The dollar needs a new bonfire of the bills

Fiat money, first invented in colonial America, gained value as colonial governments periodically burned their tax revenues to demonstrate scarcity. Massachusetts initiated fiat money as 'bills of credit' in 1690, which were circulated as substitutes for scarce metal coins. To instill trust in this paper currency, colonial legislatures publicly burned tax-received bills, showcasing fiscal responsibility. Fast forward 300 years, and the Federal Reserve has similarly 'burned' $2.4 trillion worth of dollars by letting bonds mature, thereby reducing bank reserves. However, this modern approach lacks the dramatic public spectacle of the past. Recently, Fed Chair Powell indicated a shift away from this policy, suggesting the Fed may resume bond purchases, indicating potential money printing, as current reserves are deemed inadequate. This contemporary monetary policy contrasts sharply with historical fiscal actions, raising concerns about U.S. debt levels, which have surged by $6 trillion during the Fed's reserve reductions. The past's trust-building public actions have not been mirrored today, creating unease regarding fiat money's stability.

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