The concept of sound money is one that has been debated for centuries. It’s important to have a basic understanding of what sound money is, what it isn’t, and its history if you want to be informed about the subject.
Sound money is a valuable resource and its importance in any civilization can not be overstated. Lack of it as the underlying economy of the World is why we continue to fight endless wars and be ruled by corrupt psychopaths. Sound money, some would say, is the key to happiness in any civilization.
What is Sound Money?
Money is a medium of exchange, or a unit of account, or a store of value. Money is anything that serves all three functions. The first function is to be a medium of exchange—something that people can use in order to buy goods and services from other people.
The second function is to be a unit of account—something that can be used to compare the prices of different goods and services. The third function is to store value—something that people can hold onto even if they don’t plan on using it right away.
Money is anything that serves all three functions. The first function is to be a medium of exchange—something that people can use in order to buy goods and services from other people. The second function is to be a unit of account—something that can be used to compare the prices of different goods and services. The third function is to store value—something that people can hold onto even if they don’t plan on using it right away.
“Sound money allows people to think about the long term and to save and invest more for the future. Saving and investing for the long run are the key to capital accumulation and the advance of human civilization.” ― Saifedean Ammous, The Bitcoin Standard
Fiat currency is not sound money
Fiat currency is money that has no intrinsic value, but rather its value comes from being declared by a government entity to be legal tender. Fiat currency can be manipulated at will by those who control it.
The most common example of fiat money is the U.S. dollar, which has no intrinsic value and is merely backed by the faith of the government that issues it and the guns they hold. The value of fiat money can be manipulated by central banks in an attempt to control the economy.
Fiat money became the norm for most countries in the 20th century after most of the world came off the ‘Gold Standard’.
Banks have also been known to manipulate their currencies as well as hide their reserves, creating instability in the market. In fact, it’s estimated that 75% of all currency trading is done by banks and hedge funds. This means that when you buy a stock or bond from someone who owns them (or wants to), they are actually selling you their share of money.
The problem is that these shares are not backed by anything tangible; they’re just pieces of paper with numbers printed on them or digital entries on a computer screen. In other words: there’s nothing real about any given currency except what we collectively agree upon through trust in its value and acceptance by others as payment for goods or services rendered–and even then only if we agree on what those goods/services are worth!
Gold is an excellent example of sound money, but it is still not perfect.
The gold standard was a set of rules that determined how much money a country had and what it could do with that money. It also dictated how much gold a country had to have on hand to back up its currency. The standard was in place between 1879 and 1914, when it was replaced by the Federal Reserve System.
Early on, this system worked very well because most countries were on board with it. But as time went by and the United States became more and more powerful, other countries began to resent being told how much gold they needed to keep on hand and what they could do with their money.
In 1907, Jekyll Island brought together seven of America’s most powerful bankers to discuss ways of preventing another economic crisis like the one that happened in 1907 (when banks failed and stocks fell). The men agreed that there should be more regulation over banking practices—and that led to the creation of the Federal Reserve System in 1913.
The gold standard wasn’t officially abolished until 1971 when Nixon took us off the gold standard entirely.
For those wanting to understand more about the history of the gold standard and how it was finally abolished following the efforts of a very small number of very powerful people who met in secret, in the middle of the night on an island far away from home, check out the excellent book from G. Edward Griffin, The Creature from Jekyll Island.
“Almost all of history is an unbroken trail of one conspiracy after another. Conspiracies are the norm, not the exception.” ― G. Edward Griffin, The Creature from Jekyll Island
But what exactly does it mean for something to be sound money?
You might think that if something has intrinsic value like gold does, then it must be sound money–and you’d be right, well, kinda. There are a few other factors at play here too: how easily can people carry around their precious metals? How easy would it be for someone who doesn’t want their wealth stored as coins or bars instead of paper bills? And what about divisibility – can someone only keep small amounts under their pillow at night without fear of theft (or worse)?
Bitcoin is the ultimate sound money
Bitcoin was created in 2009 and has grown in popularity ever since. It’s a decentralized currency, not controlled by any government or bank. This means that it is not subject to inflation or manipulation by government entities (like the Federal Reserve). It also makes bitcoin immune to manipulation by banks, who often manipulate fiat currencies for their own gain.
Bitcoin has a limited quantity of coins that can ever be mined: 21 million coins total, with 18 million already in circulation at the time this article was written (3 million left).
This fixed supply and pre-determined release of newly minted coins makes bitcoin a very rare commodity, which in turn contributes to its value as an investment vehicle.
Bitcoin was created as an alternative to fiat currencies (i.e., government-issued currencies). It was designed with the intention of being a peer-to-peer electronic cash system that allows people all over the world to send payments without intermediaries like banks or payment processors like Paypal charging fees for processing transactions on their behalf.
It does this by storing data about every single transaction ever made on its blockchain network–a ledger that contains information about who owns each bitcoin wallet address, how much bitcoin each person holds at any given moment in time, etc..
Economists who don’t understand bitcoin make the argument that it backed by nothing, it has no intrinsic value. However, it does. Bitcoin is backed by the decentralziation blockchain that continues to verify. Bitcoin is backed by it’s own unstoppable, leaderless and permissionless existence.
The gold standard was a system of sound money that provided stability and predictability for individuals and businesses. It was also the basis for an international monetary system that allowed trade to flourish without fear of inflation or deflation. In today’s world, we don’t have such a system–but there are some promising new technologies like bitcoin that could help bring around an economic environment like the world has never seen!