What is Money?

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Comment by Call me what you want on October 6, 2008 at 4:41am

Forgot to add:

The author of the blog has specifically clarified that he didn't post this to support the Gold Standard. The comment above is from someone else.

Comment by Call me what you want on October 6, 2008 at 4:23am

By Mike:

Fiat money is *not* a store of value. Like a new car driven off the lot, it loses value the second it leaves the printing press, as more bills roll off the printing presses after it.

With nothing to to give the dollar intrinsic value, as it had on the gold standard, its value is determined solely by the amount of money available, and how easy it is to get more of it. That is the original and true definition of inflation: an increase in the supply of money.

When there is an increase in money, prices go up to match. The increase in prices is the symptom of inflation that people see and feel.

All of the booms and busts in our economy are caused by our fiat money and the Federal Reserve system. They create money, create easy credit, and spread out new money liberally and cheaply. The vast amount of cheap money available encourages borrowing and spending and investment in risky ventures. This is the boom, and prices rise as boatloads of cheap money hit the market, as we plainly saw in the housing boom.

But booms never last forever, and sooner or later the Fed raises rates, decreases the money supply, makes credit more expensive, and they cause a bust. Sometimes they risk putting themselves out of business, but thanks to their vast financial influence, they are able to get government to force taxpayers to cover their losses and keep them in business. This is the sole reason for the existence of The Fed, the FDIC, the World Bank, the IMF, etc.

With fiat money, the longer you hold on to it, the less its worth, because they are constantly printing more.

Bailouts won’t save our economy, they will make it worse. Only disbanding The Fed, eliminating fractional reserve banking, shrinking government, and returning to a silver or gold standard will.

Comment by Call me what you want on October 6, 2008 at 4:22am

From this site:

http://www.getrichslowly.org/blog/2008/09/27/what-is-money-a-basic-economics-lesson-from-1947/