Aside from stealing your life savings and launching depressions, one of the nastier features of paper money is what it does to governments. In short, paper money transforms governments from parasite to predator. Because once a government can print what it likes, it no longer needs taxes.
Therefore, once a government issues fiat, it can no longer be “by the people, for the people.”
The old adage, "History doesn't repeat but it often rhymes," may be cliche, but it's looking more correct by the day.
Knew nothing about the Song Dynasty, very interesting. Your article made me find more information about the US gold standard and FDR/Nixon's policies. After following you for awhile now, I am learning so much, thank you.
Enlightening, as always. Thank you for writing these, Prof.
Dr. St. Onge, thank you for the important and interesting history lesson. Can you describe to me how bitcoin is a commodity like gold? Thanks and I do keep listening!
I like your focus on the incentives. It seems like the main logical fault that allows socialist economic theories to thrive is when people ignore the power of virtuous incentives and destructive incentives.
The WSJ highlighted this with their piece "Labor Lessons From the Pandemic" http://tiny.cc/4m1cvz
-- "New research confirms that if you pay people not to work, they won’t." Imagine that!
"subsistence farming" -- what we'll be doing once we reach Net-Zero!
(fyi: typo in subsistenence)
The only flaw in this article is thinking that BitCoin is in any way the same as gold and silver. BitCoin is just 1/0s on a hard drive. It does not exit and will never replace real metals.
Fiat money is bad, but its a symptom of government that has gotten too big and power hungry. We need to repeal fiat money, but we also need a massive reduction in the size and scope of government.
At the end of your article, you’re arguing for a CBDC. Wouldn’t that give government even more control over how and where we spend our money? I’m all for a gold/silver backed currency, but a digital one would grant even more unwanted power to government.
Will crypto be safe if we need the internet to use it?
You say, "How to fix it? Simple: back the currency with hard assets. Gold, silver, Bitcoin would all take the money printers away."
If Bitcoin is not a hard asset backing currency, but rather a digital currency that derives its value from consumer confidence, like fiat currency that derives its value from citizens' confidence in the government, and its usefulness as a mode of payment, how can it be used to back currency?
There's limited supply of gold in the world.
The need to equate a "token quantum" value for the amount of gold held by a country aginst its local currency needed for a proper economic sustenance would determine the actual worth of that local currency against a quantum of gold. For USA the $ value would be some small dust particles of gold.
How does one envisage the rate of exchange between two currencies of countries? Based on gold they hold? Some countries don't have that much gold or silver, but a lot of natural wealth.
Doesn't seem practical to setup gold backed economy given the size of world economy and constantly growing, while gold supply is limited and growing extremely modestly and some cultures like China & India and many countries where people like to put away their savings in gold for their rainy day.
There just isn't enough gold for the 9 billion people to parcel out and back a global economy based on that.
I wonder how one can structure a gold based currency in today's multi polar, multi controlled world where currency manipulations are rampant?
Why I feel that we should get a 'do over' for the year 1913.....
Bitcoin is fiat without a government to back it.
Most enlightening as usual. Now how do we get back to that "gold standard", with smaller gov`t, less war and middle class prosperity? Maybe that`s what a "great reset" needs to look like.