Since we were born our parents, media and teachers teach us the importance of accumulating money as a method to keep us away from poverty. As adults we realize that work is not the fastest way to obtain wealth (although it is the safest) and we get involved in the world of investments to accelerate the process, taking risks with our savings aiming at actions that multiply our finances.
Unfortunately there are people who take advantage of this human need to multiply money and invent creative methods to steal investors' funds, the most relevant of these is a method known as "Ponzi Scam", named after its creator, Carlo Ponzi, an Italian immigrant who made a lot of money through his peculiar business scheme.
His method was simple but at the same time required a tremendous effort to be maintained over time: convince a group of investors about any project, they contribute money for the implementation of the same, then continue to call more investors to give their money and use it to distribute it among the first ones who contributed money. The problem with this scam is that more and more people are required to keep it afloat, and only the first investors and the creator of the system, who almost always ends up in prison living happily on a tropical island, will benefit.
Basically this is what is happening with all fiat currencies, especially the U.S. dollar, the main currency of the planet. The Federal Reserve (FED) acts as a kind of institutional Carlo Ponzi, endlessly issuing money that will eventually become worthless. Since 1970, when the dollar ceased to be backed by gold, a measure taken by President Nixon, the value of the dollar is determined by the population's confidence in its institutions and power as the planet's leading economic power.
In order for the fiat dollar not to lose its value, the United States made use of China's cheap labor force, that is to say, the Asians were in charge of selling their manufactured products to the USA while America only printed dollars to pay the Asians, who by the way recycled the dollars from the sales into the American economy through the purchase of debt bonds. Quid per quo: I give you free money and you give me everything I need to keep people happy with cheap products.
Basically what the United States was doing was exporting its inflation to China and other countries (Mexico, Europe, Canada among others) as long as the greenback machine does not stop. But the COVID-19 pandemic stripped the king naked, China is now an economic superpower and its products are now more technological and therefore more expensive, on the other hand another new form of money is here to stay: the bitcoin, which as we know cannot be manipulated by any institution, person or government and that at this moment implies a real headache for those who pull the strings of the fiat dollar.
But the situation did not start because of the pandemic that undoubtedly accelerated what was already written: a global collapse of the fiat system. In 2019 the banks were busy requesting more and more money from the FED and if the FED did not respond it ran the risk of collapsing the entire American and global banking system. It all started with repos, loans that banks make to each other to pay debts in exchange for their treasury bonds. The problem with this activity lies in the fact that the more repo's that are requested the more the value of treasury bonds, the hitherto main medium of value in the world (now it is gold and BTC), deflates.
Like any Ponzi scheme the FED has no choice but to keep up the play: printing money non-stop, meaning it loses its value over time. The trillions of dollars distributed around the world will return to the United States, a situation that will drastically affect the economy of that country as raw materials will suddenly increase exponentially in value and the prices of all goods and services will go to the moon (Venezuela case).
Precisely in the Davos Forum this situation with the dollar, the fiat currencies and the BTC was discussed (I will refer to this subject in another opportunity) and the great institutions of the world came to the conclusion that a restart of everything is necessary, although they were not very clear on how they will execute it. Likewise, institutions increasingly trust bitcoin as real hard money and are rushing to buy the main cryptocurrency. The future of the dollar scam looks like it will soon come to an end.