Sound Money: Part II
The Value Proposition: From Paper Promises to Sound Money
The Erosion of Value
I found myself in a moment of stark clarity recently, contemplating the true value we're creating at Maevlo—not through the conventional lens of annual returns or five-year IRRs, but through a much more personal perspective. I imagined my children graduating from college someday, entering the working world where their starting salary might be $200,000 to $300,000, yet they couldn't afford basic necessities like rent for a one-bedroom apartment and groceries. Shocking I know, but could that even be a possibility? Unfortunately, from where we sit today, I believe so.
This thought experiment instantly recontextualized our company's "success," suggesting it might deserve those sardonic air quotes we use to denote irony. This, I believe, crystallizes our fundamental challenge: we're investing tremendous effort—blood, sweat, and tears—to create genuine value, only to watch it dissipate like a sandcastle against the rising tide of monetary devaluation.
The Nature of Money
This realization takes us to a more foundational question: what exactly is money? It stands among humanity's strangest yet most useful inventions. Throughout history, effective or "sound" money has consistently demonstrated three essential characteristics:
Scarcity - it must be genuinely difficult to obtain
Transferability - it must move easily between parties
Consensus value - society must broadly agree on its worth
Sovereignty - who controls the supply & implementation of it?
For millennia, precious metals—particularly gold—fulfilled these requirements admirably. They're naturally scarce, reasonably transferable, and universally valued for their utility, beauty, and durability. They satisfy genuine human needs beyond mere convention. Yet we’re in 2025 and no longer in analog worlds where carrying & tendering such metals is applicable. We’re in a digital world (whether you want to admit that or not). A digital ecosystem brings speed, transparency and consensus to our fingertips and this is the dawn of a new era–digital sound money.
The Great Monetary Abstraction
The last century witnessed an extraordinary shift in our conception of money—a mental transformation that underpins many of our current difficulties (societal, economic, or even political). Originally paper money was called a promissory note, which was literally, a promise to give the bearer gold in exchange for the paper. The value of the note was tied to something of more enduring value. There was a soundness to it. So let's go down the rabbit hole of currency history a bit and see how we've swung on and off of sound money.
1913
The United States broke itself off from the gold standard at this point, because it had a war (WW I) to pay for. We needed more dollars than we had gold at the time. That's when the first break occurred. What did we see? Well the temptation for the odd manipulation, the inflation, and extra money printing. In 1934, President Franklin D. Roosevelt effectively suspended the gold standard domestically. Executive Order 6102 prohibited private gold ownership (except for small amounts, jewelry, etc.), and the U.S. stopped converting dollars to gold for citizens. The dollar was devalued in 1934 under the Gold Reserve Act, resetting the price of gold from $20.67 to $35 per ounce. The ensuing years were marked by hyperinflation, protectionism, and ultimately, the Great Depression. Now, was fiat currency the sole cause of all of these items? No. Was it a material cog in the wheel? Yes.
1945
After WW II, to avoid the same situation all over again and in an attempt to create a stable monetary system, the 44 Allied nations came together in the Bretton Woods Agreement. In it, the United States agreed to tie its dollar to gold at $35/ ounce. And everyone else, i.e. Europe at the time, agreed to tag their currency to the dollar. Sound money was back in action and we saw a time of great prosperity and growth, in the United States as well as in Europe as it is being rebuilt.
1971
Here we faced another crisis of war, over extended ourselves, and President Nixon broke us off the gold standard (again!). And now we're really in the time frame that we can relate to, rather than 1913. This was the hard break where we truly left sound money, and 50 years later, it's where we're still sitting. Somehow somewhere along the way, everyone just accepted that the paper currencies that used to represent gold, simply held inherent value in themselves.
Later still, as the world went digital, we increasingly accepted digital representations of those empty paper promises—mere numbers in banking databases. This shift from physical gold, to physical paper, to digital money is a very important one that we'll go after later.
So, this system has worked alright but only under two critical conditions: first, that currency issuers exercise restraint in their "printing"; and second, that collective faith in these increasingly abstract representations remains intact. Have you ever thought about the fact that we’re all working, investing, trading and saving a ‘thing’ that someone else has the whim to simply print more of? With this history in our pockets, our current situation, as discussed in the last blog, looks increasingly fragile.
Investment Implications
This shaky foundation money is standing on explains why so many sophisticated investors rarely maintain significant cash positions. Many prefer real estate for its appreciation potential, despite its ongoing costs in taxes, insurance, and maintenance. Others, with a certain contrarian foresight, have maintained wealth in physical gold—which has certainly preserved value remarkably well, but is problematic for many reasons. But there is a solidity and soundness to these assets that we can learn from.
The Sound Money Imperative
This concept of "sound money" has become my north star as we continue our investment thesis here at Maevlo. If we commit our careers to meaningful work—deeply rooted in Family. Life. Investing—and if we seek to transform that created value into something transferable, inheritable, shareable, and generative, the medium has got to be sound.
It cannot be ephemeral or vulnerable to rapid devaluation. It cannot evaporate like volatile compounds or scatter like chaff in the wind. Money needs to be like a sound timber beam, a sound foundation, like sound judgement.
This is why I've begun actively exploring the three soundest money alternatives that might better preserve the value we create. In the next installment, I'll lay out some other options of what might constitute the sound money of our era—a more reliable store of value for our future.
Until then, I welcome your thoughts on this fundamental challenge facing all investors committed to genuine long-term value creation.
