Principles Of Sound Money

The principles of sound money are the same in any era, so I don't buy the argument that the founders' warnings about private banks and fiat money do not still resonate today . The lines between good money and bad money and good banking and bad banking are the same in 2009 or in 1789.

Money is a representation of other wealth that is compact, difficult to counterfeit, and enduring enough to serve as a medium of exchange. A unit of money is a stand in for an hour of labor or a gallon of gas or a loaf of bread, the interface that allows producer and consumer and laborer to all conduct commerce using a mutually-agreed upon form of money.

An honest money supply looks identical in 2009 or 1789 or 1089. The problem is that the Fed is not managing an honest modern money supply.

The Fed has transplanted a completely fiat monetary supply which is debt-backed. Honest money is supposed to be backed by a commodity that holds value and has a supply that is limited by human labor or production.

Debt frequently loses value ( sometimes totally ), and the debt load can be increased endlessly until a complete bankruptcy occurs.Deb­t-backed money is completely unhinged from the restraints of honest money.

The only thing gluing the money supply together is trust ( and fear of abandoning the FRN ). 'trust' and 'fear' are not commodities, they're states of mind.