"All money is backed by debt" Is it really??

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doc's picture
doc
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Joined: Aug 30 2008
Posts: 3
"All money is backed by debt" Is it really??

I am enjoying your seminars. This 2nd time round I will have questions. Here is the first: Australia runs the same monetary system as the US, UK etc. In Australia, the government runs surpluses and wanted to retire all government debt. People objected because government debt seems to play a useful role (eg safer than banks for parking $$hundreds of millions). Let us assume the government did retire its debt as this is possible. OK: now what is money backed by? (My answer would be: "faith" or "full faith".) So I am inclined to disagree with your Concept until you explain otherwise. Once faith is lost, it does not matter how much or how little debt is backing the money, the money and the debt are both worthless.
Thanks for clarifying.
doc

Liberator's picture
Liberator
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Joined: Oct 13 2008
Posts: 22
Re: "All money is backed by debt" Is it really??

Chris might have been referring to current, US "money" - not to all money everywhere and always.

The idea that money gets its value from "faith" is interesting but perhaps not quite right. Faith in what, exactly? For a few thousand years mankind has had a faith in gold as a store of value, but that's faith well-based on reason: gold is hard to counterfeit, desirable for purposes other than money, etc. Paper is not; faith in fiat money is faith in a phantom, whether it derives from debt or purely from the printing press. And ultimately it's faith in the faithfulness of government, with that press at its command; and which government, in all of human history, has ever proved itself faithful?

The phrase "full faith and credit of the US Government" rolls easily off the tongue. Translated into plain English, it means faith in the ability of that gang of thugs to steal whatever is needed for its purposes, from productive people. Government has absolutely no other asset; just that of the gun. And the printing press. It survives solely by the implicit consent of its victims.

Might not a better word be "gullibility"?

 

 

 

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