Money Vs. Fiat

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QUESTION: Why do you do not see that money must be backed by something tangible?

CHINAPAP-2

ANSWER: That is a barter perspective which is antiquated and no longer relevant. This proposition dictates that only gold has value and you yourself are worthless. This idea of fiat money is just out of line with reality. The traditional definition of a fiat currency such as a paper currency has no worth unless backed by something with a defined tangible commodity value is preposterous. That is still a derivative of barter. Paper currency that is not backed by something of tangible value is by no means worthless. China invented paper money during the 13th century and never issued gold coins. You are confusing money with politicians.

This traditional definition of a fiat currency is primitive. A currency is backed by the productive capacity of its people like a share in a corporation. If this were untrue then Germany, Japan, and China would never have been able to rise from the ashes without gold. Obviously, it was the productive ability of their people absent gold. Under Socialism, a currency is also backed by the taxpayers being shaken down to pay the interest on the debt. Going to prison for not obeying their command is very tangible.

invisible-hand

The Wealth of a Nation is not its gold, land, or natural resources for it still takes labor to bring any commodity to market. The Wealth of a Nation is its people. Look at Germany. Its productive capacity was the highest in Europe and it rightly rose to the top. Africa and places in South America where the people are not educated as a whole or productive from an international trade perspective, have been unable to rise to the top at any point in their history.

Money-Assets

This idea of fiat is a primitive distortion of reality for it also degrades humanity. Gold is a hedge against government as all things to varying degrees on the opposite side of money. During a boom, money declines in purchasing power and tangible assets rise. During a recession or depression, money rises in purchasing power and assets decline. 

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