Kennedy Gold Halves Issued straight from the horse's mouth

What some fail to realize is that the the value of fiat is directly linked to the faith and trust in the issuing agent......that being the government. Once that faith is shaken, the trust in the fiat currency (specie) is lost and becomes greatly devalued.

[disclaimer] I failed economics in college. The class was at 8 AM, an ungodly hour for any eighteen year old........especially after a nite of partying.

 

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Good observation... I wrote about this same question earlier, Why are we not still on the silver or gold standards now? Well that,s hot tough to figure out. Inflation plays the lead roll in Economies. In 1933, gold became too overvalued (over $20/oz) to remain as a currency. I asked my parents in 1964...why did they take away our silver coinage and replace it with worthless junk? Pop said it,s worth more than face value. Everyone started hoarding the stuff, and in a couple of days, most silver was gone from circulation. Why does this always happen to Economies? More demand than supply caused by growth and inflation is the reason. If you have a commodity which is fairly finite, and you increase it,s demand which is infinite, than you then you must raise the price accordingly. There simply is not enough precious metal on the planet to back modern economies , not even close! If the day came when you had to spend your gold or silver to buy commodities, not only would no one sell to you, but you might be plundered and killed for trying such a stunt. In a democratic society, we use a widely accepted currency for everyday commerce. Some end up with a lot of wealth and others not, but most end up somewhere in the middle. In a monarchy, some end up with most, and most end up with little, with very few in the middle. Where are today,s modern economies on the scale of Monarchy vs. Democracy? A balance seems to exist somewhere between the two, but where is it? I believe our very lifestyle is mostly to blame for our eventual demise. Families used to be large enough to share the burdens of daily life with all the members, young and old, strong and week, and it worked. Today, family members split up, go their different ways, live in tiny houses in new communities which need to be built, all with money we don,t have. Our very idea of a perfect society with longevity, is being undermined with greed without do respect for future generations to come.

Chascat

 

This is what the monetarists would have every one believe which is why perpetual increases in the money supply and inflation are supposedly necessary. In actuality, the only reason it is "necessary" is because of perpetually increasing debt which governments and central banks prevent it from being liquidated through credit defaults. There should be no shortage of money because it is divisible into smaller units through price deflation.

Moreover, even during the time when gold and silver were used in coinage, much if not most of the "money supply" was also still debt, in this instance in the form of privately issued banknotes.

 

Youare so right!