What is Bitcoin and How Does it Work?
It’s gonna be very disruptive but also beneficial too.
I think you just in terms of just pure economics are just unlocking all of this human potential right we don’t have to devote so much energy towards reconciling these disparate accounts. We all kind of function within one ledger that reconciles itself makes a lot of sense um the petro dollar what so we go off the gold standard in 1971. What is the petrodollar yeah all right so in 1971 we went off the gold standard in 72 73 and 74 the US went into a major recession so that was called stagflation. We were suffering from stagnation so we had high inflation low output basically and so it was being caused by going off the gold standard right and so the US had to do something. So we went to the oil-producing states and um by say so many countries like saudi arabia and the oil-producing countries and we set an agreement with them and the agreement was you sell your oil and dollars and we’ll protect you with our military so you don’t have to have a military.
And so in effect our dollars were now being backed by oil a commodity right instead of being backed by gold. Now it’s being backed by oil so now we have this and you know military industrial complex to protect the oil-producing nations which basically protects our dollar. Right and that’s the petrodollar well that system broke around three weeks ago and nobody’s talking about this right. No and it’s it’s very strange to me that it’s not on the news and no one’s talking about it but what broke was that russia decided to sell oil to india for rupees instead of dollars. And iran is selling oil to china for yen or juan and so you know it’s you know it’s yeah i mean it’s happening you know countries are starting to sell oil and denominations other than dollars right and so the system broke.
The system is breaking or it has broken and so what that means is that our money isn’t backed by our dollars. Our us dollars aren’t backed by oil anymore right now so what are they backed by? they’re backed by the trusts and the government. Well I mean how many people trust the government after what just happened with covet. Right you know I mean we’ve been lied to for two years. So yeah it’s you know trust is you know at a you know is at a minimum and you know and that’s what’s you know backing our money.
I mean it’s just you know it’s very uncomfortable to think about that yeah absolutely um there’s a great point that the dollar was backed by gold originally which a lot of people don’t know or remember. Which is interesting um which is itself kind of you know being tethered to a commodity like gold is effectively tethering it to the energy necessary to produce gold.
That was the proof of work that made gold valuable.
When we went off the gold standard we immediately had to get onto another standard to create some reservation. Reservation demand for the dollar so move from gold to black gold and to your point we’re in early april 2022. Three weeks ish ago that broke um due to this this russia ukraine conflict and that really I mean that has massive potential geopolitical implications for the dollar because now if countries are settling in currencies other than dollar settling oil transactions and currencies other than the dollar that reservation demand now goes away. So we may see what additional inflation presumably in the dollar yeah you see the debasement of the dollar yeah right which people call it inflation but it’s really the you know it just takes more dollars to buy the same thing. Yeah you know like home prices are up 20 to 30 percent over the past year.
Um my home isn’t 20 bigger than it was a year ago right I don’t have more bedrooms or a bigger yard or you know my home’s the same size but it just takes more depreciated dollars to buy the same thing. Right and same thing with bitcoin. Right I mean you know one bitcoin is equal to one bitcoin it just takes more dollars to buy them. Yeah because you know the dollars are losing their value so yeah and there’s so few people that understand that illusion it seems like we tend to for better or worse we do denominate ourselves. Most of us I mean especially in the us but even globally denominate ourselves in dollars so we think if we have more dollars than we did yesterday we’re better off but to your point if it’s depreciated over time that’s not necessarily the case.
So what do where does this go so we have the petrodollar petro dollar breaking down um.