Money vs. Currency: The Difference Between Real Money and Fake Money

Why the world is filled with fake money and how you can get richer using it? 

The rule #1 in “our ebook "The 10 Ne Rules Of Money” is, “We work to build and acquire passive income and make money work hard for us” What is the difference between money vs. currency? 

We can say that they rich do not work for fake money or simply they do not work for earned income with comes from a job. We work for passive income. To understand the modification, you must take a brief history lesson.

The world and money rules change back in 1971

On August 15, 1971 President Nixon took the dollar off the gold standard. 

The price has been in fluctuating since the changed in the law, gold keeps going up and dollar continues to lose its value. The dollar keeps going back to intrinsic value. Additionally, the price of gold is the same all over the world.

The lesson on money you need to understand is to understand that money is back up by nothing but confidence. It is not longer real money.

The impact of Nixon turning money into currency

In 1971 like we mentioned President Richard Nixon changed the rules of money. That year, the U.S. dollar ceased being money and became a currency. This was one of the most important changes in modern history, but few people understand why.

Prior to 1971, the U.S. dollar was real money linked to gold and silver, which is why the U.S. dollar was known as a silver certificate. After 1971, the U.S. dollar became a Federal Reserve Note—an IOU from the U.S. government. Instead of our dollar being an asset, it was turned into a liability. Today, the U.S. is the largest debtor nation in history due in part to this change.

Taking a brief look back at the history of modern money, it's easy to understand why the 1971 change was so important.

After World War I, Germany's monetary system collapsed. While there were many reasons for this, one was because the German government was allowed to print money at will. The flood of money that resulted caused uncontrolled inflation. There were more marks, but they bought less and less. In 1913, a pair of shoes cost 13 marks. By 1923, that same pair of shoes was 32 trillion marks!

As inflation increased, the savings of the middle class was wiped out. With their savings gone, the middle class demanded new leadership. Adolf Hitler was elected Chancellor of Germany in 1933 and, as we know, World War II and the murder of millions of Jews followed.

Also, President Nixon converted the real money to fake money (currency) was due because we were importing so much products like we are today,  change need it to happen because we were  giving our gold to other countries hands (China, etc.). Think about it, if the dollar continue to be backed up by. gold then today, we would be in had giving over 17 trillion dollars in Gold to countries like China. 

These changes in law, allows the FEDERAL RESERVE BANK to back up the ongoing printing on currency, and gave the keys of unlimited to wealth to those who are financially educated. In other words, inflation is great for the ones that are aware of the changes and play by the new rules of money. It is easier to get richer today due to the ability to use fake money to get rich. We can simply use debt which is tax free and invest for passive income in an asset that produce ongoing cash flow.

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A New System of Money

In the closing days of World War II, the Bretton Woods System was put in place to stabilize the world's currencies. This was a quasi-gold standard, which meant currencies were backed by gold. The system worked fine until the 1960s when the U.S. began importing Volkswagens from Germany and Toyotas from Japan. Suddenly the U.S. was importing more than it was exporting and gold was leaving our country.

In order to stop the loss of gold, President Nixon ended the Bretton Woods System in 1971 and the U.S. dollar replaced gold as the world's currency. Never in the history of the world had one nation's fiat currency been the world's money.

To better understand this, look up the following definitions in the dictionary.

"Fiat money: money (as paper money) not convertible into coin or specie of equivalent value."

The words "not convertible into coin" bothered me. Look up the word: "fiat."

"Fiat: a command or act of will that creates something without or as if without further effort."

Does this mean money can be created out of thin air?

Germany did it and now we are doing it.

That's why savers are losers.

Over the last year, we’ve experienced record inflation. As of the end of September 2022, the inflation rate was 8.2% over 12 months. In 2021, inflation was 7.0%. Inflation hasn’t been this high in over 40 years. According to CNN, June consumer prices for gasoline were up 59.9%, food was up 10.4%, and housing was up 5.6%. In short, the middle class is feeling it.

In spite of all these record increases in prices, the federal government's economists spent much of 2021 saying inflation was “transitory,” meaning it would be temporary and go away. They were very wrong, and now the Fed is raising interest rates aggressively to try and tame the inflation beast. But they are having a hard time because there is so much fake money in the economy thanks to years of low interest rates and quantitative easing.

What is fake money?

When President Nixon took the U.S. dollar off the gold standard in 1971, the U.S. dollar became fake money. To understand how taking the dollar off the gold standard turned the US dollar into fake money, you need only to look at this chart.

How does this happen? When a currency is not tied to real money, governments are able to print more and more money out of thin air. This leads to inflation, the devaluing of the purchase power of that currency.

Look at this chart to see how the US government printing money out of thin air has impacted the dollar's purchasing power.

This is nothing new. Countries from ancient Rome to Weimar Republic Germany to modern day Zimbabwe have printed or debased money to the point of no return. This results in hyperinflation where money literally becomes worthless and people use it to create fires rather than to buy things.

While we’re not currently experiencing hyperinflation, as I mentioned earlier, the US is facing the highest inflation rates in recent history. Given the global insecurity between pandemics and war, it’s not hard to imagine a scenario where we see hyperinflation. The question is how will you prepare like the rich do?

But first let’s dig a little deeper into why what you think is money is not really money.

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Money is no longer money

Most people think of dollars as money, but the reality is that it is not. An amusing way of looking at this is to realize you can buy $10,000 in cash from The US Bureau of Engraving and Printing for only $45. The catch is that they're shredded.

More seriously, as we mentioned earlier, since Nixon took the dollar off the gold standard in 1971, it is no longer money. Before 1971, there was a relationship between a dollar and how much gold was backing that dollar in the US treasury. After 1971, that dollar was not backed by anything other than the full faith or confidence and credit of the United States government.

Money vs. currency

Today, the dollar is a currency. It can go up and down in value depending on how other currencies are performing and based on many economic conditions. It is tied to nothing and can move in either direction very quickly. In 2021, the “Wall Street Journal” wrote that the dollar was “dwindling”. Today, in 2022, “The New York Times” writes, “A Rising Dollar Is Hurting Other Currencies”. Of course, what is really meant here is the cost of dollars vs. the value of dollars. Savers are losers in inflationary economies because their saved dollars have less purchasing power over time. But at the same time, the cost of borrowing dollars is higher in the US, so there is an influx of US dollars into the US by foreign investors, which strengthens the dollar. As “The New York Times” writes, “As a result, the currencies of other countries — which are valued in relation to each other — have weakened, upsetting markets in some of the largest economies in the world, from Japan and China to India and Britain.”

All of this is possible because the U.S. dollar is no longer money but instead a currency.

So, what does it mean that the dollar is a currency? I find it helpful to talk about electrical currencies. An electric currency carries electricity from one place to another. In order to survive, a currency must be moving. Once it stops, it dies.

Similarly, the dollar as a currency is simply a vehicle to move wealth from one area to another. For instance, smart investors who saw the rout in the bond market coming in 2016 most likely moved their wealth from bonds to another sector that stood to benefit from higher interest rates and a rising dollar. Today, with inflation high, smart investors are most likely moving into commodities. It’s all cyclical, but the rich know that true money is now found in assets, not in the currencies that go up and down.

The rich use fake money to get richer and make others poorer

Dr. R. Buckminster Fuller, who wrote the book “Grunch of Giants.” Grunch stands for Gross Universal Cash Heist. That book was a revelation for many because we can learned how those with the most power in the world manipulate money to steal from the middle and poor classes. They are the puppet masters who know how to manipulate fake money to make real money and acquire vast amounts of real assets that produce cash flow.

Quoting Steven Brill from the article:

Translation: The elites got greedy taking care of themselves, at the expense of others.

They created an economy built on deals that moved assets around instead of building new ones.

Translation: The elites focused on making themselves rich, rather than creating new businesses, new products, more jobs, and rebuilding the U.S. economy.

They created exotic, and risky, financial instruments, including derivatives and credit default swaps, that produced sugar highs of immediate profits but separated those taking the risks from those who would bear the consequences.

Translation: The elites created fake assets that made themselves and their friends rich and ripped off everyone else who those not know the new rules and financial education that makes you truly rich. When the elites failed, they were paid bonuses. Mom, Pop, and their kids would pay for the elite’s failures via higher taxes and inflation.

Long story short, the ultra-rich and elites are able to utilize the volatile nature of the dollar to create vast amounts of wealth for themselves. Meanwhile the poor and the middle class get poorer. 

The difference between the rich and poor = knowledge

The reason why fake money is so dangerous is because most people do not know that their money is fake. So, they do what they are taught. They save it. The problem is that savers become losers because money devalues over time and becomes more and more worthless.

The rich know the difference between fake and real money. That is why rich people use fake money to buy real money, i.e., gold and silver, as well as assets with real value like real estate and commodities and businesses. By doing this, they print their own fake money (cash flow with debt that is tax free) that they then use to purchase more real money and assets.

The secret to building wealth

And that is the secret the rich know about building wealth. You can never get comfortable and you can never park your wealth and forget about it. You must always be learning and always be moving your wealth to where it will grow. Once you see that area is in danger of falling, you look at the trends, determine the next area of growth in the economy, and move your money there.

MASTER INVESTOR's company is investing in apartment buildings during the high point of the great recession. People who have no financial education will have a hard time to understand how to get ahead financially, and without the proper mindset about money it is difficult to get people to move their wealth into the real investments (the fear makes them want to sit on their cash), the smart people saw a ripe opportunity to pick up cash-flowing properties at rock-bottom prices.

Years later, when we buy real investments then you sell them at multiples of what we paid for them, and all the while we enjoyed positive cash flow from their operations. Then, we are ready to roll the gains into a bigger cash flowing asset of course. Because Cash Flow must always move to maintain its power and value, specifically moving from cash flowing asset to another cash flowing asset. 

The holy grail is to turn fake money (debt) into real assets that prints cash flow, then moving the cash flow into more real cash flowing assets to compound true wealth. But we can only do that when we understand the history of money, and play with the new rules of money. Also, you need ongoing learning financial education to learn about business. The better businessman we are, the better investors we are. 

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Print fake money to buy real assets like the rich do. Here's all you need to do it, legally.

On one level, you probably already print fake money. When you save money in the bank and get interest from that bank, you’re printing money. Granted it’s very little that you’re printing, but you’re doing it.

Conversely, when we use your credit card, we are printing money for the bank by paying them an interest rate.The bank is in the business to lending fake money. Now the magic is to use the debt or credit to invest to acquire a real asset that your company controls. 

The good news is we can also print fake money to buy real money and real assets like the rich do. All you need is the knowledge and to take the initiative. Remember the path to financial freedom and wealth is all about taking action with the wealthy principles. 

For instance, in my article, “Master Investor Fundamentals: OPM,” I share how you can make an infinite return on investment (IROR) by using other people’s money to invest.

And in my book, “How to build cash flow with the internet? Turn passive income on,” I go into even greater detail on how to think and act like the rich today. 

The lessons we teach on fake money, fake teachers, and fake assets are essential to learn in order to make sure we can grow wealthier in a world that has and continues to change.

Read our ebook: How To Build Cash Flow With The Internet? Turn Passive Income On

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