I was at a family dinner recently and someone asked me: “But what should I actually do with my money? Just buy bitcoin?” It wasn’t a sarcastic question. They were genuinely confused about what to do with savings in an environment of rising debt and persistent inflation. And I realized I’d never actually written about the macro problem that makes bitcoin even worth discussing in the first place. The problem is what’s happening to money itself.
This article isn’t about bitcoin being amazing. It’s about the arithmetic of what’s happening to savings, currencies, and government debt. Once you understand that, bitcoin becomes relevant whether you like it or not.
The US Debt Problem in Numbers
The United States national debt is $39 trillion. That’s not a forecast. That’s current. Annual interest expense on that debt is approaching $1 trillion. That’s the fastest-growing category of federal spending. Here’s the problem: tax revenue is roughly $4 trillion annually. So $1 trillion of that goes just to interest payments, before the government spends a single dollar on Social Security, Medicare, defense, or infrastructure.
This math doesn’t work. It cannot be sustained. Either taxes will need to increase massively, spending will need to be cut massively, or the debt will be inflated away through currency debasement. Guess which one is politically easiest?
It’s inflation. Debase the currency so that today’s $39 trillion debt is worth less in real terms. Turn it into a hidden tax on savers and creditors. This is what every government in fiscal crisis has done historically, and there’s no reason to think the US will be different.
What Happened to the Money Supply
The Federal Reserve’s M2 measure (money in circulation plus checking/savings deposits) was $287 billion in 1970. By 2008 it had grown to $8 trillion. By 2020, during COVID, it was expanded to $18 trillion. By 2024, it’s $21.5 trillion.
That’s a 75x increase in 54 years. But real economic output hasn’t increased 75x. So either there’s massive inflation, or there’s hidden inflation (prices of certain assets like real estate and stocks are inflated, but official CPI is suppressed because the basket doesn’t capture those assets).
The annualized growth rate of M2 over the past 20 years has been 12.8% per year. This matters because 12.8% annual growth in money supply means that the purchasing power of each dollar is declining at roughly 12.8% per year in nominal terms. The official CPI inflation number is lower (because it’s measured differently), but the real depreciation of the currency is reflected in asset prices and the cost of living.
Lyn Alden’s “Broken Money” thesis explains this: the current monetary system is based on perpetual debt growth and currency debasement. It’s not a bug. It’s the system’s design. But it only works as long as people believe it will continue. When they stop believing, you get currency crisis.
What This Means for Your Savings
If you have $100,000 in a savings account earning 1% interest, and inflation is running at 5-7%, you’re losing 4-6% of your purchasing power every year. After 10 years, your $100,000 is worth roughly $60,000 in real terms. You kept the dollars, but the dollars are worth less.
In South Africa, this effect is even more pronounced. The rand has lost approximately 70% of its value against the US dollar over the past 20 years. That’s not because of anything you did wrong as an investor. That’s because the SARB’s monetary policy (while reasonable by central bank standards) created more rand than warranted by economic growth. The rand debasement was the mechanism the system used to handle government debt and current account deficits.
A South African who kept their life savings in rand over the past 20 years lost 70% of their purchasing power in global currency terms. In rand terms, they see the numbers stay the same. But if they wanted to buy property abroad, or pay for education in dollars, or emigrate and bring capital with them, the effect is clear. Their savings depreciated.
This is the core theft embedded in the current monetary system: savers lose wealth to inflation while borrowers (especially governments) benefit. Government can borrow money that’s worth less when they repay it. Corporations can borrow cheap capital and do share buybacks. Only savers suffer.
Historical Precedents of Monetary Collapse
Weimar Germany: 1923. The government couldn’t service war reparations debt, so they monetized the deficit by having the central bank print money. Hyperinflation resulted. The currency became worthless. Savings were destroyed. Savers lost everything.
Argentina: The government ran a peg (the peso was supposedly tied to the US dollar at a 1:1 ratio). But they kept spending, so they kept printing. When people caught on to the deception, they ran to convert pesos to dollars. The government froze bank accounts to prevent this. People’s savings were trapped and eventually inflated away. Wealth destroyed. Savers ruined. This happened in 2001, not in ancient history.
Venezuela: Hugo Chávez took control in 1999. The government controlled oil prices and had oil revenue, so they overspent wildly. When oil prices fell and revenue disappeared, they kept spending and printing currency. By 2018, the bolivar had experienced 1,698,488% cumulative inflation (yes, million percent). Savers who held bolivars lost everything. Savings in currency became worthless in months.
Turkey: Lira hyperinflation happened over a longer period. Savers in lira lost purchasing power steadily over years. The currency never became completely worthless, but it depreciated by 90%+ against the dollar.
These aren’t ancient history. Argentina’s collapse was 2001. Venezuela’s hyperinflation started 2008 and got severe by 2018. Turkey’s currency crisis is ongoing. This is modern history, and it happens more often than people realize.
The Stealth Wealth Transfer
Here’s what’s actually happening in the current monetary system: the government (and those who borrow at government rates) transfers wealth from savers to themselves. They borrow money, spend it, create inflation, and repay the debt in depreciated currency.
The saver,you, if you hold cash,pays the price. Your savings lose purchasing power. The borrower (government, corporations with fixed-rate debt) benefits: they borrowed when the currency was worth more and repay when it’s worth less.
This is mathematically inevitable when you run persistent deficits financed by central bank money printing. It’s not a conspiracy. It’s just how the system works.
South Africans see this clearly: the government runs a fiscal deficit, the SARB accommodates it with credit expansion (quantitative easing), the rand depreciates, and savers lose. The JSE has done okay in nominal terms, but in real rand-depreciated terms? A South African investor in JSE stocks has underperformed a South African investor in global stocks or Bitcoin, simply because of rand debasement.
What’s Different Now
Previous societies that faced this problem had limited options. Savers could hold gold (physical storage risk). They could emigrate with capital (restricted by exchange controls). They could buy property abroad (if the government allowed it).
For the first time in history, there’s an alternative that doesn’t require permission: bitcoin. It’s a monetary network that cannot be debased. No government can inflate it. No central bank can create more of it. The supply is fixed at 21 million coins forever.
This doesn’t make bitcoin immune to loss of value. But it makes bitcoin immune to government monetary policy. The value of bitcoin is determined by what people are willing to pay, not by a government’s decision to print more currency.
The Strategic Reserve Thesis
In “The Strategic Reserve: Bitcoin as the Ultimate Treasury Reserve Asset,” I laid out why institutional and sovereign holders should allocate to bitcoin. The core argument: when government debt becomes unpayable (and the US trajectory makes this likely within 15 years), central banks will need reserve assets that aren’t denominated in any single government’s currency.
Gold served this function historically. Bitcoin serves it now, with the advantage that it can be moved across borders instantly and audited mathematically.
The fact that MicroStrategy, Metaplanet Japan, and serious institutional investors are accumulating bitcoin for their treasuries isn’t hype. It’s a reasonable response to unsustainable fiscal and monetary conditions.
What Does This Mean for Your Specific Situation?
You don’t need to convert all your savings to bitcoin. That would be reactionary and probably wrong. But you should understand that holding 100% in cash (or cash-equivalent bonds at low real interest rates) is a decision with consequences. You’re betting that the government will manage the fiscal crisis without currency debasement. The historical odds are against you.
A diversified approach makes sense: some local currency for operational needs, some assets in your local economy (property, equities), some exposure to hard assets that can’t be debased (bitcoin, gold, commodities), some exposure to strong foreign currencies (USD, EUR).
The exact allocation depends on your circumstances. But everyone should have some exposure to fixed-supply assets. Not because they’re going to 10x in price, but because they protect you from the slow certainty of currency debasement.
In South Africa, this is particularly important. The rand will likely continue to depreciate relative to global currencies. A rand savings account earning 6-8% interest is being offset by 5-7% rand depreciation, leaving you with roughly 0-1% real purchasing power growth. You’re not actually gaining wealth. You’re just treading water.
Some allocation to bitcoin (or gold, or USD, or global equities) gives you protection against that depreciation. It’s not about getting rich quick. It’s about not getting slowly poor.
Why I’m Telling You This
The honest conversation about money is this: the system is designed to transfer wealth from savers to borrowers (especially governments). It does this through persistent monetary inflation that destroys the purchasing power of currency.
You can’t stop this system. But you can position yourself to not be victimized by it. That positioning requires some exposure to assets with different supply properties than government-issued currency.
Bitcoin is one option. Gold is another. Diversified global equities are another. The point isn’t which specific asset. The point is: don’t put all your wealth in an asset (your national currency) that’s being designed to depreciate.
The math of government debt in the developed world is unsustainable. That eventually resolves through inflation or currency weakness. Savers in those currencies will lose. I’m not predicting this. It’s already happening. It’s just slow enough that most people don’t notice.
Notice. Protect yourself. Allocate accordingly.
