthy when you zoom out?

Your 401(k) Priced in Gold

In 2000, the S&P 500 was worth about 44 ounces of gold. In April 2026, it's worth about 1.1 ounces.⁶ The dollar price of the index went up (that's the chart CNBC shows every night) but over the same 26 years, the broadest measure of the American stock market lost roughly 97 percent of its value when measured against sound money.

This is the same Lavish math, pointed at the one place most people are sure they're winning. You were told your 401(k) was growing. The account balance got bigger every year. But the ruler you were using to measure that balance got shorter every year, too. The stocks didn't grow. The ruler shrank underneath them. That's the difference between real returns and nominal returns.

Sources: ¹ London Bullion Market Association, gold PM fix (April 2026). · ² World Gold Council, Gold Supply and Demand Statistics. · ³ Reserve Bank of New Zealand, history of inflation targeting; BIS monetary policy archives. · ⁴ James Lavish, The Informationist, "The Stealth Tax." · ⁵ Federal Reserve Economic Data (FRED), CPI-U historical series (CPIAUCSL), 1913–2024 annualized. · ⁶ S&P Global, S&P 500 index; LBMA gold price; author calculations (index level ÷ gold price/oz).

What Is Money?

Section 2 showed that our ruler is broken. Before we talk about what might replace it, we need to look at what a working ruler is supposed to do, and why, for five thousand years, the answer kept coming back to the same thing.

The Problem Money Solves

Early humans bartered: I trade you a chicken for your basket. But this creates a problem called the double coincidence of wants. You have baskets. I have chickens. But what if you don't want a chicken for your baskets? Trade breaks down.

Money solved this by becoming a universal intermediary. I sell my chickens for money, you sell your baskets for money, and now I can buy your baskets anytime. Money is the lubricant that makes the economy work.

The Double Coincidence Problem, And How Money Fixes It

What Money Has to Do

Good money must do three things:

Medium of Exchange

Widely accepted in trade so people don't have to barter.

Store of Value

Maintains purchasing power over time so you can save.

Unit of Account

A standard measure for pricing goods and services.

Gold Won for 5,000 Years

Thousands of years ago, civilizations independently discovered that gold worked best. It's scarce, durable, divisible, portable, and widely accepted. Civilizations from Egypt to Rome to China converged on gold as the ideal money, not because anyone mandated it, but because it worked better than everything else.

The Real Pattern

When multiple independent cultures choose the same solution, that's not an accident. It's evidence that the solution is right. Gold wasn't imposed by decree; it was discovered through trial and error to be the best money that naturally emerged. For thousands of years, gold was the money.

The One Thing Gold Had, And the One Thing That Just Surpassed It

Economist Saifedean Ammous calls this specific property the stock-to-flow ratio, the existing supply (stock) divided by the amount produced each year (flow). Gold's stock-to-flow is the highest of any metal; roughly 60 years of mining at current rates would be needed to double the above-ground supply. "Gold was chosen by the market," Ammous writes in The Bitcoin Standard, "because it had the lowest flow, the slowest supply growth, of all metals."¹ The market didn't pick gold for its color. It picked it because you couldn't print more of it.

Here's the part most people have never been told. By the one measurement that made gold the monetary king for five thousand years, gold is no longer the leader. After Bitcoin's April 2024 halving (an event hardwired into the code every four years that cuts new issuance in half) Bitcoin's stock-to-flow ratio passed gold's. Gold sits around 60. Bitcoin sits above 120, and it doubles again in April 2028.² We're not arguing this makes Bitcoin "better money" yet. We're saying that by the ruler Ammous says the market actually uses, there is now a new candidate.

The Nixon Shock: 1971

In 1971, President Nixon ended the gold standard. The dollar was no longer backed by a fixed amount of gold. It became fiat currency: money by government decree, backed by nothing but the government's promise to accept it for taxes.

Economists still argue over what that meant. Keynesian economists call it necessary evolution, freeing governments to respond flexibly to crises. Austrian economists call it the moment governments gave themselves permission to debase their citizens' savings without limit. The data in this lesson doesn't settle that argument. It simply shows that something broke after 1971, and the cost is not hypothetical.

In 1971, gold was fixed at $35 per ounce. Today, it trades around $4,800.³ That's not gold going up. That's the dollar collapsing against real money. The dollar has lost over 99% of its purchasing power measured in gold since Nixon cut the tether, and the acceleration is the point. It took 58 years, from 1913 to 1971, for the dollar to lose about 41% of its gold value. It has taken just 55 years since Nixon to lose almost all of what remained.

$35

Gold per oz in 1971

$4,800

Gold per oz today

Dollar value lost vs gold since 1971

Before 1971, the gold standard acted as a leash: governments could only print as many dollars as they had gold to back. After 1971, the leash came off. The data from Section 2 (oil and housing getting cheaper in gold but exploding in dollars) shows that acceleration happened almost entirely after this moment.

Money Trends Toward One

Throughout history, money doesn't stay diverse. It consolidates. People abandon weak money for strong money. Gold won that competition for five thousand years, and the dollar replaced other fiat currencies in the 20th century. What's new in our lifetime is a different kind of candidate. Bitcoin is the first money no committee controls: not issued by a government, not debased by a central bank, not dependent on any single party's permission. Whether that ends up mattering is the subject of the rest of this course.

Sources: ¹ Saifedean Ammous, The Bitcoin Standard: The Decentralized Alternative to Central Banking (Wiley, 2018), chapter on scarcity and stock-to-flow. · ² Bitcoin stock-to-flow derived from post-April 2024 halving block reward (3.125 BTC/block): ~164,250 BTC/year issuance against ~19.65M BTC circulating supply (April 2026). · ³ London Bullion Market Association, gold PM fix (April 2026).

The Inflation Machine Unleashed

Everything in this lesson so far has been the slow bleed: a few percent a year, a penny at a time, the kind of loss you only notice when you stop to measure. In March 2020, the slow bleed became a firehose.

When COVID-19 shut down the economy, the US government responded with trillions in stimulus spending. The Federal Reserve created new money on an unprecedented scale. The M2 money supply, a measure of all dollars in circulation including savings and money market accounts, tells the story:

US M2 Money Supply Growth

+40% in ~2 years

$4.6T

2000

$6.5T

2005

$8.5T

2010

$12.3T

2015

$15.4T

2020

$21.7T

2022

$21.2T

2024

$22.4T

Jan 2026

Source: Federal Reserve Economic Data (FRED). Red bars highlight the post-2020 surge.

It took 200+ years, from the founding of the dollar through early 2020, to put about $15.4 trillion into circulation. In the two years that followed, the money supply expanded by roughly 40%, surpassing $21 trillion by 2022. As of January 2026, it stands at $22.4 trillion.¹ That is more than $7 trillion of new dollars in six years, more than the entire money supply that existed in the year 2000.

"We are printing money to solve the problems caused by printing money."

Jeff Booth, The Price of Tomorrow²

The Real Result

When you create 40% more money in two years, two things happen: (1) people have more dollars, so they bid up prices, and (2) each dollar is worth less. The official inflation rate peaked at 9.1% in 2022. But real-world experience (at the grocery store, at the gas pump, on your rent check) felt far worse.

Grading Your Own Paper

Since 1971, the government has measured inflation using the Consumer Price Index (CPI). But the CPI methodology has been quietly adjusted many times, and every revision has moved the reported number down. Three adjustments do most of the work.

Hedonic adjustments. If a laptop's price goes from $800 to $1,000 but the processor is faster, the Bureau of Labor Statistics may record the laptop as cheaper because you got "more computer per dollar." You still paid 25 percent more at the register, but the inflation reading goes the other way.³

Substitution effects. When beef gets too expensive, CPI assumes you switch to chicken and tracks chicken instead. The logic is that consumers adapt, which is true. What it obscures is that they adapt because they were priced out, not because they preferred the substitute.

Geometric weighting. Since 1999, CPI assigns more weight to the cheaper items in a category and less weight to what people actually buy when they have the money. Each of these changes is individually defensible. Together, they have consistently pushed the reported number down.

Truflation, a real-time index that tracks more than 15 million actual retail and housing prices⁴, often shows inflation running above the official CPI figure in the same month. The gap is not a conspiracy theory. It is a measurement choice made over decades, one methodological update at a time.

The Government's Own Grade

Since 1971, the official CPI says cumulative inflation is roughly 700 percent. Measured against gold, the dollar has lost over 99 percent of its value in the same period, a roughly 12,500 percent devaluation. The CPI is the dollar's grade, set by the people who issue it.

$10,000 in 2010 Is Worth $6,800 Today

If you saved $10,000 in 2010 and did nothing with it, you lost $3,200 in purchasing power by 2024, not from bad spending, not from a failed investment, simply from holding the currency. This is not a risk disclosure the bank handed you when you opened the savings account. It is the cost of using a ruler that shrinks while you're not looking.

Unless you hold a form of money they can't print.

Sources: ¹ Federal Reserve Economic Data (FRED), M2 Money Stock (M2SL), January 2026. · ² Jeff Booth, The Price of Tomorrow (Stanley Press, 2020), Ch. 3. · ³ Bureau of Labor Statistics, CPI Handbook of Methods, hedonic quality adjustments and item substitution. · ⁴ Truflation, decentralized real-time CPI alternative.

Who Pays the Price?

Picture a 1970 family: one paycheck, a median home, a car in the driveway, a vacation most summers. One adult could stay home with the kids because the math worked.

Picture a 2024 family: two full-time incomes, a median home that now costs over twenty times what their grandparents' did, and a savings rate half of what their grandparents had on a single income.

That is inflation. Not as a chart. As a family working twice as hard for what used to be considered ordinary.^2,3

Item	1970	1990	2000	2024
Median Home Price	$23,000	$79,100	$119,600	$420,400
Gallon of Gas	$0.36	$1.16	$1.51	$3.50
Dozen Eggs	$0.61	$1.00	$0.96	$3.20
Gallon of Milk	$1.15	$2.15	$2.79	$4.05
Median Household Income	$8,730	$29,940	$41,990	$83,730

Those numbers look like growth until you translate them into time. A 1970 median home cost 2.6 years of median income; a 2024 home costs 5.0 years.^1,4 A single-income family in 1970 could retire a mortgage in 15–20 years on one paycheck. A dual-income family in 2024 signs up for 30 years of payments and still counts every bill. The table isn't showing "prices went up." It's showing how many more years of your life, and whose lives, each line item now requires.

Home Price Increase Since 1970

Income Increase Since 1970

Affordability Gap Widened (2.6x ? 5.0x Income)

Homes went up 1,728%. Incomes only went up 859%. That 869-percentage-point gap is inflation, money printing, working against you. And notice which things are getting more expensive: the things you need: shelter, food, energy, healthcare, education. The things getting cheaper are the things technology disrupts faster than the printer runs: electronics, storage, communication.

A Keynesian would say wages went up too: "that 859% is growth." An Austrian would ask: growth into what prices? More dollars that buy less of what matters isn't growth. It's arithmetic.

"Inflation is taxation without legislation."

Milton Friedman, Nobel Prize-winning Economist

Inflation is a transfer. On one side of the transfer are the people who get to spend newly-created money while prices have not yet adjusted: banks, governments, and the largest corporations, who sit closest to the printer. On the other side are the retirees on fixed incomes, the savers, and the wage-earners whose paychecks arrive only after prices have already moved. The first group receives the new money at its old value. The second group holds the old money as its value disappears. Economists call this the Cantillon Effect. The short version: the rich get richer because they are first in line, and everyone else pays the tax silently.

A Very Old Warning

"The rich ruleth over the poor, and the borrower is servant to the lender." (Proverbs 22:7)

In sound money, the saver is honored and the borrower is subordinate. That is the order the proverb describes. Inflationary money inverts it. When the currency loses value every year, the borrower is quietly rewarded (their debt shrinks in real terms) while the saver is quietly punished for doing what every generation before was told was wise. The system does not abolish the moral order the proverb names. It just reverses who the servant is.

The Real Cost

When necessities cost more and wages lag behind, families are forced to make choices a generation ago did not have to make. Groceries or rent. Emergency fund or childcare. The next semester's tuition or this month's electric bill. These are not budgeting failures. These are the arithmetic of a ruler that shrinks while nobody tells you.

Sources: ¹ Federal Reserve Economic Data (FRED), Median Sales Price of Houses Sold (MSPUS); US Census Bureau, median household income series. · ² US Energy Information Administration, retail gasoline prices (1970 vs. 2024 annual averages); BLS minimum wage history. · ³ Bureau of Labor Statistics, Average Retail Food Prices, eggs and milk. · ⁴ US Department of Housing and Urban Development, historical home price-to-income ratios.

Money With Scarcity Built In

Gold held the monetary crown for five thousand years because no one could print more of it. The problem was never that gold was bad money. The problem was that gold is heavy, hard to verify, and slow to send. Every upgrade we have made to money since (paper certificates, bank notes, digital dollars) has traded gold's scarcity for convenience. The trade ended in 1971, when the last tether to scarcity was cut.

What if there was a form of money that had gold's scarcity (the thing that kept prices stable) but was digital, portable, and divisible? What if you could send it in seconds? What if no one could print more, no matter what emergency came along?

Gold

? Scarce (limited supply)
? Durable (lasts forever)
? Store of value (proven, 5,000 years)
Heavy (hard to transport)
Hard to verify (counterfeits exist)
Slow to settle (physical transfer takes time)

$ Fiat (Dollar)

? Convenient (easy to use, store digitally)
? Divisible (coins and cents work)
? Fast settlement (instant digital transfer)
Unlimited supply (can print endlessly)
Debasable (loses value constantly)
Centralized control (government controls it)

? Bitcoin

Scarce (21 million coins, fixed by the code)
Portable (digital, anywhere in minutes)
Divisible (to 8 decimal places)
Final settlement (no central party can reverse)
No committee controls issuance
Every transaction and the entire supply is independently auditable
Volatile in dollar terms: the monetary policy is fixed, the price discovery is not

The Bottom Line

Bitcoin takes the properties that made gold money (scarcity, durability, and the fact that no central issuer controls its supply) and separates them from what made gold impractical: the weight and the difficulty of verifying it. You can send it anywhere in minutes, and anyone with a computer can verify a payment and the entire supply without trusting a third party. You cannot print more. Its supply schedule is written in code, visible to everyone, and cannot be changed without the agreement of the entire network. It's the first money whose scarcity cannot be altered by any government, bank, or individual.

This Isn't a Fringe Thesis

When this lesson was updated, BlackRock, the world's largest asset manager, held roughly 782,000 BTC on behalf of its clients through its iShares Bitcoin Trust.¹ The United States established a Strategic Bitcoin Reserve in 2025.² Fidelity, Franklin Templeton, Goldman Sachs, and VanEck now operate or hold positions in spot Bitcoin ETFs.³ JP Morgan, whose CEO spent a decade dismissing Bitcoin, now offers Bitcoin exposure to its wealth management clients and has built out digital asset custody services.⁴ Fannie Mae and Freddie Mac, the agencies that back most American mortgages, have begun treating cryptocurrency holdings as qualifying assets for loan applications.⁵ None of these are arguments for Bitcoin. They are evidence that the argument has left the internet forums.

Sources: ¹ BlackRock iShares Bitcoin Trust (IBIT) fund page; Farside Investors ETF flow data. · ² White House Executive Order, "Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile" (March 2025). · ³ Bitcoin Treasuries and SEC 13F filings, spot Bitcoin ETF issuers and institutional holdings. · ⁴ JP Morgan Private Bank and Asset & Wealth Management, digital asset offerings; Onyx Digital Assets custody platform. · ⁵ Federal Housing Finance Agency directive on digital asset treatment in mortgage underwriting; Fannie Mae / Freddie Mac implementation guidance.

Common Questions

Q: I keep hearing inflation is "only 2–3%." Why doesn't that match what I see at the store?

A: Because the government's number, the Consumer Price Index, is an average that gets adjusted in ways that consistently make it look lower. It uses tricks like "substitution" (if steak gets too expensive, they assume you switch to chicken and call that stable pricing) and "hedonic adjustments" (your new phone has a better camera, so they say it got cheaper even if the price went up). The number you see on the news and the number you feel in your wallet are two very different things.

Q: Wait, does this mean my savings account is actually losing money?

A: Yes. If your savings account pays 0.5% interest but real inflation runs 3–5% per year, you're losing 2.5–4.5% of your purchasing power every single year. You still see the same number in your account (or slightly more) but what that money buys shrinks. It's like having a slow leak in your tire. You don't notice it day to day, but over a few years, you're running on flat.

Q: If gold holds its value so well, why don't we just use gold?

A: Gold is excellent at storing value; that's exactly what the data in this lesson shows. But it has real limitations as everyday money. It's heavy, hard to divide for small purchases, slow to verify, and impossible to send digitally. That's why we moved to paper backed by gold, and eventually dropped the backing altogether. The question becomes: is there something with gold's scarcity but without its drawbacks? That's exactly where the next lesson picks up.

Q: What can I actually do about this?

A: That's what this entire course is built to answer. Step one is what you just did: understanding the problem. You can't fix what you can't see. Step two is learning about tools that exist outside the system of endless money printing. The rest of this course walks you through the most important one, and how to use it to protect yourself and your family.

Key Takeaways

Prices aren't going up; the dollar is buying less! Priced in gold, oil is actually 36% cheaper than in 1913. Housing rose only 32% in gold over 111 years, compare that to the 16,716% increase in dollars). The dollar lost 97% of its CPI purchasing power in the same period. The problem isn't the goods; it's the measuring stick.
Gold maintained purchasing power because its supply grows slowly, roughly matching economic growth. The dollar failed as a store of value because its supply expands without limit, roughly 3.1% per year on average, and far more during crises like 2020.
Money's function is to solve the barter problem by serving as medium of exchange, store of value, and unit of account. For thousands of years, gold was the best money because it was scarce and stable. The dollar was good when backed by gold. It became a poor choice once the backing was removed.
Two schools frame inflation differently. Keynesians treat moderate inflation as healthy, a lubricant for the economy. Austrians treat it as a wealth transfer from savers to anyone positioned closest to the new money. The 97% loss in the dollar's purchasing power since 1913 is the data. Which school the data fits is a judgment the reader gets to make.
The money supply grew ~40% in just two years starting in 2020. Over $6 trillion in new dollars were created, causing 9.1% official inflation and worse real-world inflation for the necessities people actually buy. The people who can least afford it paid the highest price.
Bitcoin pairs gold's scarcity with digital transferability. The supply schedule is written in code and verifiable by anyone running the software. No single authority can expand it; no committee can change the rules without consensus from the entire network. Volatile in dollar terms: the monetary policy is fixed, the price discovery is not. Lesson 1-2 unpacks how that actually works.

The Lesson Behind the Lesson

For most of recorded history, gold wasn't just money; it was the best money humanity had found. Not because of tradition, but because of a property: no one could print more of it without finding it first. Scarcity was what made it honest.

Paper money was a real upgrade over hauling metal around. Fiat currency was lighter, easier to divide, and easier to send across distance. For a long time, it worked, because the paper was still tethered to something that couldn't be printed. The convenience was real. What happened in 1971 wasn't that paper failed. It was that the tether was cut.

The question this lesson really asks isn't "Is fiat bad?" It's older and simpler: what happens when the people who issue the money also decide what it's worth? Silver gets mixed with dross. Wine gets watered down. Bread gets stretched with filler. The scale lies about the weight, and the ones who pay are always last in line.

"Your silver has become dross"

"Your silver has become dross, your wine mixed with water." (Isaiah 1:22)

The prophet is describing a nation whose money has been debased. Twenty-seven hundred years later, the same mechanism produces the same result, and the same people bear the cost. The words are old. The problem is not.

Satoshi Nakamoto, the anonymous creator of Bitcoin, put it more plainly in February 2009, a month after the Bitcoin network went live:

"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."^¹

Lesson 1-1 doesn't ask you to decide whether Bitcoin is the answer. It asks you to see the question clearly. If the measuring stick can be changed by the people being measured, then no amount of "earning more" ever really closes the gap. Anyone working with that ruler is on a treadmill whose speed is set by someone else.

The Real Question

The question isn't just "What is money?" It's what should money be? That's where Lesson 1-2 picks up.

Sources: ¹ Satoshi Nakamoto, P2P Foundation forum post, February 11, 2009 (Satoshi Nakamoto Institute archive).

Resource	Author/Source	Type	Time
WTF Happened in 1971?	Various / Community	Data Visualization	10 min browse
How The Economic Machine Works	Ray Dalio	Video	31 min
The Bitcoin Standard (Chapters 1-3)	Saifedean Ammous	Book	2-3 hrs
Shelling Out: The Origins of Money	Nick Szabo	Essay	30 min read
M2 Money Supply Data	Federal Reserve (FRED)	Data	5 min browse
Truflation	Decentralized Inflation Tracker	Data	5 min browse
The Price of Tomorrow Argues technology creates natural deflation; pairs well with understanding Bitcoin's scarcity, though Booth is not primarily a Bitcoin advocate.	Jeff Booth	Book	4-5 hrs
Money Creation in the Modern Economy The Bank of England itself explaining how commercial banks create money when they lend. A primary-source antidote to "money is just printed by the government."	Bank of England (2014)	Research Paper	20 min read

Glossary

Terms are clickable in the HTML version of this lesson. This section is a full reference.

Austrian Economics: A school of economic thought emphasizing free markets, sound money, and minimal government intervention. Austrian economists view inflation as an expansion of the money supply that transfers wealth from savers to those closest to the money printer.
Bitcoin: A decentralized digital currency with a fixed supply of 21 million coins. It combines the scarcity of gold with the convenience of digital money. No central authority controls it.
Cantillon Effect: The observation that newly created money doesn't enter the economy evenly. It benefits those who receive it first (banks, governments, large institutions) while diluting the purchasing power of those who receive it last (ordinary workers and savers).
Consumer Price Index (CPI): The government's primary measure of inflation, tracking price changes in a basket of goods and services. Critics argue its methodology has been adjusted over decades to understate actual inflation experienced by consumers.
Deflation: A decrease in the general price level, meaning your money buys more over time. This happens naturally when productivity increases faster than the money supply.
Double Coincidence of Wants: The problem in barter where both parties must want exactly what the other has at the same time and place. Money solves this by acting as a universal intermediary.
Federal Reserve: The central bank of the United States, created in 1913. It controls the money supply and sets interest rates. Its ability to create new dollars is the mechanism through which inflation occurs.
Fiat Currency: Government-issued money that isn't backed by a physical commodity like gold. Its value comes from government decree and public trust. The US dollar, euro, and yen are all fiat currencies.
Geometric Weighting: A mathematical formula used in CPI calculations since 1999 that assigns more weight to cheaper items in a category, producing lower inflation readings than the older arithmetic method. Each methodological update has consistently pushed the official inflation number down.
Gold: A precious metal that served as the world's primary money for thousands of years due to its scarcity, durability, and difficulty to counterfeit. The US dollar was backed by gold until 1971.
Halving: A hardcoded event in Bitcoin's protocol, occurring roughly every four years, that cuts the rate of new bitcoin issuance in half. Halvings are the mechanism that drives Bitcoin's increasing scarcity over time. The next halving is scheduled for April 2028.
Hedonic Adjustments: A CPI method where product quality improvements are counted as price decreases, even when the actual dollar price went up. If a laptop gets a faster processor, the BLS may count it as cheaper. Critics argue this consistently understates inflation because consumers pay the higher price regardless of whether they wanted the upgrade.
Inflation: The expansion of the money supply, which results in each unit of currency buying less over time. Commonly described as "rising prices," but more accurately understood as the currency losing purchasing power.
Keynesian Economics: A school of economic thought advocating for government intervention, central bank management of the money supply, and moderate inflation as tools for economic stability. Named after economist John Maynard Keynes.
M2 Money Supply: A measure of the total amount of money in circulation, including cash, checking deposits, savings accounts, and money market accounts. Used as a key indicator of how much money exists in the economy.
Medium of Exchange: One of the three functions of money. Something widely accepted in trade so people don't have to barter directly. The dollar serves this role today; Bitcoin is increasingly doing so.
Money: A tool that solves the barter problem by serving as a medium of exchange, store of value, and unit of account. Good money is scarce, durable, divisible, portable, and widely accepted.
Money Supply: The total amount of money in circulation in an economy. When the money supply grows faster than the production of goods and services, inflation results.
Nominal Returns: Investment returns measured in raw dollar terms, with no adjustment for inflation. The number on the statement gets bigger every year, but the ruler used to measure it shrinks. Nominal returns flatter the chart and obscure whether your purchasing power actually grew.
Purchasing Power: The amount of goods or services a unit of currency can buy. When inflation occurs, purchasing power decreases, and each dollar buys less than it used to.
Real Returns: Investment returns adjusted for inflation. They show how much your purchasing power actually grew, not just how much the dollar figure went up. Real returns answer the question that matters: can you buy more with what you have than you could before?
Stock-to-Flow Ratio: A measure of scarcity: the existing supply (stock) divided by the amount produced each year (flow). A high stock-to-flow means new supply is small relative to what already exists, making the asset hard to debase. Gold's stock-to-flow sits around 60; Bitcoin's, after the April 2024 halving, is above 120 and doubles again in 2028.
Store of Value: One of the three functions of money. Something that maintains its purchasing power over time. Gold is a strong store of value; fiat currencies are weak stores of value due to inflation.
Substitution Effects: A CPI method that assumes consumers switch to cheaper alternatives when prices rise: beef gets expensive, so they buy chicken. Instead of tracking what things actually cost, it tracks what a cost-flexible consumer would spend, consistently producing lower inflation readings than actual prices would show.
Truflation: A decentralized, real-time inflation index that tracks over 15 million items using actual retail, housing, and economic data. Provides an alternative measurement to government-reported CPI.
Unit of Account: One of the three functions of money. A standard measurement for pricing goods and services. The dollar is the dominant unit of account in the US.