Prelude — The Plumbing of Money
The "Death of the Dollar" and the Two "Assumptions" That Prevent It
Why does the warning of Walpurgis go unheeded? We will explain the underlying structure.
1. The Misconception of "Household Budget Finance" That Many People Are Trapped In
"The national debt is a huge problem." "Taxes are the government's source of income." - Many people tend to think of the national finances in the same way as a household budget. We call this "household budget finance."
However, this is a fundamental misunderstanding. A country can issue its own money (currency), but a household cannot. If we ignore this crucial difference, national economic policy tends to move in the wrong direction, such as "austerity" and "belt-tightening." As explained on the previous page, taxes are not so much a source of revenue as a tool for "repaying" the debt of government bonds and "stabilizing" the economy.
This way of thinking, "household budget finance," is the first barrier to understanding the modern monetary system (fiat system).
2. The Shocking Truth That the Euro is Actually the Dollar
The euro appears to be an independent European currency. However, the reality of its financial system is heavily dependent on the US dollar. Global financial transactions are based on the dollar, and European banks also handle huge amounts of dollar funds on a daily basis.
Therefore, if the credibility of the dollar is shaken and the US financial system malfunctions, the euro will not be able to escape its effects. The fate of the dollar and the fate of the euro are actually deeply intertwined. This is why Walpurgis is a global crisis that includes Europe.
3. The "Death of the Dollar" That Walpurgis Signifies
Why is the "failure of the US Treasury primary market" so important? It is because this event signifies the "death of the dollar," that is, the collapse of the safety myth that "the dollar is fine no matter what happens."
US government bonds are believed to be the safest assets in the world (risk-free assets). That is why countries and investors around the world buy dollars, and the dollar has maintained its position as the world's reserve currency.
However, the situation in which the United States is unable to procure money (government bonds) in its own country destroys the very foundation of that trust. It is the moment when the world realizes that what was thought to be "absolutely safe" was not actually so. This is the true horror of Walpurgis.
Why Does the Warning Go Unheeded? Two Powerful "Normalcy Biases"
Despite such a serious risk, why do so many people not listen? It is because there are two powerful "normalcy biases (assumptions)" that bind our thinking.
- The bias of the dollar safety myth: The absolute sense of trust that has been instilled over many years that "the United States cannot go bankrupt" and "the dollar cannot become worthless." This makes us ignore the risk in front of us as "impossible."
- The bias of household budget finance: The erroneous common sense that "the national finances are the same as a household budget." This prevents us from noticing the essential risk of the modern monetary system (the credibility of the currency).
These two biases are so powerful that no one takes them seriously. I myself am powerless, and in the face of this structural problem, I am currently unable to even present a solution, "THP."