Money: You Mean that Paper Stuff

I've always been fascinated by money. I don't mean that I'm greedy or that I want a whole lot of money, although heaven knows that would be handy. What I mean is that money, especially 'fiat money' (the kind of money that has no intrinsic value) is quite fascinating in its own right.

We all agree to work hard if you give us nice green paper, or even more intangible a number bump in our bank account which translates into sort of just an imaginary number hanging in the air. We all go for it. But we only do that because of trust. We trust that everyone is going to go for it. As long as people are trustworthy that system works. Now, think about it, that's a pretty big reach isn't it. "As long as everyone is trustworthy." How many trustworthy folks do you know? How much of your money would you trust them to watch for you while you went away for a month?

How about ACORN and Obama? How much of your money would you trust them with? If you're not too sure about trust, you have to recognize that it's what the whole system is built on. It wasn't always that way. In fact the shift to fiat money only goes back to FDR and even then we were on a modified real money system when I was a kid. I used to go to the bank and swap my paperboy proceeds for real silver dollars.

The advantage of money that has intrinsic value is that it can't suffer hyper-inflation. Why do I bring that up? Well we've been doing some pretty irresponsible things lately with our money. There is a serious risk of major inflation brewing. Some folks even think hyper-inflation may result. (Now that is seriously scary.)

The rest of the world is watching and today there was a news story that I thought should be at least mentioned. SEE HERE U.S. currency is right now the standard for international exchange. We used to exchange gold, but pretty much no-one is doing that anymore. Now everyone exchanges dollars. But you only do that if dollars are worth something and stable. Well pretty much everyone is starting to wonder if that will continue to be true. I sure hope so since my retirement and pretty much everything is tied up in those U.S. dollars.

I got to thinking a bit more about it when I watched Tom Woods (I have his book "Meltdown" but have not yet had a chance to read it.) Tom is a libertarian type and a supporter of Ron Paul and he's one of those that questions whether we should be on a fiat money system. If you're interested in spending a few minutes (something like half an hour if you watch all four parts) you'll have a better appreciation for what's at stake. Here are links for Tom Wood's talk earlier this month in Galveston, Texas. PART-1 PART-2 PART-3 PART-4