Money is essentially a system of trust,
with its most important function being the preservation and transfer of purchasing power.
TRUST MATTERS!
WHY IS ALL MORE EXPENSIVE IN SHOPS?
( WHY MY MONEY HAVE LESS PURCHASING POWER? )
Regarding the decrease in the purchasing power of money (inflation), excessive money creation is usually suspected, as it often leads to inflation by increasing the money supply without a corresponding rise in goods and services. To examine this, we will first compare different forms of money—physical money (e.g., gold), fiat money (e.g., the dollar, denar), and digital money (e.g., Bitcoin). Then, we will analyze how money creation is controlled for each type and how it impacts their purchasing power over time. Finally, we will evaluate the consumer basket using each form of money.
COMPARISON OF MONEY
1 trillion = 1 000 000 000 000
UNIT OF MEASURE /PRODUCTION |
CURRENT SUPPLY /FORM |
MAXIMUM SUPPLY /TRUST IN |
|
|---|---|---|---|
 GOLD |
GRAM /PHYSICALMINING |
0.21TRILLION /PHYSICAL |
0.27TRILLION /LIMIT BYNATURE |
 DOLLAR |
CENT /ISSUINGLOAN |
2153TRILLION /DIGITALPHYSICAL |
NO /LIMIT BYPEOPLE(BANKS) |
 DENAR |
DENAR /ISSUINGLOAN |
0.515TRILLION /DIGITALPHYSICAL |
NO /LIMIT BYPEOPLE(BANKS) |
 BITCOIN |
SATOSHI /DIGITALMINING |
1982TRILLION /DIGITAL |
2100TRILLION /LIMIT BYCOMPUTERPROGRAM |
The creation of gold is controlled by its natural scarcity due to its limited quantity on Earth. In the case of fiat money (e.g., the dollar, denar), scarcity is artificially controlled by central banks through monetary policy and by private banks through lending. Meanwhile, the digital currency Bitcoin has absolute scarcity, limited to 21 million coins by its decentralized computer protocol.
CHANGE IN THE SUPPLY OF MONEY AFFECTS THEIR VALUE
PERIOD |
GOLD |
DOLLAR |
DENAR |
PRICEOF GOLD |
|---|---|---|---|---|
1903-2024 |
+493% |
|||
1959-2024 |
+185% |
+7414% |
+7383%IN DOLLAR |
|
2003-2024 |
+46% |
+729% |
+641%IN DENAR |
The table above shows the impact of changes in the money supply on purchasing power. For example, over 121 years, the quantity of gold has increased fivefold, while in just 21 years, the amount of fiat money in Macedonia has increased sevenfold—hence, their purchasing power has correspondingly decreased.
CONSUMER BASKET IS CHEAPER WITH MONEY THAT DO NOT LOSE VALUE
PERIOD |
GOLD |
DOLLAR |
DENAR |
BITCOIN |
|---|---|---|---|---|
2004-2010 |
-60.19% |
+32.11% |
+26.73% |
|
2011-2024 |
-8.76% |
+69.34% |
+115.28% |
-99.99% |
The table shows that the consumer basket, calculated using the old methodology and expressed in gold over a six-year period, became 60% cheaper, while the same basket expressed in dollars and denars became more expensive. Additionally, over a 13-year period, the consumer basket, calculated using the new methodology and expressed in gold and Bitcoin, also became cheaper, whereas when expressed in denars and dollars, it became more expensive.
From the above, it can be concluded that the main reason for the decline in the purchasing power of fiat money is excessive lending (creation of new money) by private banking sector.
Ask yourself one question: