Money

It may be very un-American of me to say this, but I never liked baseball. I could never sit through two innings, let alone pay attention to an entire game. I don’t care what anyone’s batting average is, or how many strikeouts any pitcher has, and I never did, but when I was a kid, I had an awesome collection of baseball cards.

If you’re wondering why a kid who doesn’t like baseball would collect baseball cards, it’s because I was an aspiring businessman, and baseball cards are the “fiat currency” of America’s young boys. They’re not only traded for other baseball cards, but they can also buy other toys, and favors (goods and services), and also provide a youngster with the prestige of great wealth.  

And just like the cash in your pocket, they came in different denominations. Just as you would rather see Franklin’s face on your cash than Washington’s, a kid in Brooklyn would much rather see Tom Seaver’s face on his baseball card than some unknown rookie from the Houston Astros. The N.Y. Mets were like dollars and the Houston Astros were like pennies, and I assume the opposite would be true for kids in Texas.

When you brought U.S. currency to the candy store and exchanged it for a pack of baseball cards you never knew what you would get, but it was always possible that the cards inside could turn out to be worth more to a kid than the U.S. currency he paid for it, and that was our introduction to gambling.

The baseball card itself was a worthless piece of cardboard, and the only thing that gave it any value was the fact that every kid agreed that it had value, and nothing more. That’s also why the value could change from one city to the next.

Throughout history, people have used feathers, sea-shells, sticks and stones as money, and they conducted business with these items just as you would use U.S. Dollars today. It doesn’t have to represent a quantity of gold, or any other commodity. It only needs an agreement, and a limited supply to give it value. A Tom Seaver card was rare in New York, but I’m willing to bet there was one in every other pack of baseball cards sold in Houston, because that scarcity would give it value, which would induce kids to buy more packs of baseball cards.

U.S. Dollars are often referred to as a “fiat currency” because our money is no longer backed by gold, but that’s not entirely accurate. Our money is a debt instrument, or an “I.O.U.”, because each dollar represents a debt owed by the U.S. government, to the privately owned Federal Reserve Bank. You and everything you own unfortunately are the collateral on that debt, and that’s why it’s not a true “fiat currency” like the baseball cards, which are backed by absolutely nothing.

As it’s becoming obvious to more and more people that our currency is about to lose its value through overprinting, many people are demanding that we return to a “gold standard” to preserve our currency’s value. A gold standard would dictate that each dollar represents a given amount of gold, but for that to work, you must have a reserve of gold in storage, and the quantity of gold in that reserve would limit the amount of money that could be created.

One problem with this is that we’re not sure if we have gold or tungsten in Ft. Knox, so a gold-backed currency would put control of our money into whomever does have gold, and enslave us to them just as we’re now enslaved by debt to the owners of the Federal Reserve bank (who in all likelihood, also have all of our gold too).

Another problem with this is that it also limits the potential for growth. As populations grow and when business is good, more money is needed to facilitate the exchange of goods and services. If there’s not enough money to allow that to happen, both businesses and people will die.

To illustrate this, let’s forget the baseball cards and play Monopoly with only the money distributed to players at the beginning of the game, and no money in the bank. You’ll play the game for weeks before anyone gets a hotel on Park Place, if it’s possible at all, and anyone who lands there will be bankrupted immediately. The rent will never be paid, and the owner will never see a return on his investment, so if he’s wise, he’ll never put the hotel there in the first place, thus limiting the game to everyone running around the board in poverty.

Fiat currencies only fail, and always fail for the same reason, and that reason is  overprinting. Someone in government wants things the treasury can’t pay for, so they wind up creating the money that’s needed, but after the item is paid for, the money remains in circulation, thereby reducing the value of all existing money as per the laws of supply and demand. If there were a Tom Seaver in every pack of baseball cards sold in New York, he may as well be an unknown Houston Astros rookie. Kids wouldn’t buy as many baseball cards, because they’d have no value for trade.

Money isn’t wealth. It’s only a commonly accepted representation of wealth which allows wealth to be easily traded. Your wealth consists of the things you own; not the money you pay for it. Your wealth is your house, or your car, or the fact that your house is warm and you eat everyday. Your wealth is your standard of living, and your money is what’s traded to achieve that standard.

Let’s say for example that you have two houses and no car, and a car is something that you want to improve your standard of living. You wouldn’t trade your second house for a car, because it has the value of ten cars, and you have absolutely no need for ten cars. That’s where money becomes important. You can trade one house for money, then trade some of that money for a car, and have a lot left over to put gas in the car, food on the table, logs on the fire, and save some money for future use. Money is thus needed to insure that everyone can make fair trades, and receive the true value of what he’s trading. Without money, you would have nine cars to trade, and trading cars would leave you with more gas than you can use, or an amount of food that would rot before you had a chance to eat it, and that situation would cause your wealth to vanish. With money that wealth could be stored.

On a national scale, all that would be required to give any object the value of money is an agreement that it was money, and that the supply of if be controlled. If our present money became valueless tomorrow, business could continue to function, and people could still buy food if congress simply passed a law saying “all taxes are now required to be paid in Monopoly money”, because that would put Monopoly money in instant demand. You could then bring your pink fives and yellow tens to the grocery store, and the grocer would be happy to accept it as payment for steaks, eggs, and milk. Of course, congress would also have to pass a law prohibiting the creation of any more Monopoly money than already exists, or else it would be just like having too many Tom Seaver baseball cards in New York.

The key to having a successful fiat currency, which would allow a nation’s economy to flourish without owning a mountain of gold, is simply to regulate its supply. There’s no need for me to go into how, because many learned economists have already arrived at successful formulas for doing so. They usually involve increasing the quantity of money in circulation for each baby born, and reasons for diminishing the money supply too, but I’m not sure complicated mathematics are even necessary, because the British used notched sticks of wood known as “tally sticks” as currency for seven hundred years.

The important concept is that our money doesn’t have to be backed by any precious metals or commodities, and nor should it be, because doing so puts control of our nation into the hands of whomever owns whatever commodity is used. It’s only value or backing need be that it can be traded for other things that people need or want. This type of money is also what founded this nation. Colonial Scrip was a true fiat currency, and it worked fine to provide the colonists with a comfortable standard of living, until too much of it was printed to fund the revolutionary war.

Many people are still a little confused about how our present monetary system “enslaves us”, so please consider this illustration as a way of explaining it to others:

Imagine that congress passed a law stating “Jolly Roger can now print money that’s legal tender for all debts public and private.” I could simply go down to the basement, print up a million dollars and lend it to you. You of course, would have to work your life away paying back the debt, thereby becoming my slave. It sounds outrageous, but that is what’s been done on a national scale with the passage of the Federal Reserve act in 1913, and as we slave away to pay back the debt, the wealth of the nation is drained from under out feet.   — Jolly Roger

“Of the two suitors for my daughter’s hand, I choose the likely man in preference to the rich man; I want a man without money rather than money without a man”.
— Plutarch