Interactive Gold History Chart

Paper Money

It sure feels like money is worth something, doesn't it? I can go down to my choice box or grocery store, pick out whatever I want, and use little pieces of paper (or a card that represents those pieces of paper) to get things that I want or need. I can also take out debt, and gain access to that debt on the promise that I will pay it back on a certain date, or with interest over a longer period of time.

The Following was put together quickly - I hope it's accurate. (note to self: Do way more research to be absolutely sure.)

Here's the problem: paper money isn't backed up by anything other than trust and promises. In theory, this is an outstanding way to run an economy, because it tells people that they have intrinsic worth. However, it is a system that is far, far too easy to manipulate for one's own benefit at the expense of others. This makes it incredibly dangerous. The ideal behind the system is that Central Banks and governments promise not to print more money than international monetary law says they can, and the public is charged with the task of spending less than they make and saving the difference. This was actually the case at one time in the West, when money was backed by Gold. If the government didn't have the gold, they couldn't print the money. But now, money is a debt-based system. Governments make money, not primarily through taxes, but primarily through a series of regulations that allows them to print a certain amount of paper money over certain periods of time.Taxes is just giving the government back what they created out of thin air in the first place. So if a government over-spends, they can print more money at the expense of de-valuing their currency against a basket of international currencies led by the US dollar.

Money doesn't even need to be printed anymore. It just needs to be generated on some government computer someplace as a binary code, and then that code needs to be transferred into the ownership of a bank. Voila! Digitally printed money that is absolutely virtual, has no intrinsic value, but can be converted into something real. It sounds amazing because it is. It's also incredibly dangerous. Here is a case-in-point. A credit card is like a personal licence to print money. All one has to do is gain approval from a regulator (in this case, a bank), and a credit limit is given based on a person's ability to pay back whatever they borrow. If one runs out of credit, they can always apply for more (in the US it used to be given away liberally). Or, one can hold multiple sources of credit. The issue is that one can get so far into debt through their access to credit, that it becomes impossible to make even interest payments. Thus, a default ensues. This is where the US is headed. Hopefully we don't EVER get there, but chances are much higher than one might expect.

This kind of money is called "fiat currency', which literally means "let it be done" in Latin. Fiat currency is responsible for creating the most prosperous set of nations the earth has ever known (especially the USA), but fiat currency is also responsible for the take-down of some of the most powerful nations the world has ever seen. The reason: Its easier to make more worthless money than it is to actually fix an economic problem for real, because fixing problems is often sharp and painful for a time, even though the end result is more economic stability. It's also too easy to make more worthless money for yourself that you can turn into things of value than it is to actually work and toil to gain things of value in an equitable way. This combination of political greed and laziness has taken down fiat currencies time and time again throughout history.

The Fiat currency of the US will be no different, because the problems faced by western currencies today are eerily similar to those faced by fiat-based regimes of the past: overspending, military over-extension, and devaluation over time. Some examples of fiat-based (or fiat-like) money systems that have failed in the past are the Romans Denarius, the Chinese Flying Monkey, France's Livres, Assignats, and paper Francs, and the German Mark. More recently, Zimbabwe, Argentina, Mexico, and Russia all found themselves (through varying circumstances) faced with severe inflation, or even hyperinflation due to rampant devaluation. Again, the circumstances were all different and to varying degrees of severity, but they all took the easy way out instead of hunkering down and fixing things properly.

That is exactly what is happening in the US - plain as day. The bait and switch is that the US is able to somehow convince foreign central banks to keep their currencies devalued against the USD (i.e. the Swiss Franc), even though it's quite obvious that the US is in way over their heads in debt they can never re-pay. Furthermore, people are not quick to give up old habits and at any sign of life, are willing to bet on the safety of the dollar.

So what's a person to do? The first thing that comes to my mind are Jesus' words, "don't throw your pearls to pigs, or they may trample over you." While this has an obvious financial overtone, the core of the message is not financial at all, but rather spiritual. Still, wisdom and prudence would dictate that one would not obviously give their pearls to a group of pigs - and the pigs are those who are willing to trample over others mercilessly. You'll have to be the judge of who fits that category.

Inside-out and Upside-down

Sometimes governments treat desperate people with total disregard and are not held accountable. And sometimes fraudulent companies take good people for all they're worth, and are not stopped. Other times, governments are held accountable (usually in the form of a violent revolution), and many frauds do eventually have their crimes exposed in the daylight.

Some multinational corporations (I'll pick on Walmart because they're easy) don't have a people, people, people mantra, and are willing to blur the lines of social justice issues in order to feed their bottom line and pad their wallets. We have three grocery stores in my town, and one stands out above the rest. While they are a more expensive store, they are the kind of company that I resonate with because they treat people with value and dignity. They hire special needs individuals, give competitive wages, and can give a majority of their employees a decent living wage (this includes clerks and stock-jobs). For people who can't afford the store's prices though, there are no real options to support a quality grocery store in town. Many people are forced to shop at Walmart to save the bucks, or simply go without. This is more than some 'upper story' lifestyle choice: We, as investors and consumers, need to make conscious choices to support companies that demonstrate a kind of measured self-sacrifice that gives people most would consider 'the least of these' real options. Because in giving people options, it also gives us options. In giving ourselves away, we actually gain our true selves back.

I don't believe there are, nor am I advocating for, black and white answers to any world problem, including issues of social justice. And when it comes to government, a group of corporations could become just as corrupt as a government if given enough power and control. Power and control is, perhaps, part of the problem. With this, is the problem that money = power. From the Babylonians, to the Romans, to the Kingdoms of Europe, to the Empire state(s); human beings simply don't know how to wield power properly and justly. If someone claims to be able to, it raises suspicion. One look at nearly any popular American Televangelist makes this abundantly clear.

The looming question is "how much is enough?" 1 million? 10 million? 1 billion? 2 billion? 1 trillion? Equivalent ounces of gold or silver? We need nothing short of an inside-out transformation. Left to our own devices, the theory of our minds create realities filled with malice, greed, hate and violence.

I'm sorry: a blog isn't so conductive to go in-depth, but the crux (I think) is that both the liberal and conservative political approaches to running a country are hopelessly broken. Throwing money at everything will lead to too much debt, but cutting too much of everything will lead to a growing gap between the rich and poor. As the poor blame the rich for their problems and the rich blame the poor likewise, the hope of reconciling people to one another becomes much more arduous. Only as a people reconciled to one another can we truly progress, but if we are only reconciling ourselves to the people we already love, we are really just going to perpetuate (to some extent) the same cycles of the us/them dichotomy that seems to dominate American politics and lifestyle.