Week 2                —                Day 2

The term "Wealth Transfer" is one of the most misunderstood and misrepresented concepts in discussions about the economy today. Many commentators treat it as a minor hiccup, a simple redistribution of resources. However, a Wealth Transfer can be far more significant — potentially catastrophic — if we allow it to be.

To understand the gravity of a Wealth Transfer, it’s essential to recognize that it’s not just a theoretical concept. A dramatic example occurred in the United States during the Great Depression, when the government revalued gold from $20 to $35 per ounce, leading to profound and lasting economic repercussions.

A Personal Encounter with Misconceptions

A few years ago, I attended a class reunion that unexpectedly brought this topic into focus for me. I began my career as a music teacher and have remained in touch with many friends from high school and college. At the reunion, I ran into an old friend who became a history teacher. Our conversation veered toward the monetary history of the United States, and he confidently asserted that the Wealth Transfer I was referring to actually caused the Great Depression.

I was stunned. Even though he was a history teacher, he was wrong. The truth is, the Wealth Transfer of 1934, marked by the Gold Reserve Act, was the government's attempt to end the Great Depression — not start it. With a single stroke of the pen, a significant shift in wealth occurred, altering the course of the nation’s economy. This “Wealth Transfer” transferred millions upon millions of dollars from the entire middle class and transferred it to Federal Government, a few select entities, and a few select individuals. This act created more Millionaires that any other time in history up to that time.

The Ongoing Wealth Transfer

Wealth transfers can happen overnight, like the Gold Act of 1934, or they can unfold gradually, as we see today. The rich are getting richer, driven by the growth of e-commerce and the decline of traditional Mom & Pop stores. Even major malls with national brand anchor stores are closing their doors. The disparity between CEO salaries and the wages of their workers is growing wider. The middle class is shrinking, and the value of the U.S. dollar is eroding year after year. Meanwhile, house prices, gold prices, and the value of crypto- currencies are skyrocketing. Costs like new cars, rent, college education, family vacations, and even a meal at a nice restaurant are becoming out of reach for the average middle-class family.

This time, the wealth transfer is happening slowly and quietly. In today's hyper-connected world, where news spreads instantly through social media, a sudden economic collapse would lead to widespread panic and unrest. The government is acutely aware of this, which is why the changes are being introduced incrementally.

©Copyright 2019

The Current Economic Landscape

Let’s take a snapshot of our economy today. The U.S. national debt is nearing $35 trillion. The average middle-class family carries 3 to 4 credit cards and holds between $5,000 and $8,000 in credit card debt — excluding mortgages, car loans, and student debt. The average middle-class salary ranges from $50,000 to $150,000 per year, yet more families than ever are living paycheck to paycheck.

Decades ago, there was widespread fear that computers would replace jobs. While that didn’t happen as predicted, computer literacy became a crucial skill. Proficiency with programs like WordPerfect, Excel, and dBase was once a golden ticket to employment. Today, the new frontier is Artificial Intelligence (AI). The best skill to have on your resume now is "ChatGPT Prompt Master", the ability to craft effective prompts for AI tools like ChatGPT. Those who can leverage AI effectively can command impressive salaries.

AI is advancing at a breakneck pace, faster than any technological trend in history. As AI begins to take over redundant jobs, robotics, manufacturing, farming, autonomous driving, and even office work, unemployment could soar to unprecedented levels. This looming crisis could prompt the government to step in with a solution.

The Digital Dollar: A New Era of Control

Enter the Digital Dollar (USDC). This isn’t your typical digital banking; it's a cryptocurrency issued by the U.S. government, stored in a digital wallet on your phone. Unlike decentralized currencies like Bitcoin or Ethereum, the Digital Dollar is fully controlled by the government. The rollout could start with Social Security benefits, military paychecks, and disability checks being distributed through these digital wallets, gradually getting the public accustomed to this new form of currency.

As unemployment rises, the government might introduce a Universal Basic Income (UBI), depositing $1,000 (or another amount) into your digital wallet each month. Over time, as people become increasingly reliant on this income, the value of the U.S. dollar may continue to decline. The media might not mention when the U.S. dollar is no longer the world’s reserve currency, and eventually, the dollar could become worthless. The government might then offer to exchange your cash for Digital Dollars at a fraction of their value, rendering any physical cash you have completely useless.

At this point, the government would have full control over your financial life. The question then becomes:

What side of this
Wealth Transfer
do you want to end up on?

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Until my next post,
Steve