Money… in my opinion, is more of a concept than an actual thing. Over the millennia mankind has chosen everything from rare shells to green bills without any worth and made it the excepted measure of exchange. Some of the old monetary systems are… different, to say the least.
Money used to be based on something, some sort of commodity. Whether it be gold, silver, platinum, rhodium, Kentucky Fried Chicken skins, seashells or sex was a matter of what, well, mattered! The Chinese, as far back 3,000 years ago, used Cowry shells as currency. Eventually, they began to make shells out of metal, and use those for exchange, this is the first known instance of metal money.
The Europeans, about 500 years before “The J Man” was born had coins minted in precious metals, knowing that they had an intrinsic value due to their rarity. And the Chinese have had paper money since the 800’s! Then you had Wampum and Potlach and a whole handful of other currencies based on something. Hell, even we once had our money backed by gold reserves. Those times are long gone… our money today, and not just in America, but in most places is backed by one thing, and one thing alone.
Faith.
Prrrrraise Jesus!
Next time you walk into your bank, notice the FDIC sticker that is prominently displayed. You will notice in its margins it says something…
“Backed by the full faith and Credit of the United States Government”
That is supposed to make you feel secure, but if you analyze that statement you will realize that ‘full faith’ doesn’t amount to a hill of beans in this crazy world. Because all the faith in the world won’t stop inflation, or other types of collapse which can occur. Your money, ladies and gentlemen, is worthless.
It is called the Fiat money system, and although your money is technically worthless, it is worth something because of that system. Basically, the US dollar is only worth something because you, the tax payer, can give US legal tender over to Uncle Sam to settle your tax debt! In accepting that as payment, they create a use and standardization for this green felt bill that I also use to buy a soda from the vending machine. The only reason US money is worth anything, is because we say it is. Pretty strange huh? Well my friends, it wasn’t always like that… and the story of how and why we got off the gold standard is one that bears telling.
After World War II, a system was put in place to peg the price of one dollar at a pre-determined amount of gold, which was 1/35th of a Troy Ounce. Nowadays, that would be FRICKING SWEET since Gold is running at about… $947.00 per Troy Ounce, that means my dollar bill would be worth… $27.05 not a bad deal!
It also means I could take my 35 dollars and demand a troy ounce of sweet, sweet gold (Only not in America, that was the rule). It was called Bretton-Woods, and was agreed upon by 44 nations and seemed to be a great way to offset trade imbalances and keep everyone more or less on a stable playing field, if not an even one. So what happened to this wonderful system?
It also means I could take my 35 dollars and demand a troy ounce of sweet, sweet gold (Only not in America, that was the rule). It was called Bretton-Woods, and was agreed upon by 44 nations and seemed to be a great way to offset trade imbalances and keep everyone more or less on a stable playing field, if not an even one. So what happened to this wonderful system?
I always say that we should look to history to understand the future, and what happened to the gold standard is going to give some of you a case of the Déjà vu.
In 1971, America was embroiled in the Vietnam War. We were spending money like a Texas oil tycoon at a Wild West whore house! We were printing up maddening amounts of money, increasing the supply and by doing so, we were lowering the gold coverage that each dollar had and digging ourselves into a trade deficit situation. As we printed cash and sent it overseas, other member nations that had signed on to Bretton-Woods began to worry and began to get angry that their money was becoming devalued. In 1971, Germany told us to fuck off. They didn’t consult anyone, they just took themselves off the system. What happened? The Douchemark appreciated nearly 8%!
Other countries began to make demands on the gold that backed each US dollar… Switzerland called in over $50,000,000 in gold, France called in nearly $200,000,000. We even devalued the dollar in an attempt to stave off this bloody revolt of friendly nations wanting to cash in! They were making a BANK RUN! We abandoned the gold standard to save our asses from a currency crisis brought on by a lack of faith in the dollar. Sound familiar? Can you think of any situation now where a country is engaged in a costly war, up to its eyeballs in debt, and printing money at full steam? Of course, this time, all they will be able to trade those dollars or t-bills for is 1/35th of an ounce of PURE FAITH.
But don’t lose heart my friends! Allow me to present another point of view, one rarely addressed… is Gold really any better than faith? I mean seriously, what’s so special about gold or silver? They sparkle? They are pretty? They are heavy? What am I, three? Why don’t they just give me a pacifier and a rattle… ooohhh pretttyyy! People often view the gold standard as safer, but in the event of a cataclysm, gold might still end up worthless. (Even though all the countries with money, like China, are increasing gold reserves!) Now bullets… THERE’S a great currency in times of cataclysmic occurrences!
Money, as I mentioned before, is an idea. An idea so complex and misleading that it takes stuffy old white men in suits sitting in secret meeting rooms to figure out. But it is an idea nonetheless, and we ought not think too hard about the money itself. But rather, what we can do with it. From here on out, this series is going to take a turn for the educational. We’re going to cover basic personal banking and finance, and maybe get you into a lower monthly payment or earn you some extra cash, so stay tuned, and stay motivated! Together we can beat this beast… To quote Thomas Hobbes’ great work “The Leviathan”
“This considered, the kingdom of darkness… is nothing else but a confederacy of deceivers that, to obtain dominion over men in this present world, endeavour, by dark and erroneous doctrines to extinguish in them the light…”
He was talking about something else… but it fits here quite nicely.
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