What if the bank runs out of money?

If you don't understand how our monetary system works, here's one of the main rules.

The bank never goes bankrupt! Did you read that? We have seen this rule in practice in 2008 when banks were saved with 'new' money, because they were 'too big to fail'. Has anything changed since 2008? The only thing that is different now is that banks have been capitalized by the central banks with enormous amounts of 'new' fiat money. Exactly as rule #11 from the board game Monopoly describes.

We all know that the thing about Monopoly is that if you play it according to the rules only one player is having fun, right? Let that sink in for a moment...

Fiat money is inherently worthless, yet it is worth something because we all believe it is worth something. Our faith in our fiat money is the only value it has.
But it wasn’t always this way and it is not certain it will always be this way in the future. Even a strategist from Deutsche Bank stated this week "We may be looking at ‘the start of the end of fiat money’". He also said:

“it’s possible that inflation becomes more and more uncontrollable and the era of fiat currencies looks vulnerable as people lose faith in paper money.” ~ Deutsche Bank’s Jim Reid

Just remember, a dollar from 100 years ago is worth about $0.02 in today's money...

Image source

In 1913, the US government gave birth to the Federal Reserve System (AKA the Fed) and placed them in charge of protecting the value of the US dollar. Since then, the purchasing power of the US dollar has declined by approximately 98%.

As the founder of Ford, Henry Ford, once said:

“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” ~ Henry Ford, Founder, Ford Motor Co.

Blockchain based money with a limited or fixed supply such as Bitcoin could be that revolution in my opinion. There was no alternative in 2008 when banks were too big to fail. Without banks there was no easy way to pay each other. This made Satoshi Nakamoto think and Bitcoin was born. Nowadays, we don't need the banks to make fast worldwide payments anymore. When the next financial crisis hits Bitcoin could be the revolution Henry Ford was talking about.

If you're still 100% invested in fiat currencies, think about an exit plan.

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