As long as the issuer (in this case, V&D) exists, these gift cards are a form of currency in the 'country of V&D.' But a problem arises when V&D goes bankrupt: the gift cards are suddenly worthless.

The news coverage of V&D’s collapse, and its consequences for the holders of gift cards in particular, reminded me of, in principle, the same phenomenon that we observe in our own modern monetary system, albeit on a much greater scale. The 'gift cards' we use in our own economy only have a different name: we call them money (currencies), and the issuing authority is not a warehouse chain but rather a central bank.

I can almost hear you think that our money couldn’t actually, literally, become worthless from one day to the other? Right? But are you sure? Although we haven’t seen it happen in the Netherlands for a long time, it doesn’t mean that it couldn’t happen. I have seen it happen multiple times in the former Yugoslavia and Bosnia, where I was born. Multiple times, its currency became worthless. And it hasn’t been the only example in monetary history. Furthermore, it is a mistake to think that these kind of monetary disasters could only occur (or has only occurred) in third world countries.

But you might think that a central bank could not possibly go bankrupt in a similar manner as the V&D. You are absolutely correct. Or at least, when we are talking about the formal definition of bankruptcy. Factually speaking, a central bank can go bankrupt. Moreover, the process of bankruptcy has been going on for decades. What am I trying to say? If a central bank deliberately lowers the value of the currency it issues, we can consider that as a form of bankruptcy. As a result, the value of your money (its purchasing power), is lowered annually, year after year. After some time, this amounts to a considerable decline. Since 1971, the purchasing power of the Dutch guilder has more than halved. And the guilder was known as a strong and stable currency!

The aim of all central banks is to aim for higher prices each year. Declining prices, meaning your money increases in purchasing power, is considered the state’s greatest enemy. It is combatted by all sorts of legal (cutting interest rates, all the way up to 0 percent) and illegal (monetary financing of government deficits) means. In 2012, I called this monetary murder, and it is a process set in motion for the past century. However rare the comet of Halley is, without a doubt the most well-known comet (and one we only see once every 76 years), the sight of declining prices has been equally rare. Since the end of the Second World War, prices in the Netherlands have only declined in one single year, and by a very small margin.

The process of monetary murder not only continues, but central banks have recently stated that they will strive for higher inflation than they have in the past.

In my view, this means it is a matter of time before our monetary system, which is based on a relationship of trust with the organization that issues currency, will collapse. Monetary history does not predict a good outcome either: in the entire human history there has been no example of a so-called fiat monetary system that has held up over time. On the contrary, there is no example of a collapsed monetary system that was not accompanied by long-term nasty consequences for everyone and everything involved. If there is one thing we can learn from monetary history, it is that we should be prepared for the inevitable.

In previous research of all fiat monetary systems that have ever existed, a result was that the average life expectancy of a system is approximately 27 years. Our own monetary system saw its first light in 1971, meaning it is nearly 45 years old. We have long overstayed our welcome.