Robert C Green II .com

I just read this article and have again been reminded of why sound, private money is important to capitalism. There are a few reasons, especially in the USA. Most of these are spelled out in the article I just mentioned, but I will still repeat some here while adding a few of my own.

1. Sound, private money avoids inflation. Sound money is inherently tied to a commodity or some scarce resource. Since natural resources cannot be created out of thin air (as fiat money can) inflation is negligible and if it does occurs, occurs very slowly. This means that you’re savings actually is worth something as it is not devalued by every new dollar printed by the US government.
2. Sound, private money allows wealth creation through savings, not only investment.
3. Once wealth is earned through savings, investment is pursued as a way of gaining wealth at a higher rate.
4. Sound, private money limits the expenditures and flexibility of governments. This inherently limits government and keeps it out of your life.
5. Sound money provides just scales for commerce.
6. Private money insures competition amongst currencies.
7. The US Constitution says so: “No state shall coin money, emit bills of credit, or make anything but gold and silver coin a tender in payment of debts” (Art. I, Sec. 10)

I also feel that I should take a moment here to explain what inflation really is. In the world as it stands, countries use a monetary system known as fiat currency. This means that the currency has value simply because it is believed to have value. In reality there is no value to the currency – it is just paper and very low value metals.

Historically gold, silver, bronze, and copper had always been used as currency because the have intrinsic value and are scarce. The dollar itself was originally backed by gold as well. The old saying went, “Good as gold. Sound as a dollar.” This meant that government s could not print more money than the gold/silver that they had on hand.

After WWII, the US was in a rare position and, as its currency was backed by gold and still sound currency, it became the worlds reserve currency. US dollars were a safe investment.

Once the backing of gold was removed (Thank you FDR and Richard Nixon) the government was free to print as much currency as it wanted in order to fund programs and pay bills. They still do this and they print roughly 10% more money every year. This means that every year the money supply increases by roughly 10% and the value of your cash on hand decreases by 10%. Basically US citizens don’t only pay taxes, they also let the government steal an additional 10% of their wealth through inflation.