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I can’t tell you how many videos I have watched on YouTube or articles I have read from both the MSM or the alternative news but one of the many things I have found absolutely hilarious is this idea many people seem to have about what paper money actually is. One thing it isn’t is a Fiat.

Money once had an intrinsic value of its own. Metals like bronze, copper, silver, and gold were valuable before they were pressed into coinage, unlike the coins we use today which according to their mineral content render them near worthless in comparison. As currency progressed and its actual intrinsic value questioned, paper money and coinage came to represent a stash of something valuable like silver or gold which the currency could be exchanged for on demand. This also made it much easier to transfer wealth over great distances.

Today’s currency does not have intrinsic value nor does it represent some commodity which can be demanded. In fact, the gold at Fort Knox is practically worthless and represents only a tiny fraction of America’s wealth. What is the hoarding of gold for? An economic collapse? If the world’s economy collapsed, how do we know that gold would have any value at all if people are without necessities and starving? It doesn’t seem likely that it would. Probably arms and canned and dried consumables would be though.

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So where does currencies value come from if it doesn’t have intrinsic value and it doesn’t represent some commodity (gold/silver)? That dollar bill in your pocket is a certificate of debt. It is a nonspecific certificate of debt meaning its value isn’t dependent on the value of any specific commodity or any commodity at all. Its value is actually quite subjective as you might be able to get something more for your certificate of debt than I get for mine. Regardless of what you do with your certificate, someone owes you something for it. Some trade that debt for commodities to be true but others collect that debt and use it to create more debt. We tend to refer to them as bankers.

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This is actually a pretty good system. What if a country doesn’t have any tangible commodities or stashes of gold? In a global commodity-based system that countries ability to borrow wealth would be zero. All countries borrow money in times of need and some perpetually. In a global debt based system a countries ability to borrow money is not based solely on commodities but rather on anything it might have to offer like labor. Japan doesn’t export a lot of raw materials but what they do export a lot of is labor like that Prius you’re driving that is saving the world.

As a retired foreign currency broker/trader and registered commodities representative having a debt based global banking system is also a great opportunity for people of means to gamble on the value of almost any currency worldwide. This worldwide gambling on currencies helps to stabilize currencies by sharing the risk with the gamblers …. er I mean investors. In most cases anyway, unless George Soros is involved.

The currency system we have right now is probably not a perfect system. It is, however, an evolving system since before beer was considered a currency on the banks of the Nile. So far the progression of currencies has evolved for the benefit of mankind. Whether that positive progression continues into the future has yet to be determined.

The opinions expressed in this commentary are solely those of the author and are not not necessarily either shared or endorsed by iPatriot.com.

Patrick McCarthy

Retired RCR (registered commodities representative). Conservative. Editor of The Trump News Network

 

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