Topic: Purchasing Power

The 1944 Bretton Woods Agreement established the U.S. dollar as the world's reserve currency, pegged to gold. By 1971, the U.S. Treasury was functionally underwater, holding only $10.2 billion in gold against $40 billion in circulating debt. This discrepancy forced the Nixon administration to abandon the gold standard, effectively ending an era where a dollar's purchasing power remained stable or increased over time.

Bitcoin's fixed supply of 21 million units creates a deflationary effect where purchasing power increases over time, contrasted with the melting value of fiat currency. While the price of a home in dollars has skyrocketed since 2016, its price in Bitcoin has plummeted, demonstrating the currency's strength. Authors like Saifedean Ammous, particularly in "The Fiat Standard," argue that moving toward a Bitcoin standard is an inevitable shift toward the strongest currency.