10 reasons why fiat currency is superior to gold - Part I
Here are the first five of 10 reasons why fiat money is superior to gold...all to be taken with a festive-sized pinch of salt
In the spirit of the holidays and in hope for a more prosperous 2013, I thought readers might appreciate a little humour to partially offset the relentless doom and gloom associated with our economic situation. So please, don’t take this edition too seriously. But if you happen to stumble across a ‘paperbug’ or two over the holidays, perhaps you could share some of the points made here. After all, humour sometimes helps people realise just how hopelessly misguided they are.
NUMBER 10: THERE IS NOT ENOUGH GOLD (OR SILVER) IN THE WORLD TO SERVE AS MONEY
Let’s begin with the obvious. We know that central banks the world over have printed money at exponential rates for years. There is now so much paper and electronic money floating around the world that gold (or silver) can not possibly be expected to keep up. You can’t print gold, after all, you need to find it, dig it out of the ground, refine it, etc, a hugely expensive and time-consuming process which practically ensures a stable rather than exponentially growing supply of the stuff.
Of course, we know that an exponentially growing supply of money is a good thing. How else can an economy hope to grow, especially one bearing an exponentially rising debt burden! We need all that new money to pay all that new interest, don’t we?
And don’t forget, most things keep getting more expensive, like food and fuel. Don’t we need more money to pay for all that too? What about government entitlements that keep growing in size? If we didn’t have a constant flow of new money, how on earth would we pay for all of that? It is essential that we keep the printing presses rolling.
NUMBER 9: GOLD AND SILVER ARE OLDFASHIONED, CUMBERSOME MONEY
Here’s another obvious one for you: Gold is heavy! Who wants to carry gold coins around? They might be nice and shiny, but to me, gold looks even prettier around a lady’s neck or wrist.
The more you think about it, in an age of electronic, plastic or internet money, the whole concept of coinage begins to seem a bit anachronistic. Who even uses small denomination coins anymore, except as household poker betting tokens? I suppose larger coins are still of some use, but let’s face it folks, even those are almost worthless anymore. Coinage is just so passé.
Sure, coins used to have some value. When I was young and I watched Little House on the Prairie and The Waltons I was amazed that at the general stores or other retail establishments a penny actually bought a range of items and with a few nickels and dimes you could purchase much of what was on offer!
But why bother with coins today? I use plastic or electronic money for almost everything. Sure, that money still references dollars, or euros, or sterling, or yen balances of a bank account. But hey, it would be just so barbaric to reference a gold or silver account instead, wouldn’t it? As if banks even hold enough cash on hand for large withdrawals anymore, much less gold or silver.
Oh and an ounce of gold, at a whopping $1,700, is just way too expensive for most commerce. So not only is there not enough gold in the world as per Number 10 above; what gold there is, is too expensive to serve as a useful money!
I suppose we could use fractions of ounces of gold instead of full ounces, but most people struggle with fractions, including me. Silver might be more useful, but at over $30/oz, it wouldn’t really work for making change now, would it?
NUMBER 8: GOLD RESTRAINS GROWTH
OK, this reason is a little bit wonkish, but if you’ll bear with me I’ll explain why gold-backed money would put the brakes on the healthy growth the world has been experiencing all through this prosperous, modern period of an exponentially rising money supply and might even send us back to the poor house.
We already touched on this with Number 10 but let’s go off on a tangent here. You see, back when gold was money, people were poorer. Way poorer. And economic growth was often much weaker.I mean, before the industrial revolution, we didn’t even have machines to do basic work like farming, so people had to have loads of children just to get basic work done, resulting in a cycle of poverty.
Sure, a handful of landed aristocrats held most of the wealth, and they did just fine, but really, do we want to go back to that sort of wealth disparity?
Oh and as for the industrial revolution, it was such a fluke. Sure it led to the most rapid economic growth in history in most of Europe, North America, and Japan, but it would probably have been way more rapid had money growth been exponential instead of stable at the time.
That said, inflation didn’t actually work out so well in France, where exponential money growth destroyed much of the economy in the late 18th and early 19th centuries. But hey, how else to finance that Revolution of theirs?
The American Revolution was also hugely inflationary, you know, those worthless continentals and all. But wasn’t it a huge overreaction for the US federal government to choose silver coinage as the inaugural US federal money? For that matter, had Napoleon just kept on inflating, rather than paying his soldiers in silver coin, he might have won the wars against those Brits and others who refused to inflate their currencies.
And why did the Americans experiment with gold- and silver-backed money for so long? Imagine how much faster they would have industrialised had they just kept on printing continentals instead! Ah well, hindsight is 20:20.
Perhaps technology wouldn’t exactly regress if we went back to gold- or silver-backed money but you never know. Some people talk like that. And certainly most of the innovations of modern times would never have taken place had we been on gold-backed money. Think about all those green technologies that promise to solve our energy problems someday. Things were just fine before we started consuming all the carbon stuff and now we’ve got to get back on track. Only exponentially growing money can fund these programmes that aren’t yet profitable.
Imagine what would happen if money were backed by gold. We would be dependent on energy and other technologies that actually made fundamental economic sense. No, that would be a huge mistake.
Read more on: John Butler, fiat currency, fiat systems, quantitative easing , gold standard, and gold
- Italian Communists blame capitalism for London terror attack
- This is what happened to the Bow Group - but what has happened to the Conservative Party?
- Major incident in South London with reports of shootings and a beheading
- Green Party Leader blames London terror attack on Britain
- Cameron is losing this civil war
- Major incident in South London with reports of shootings and a beheading
- Saudi Arabia beheads Yemenis, displays corpses in public
- Swastika flag flies over Palestinian village
- VIDEO: BBC presenter slapped down over question of Farage's drinking and smoking habits
- MPAC Woolwich response betrays British Muslims
- NY Democrat pleads with Republican not to share document proposing confiscation of guns
- Sunday Times blood libel cartoon, on Holocaust Memorial Day no less
- Palestinian jailed for Facebook like
- 'Muslim Patrol' vigilantes attempt to control London streets
- Saudi cleric who raped and killed daughter receives small fine
We are wholly dependent on the kindness of our readers for our continued work. We thank you in advance for any support you can offer.