Imagine a world where individuals can reliably save for the future, confident that their money will appreciate at a steady rate of 2-3% per annum. In such a scenario, one would naturally question the necessity of every purchase and only indulge in what is truly essential.
The unfortunate reality is that our monetary system has been in disarray ever since we abandoned the gold standard. Throughout the 20th century, this departure has played a significant role in the emergence of various asset bubbles. In the past, gold served as a reliable store of value, and other asset classes were valued based on their utility, as well as subjective speculation by individuals.
However, once gold was detached from the monetary system, savings mechanisms shifted towards equities, then bonds, and eventually real estate. Over the past three decades, housing prices have skyrocketed due to malinvestments and the formation of asset bubbles, all stemming from the absence of a reliable monetary standard to save for the future.
Just like all other bubbles, this current housing bubble is destined to burst. Fortunately, we now have the opportunity to rely on the orange coin, a dependable vehicle for savings.
Adopting a low time preference, where individuals prioritize long-term benefits over immediate gratification, is a powerful catalyst for human flourishing.
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#netzero
