Money. Money. Money.

Washington Crossing the Delaware, National Archives, Painting by Emanuel Leutze

     There is a saying, "Money makes the world go round." A Christian would say that God makes the world go round, but in our physical world, money is the means we use for exchange of nearly everything material. Money matters.

     To further an idea introduced in a previous article - we must not create money out of thin air or for any reason we please or with any backing we please. It has been done, with nearly disastrous consequences every time. If we look back to various cultures and civilizations with their fall from their peak in mind, most cases show moral decay and monetary decay. Does this remotely sound familiar?

     Early 20th Century Russia? 21st Century Venezuela? Late 18th Century France? Early 21st Century America? I use four very different cultures to prove a point - poor monetary policy negatively effects any and all people. No one is immune. Inflation is the consequence and it hits the poorest among us the hardest. We have an issue in America thinking we are immune to anything disastrous. It is as though we believe we are untouchable. I urge you to consider that we are not above math. Sound money means a strong economy. A strong economy is good for the poorest, the richest, and everyone in-between. Now, the question is, what is sound money? What constitutes sound monetary policy?

     In a simple answer, sound money is solid money. Solid money is backed by something that is of value to mankind. This backing cannot be emotional or by dictate. The backing must be universally understood and agreed to. As an example, if the US dollar only gets its value from what we say its value is, how does that look to, let's say, Canada? "Well, we're America! They'll accept it!" Right. Perhaps for a time they certainly will. Then, being a fully capable country in their own right, they will look elsewhere or use another means of exchange. What other means of exchange are there? The euro for one. There are two main types of currency - commodity backed and fiat. America, for some time, has fiat money.

     Fiat money, from Money.com, is "a currency backed by the government that issues it." Fiat means "decree". Our money is of value and can be used because our government says that they will stand behind it. Sounds good, right? What if the financial situation of the government is horrible? What if, for what ever reason, confidence in our country wanes? Do we still think politics isn't important? Do we still think who is in charge doesn't matter? 

     What if our money was backed by gold? It used to be. We fully left the gold standard under the Nixon administration. Yes, Nixon - a Republican. I know, you can close your mouth now. Add to the total fiat nature of our money, beginning with the Trump administration, we basically printed trillions of dollars out of thin air. Yes, Trump - a Republican. The Biden administration just double downed on the printing. There is some funny math done to make it look like it wasn't out of thin air, but if we see inflation tied to money creation then that means there was virtually no backing (in a fiat system). Of course, the reason for all of it was COVID. I get it. Do we feel like there would be no consequences? How is that grocery bill working out for us? Remember, inflation hits the poorest the hardest. A multi-millionaire isn't much concerned if food is 30% higher.

Please look up Modern Monetary Theory and stop and think. Do not think emotionally, think logically.

     Take a minute and look at the US debt clock. United States government debt is not the same as a mortgage. We are using a credit card to buy gas and food and never paying the balance. Take a look at the interest we are paying on the debt and then compare to the total budget. 

     I will further the argument for gold backed currency and ending the Federal Reserve in a future post. For now, at least, I hope I have made the point that sound monetary policy is important.

May God Bless You and Your Family.

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Gold Standard?

End the Fed?

What has government done to our money?

Fiat Money?

Wilmington? St. Augustine?