Many people spend a lot of time thinking about how to make more money. But not many people think about how our system money actually works.

It's a system that has been in operation globally for just 40 years - since the US finally departed the gold standard in 1971. The Bank Of England calls it "fiduciary money", others "fiat currency". Under this system, money is the issuance of governments. It's not backed by anything tangible except the law. Banks have the power to create money through lending.

In 1971, I could have taken my son to the FA Cup Final for £2 (now over £100). The Mars Bar I bought him at half-time would be 2p (now 60p). The beer I bought myself would be 11p (now £5 a pint at Wembley). The gallon of petrol I needed to get me there and back would be 33p (now £7). And the house we went home to would be something like 2% of the price it is now.

Average earnings have increased too, but not by the same multiples. They have risen from around £1,500-2,000 per annum to about £25,000 today. The differential has been covered up by more debt, longer working hours, more women in the workplace and so on.

Yet through the 100 years of economic growth of the 19th century, prices actually fell according the wholesale price index, and wages rose.

Why does everything - except mass-produced goods - relentlessly rise in price? It's this system of fiduciary money. There is almost no limit to how much can be created. And the more money there is, the more diluted its purchasing power becomes, and the higher prices will rise.

David Fuller's view Everyone reading this will be familiar with the problem, not least veteran subscribers. By understanding this process of currency debasement, as investors we can at least protect ourselves against it, somewhat. Fullermoney will never lose site of this challenge.