Inside This Issue You Will Discover…

*** What is Money?
*** Why Today’s Money in Not True and Honest
*** What is True and Honest Money
*** And More

What is Money?

If you were to ask someone 100 years ago: What is money?

They would reply: Gold.

If you asked the same question 200 hundred years ago the reply would be: Gold.

And if you asked the same question 1,000 years ago, you would get the same answer: Gold.

But if you asked someone today, the question: What is money?  They would generally look perplexed.  And the responses offered would vary widely.  One person would say: Dollars. Another would say: Euros.

Another would say: A promissory note.  And still another would say: Available credit or purchasing power.  Are these bad answers?  Are they wrong?  Let us explore.

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We know that money is an essential part of human civilization.  It facilitates commerce between individuals and businesses, and trade between nations.  It advances markets beyond barter and serves as a means for the accumulation of capital.  William Stanley Jevons, in 1875, stated that money has four functions – it is a:

1.  Medium of exchange

2.  Common measure of value

3.  Standard of value

4.  Store of value

Today’s money falls short in its function as a store of value. 

If you consider just the dollar, it has lost 95-percent of its value in less than 100-years.  And many other currencies that were around 100-years ago, no longer exist.  In other words, they became worthless. 

But then the concept of money has been distorted over the last hundred years too.  Rather than cash in hand, it is now cash flow.  Rather than available savings, it is now available credit.  Rather than pay as you go, it is buy now pay later.  And rather than wealth accumulation, it is ability to service debt.  In effect, money has lost its integrity.  It is no longer true and honest.

Here is why…

Why Today’s Money is Not True and Honest

Today’s money is not true and honest because it does not provide a firm baseline for measuring the price of goods and services. 

When a carpenter measures the length of a cabinet as being three feet, he is certain that the length measured as three feet will always be three feet.  To the contrary, when a shopkeeper prices a 24-ounce loaf of bread at $3.29, he is not certain that the value of one loaf of bread will always be equal to $3.29.  In fact, in 1971 he would have valued three 20-ounce loaves of bread equal to $0.89. 

Has the usefulness of a loaf of bread, on a per ounce basis, really changed 826 percent? 

Certainly not.  Rather, the baseline used to measure the value of a loaf of bread has changed.  It is true that prices of individual goods and services will fluctuate to account for natural changes in supply and demand, but when money is anchored to a stable baseline, overall prices will by and large be stable.

Money, as a store of wealth, is also a store of an individual’s time and industriousness.  When a person goes to work to earn money they are trading their time for that money.  Would not they rather use that time to be with their family or to engage in hobbies or recreation? 

Indeed yes.  But they have made the decision to earn money today, to provide greater security, and to possibly store up some of that time for use at a later date.  When money is not true and honest, when it loses value over time, it not only robs a person of their savings, it robs them of their time and, in effect, their life.  Also, because it is not true and honest, it spoils the notion of ‘an honest days work for an honest days pay.’

What is True and Honest Money?

For money to be true and honest it must be a store of value.  In other words, it must retain its value over time.  It must not rely on governments to fix its price or to determine its circulating quantity.  It must not be borrowed into existence or created out of thin air.  And it must exact discipline from the public, from governments, and from bankers.

Read this entire article here: Why Gold is True and Honest Money.

Sincerely,

M.N. Gordon
Great Depression Online

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