Real Money of Silver & Gold
“Sapiens dominabitur astris.”
Introduction
We have covered a lot of information in the first eight parts of the Honest Money Series. Before continuing with any new topics, it is prudent to summarize the most important points and issues we have discussed so far. The following is a synopsis of the first four articles.
Chapter One - Money
The highest order of wealth is life
Health is the next lower order of wealth
The necessities of life needed to sustain health & life are the next lower order
Man’s energy focused as labor to produce life’s basic needs is the next lower order
Man is a social being that interacts with others
Man cannot live in self-isolation or by self-preservation, alone on a large scale
Man interacts with other men to exchange that which is needed
The most basic type of exchange is barter
Coincidence of wants is needed for barter to occur
Man uses a subjective value system to determine the usefulness of things
Man compares the usefulness of goods he trades with other goods
Man exchanges things of less value for things he considers to be of more value
Barter or direct exchange limits the division of labor
Indirect exchange facilitates the division of labor and the level of commerce
Indirect exchange requires a common medium of exchange
A common medium of exchange overcomes the coincidence of wants
The common medium of exchange has the least declining marginal utility
The common medium of exchange is called money
The most important quality of money is that is exchanges for ALL GOODS
Money has no intrinsic value – its value is extrinsic
Money has value only in regard to the goods it can be exchanged for
The goods and services have value as necessities of life
Indirect exchange involves a buyer and a seller
Barter completes the entire exchange at the moment of exchange
Indirect exchange DOES NOT complete the entire exchange in the present
The buyer obtains the goods he needs – the seller does not
The seller of goods receives money
Money is a receipt of value for the seller to exchange for future goods
Chapter Two – The Quality Theory of Money
The buyer and the seller must agree on a number of units of money that goods are worth or valued at compared to the unit of money.
From the subjective use value of money, to the subjective exchange value of money, comes objective exchange value – the expression of the purchasing power of the medium of exchange in regards to the ratio or amount of goods that can be purchased with it.
The quality (purchasing power) of money is more important than the quantity
Reciprocal exchange between buyers and sellers is what makes a market
The buyer must fulfill his inherent obligation that at a future date he will offer his own goods for sale in the marketplace.
Likewise, the seller must offer his commitment that at a future date he will be a buyer in the market
The use of money is the offer & acceptance of the reciprocal commitments above
Money is the measure of value between all goods
Money is a receipt for value to be used in future exchanges
Money must retain its purchasing power better than all other commodities
Honest Money retains its purchasing power, this is key to the quality theory of money
One goal of the quantity theory of money is to hide the self-destructive nature of paper fiat debt-money
Wealth transference is the ultimate goal of paper fiat debt-money
Money is an abstract concept of a measure or unit of value. It has no value in and of itself. The value lies within the goods and services that money procures
When money is exchanged for other goods, we do not literally exchange the money for the other goods, but the value that the money represents in other goods. We exchange values for values
Chapter Three – Savings & Credit
When man produces more than he consumes, he begin to accumulate excess production
This is commonly called savings or the accumulation of wealth.
In the later years of life, man uses his saved money or accumulated wealth to turn back into income, to obtain the necessities of life: food, clothing, shelter, etc.
The more the saver’s money has retained its quality or purchasing power, the wealthier and better off he will be
Honest Money retains its purchasing power and is the ultimate store of wealth
Once society chooses a common medium of exchange, commerce increases to the point that people want to borrow or lend the common medium of exchange, money, to further increase their ability to trade goods and expand commerce.
A lender of money or credit wants to be repaid with money that will be worth, as much in the future as it was when he lent it in the present
He wants the money repaid to retain its purchasing power
Indirect exchange overcomes the coincidence of wants in the present by invoking the concept of value in the future .
The word credit comes from the root credere - to believe in or to have faith
The seller believes and has faith that the money he accepts in exchange for his goods, will in the future be accepted by another seller of goods.
Money is a claim based on this reciprocal agreement. It is a form of contract promising future performance. It is a future good.
In this type of usage, money is an indirect form of credit.
With the lending out of money directly to another, a direct form of credit occurs.
Until the seller becomes a buyer with the money he has accepted, he has indirectly extended credit to the original buyer, by accepting the buyer’s money.
He has accepted the money as a pledge that he the seller has faith that it will be honored and valued for the same value that he gave up or sold to the original buyer
It is this belief in the future acceptance of money as the common medium of exchange that makes money valuable
Chapter Four – Store of Wealth
The quality theory of money stresses the importance of purchasing power
The more purchasing power that money retains the more goods it can purchase
Loss of purchasing power is loss of wealth
Loss of purchasing power is inflation or debasement of the currency
Since the Federal Reserve took control in 1913, our money has lost 95% of its purchasing power or value
If you own more than you owe you have a positive net worth. If you owe more than you own, you have a negative net worth
The bank holds the title and owns the house until the mortgage is paid off in full
If money retains its purchasing power, it is a good store of wealth into the future
Inflation is not the prices of stuff going up. Rising prices are the result of inflation
The U.S. International Investment Position is –3 TRILLION DOLLARS.
This figure (-3 trillion) is equal to 25% of our gross domestic product
At the present rate that our deficits are growing, within the next few years this percent will be 50%
Who is buying America – Who Owns America?
This is wealth transference by the elite collectivists
Only savings can accumulate wealth – by producing more than one consumes and saving the excess.
The accumulation of debt is the opposite of savings – it is the opposite of wealth
It is impossible to accumulate wealth when the currency is an obligation of debt
The wise shall exercise dominion over the stars
By Douglas V. Gnazzo