i actually agonized a little over this one--i mean, is it better to post something that's likely to bore most of my readers, or post nothing at all? and then i remembered i write this blog for my own amusement, which answered the question.
for what it's worth, the following is a modified excerpt from a recent (i.e., 20 minutes ago) email to my friend and frequent commenter noblesavage regarding his contempt for my beloved gold standard [and yeah, we actually back-and-forth about shit like this].
if you happen to be one of the few who not only read all the way to the end of this post but actually get it, then good for you.
there's only two kinds of money, rob: (1) money backed by a fixed, finite, rare and tangible commodity, such as gold or silver; and (2) fiat money (i.e., money which is backed by nothing other than its issuing government's dubious guarantee of value).
most governments start out with the former, and end up with the latter.
see, they start out with the former because they have no choice--they're new, and people are willing to accept their money only if it's backed by something real, like gold.
but there's a funny thing about governments, rob: once established, they always wants to grow, grow, grow--and growth takes more money.
problem is, a government only has two ways to get more real money: (1) taking it from its own citizens via taxation; and/or (2) taking it from other countries by force (i.e., war or colonization). of course, there's just so far any government can go with either one.
which is why, to feed their insatiable appetites for expansion, most governments eventually say fuck it, drop the gold standard and declare that their currency is worth whatever they say it's worth.
and my god, rob, once they've freed themselves from the annoying requirement of backing their currency with tangible assets like gold, amazing new vistas open--hell, now they can pretty much print as much money as they fucking want, and who's to stop them?
[of course, if you try this at home they'll throw you in jail for a thousand years, but for some reason when a government does it, it's ok--splain me that, will you, rob?]
and once a government finally takes this step, what inevitably happens next, as night follows day? why, inflation, of course--i.e., more money in circulation chasing the same amount of goods means that it'll take more money to buy said goods.
it happens slowly (hell, our overlords aren't stupid--if a cup of coffee went from a nickel to two dollars overnight it would freak people out, but somehow it's ok when it happens over fifty years).
until, as a consequence of this slow madness, something really bad happens, the government needs lots of money fast, and the printing presses shift into high gear.
then all of a sudden you find yourself needing a wheelbarrow of your once-stable currency to buy a loaf of bread.
* * * * *
what i've just described has happened to every fiat currency that's ever existed on the face of the earth, and as much as you don't want to believe it, it's now happening to ours. tell me, rob--why do you think we're somehow magically exempt from the laws of nature?










