Seigniorage, the creation of money to facilitate trade is one of the most important inventions of all time. Reduced to its essence, money is an accounting system which makes it possible to ascertain who owns what and how much of it. To work, money needs to be fungible. It needs to be readily acceptable by sellers of stuff. To be readily acceptable it needs to maintain a modicum of stability of value in relation to stuff. If an apple sells for one dollar today and ten dollars tomorrow, it loses that stability and becomes undesirable as a store of value and a medium of exchange.
But if one dollar buys an apple today and a dollar and two cents buys a similar apple a year from now, that's close enough so that most folks won't notice. Never mind that it means that a dollar loses half its value in about 36 years.
This is called seigniorage. It's why governments and/or bankers have always insisted on having a monopoly on the creation of money and guarding that monopoly with their life. It gives the sovereign, whether it's a king, an emperor, or a government/banking hybrid like the Federal Reserve, the power to create a little extra money for itself. If a king mints gold coins alloyed with 2% base metals and buys stuff for the kingdom as if they were 100% gold, the kingdom gets 2% more stuff. It's effectively an invisible tax on the king's subjects.
Likewise if the Fed increases the number of dollars in existence simply by creating them out of thin air and lending them to the Federal government, it allows said government to buy stuff at a 2% discount.
An honest sovereign or an honest federal government would simply levy a tax yielding the same amount of money as 2% inflation does. But who ever heard of an honest king or an honest government?
The goal of most kings, emperors...and central banks...is to counterfeit, I mean inflate just enough money to make it worth while but not so much that the subjects will notice and look for alternative forms of money. Hence the 2% Fed target. Sometimes governments get greedy and counterfeit like crazy. Think Weimar Germany, Zimbabwe, Venezuela or Argentina. That usually eventually leads to regime change in one form or another. Often not for the better. Think Nazi Germany. It always leads to the eventual downfall of the empire. Think Rome. Or it leads to a change in which empire predominates.
That may be where we are now. Post WWII the United States took over the empire role from Great Britain. The dollar, legally linked to gold replaced the pound as the world's reserve currency, the form of money used to settle balance of payments between countries engaged in trade with one another. When the link to gold was severed by Nixon in 1971, a new link was established by Henry Kissinger. The link was an agreement with Saudi Arabia. If they agreed to price their oil in dollars, we agreed to support their feudal government. We went from a gold standard to a de facto oil standard. It worked well for nearly 50 years. But, as a country, we've gotten greedy, lazy and less productive. We thought it would be cool to trade our counterfeit dollars for Chinese manufactured goods and hollowed out our industrial infrastructure. We bought into the defense industry claims that we needed to spend obscene amounts of money first to fight off commies in the cold war and when that went away, a new enemy, jihadists with box cutters. Next was a flu bug roughly as severe as the 1968 flu which no one remembers. Next enemy, the weather. Meanwhile we bought off those who vote, mostly retired people, with generous socialized medicine and retirement benefits.
Unfortunately for the government, they got a little too greedy and pushed up the inflation tax from 1 or 2% to double digits. Now people who can read the writing on the wall are urgently putting money into gold and cryptocurrencies to protect themselves from the depreciation of their dollars. And it's not just our own citizens. The rest of the world noticed when the Biden administration confiscated reserves from Russia's Central Bank as part of its proxy war in Ukraine. The rest of the world has noticed. Later this month the BRICS, Brazil, Russia, India, China and South Africa are having a little confab in South Africa. On the agenda, a new BRICS currency linked to gold. They have a waiting list of other countries who would like to join. If the United States dollar loses its role as the currency for settling international trade balances, which looks more and more likely, the dollar becomes just another banana republic scrip currency. Barely worth the paper it's printed on.
The end of pax Americana or the American Empire may be coming a little faster than the elites are expecting.