Sound money

The numbers, in one place

Three kinds of figure appear below. Official means a published index. This page's calculation means the fixed euro basket. Money stock means growth of the quantity of dollars, which is not a price index.

A long average hides a spike. Official US CPI rose 9.00% in the twelve months to June 2022. The euro-area HICP annual average rose 8.39% in 2022.

What money is

Money does three jobs. It is a medium of exchange, so two people can trade without bartering. It is a unit of account, so prices share one measure. It is a store of value, so saving today can still buy goods later. The short comparison of those jobs is on the Education page. This page is about which goods can keep the third job.

Why some money wins

A good monetary good is durable, easy to check, easy to carry, and easy to split. The property that decides the store of value is hardness: the stock already in existence, divided by how much can be produced in a year. If new units are cheap to make, the stock-to-flow collapses and the old holders are diluted.

Shells, gold, housing, notes, bitcoin

Shells have been money. They fail when someone finds a beach, or a way to manufacture them. Gold lasted as money because a year of mining is small next to the gold already above ground. Housing is scarce in a given city, but the stock grows when people build, including upward. A higher price calls forth more floor space. Fiat notes have no such physical limit. The central bank sets the new supply. Bitcoin's new supply does not rise when the price rises. The subsidy started at 50 bitcoin a block and is cut in half every 210,000 blocks. The sum of that schedule is 21 million. Integer division of the subsidy leaves the issued total slightly under the round number. By 6 October 2026, 20,094,278 bitcoin had been issued.

How long a money lasts

Gold as a monetary metal is measured in millennia. The metal is still here. Fiat units are not. The Papiermark was destroyed in the hyperinflation of 1923. The Reichsmark was replaced in the western zones by the Deutsche Mark in 1948. The Deutsche Mark itself ended as cash when euro notes arrived on 1 January 2002, after book-entry euros began on 1 January 1999. The state continued. The unit did not.

The US dollar is a different case. The unit still exists. On 15 August 1971 the United States suspended the promise that foreign central banks could convert dollars into gold at 35 dollars an ounce. That promise did not return. This was a broken redemption contract, not a court bankruptcy of the United States. The note continued without the asset it had pointed to.

Bitcoin is young. The genesis block is dated 3 January 2009. Issuance since then is public: about 20.09 million of the scheduled 21 million by 6 October 2026. Adoption into regulated savings products is also dated. On 10 January 2024 the US Securities and Exchange Commission allowed spot bitcoin exchange-traded products. In Switzerland, pillar 3a providers such as finpension have offered an optional allocation to a bitcoin exchange-traded product inside the pension foundation. The foundation holds the product. The saver does not hold the keys. Published accounts put the foundation's own cap near 5% of the 3a assets. That cap is the foundation's rule, not a feature of Bitcoin. If the network is still here in several decades, savings that today sit in other scarce goods have an alternative with no issuer. That consequence is set out below. It is not a claim that the switch has already happened.

A short history

People have settled debts in shells, cattle, salt, and metal. Coins concentrated that job. Gold and silver carried value across distance because they were hard to multiply. Later, paper notes circulated as claims on metal sitting in a vault. The claim was only as good as the vault's promise.

Bretton Woods, agreed in 1944, tied other currencies to the dollar and tied the dollar, for foreign central banks, to gold at 35 dollars an ounce. On 15 August 1971 President Nixon suspended that conversion and called the step temporary. The conversion did not resume. The world moved to fiat: notes and deposits backed by law and by the issuer's restraint, not by a redeemable stock of metal.

Bitcoin's genesis block followed on 3 January 2009, with a schedule no issuer can quietly raise. A central bank digital currency is the next proposal from the other direction: the same issuer, in digital form, with the account rules the issuer can write. The ECB says no decision to issue a digital euro has been taken. It is preparing for the possibility.

What changed in 1971

The break is documented by Federal Reserve History. A German-language walk through the years after the break is at Blocktrainer, WTF happened in 1971. The multiples below are computed from the primary series, not copied from that article. They are developments since the gold restraint ended. They are not a cause for every social chart that starts near 1971.

Read together, in dollars only: the money stock compounded at 6.60% a year, official consumer prices at 3.90% a year, and median house prices at 5.20% a year. The quantity of dollars grew faster than consumer prices, and house prices grew faster than consumer prices again. Output per hour pulled away from real pay. Gold, measured against the old 35-dollar parity, repriced by about 120 times. The futures print of 4,199.80 dollars is a market price on 6 October 2026. The 35-dollar figure was an official parity, not a futures settlement from the same contract.

Why the official price index fails a hard check

The statistic is not a forgery. It is a different question from the one a household asks. The ECB says it aims for 2% inflation over the medium term, and that its reference is the Harmonised Index of Consumer Prices compiled by Eurostat. That 2% is a target for that index. It is not a measurement of an unchanged household bill.

The dataset is incongruent with that bill. When a good rises fast, the basket substitutes a cheaper one and the expensive good loses weight. Weights are updated every year, so the pain of last year's bill drops out of next year's average. A quality adjustment can count a higher till price as a price cut if the statistician decides the new good is better. Eurostat also publishes indexes that exclude energy, food, alcohol, and tobacco. Officials often cite that narrower rate. Electricity and the grocery bill are outside it by construction.

Housing and insurance are the clearest gaps. The HICP has measured tenants' rents, not the price of buying the home you live in. On 8 July 2021 the ECB kept the HICP as its reference and recommended adding owner-occupied housing over time. Health premiums are often rewritten inside the health component instead of entered as the transfer the household actually sends.

A fixed basket, nothing swapped

This is a counter-account, not a second statistical office and not "the true inflation." It uses euro-area sub-indexes so it answers the ECB rather than mixing in another currency. The goods stay the same from 2015 to 2025. The weights below are chosen once, for costs a household cannot drop, and they are not updated when a price rises. Nothing is swapped for a cheaper category.

The basket index is the weighted sum of the 2025 indexes: 0.40 × 118.85 + 0.30 × 141.41 + 0.10 × 154.17 + 0.05 × 160.84 + 0.15 × 115.44 = 130.74. The annual rate is that index over 100, to the power of 1/10, minus 1, which is 2.72%. Headline HICP over the same window is 2.56%.

The gap is 0.16 percentage points. That is not the hard check, and it does not clear the 2% target. It shows the limit of reweighting indexes that are already adjusted inside each series. Electricity and gas inside the basket rose faster than the headline. They are diluted by the rent and health sub-indexes. The hard check is elsewhere: US M2 at 6.60% a year against US CPI at 3.90% a year, and house purchase prices, which this index leaves out.

The row the index still leaves out is the purchase of a home. Euro area house prices rose from 100 to 153.45 between 2015 and 2025, about 4.38% a year. That series is not called inflation on this page. It is the scarce good households actually buy when they try to store savings, and it is absent from the rate the ECB steers by.

The ten-year euro average also hides 2022. The HICP annual average rose 8.39% that year. In the United States, CPI-U rose 9.00% in the twelve months to June 2022. A rate near 2% is what the long window looks like after that spike has been averaged in.

Why prices rise

A price is a ratio: how many units of the money for how much of the good. More units, with the same goods, raise the ratio. Technical progress works the other way. It should make many goods cheaper. From 1971 onward the US price level rose anyway, while the money stock rose faster still. The new units did not fund a matching pile of new goods.

Richard Cantillon described the path in the 18th century. New money does not reach every person on the same day. It arrives first at the point of issue: the state, the banks, and the markets where the new balances are spent. Those buyers pay yesterday's prices. As the units move outward, rents, food, and energy are already higher. Wages and the savings account adjust last. The same official rate therefore feels different to a renter than to the balance sheet that received the units first. Since 1971, house prices and financial assets have outrun the consumer basket. That is what the order of arrival looks like in the data.

What inflation does to savings

United States, in dollars

US M2 compounded at 6.60% a year from August 1971 to August 2026. That is growth of the money stock. It is not consumer price inflation. A claim on that stock shrinks at the same rate: $500,000 / (1.066)¹² = $232,211. The account can still show $500,000. No parliament voted a tax in that amount. New dollars did the dilution. Rule of thumb: 72 / 6.6 is about 11 years for that claim to halve.

Official CPI-U compounded at 3.90% a year over the same months. $500,000 / (1.039)¹² = $315,925. That line is the official consumer-price path. Median house prices compounded faster, at 5.20% a year, and they are not the CPI. The twelve months to June 2022 rose 9.00%, which the 55-year average smooths away.

Euro area, in euros

This paragraph does not use the dollar lines. Official HICP, 2015 to 2025, compounded at 2.56% a year. This page's fixed basket compounded at 2.72% a year. At the published basket rate of 2.72%, €500,000 / (1.0272)¹² = €362,335. House purchase prices, outside the HICP, compounded at 4.38% a year. The 2022 HICP average of 8.39% is inside the ten-year figure, not instead of it.

How to save, and the shift in scarce goods

Saving is consumption postponed. It only works in a good whose quantity does not grow with the price. Long-term savings left only in bank deposits lose the gap in the section above. Hard money keeps the purchasing power because nobody can vote a larger supply into being.

Housing is the scarce savings good many households, and many pension funds, already use. Against bitcoin it is clumsy. It does not split into a small amount without selling the whole asset. It does not travel. It needs maintenance, tax, and permission from the place it stands. And, as above, new living space can be built, including upward, so the stock responds to the price. Bitcoin splits to a satoshi, settles worldwide, has no building to repair, and does not issue more units because the price rose.

The price still moves, and that risk belongs on this page. From 1 January 2026 through 6 October 2026, the distance from the low to the high was about 41.00% for COMEX gold futures, about 120.00% for COMEX silver futures, and about 70.00% for bitcoin. Bitcoin is not in a class of its own on that year's range. Gold and silver swung hard too. What is different is age. Gold has been a monetary metal for millennia. Bitcoin has been issued only since the genesis block of 3 January 2009, so the record is short and a young market can gap. A price drop does not change the 21 million schedule. The range is not a forecast of the next year.

A shift follows if bitcoin keeps purchasing power better than housing. This is a consequence, not a forecast and not a claim about next year's price. Pension funds and property funds hold buildings partly because the buildings are scarce. Early, capped access already exists inside some Swiss pillar 3a foundations, as a small slice of a regulated portfolio rather than as self-custody. If that scarcity premium moves toward a monetary good with a harder supply, funds have a reason to sell buildings and hold the harder good. Less demand for the property fund, more buildings offered for sale, and a smaller monetary premium inside the house price. The roof and the rooms remain. The role of the house as a savings technology gets weaker.

This page does not say "buy now." A practical distinction is custody. Coins left on an exchange are someone else's promise. Coins under keys you control are not. The Tools page lists wallet software and a hardware wallet, along with exchanges.

CBDC and Bitcoin

A central bank digital currency is money issued by the central bank in digital form. The ECB describes a digital euro as a digital form of cash for the euro area, complementary to notes, with no decision yet to issue it. The comparison below uses the ECB's own FAQ where it states a design choice, and states the matching Bitcoin rule beside it.

The sentence worth quoting in full is the ECB's, from its digital euro FAQ: programmable money is "a digital form of money used for a predefined purpose, like a voucher, with limitations on where, when or with whom it can be used." The ECB says the digital euro would never be programmable money, and that it could facilitate conditional payments, for example pay-on-delivery. Read both halves. The refusal is a rule the issuer writes and can later revise. Conditional payment is already a condition on when the unit moves. Bitcoin has no office that can add a voucher rule, a holding cap, or a border.

Reach is the same distinction. Bitcoin can be sent between two people anywhere the network is reachable, without a state approving the payment. A digital euro, on the ECB's description, is for the euro area and moves through payment service providers. A payment the issuer or the provider will not pass does not pass. Foreign use is not a default. It exists when the authorities open it.

An automated agent that pays another party needs a unit it can receive without opening an account at a bank or a payment service provider. Bitcoin allows that on the rules already stated above: no issuer, and settlement between any two parties that can reach the network. The agent still needs keys, a fee, and a counterparty that accepts the payment. A digital euro, on the ECB FAQ as of 6 October 2026, would still move through supervised intermediaries inside the euro area. This page only states which design properties fit settlement without a bank or payment-service account.

Questions this page answers

The same answers are in the page markup for search engines and AIs. The rates match the sections above, including 6.60% for US M2.

Sources

Last reviewed 6 October 2026. The levels were read from the linked series on that date and will change. Dollar arithmetic uses the rounded US rates in the summary (6.6% and 3.9%). Euro arithmetic uses the rounded basket rate of 2.72%. Neither line is a forecast, and neither is the other currency.

• FRED M2SL. US M2, billions of dollars, seasonally adjusted.
• FRED CPIAUCSL. US CPI-U, 1982–84 = 100.
• FRED MSPUS. Median sales price of houses sold in the United States.
• FRED OPHNFB. Nonfarm business, output per hour.
• FRED COMPRNFB. Nonfarm business, real compensation per hour.
• COMEX gold futures (GC=F). Futures price 4,199.80 dollars an ounce on 6 October 2026, and the 2026 low-to-high range of about 41%. Not the 1971 official parity.
• COMEX silver futures (SI=F). 2026 low-to-high range of about 120%, through 6 October 2026.
• Bitcoin price (BTC-USD). 2026 low-to-high range of about 70%, through 6 October 2026. A price range, not a change in the 21 million schedule.
• Gold convertibility ends. Federal Reserve History on the 15 August 1971 suspension. Bretton Woods parity was 35 dollars an ounce.
• Eurostat HICP annual index. Dataset prc_hicp_aind. This page uses annual averages, 2015 = 100, euro area, 2015–2025.
• Eurostat house price index. Dataset prc_hpi_a, annual average, 2015 = 100, euro area. Not part of the HICP.
• ECB on the HICP and the 2% aim. The ECB says it aims for 2% inflation over the medium term and that the HICP is the reference.
• ECB monetary policy strategy, 8 July 2021. Symmetric 2% target. The HICP stays the reference. Owner-occupied housing was recommended for inclusion over time.
• ECB digital euro FAQ. Programmability, holding limits, and the euro-area scope, in the ECB's words.
• Blocktrainer, WTF happened in 1971. Context for the break in 1971. Figures on this page are taken from the primary series above, not copied from the article.
• Bitcoin whitepaper. Satoshi Nakamoto, 2008. A declining issuance subsidy.
• Bitcoin issued supply. Satoshis issued. Read on 6 October 2026: 20,094,278 bitcoin.
• SEC spot bitcoin exchange-traded products. US Securities and Exchange Commission statement, 10 January 2024.
• finpension and pillar 3a bitcoin. A published account of a Swiss pillar 3a provider offering a capped bitcoin allocation inside the foundation, not in self-custody.