Southern Bread

One of the hardest things about having meaningful dialogue in today’s political climate is how so many words and phrases have taken on the wrong meaning, or been culturally redefined into something they are not. I find myself constantly having to search for new ways to explain things or even make up new terms entirely, simply to avoid being misinterpereted. It’s frustrating, and we see it all over the current media. For instance, 60 years ago, if you had been speaking of “capitalism”, it would have been understood as simply a condition where private entrepeneurs own the means of production in an economy. Today, the word “capitalism” is somehow synonomous with fascist transnational corporations and jingoistic right-wingers. Those definitions are totally innapropriate and one certainly doesn’t follow from the other. So we go in search of new terms. Thus we have ended up with crazy nonsense like neo-liberal anarchism and paleo-libertarianism. Give me a break. The truth is always much less nuanced. In fact it’s often quite simple. The concept of “hard money” is no exception.

Despite what is commonly implied today, hard money isn’t just some cooky thing cooked up by Ron Paul. It’s the only way of doing money that works long term. And I’ve got good reasons for saying this. Imagine for a moment that there is no such thing as money of any kind. How would people acquire the items they need in that situation? Well, there are only two ways that are possible. Theft or trade. In the absence of money, people have to either trade for what they want/need or else they have to steal it. This is pretty self-evident. This is going to apply to governments as well. Taxation is theft in the eyes of the one who doesn’t want to pay it and trade in the eyes of the one who does. We still are only left with two options. Even benevolence is the same way. If I give some food to a poor man, it’s basically trade. I gave him the food in return for the knowledge that I did something good and moral. It’s still trade. If someone forces me to give the food to the poor, it’s theft.

So, with that basic principle in mind, what happens when we apply money to that same economy? Do we all of the sudden have some new third option? No. Remember that money’s primary role is as a medium of exchange. It evolves naturally in a society as the fulfillment of a need. That need being that it’s exceedingly difficult to do direct barter transactions. At any given time person A would need to have exactly what person B wants and vice versa in order for any transaction to take place. That’s very hard. Money makes this much easier on a society by filling in as a value proxy. The money simply represents the value of a good in a generic way so that it doesn’t matter which good it is. This makes exchange much simpler. But, observe that the intrinsic value placed on a given good by the person who wants it is the same whether there is money involved in the exchange or not. Money is simply a generic placeholder of value. A medium of exchange.

With all of that groundwork in the can, let’s talk about why “hard money” (i.e. gold, silver, labour) has always been what has evolved naturally in society. The inherent risk of any money is that the money itself will be produced, absent of any exchange of value. This is why counterfieting is illegal. When you produce more money, the marginal utility of each unit of that money goes down. That’s the process of devaluation/inflation of a currency. The best mechanism to combat devaluation is to make the money extremely difficult to produce. That’s why gold and silver have always been such good choices. They are very rare and hard to mine, so the threat of an independent producer being able to devalue it as a whole is very slim. But, with paper money there is virtually no barrier at all. It can be mass produced with virtually zero cost. The only thing holding that back would be the good sense of the government, which is to say nothing at all.

The bottom line here is that a hard money is what best represents the value it stands in for. Fiat money is too easily(and inevitably) devalued and therefore will always undervalue the labour it represents. An honest wage for honest work is not possible with paper money since it is constantly being inflated, and therefore devalued. Some people are afraid of the idea of a money like silver that can be dug up out of the ground by anyone. They see it as a risk to the value of the currency. Their answer has been to give government the sole power to create money. Well, we see how that has turned out. The dollar is worth three cents of what it was less than a hundred years ago. On the contrary, gold and silver are worth $1000/oz. and $17/oz. respectively. Hard money isn’t some crackpot idea. It’s the only idea that places people before money. It’s the best money we can have that properly holds the value of the labour it’s supposed to represent.