Sound Money: Part 1
A Pot of Frogs
If you were the frog in the pot, wouldn't you want to know?
If so, I'd like to invite you to join me on a thought journey over the next few blogs that has led me to make some concrete financial changes in my own life. These ideas are also shaping how we build future Maevlo funds, so I want to give you the context for these developments. I hope these next few blogs will spark some good conversations within your families and with me as well, if you've got the inclination to pick up the phone. Now, to give away the punchline of it all, I've come to believe there's a serious currency fire under the pot, and we're going to boil.
It all started for me in the drive-through of Chick-fil-A when getting dinner for my family demanded a $100 debit on my bank account . . . $100 . . . Do you remember when $100 used to feel like a significant number? When I was a kid, I dreamed of having a HUNDRED dollars. I would think with despair about how long it would take for my allowance to get me there. Do you have a similar memory? What number still sits in your head as a BIG amount of money? Regardless of when that was or how much the amount,it always seems to be a shifting target, doesn't it? Why?
We all hear about inflation—that global economic force supposedly beyond our control. We read about it, theoretically care, but day-to-day it's remarkably easy to ignore its creeping impact. Our capacity to adapt to gradual discomfort is truly extraordinary. But $100 for a white paper bag of hastily assembled chicken sandwiches, fries, and milkshakes? That moment made me pause and ask: what's really happening here?
Inflation, folks. That’s what’s going on. Let me explain.
I started Maevlo in 2018 with the intention of being able to do Family, Life, and Investing alongside great partners. With a lot of gratitude, I can say that it's been a successful endeavor so far. We own great assets in the ground, and we've created great value for our partners. But over these short years, that value has already been significantly eroded by the loss of our currency’s value. Think of dollar devaluation & inflation as simply: cause & effect. Devaluation is more macro, when money supply increases, lowering the purchase price of the dollar and through that process inflation sets in and increases prices for goods and services. A double whammy to families like ours! Since 2020, led by massive waves of new liquidity pushed into the market we've experienced inflation run up to levels not seen in the past 40 plus years! Everybody's bottom line is being diluted by inflation & dollar devaluation. Rats are eating away at the bottom of the grain pile.
How much money is there, and what is it worth?
I'm not an economist, and there is a lot to it I still don't understand, but let me just share a bit of what I've learned. Start with these two staggering facts.
62% of all US currency in circulation has been printed since 2020.
62% since 2020!
And this one:-
Over the past 100 years, the dollar has lost 95% of its value.
Just sit with these facts for a minute.
Welcome to the fiat currency game, where money is an abstract idea tied loosely to reality but only by the whim of those in charge of the interest rate and federal budget. The fiat game, over the last several decades, has been built on the competing precipices of boom and bust cycles, interest rates set by magic wand waving technocrats who need to keep their jobs by keeping people happy. What do they do when things threaten to go off the rails economically? Well, they've only got a few levers: taxes, tariffs, and money printing. Do you know which one makes the markets happy and keeps people in power? Printing. But no matter which one you pick, they all erode our bottom line. They all eat away at the real value we as human beings bring to the world through our ingenuity and effort.
It’s not difficult to deduce: Money is broken. Has been and continues to be.
What's the boiling point?
Well, you say, it's worked so far. Our standard of living has managed to keep pace with the inflation through it all. Yeah, eggs are $8/dozen, but wages have mostly kept up and we can still buy them. Isn't this all a bit chicken-little? The sky hasn't fallen, has it? Well, as in any piece of writing about finance, you have to say we can't predict the future. We don't know what will happen. But we do know what has happened.
Here are two more pieces of info that have been keeping me up at night. A 2022 study by Hirshchmann Capital looked at the impact that skyrocketing government debt has had on countries since 1800. Their startling finding: when a country's debt reached 130% of its GDP, in 51 out of 52 cases, that country experienced economic collapse, defaulted on debt, and suffered devastating currency devaluation within a few years. Greece stands as the most recent cautionary tale.
Right now the US debt is sitting at 124% of our GDP and has been rising steeply. Are we next? I don't know. Nobody can tell the future. Perhaps we're "too big to fail." But do you see the political will to change course? I haven't.
What it means for us
You may say, sure Matthew, these are all big macro economic musings. Who knows? What's the point of focusing on them? Well, the thought that came to me in the light of all this was this: We could build the best mineral & royalty investing company in the world, but if the currency continues to be debased and destroyed, all of it would be worthless. All of this very comes home for me and what it means to my aim of a life of authentic Family, Life, and Investing.
Do we have to keep swallowing this bitter inflation pill? Couldn't there be other options? So I've been exploring, and have found other people who are exploring this problem too. I'm excited to share it with you in the next two installments. But for now, what do you think about the situation we're in? Are you feeling the temperature rise? Is it still just a comfortable summer pond puddle? Or a boiling pot?
