Money used to make a promise.

In July 1944, with the war still on, delegates from 44 nations met at a hotel in Bretton Woods, New Hampshire, and rebuilt the world's money.¹

The deal was simple to state. Every major currency was pegged to the US dollar. The dollar, in turn, was redeemable by foreign governments for gold at a fixed rate: $35 per ounce. Your francs were a claim on dollars, and dollars were a claim on gold. The United States could anchor the whole arrangement because it held about three-quarters of the world's official gold reserves.¹

The peg did a specific job. A government whose money is redeemable for something it cannot print has a budget it must more or less respect. Under that constraint, the postwar decades put up numbers economists still study:

Prices behaved differently too, in a way that is hard to imagine now. Under gold-anchored money, the price level was roughly flat across generations: from 1790 to 1913, inflation in the United States averaged 0.4 percent a year.¹⁰ A dollar saved was a dollar kept. Grandparents and grandchildren priced the world in the same units.

There was just one problem with Bretton Woods, and it was structural.

The promise was a checkable claim. So people checked.

The world settled its trade in dollars, which meant one country got to print the world's settlement money. That is a hard privilege to use responsibly, and it wasn't.

Through the 1960s, Washington ran the Vietnam War and the Great Society at the same time, paying for a growing share of both with new dollars. The dollars piled up in foreign central banks, each one in principle a claim ticket on American gold. The claims grew. The gold did not.²

Other governments could do the arithmetic. France, under de Gaulle, announced in 1965 that it would take its reserves in gold rather than promises, and kept showing up to redeem — by one famous account, sending a ship across the Atlantic to carry the metal home. Days before the speech, Britain asked for cover on billions of its own dollar holdings.⁴ The vault was being emptied by people reading the public numbers.

On Friday, August 13, Nixon took his senior advisers to Camp David. On Sunday night he addressed the country. The villain of the speech was the “international money speculator.” The policy was the default:

No law was repealed. No vote was taken. The last thread between the world's money and anything anyone couldn't print was cut in a Sunday-night television address, framed as a technicality, promised as temporary.

The peg had lasted 27 years. The suspension is now on year 55.

So: was the dollar worth just as much tomorrow? That promise turned out to be checkable too. The rest of this page checks it.

The receipts.

Every chart below has a vertical line at 1971. Left of the line, money with a constraint. Right of the line, money without one. Look at what the lines do when the constraint is removed.

None of this required villains.

It only required incentives. Once money could be created at a keystroke, three things followed as surely as water runs downhill.

1. Whatever can be printed, will be.

Deficits are politically free and taxes are politically expensive, so every government of every party chooses the printer eventually. The record shows it: 50 deficits in 54 years, under every combination of party and Congress. The gold window was the mechanism that made the printer expensive. Nothing has replaced it.

2. New money enters somewhere, and “somewhere” is never your paycheck.

Freshly created dollars reach the government, the banks, and the asset markets first, while prices are still old. By the time they reach wages, prices are new. Economists have called this the Cantillon effect for 270 years. It is why the same decades read +34% on the pay chart and +1,094% on the CEO chart: the two groups stand at different distances from the spigot.

3. Savers are punished, so people stop saving.

Money that loses 2–9% of its value every year is a leaking bucket. Rational households respond exactly as the saving-rate chart shows: they hold less cash, borrow more, and push savings into houses, stocks — anything scarce. Housing becomes a savings account you can live in, priced accordingly, and a generation gets locked out. Inflation is a tax that no one votes on and the poorest pay first.

Diagnosis is cheap, though. The interesting question is the cure: what would money have to be, so that no one — no committee, no crisis, no well-intentioned emergency — could quietly do this again?

What sound money requires.

Humanity has run this experiment for 5,000 years, with shells, cattle, beads, iron, silver and gold. The monies that survived all solved the same short checklist.

The properties are boring on purpose. Money is the one technology whose job is to not surprise you:

Scarcity is the load-bearing property, and it's measurable: stock-to-flow, the number of years of current production it would take to reproduce the existing supply. Gold's is about 60; whenever gold's price rises, miners can barely increase the flow. That's why gold beat everything for five millennia: every rival money was eventually cheap to make more of, and every money that got cheap to make got made, and died. Ask the societies whose shell money met industrial shipping.²⁰

But look at the gold column again. It fails at portability and verifiability. You cannot email a bar of gold, and you cannot easily check one. So gold centralized into vaults, and paper claims on the vaults became the actual money — first bank notes, then the Bretton Woods dollar itself. Sound money with a custodian is only as sound as the custodian.

And the custodian's record is on this page. In 1933 the US made private gold ownership illegal, collected it at $20.67 an ounce, then repriced gold 69% higher — devaluing the dollar about 41% against gold in one move (Executive Order 6102). In 1971 it defaulted on redemption outright.² Gold didn't fail as money. Gold's custodians failed, twice, and the second failure is the chart you've been scrolling through.

So the checklist has a hidden ninth line, the one 1971 teaches: sound money must need no custodian at all. For all of human history, that column stayed empty: scarcity seemed to require a physical thing, and physical things need vaults.

Then, three months after the largest bank bailout in history was signed, someone filled it in.

Money that nobody has to promise.

On January 3, 2009, a pseudonymous programmer called Satoshi Nakamoto launched a form of money whose supply is fixed by software that every participant runs and verifies: Bitcoin. There will only ever be 21 million.

Read that against this page's history. Not “21 million unless there's a war.” Not “21 million, suspended temporarily.” The schedule is enforced by tens of thousands of independent computers checking each other's work; changing it would require convincing essentially everyone who uses the system to devalue themselves. In seventeen years, through manias, crashes, bans and bailouts, the schedule has never moved.²⁰

You don't have to buy any of it — the asset or the argument. But keep the one word. In 1971 the supply of money became a policy, adjustable by the people it funds, and the adjustment was sold to you as temporary. In 2009 the supply of money became a protocol, adjustable by no one. That is the entire debate, in two dates.

If you want to go deeper, start where it started: the nine-page Bitcoin white paper, then bitcoin.org and the River Learning Center. Bring your skepticism — this money was built for people who check claims.

The suspension of the gold window, meanwhile, remains temporary. and counting.