The Market Maneuvers around the Money Monopoly

The Market never ceases to amaze me.  Even with crippling laws and regulations, the creative minds of entrepreneurs and businessmen find unique ways to provide the goods and services that we, the people, demand.  This applies to all areas of life, but most importantly to money.  Since the United States shredded the last remnants of the gold standard in 1971, there has been no physical backing to any of the world’s circulated money.  As anticipated by the Austrian School, the faith in this fiat pseudo-money system is being lost, and the pace of its devaluation is gaining momentum.

Storing your wealth in gold has historically been an excellent way to preserve purchasing power from the hidden inflation tax.  Unfortunately it does not act well as a medium of exchange.  In contrast, many of the world’s fiat currencies are coming into question as a store of value, but are still being used primarily as the accepted medium of exchange.

When fiat currency is no longer seen as a store of value, its days of being used as money are numbered. The main difference between currency and money is that true, market-accepted money must be scarce, and thus valuable to the public.  When “money” is no longer scarce it does not serve the purpose as a medium of exchange.  People begin to reject this pseudo-money as a valuable alternative to the goods or services that they have to offer.  This is why prices rise after inflation (money printing) is introduced.  Global prices are rising because of worldwide inflation.

For the first time in history, the entire world is on a fiat, paper money standard.  Before 1971, most fiat money was tied to the USD, which in turn was tied to gold.  This two tiered “gold standard” seemed to work, but eventually the calls for monetary easing were too strong to ignore, and the US was forced to axe the tie to gold.  This effectively removed the tie to gold from all of the world’s currencies. Measuring fiat money against other fiat money isn’t very helpful for the market’s price discovery mechanism.

Cue Gold!  More and more people are coming to the realization that money must originate in the marketplace instead of by law or decree.  The people should voluntarily put their faith in money and accept it as half of every transaction.  This builds a vibrant and healthy economy where both the buyer and seller feel as if they both have benefited after an exchange is made.  The term “honest money” is used when referring to gold because the amount, or weight, of gold stays constant when coined.  Unlike fiat currency which is tied to nothing tangible, gold acts like an economic measuring stick of consistency.  Just as it would be difficult to build a structurally sound house if the ruler is resized daily, it is hard to build a sound economy when the accepted money supply has no foundational base.  Gold does not go up in value, but instead the paper money in which it is measured constantly changes.  An ounce of gold will always have the same weight which makes economic calculations consistent.  This consistency is the foundation of the advanced economy.

This is where the creative spirit of the Market has come in to save the day.  Instead of having to shave off grams from your one ounce gold coin for small purchases, you can now have a savings account denominated in gold with the ability to buy and sell electronically.  The proceeds from a gold sell are credited to a currency account which can be accessed by a debit card accepted worldwide.  While you still have to convert the gold into currency, the new gold bank account allows you to literally put yourself on a personal gold standard.  The days of searching around town for someone to buy your gold at a fair price are over.  The ability to buy and sell gold from an online banking account makes this process much more convenient and efficient.  Now you know exactly the gold price without having to haggle or leave your home.  Selling $100 worth of gold to take your wife out to dinner is just a few mouse clicks away.  This is just another Market miracle helping people preserve their wealth and better their lives.

I believe that one day gold will once again become the accepted form of money, but until then you should check out the Gold Backed Debit Card at Euro Pacific Bank.  This is cutting edge innovation, and provides even the smallest investor with the means to easily benefit from the rise in gold against devalued fiat currency.  Its simplicity is unmatched, and it removes the inconveniences normally associated with holding the physical metal.  Become your own central bank, and put yourself on a personal gold standard today!

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2 Responses to “The Market Maneuvers around the Money Monopoly”

  1. Zane W says:

    Very interesting learning that the entire world is currently in a fiat money fiasco. Thank you for providing a solution, even for the little guy, on how to preserve wealth by investing such a trusted, and now super convenient, store of value.

  2. James Guzman says:

    Great article! Getting people to transact in ways like this is how we win against the cartel.

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