The Illusion of Wealth: Your Bank Balance is a "Debtable" and Military Rules Global Finance

In the traditional classroom, we are taught that money is a medium of exchange—a neutral tool that evolved from bartering seashells to minting gold. But if you look at the tectonic shifts in global geopolitics today—from the freezing of national reserves to the sudden seizure of state assets—that textbook definition feels like a fairy tale.

To understand the modern world, you must unlearn the idea that money is “wealth.” Instead, you must recognize that money is a tradable IOU, and its value is secured not by math, but by the physical ability to enforce debts.

1. The Credit Origin: Money Was Never About Barter

Contrary to Adam Smith’s theory, anthropologists have found little evidence of pure barter societies. Instead, ancient communities operated on credit. If a hunter came home empty-handed and “bought” beef from a neighbor, he didn’t always give a seashell of equal value; he gave a token representing a debt.

In this light, money isn’t a “thing”—it’s a ledger entry. Whether it is a notch on a bone, a tally stick, or a digital entry in a banking app, money represents what society owes you for your past labor.

The Shift in Perception

Perspective	Traditional View (Textbook)	Credit Theory (Reality)
Origin	Barter efficiency	Debt recording
Process	Deposit $\rightarrow$ Loan	Loan $\rightarrow$ Deposit
Nature	Asset/Store of value	General circulating debt
Backing	Scarcity (Gold/Silver)	Enforcement/Taxation

2. How Modern Banks “Print” Money (It’s Not a Printing Press)

Most people believe banks act as middlemen, taking money from Saver A to lend to Borrower B. This is incorrect. In a modern credit-based system, loans create deposits.

When a bank approves a $1 million mortgage, it doesn’t move physical cash from a vault. It simply types “$1,000,000” into the borrower’s account. At that moment, new money is created out of thin air.

The Borrower has a new debt.
The Bank has a new asset (the right to collect interest).
The Economy has new liquidity.

If every debt in the world were paid back tomorrow, “money” as we know it would virtually vanish. This is why the system requires constant growth; it is a treadmill of debt that can never stop.

3. The Venezuela Precedent: Military Power as the Ultimate Ledger

The recent geopolitical maneuvers involving the seizure of state assets and the pursuit of foreign leaders demonstrate a brutal truth: Financial rules only apply as long as you can defend your sovereignty.

If you spend a lifetime working and saving, you are essentially holding a stack of IOUs from the state. However, if a dominant military power decides to “unplug” a nation from the global financial system (like SWIFT), those IOUs become worthless overnight.

Why Defense Always Precedes Finance

Economics is often viewed as the “software” of civilization, but military power is the “hardware.”

Physical Control: If you control the person, you control their assets.
Resource Dominance: Oil, minerals, and land are “hard assets” that don’t disappear when a bank fails.
Enforcement: A contract is only as good as the court (or army) that enforces it.

In a volatile world, the “Defense Industry” isn’t just about war; it is the insurance policy for a nation’s currency. This explains why defense stocks often outperform during “rule-breaking” eras—investors realize that when the global rulebook is torn up, the person with the most “persuasion” wins.

4. Bitcoin and Gold: The Quest for “Trustless” Ledgers

Why did Bitcoin go from $0 to $60,000+? Not because it has intrinsic utility like a hammer, but because it is a perfect ledger.

Humans have realized that centralized “IOUs” (fiat currency) are subject to the whims of governments who can print more or seize them at will. This has led to a bifurcation of assets:

Hard Assets (Physical): Gold, silver, and commodities. They have no “counterparty risk”—meaning their value doesn’t depend on someone else’s promise to pay.
Decentralized Assets (Digital): Bitcoin, which uses math instead of a central bank to record the “IOUs.”

5. Strategic Conclusion: How to Protect Your Labor

If money is just a record of what the world owes you, the greatest risk is that the “debtor” (the system) goes bankrupt or refuses to pay. To navigate this, a professional portfolio must account for the hierarchy of power:

Productivity: Your ability to create value is the only thing that can’t be seized.
Hard Commodities: Physical assets that exist outside the digital ledger.
Strategic Defense: Understanding that “the rule of law” is often just “the rule of the strongest.”

The “thrifty saver” who keeps 100% of their wealth in a bank is the ultimate optimist—they are betting their entire life’s work on the hope that the global political climate will remain peaceful and the IOUs will always be honored. History suggests otherwise.