I didn't disagree with a single word until that statement.
Under a gold standard, for example, the dollar would not simply be backed by gold, it would be defined as gold. Let's say that it is newly defined by Congress as 1/4 of 1 grain of gold.
Under that system, fluctuations in the price of gold would have no effect on the dollar whatsoever [they are one and the same] and since all contracts would be denominated in dollars or in gold, the fact that I was paid in Euros wouldn't matter to me as the buyer would have to settle at the current gold/dollar price.
Now, let’s see what happens if we let people or businesses create/print their own currency backed by nothing. Well, I’d go right out and buy the printers, inks, etc, and start printing - wouldn’t you ? I would therefore not be producing my goods and services. Why bother ? We have a license to print money ! Woo-hoo !
But who in his right mind would use your money? In order for money to become commonly-accepted [else it isn't really money, is it], it would have to be backed by something and you would need to have a well-established reputation.
I certainly was not suggesting that Joe print up some coupons and call it money, though I probably wouldn't pass a law against that, either, unless he was trying to counterfeit someone else's. I just don't see why government should have a monopoly on the thing.
I'm a believer in so-called "hard" money. My comments on money here are always premised by that. I distrust the government much more than I do markets. That was really my point.
Regarding “defined” as gold, then we would have completely moved over to a gold standard.
In that case, we’d have certificates that are denominated in how many ounces of gold back each particular certificates, and gold coins.
Let’s call the currency GOZ, for gold ounces.
We could have paper GOZ notes denominated like this:
(ounces of gold)
0.001
0.01
0.1
1.0
Then, the currency that businesses and people would keep their records and report in would be in GOZ.
In terms of the relationship between GOZ and other currencies, GOZ would be just another currency.
Now the currency is truly defined as gold; a .01 ounce gold note would always be worth .01 ounces of gold.
Unfortunately, the supply and demand for gold as a commodity would fluctuate. These fluctuations, of course, would not have any effect on the GOZ currency valuation relative to gold, because the GOZ paper and electronic currency denominations simply descriptively say exactly how much gold those GOZ currency units are worth.
But here we get into whether we want the GOZ currency actually to have ounces of gold sitting in a vault, enough to back every paper or electronic ounce.
If we do want that “backing” gold in a vault, at today’s dollar price of gold, there is nowhere near enough gold available to the US Treasury to back the GOZ currency that would translate to the USD that is now in paper or electronic form.
If the Dollar price of gold were, say, $20,000 per ounce, perhaps we’d be getting close (I’d looked into this a little a few years ago, but don’t have much interest in getting into those details if not necessary).
So at the time of changeover from USD to GOZ currency, the price of gold in USD would shoot up much higher than it is today.
After a changeover, if the GOZ replaced the USD completely, so USD go out of circulation and are no longer used and the US only used GOZ, we’d be left, worldwide, with a very tight supply of GOZ. This is because if they economy expands and we get in increased velocity of money, and we then desire to grow the money supply, the Treasury would have to wait for gold producers to mine and purify gold and then buy it from them with newly created GOZ paper or electronic money.
The goldmining companies would sell directly to the Treasury, which would be unable to issue GOZ notes or coins - other than by purchasing gold from the goldmining companies.
Unfortunately, the Congress and Treasury still could and would continue taxing and borrowing in order to get money to spend for everything it currently spends on. The Treasury doesn’t create money today - it taxes and borrows to get cash. So the GOZ would not fix the problem of government spending more than it receives in taxes.
New world order would still be in the driver’s seat in terms of controlling our government, because in addition to controlling sovereign debt markets, they have controlled the precious metals industry for centuries. Through precious metals mining, that is, increasing or decreasing production, or coming up with new uses for increased demand or obsolescence of old uses, the creation of money by the government would be very much still subject to their control. Government would simply stand there with their hand out begging for gold. Of course, new world order might prefer that the Federal Reserve be the entity that creates this GOZ money anyway, which would mean that pretty much everything would remain the same as it is, that is, after new world order profited enormously and caused who knows what kind of world events to happen during the changeover.
Now -the privately issued money. I agree, the “little people” would be unable to get anyone to accept the money they created. Large banks, financials, etc. (new world order), however, certainly could successfully push such instruments they created out into the market.
So then we come to the question of whether the money created by say, JP Morgan, actually had good backing. If the money JPM issued is presented to JPM for redemption, can JPM redeem it. A) does it have the assets that it says “back” the money still in its possession - can it deliver ? B) Are those assets still worth what the money says they are worth ?
Well, JPM and others of these banks recently securitized a lot of mortgages - and the underlying assets - the mortgages those securities were supposedly backed by - wound up being worth significantly less than they were touted to be worth.
How often does Wall Street do a pump and dump on an IPO ?
Doesn’t bode well, IMHO.
I looked over my prior post and I have to make a correction.
The credit to the issuance of the PCNote actually would not be to Equity, it should be, IMHO, to a Liability account, something akin to Unearned Revenue.
Ergo, there is a liability, but the moment the PCNote is issued - it sits on my books as a short term asset - cash - and a liability, unearned revenue, so things are still in balance. I have the liability, but it has an exact matching asset, so my balance sheet is still in good shape.
It’s the moment that I spend my PCNote; it’s supposed to be spendable like money, after all. I spend it and someone accepts it. I credited PCNote Cash and debited say, my telephone expense.
Now I still have that liabilty I booked - any time someone presents my PCNote back to me and “demands” - I have to exchange it for the underlying asset.
What really happened in all this ? My businesses just wrote itself a collateralized loan. No outside approval was needed - the approval comes when I convince someone to accept my PCNote as payment. So my PCNote is really a debt instrument.
True Cash, however, is not a debt instrument. If I paid my telephone bill with $100 - 100 Dollars - and later on someone brought the $100 bill back to me for redemption - I don’t have to redeem it. I can sell them something for $100 - they can use it to buy anything from anyone. But I don’t have to redeem dollars that I’ve paid out.
My debt instrument, my PCNote - if it says it’s backed by, let’s say a mortgage, and is redeemable - then when someone presents my PCNote for redemption, I would have to give them the mortgage that I’m holding, if that’s what backs it.
If the “mortgage” at the point of PCNote redemption is non-performing, I’ve then concluded my hoodwinking of my vendor. They’ve legally accepted payment, which I made with something worthless.
Given the way the world operates (the bigger the financial institution, seems like the more corrupt they are), and the fact that the bigger the institution, the more accepted their “private money” would be, “private money” sounds like in practice it would never work.
Of course, there’s the more fundamental problem that privately issued notes that are redeemable are private-sector-issued debt instruments. Even if they have underlying collateral, the collateral always has a degree of uncertainty - and even the issuer does as well (i.e., the issuer going bankrupt would basically wipe out the underlying collateral).
So this type of private money really isn’t money. Using it to make payments then is actually barter, with one entity using debt notes for their part of the transactions.
These types of ideas are the the Von Mises Institute puts out, to the joy of new world order. They present alternatives to the current new world order scams, alternatives that are designed for “conservatives”. This makes the choices available to the public a) continue as we are or b) use this “conservative”, “sound economics” alternative. Of course, either way, new world order is happy with the outcome.
Of course, Von Mises work - actually points out “the oligarchy”, Rothbard even wrote the book “Wall Street, Banks, and American Foreign Policy”.
But how else to make sure that conservatives and libertarians do not think that the needing money to be “backed” by something is yet another “establishment” or “new world order” trick ? Be absolutely sure to have the idea touted by a group - that makes a point of calling out “new world order”.
New world order would never create a group that attacks itself, that’s preposterous. These Von Mises guys CAN’T be new world order - they vociferously attack new world order. They MUST be on our side.
It’s very easy to trick someone who thinks you are on their side; they can’t help but color their judgement of what is being said by who is saying it, and their preconceptions about that person.