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the United States is drowning in $35
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trillion in national debt if we compare
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this to the country's GDP it's about
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125% of their GDP it's estimated that
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the US government will pay around $892
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billion in interest this year to put
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this into perspective in fiscal year
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2024 the US government collected $4.8
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trillion in Revenue meaning that 22% of
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that Revenue will be spent solely on
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paying interest and with the way the US
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continues to borrow its Pro ejected that
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over the next decade the country will
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end up paying $12.9 trillion in interest
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alone so the big question is can the US
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actually manage these payments while it
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might be able to keep up with the
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interest repaying the principle seems
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far Out Of Reach but here's something
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interesting to think about if every
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country in the world was asked to pay
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off its debt entirely how many do you
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think would default 50% 70% 80% actually
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the answer is 100% that's right there
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isn't a single country that could fully
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repay its debt because there's more debt
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in the world than actual money
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surprising right in this video I'll
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break down the nature of our debt-based
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monetary system and how the US is
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exploiting it which ultimately affects
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the rest of the world I'm also going to
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share the surprising truth about modern
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money creation but first let's rewind a
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bit trade has been an essential part of
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human civilization for thousands of
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years with the barter system being one
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of the earliest forms in this system
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people traded goods and services based
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on Mutual need but the barter system
1:29
system had its flaws it was extremely
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inefficient for example imagine someone
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who makes tents but needs a pair of
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shoes should they trade an entire tent
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just for one pair of shoes clearly this
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was not a practical way to trade because
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of this A New Concept of medium of
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exchange emerged initially it wasn't
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what we now know as money the first form
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of this medium was sea shells instead of
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trading Goods directly people could
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exchange shells to make a transaction
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the problem though was that shells were
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too common you could just pick one off a
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be be and use it as currency so humans
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tried using cattle grains and other
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items but none were perfect you could
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breed more cattle or grow more grain
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making them unreliable as a currency
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what was needed was something rare and
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valuable which is how gold became the
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ultimate form of money gold was rare and
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couldn't be created by people so it
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became the standard for trade over time
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gold was minted into coins and
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international trade began to flourish
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but as trade grew gold became
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inconvenient especially for large
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transactions transporting large amounts
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of gold over long distances was both
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difficult and risky to solve this the
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use of receipts or paper money emerged
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for example instead of handing over
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1,000 g of gold to another Trader people
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started using receipts that stated the
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equivalent value of gold was reserved
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for them in a specific Vault the value
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still lay in the gold but now paper
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receipts made trading easier eventually
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every country created its own currency
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and by 1873 these currencies were backed
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by gold this meant if you had 20 $20 you
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could exchange it for $20 worth of gold
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at the bank this system lasted for about
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40 years but in 1914 World War I broke
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out and everything changed many key
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nations were drawn into the conflict and
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the costs of War skyrocketed governments
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needed more money than they had
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available so they came up with a
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solution before the war $20 in paper
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money was backed by $20 in Gold but
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during the war countries like the US
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realized they didn't need physical gold
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to fund their spending the gold stayed
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in the vaults and only paper money was
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circulated this led to a new system
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known as the gold exchange standard
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where currencies were only partially
3:36
backed by gold so for example $50 worth
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of paper money might only be backed by
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$20 of gold this allowed countries to
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print more money to finance their War
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efforts then in 1939 World War II broke
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out leading to even more economic
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upheaval here's an interesting point
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about wars countries involved in them
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often shift all their resources toward
3:56
winning the war which means they import
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their everyday goods from other nations
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the us having joined both world wars
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late primarily exported Goods to
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European countries in need of supplies
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since international trade was done in
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Gold by the end of World War II the US
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had accumulated 2third of the world's
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gold reserves meanwhile Europe and other
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countries were left with only a fraction
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of the world's gold and a lot of US
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dollars from loans taken during the war
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this set the stage for a new monetary
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system the Breton wood system under
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Breton Woods other currencies were no
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longer directly backed by gold instead
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they were were backed by the US dollar
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which could be exchanged for gold at $35
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per ounce this system solidified the US
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dollar as the world's Reserve currency
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for the next two decades the US took
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full advantage of the Breton wood system
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post World War II the US funded numerous
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conflicts including the Korean War and
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the Vietnam War by printing more dollars
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with global trade happening in dollars
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the us could print as much money as it
4:55
needed exporting these dollars to its
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allies over time the US printed more
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dollars than it had in gold reserves
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knowing that most countries wouldn't
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demand their gold in return but then
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France's president Charles deal called
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out the US accusing it of deceiving the
5:09
world he emphasized that the value lay
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in Gold not in US Dollars and France
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began withdrawing its gold from the US
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in response other nations followed suit
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by 1971 the US had lost 50% of its gold
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reserves and the US government panicked
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on August 15th 1971 president Richard
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Nixon announced a major change the US
5:30
dollar would no longer be redeemable for
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gold introducing a new system called the
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dollar standard from then on global
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currencies became Fiat money backed by
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nothing but trust in the government that
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issued them this leads us to our current
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system in today's world debt is
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intrinsic to the monetary system to
5:47
explain this further let's look at how
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money is created in the US the process
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involves two main entities the
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government represented by the treasury
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and the Central Bank known as the
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Federal Reserve whenever the US
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government needs money it issues bonds
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equivalent to the required amount for
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instance if the government needs $1
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trillion it will issue $1 trillion in
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treasury bonds which the Federal Reserve
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will purchase by printing dollars these
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printed dollars are known as base money
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now when people receive these dollars
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they deposit them in Banks the banks
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following a reserve ratio system keep a
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portion of the deposit let's say 10% and
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lend out the rest this creates new money
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in the form of loans over time this
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process creates more money but it also
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means the national debt continues to
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grow because the money supply is
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debt-based here's the kicker after the
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1971 shift US Dollars lost their gold
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backing and became backed by government
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bonds essentially debt the US government
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pays interest on this debt using tax
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revenue and since the US can print more
6:51
money it doesn't need to pay off the
6:53
principal amount but the interest burden
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keeps growing shouldered by taxpayers
6:57
given that the US dollar is still the
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world Reserve currency when the US
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prints more dollars inflation is
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effectively exported to the rest of the
7:05
world the sheer amount of dollars in
7:07
circulation devalues the currency over
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time for example since 1971 the US
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dollar has lost 98% of its value however
7:16
the global landscape is changing
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countries like China are moving away
7:19
from the US dollar stockpiling gold and
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conducting more trade in their local
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currencies various groups such as
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brcs have also started to trade in
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non-dollar currencies most notably oil
7:32
arguably the world's most important
7:34
commodity is increasingly being traded
7:36
in currencies other than the dollar in
7:38
the past 80 years the US has leveraged
7:40
its position to dominate the global
7:43
economy but this era might be drawing to
7:45
a close so now you understand how the
7:47
global economy may be shifting away from
7:49
the US dollar regarding a recent
7:51
groundbreaking development scientists
7:53
have successfully created a mini brain
7:55
which I have explained in detail in a
7:57
previous video that you can watch here I
7:59
high recommend it as one of our most
8:01
interesting videos if you learn
8:02
something new from this video please
8:04
give it a like and if you have more
8:06
questions subscribe to the channel as
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