Gold vs. Debt-Based Fiat Money

When currency debasement inevitably becomes extreme,governments refuse to accept one another’s currencies but,as noted by Alan Greenspan,“…in extremis gold is always accepted.”  The International Monetary Fund (IMF),for example,accepts payments in gold for settlement of debts.  Greenspan also wrote that “An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions.

  They seem to sense…that gold and economic freedom are inseparable.”  Without gold,banks can turn the financial system into a casino where they are guaranteed to win while ordinary citizens are stripped of their wealth and robbed of their financial futures through inflation.  Without gold,governments can pursue endless wars funded by debt and build military empires while private banks that buy government bonds quietly collect the wealth of their citizens.  If debt levels rise too high,banks reap huge profits at the expense of the overall economy,leaving behind a hollowed out shell set to collapse.

  In contrast,gold distributes wealth through the economy (as tangible private property) while fiat money concentrates wealth and financial power in the central bank and its dealers,as well as in the government.

	Gold	Debt-Based Fiat Money
1.	Gold is a tangible financial asset with no bank or government liability.	Fiat money is a debt instrument or note that is the liability of a government or bank.
2.	Transactions in gold are fully settled.  Both parties hold finished goods.  There is no outstanding liability.	Transactions in fiat money are not settled.  One party always holds a note owed by a bank or government.
3.	Gold certificates or electronic credits in allocated gold accounts are redeemable in a real,physical asset:gold.	Fiat money is not redeemable.  While it functions as a medium of exchange,it lacks any backing in terms of real assets.
4.	Gold is,at all times,in all places and under all circumstances,universally accepted as money.	National currencies are accepted according to agreements that,like any contract,can be breached or made legally void.
5.	In extremis,gold is always accepted.	In extremis,such as in a time of war,a national currency (or any form of paper money) may not be accepted.
6.	Gold has intrinsic value.  The economic inputs (labor and resources) used to produce a gold bullion coin or bar are still present,preserved as a finished product.	Fiat money has no intrinsic value,except perhaps insofar as paper can be used,for example,as kindling to start a fire.
7.	Gold is rare,valuable and difficult to produce in large quantities.	Fiat money can be printed or instantly created electronically in unlimited quantities and at essentially no cost.
8.	The rate of increase in the above-ground gold supply is,and has been throughout history,roughly the same as the rate human population growth.	The supply of fiat money, because of its inflationary structure,always increases in excess of population growth or sustainable economic activity,thus it is destabilizing
9.	Gold is a consistent measure of value over time and across economies.	No fiat paper currency is or can be a consistent measure of value over time or across economies.
10.	The value of gold,measured in real terms,is stable over long periods of time.	The value of all fiat paper currencies is volatile and always declines in the long run.
11.	Gold is durable and virtually all of the gold ever mined still exists today.	Neither governments,nor banks,nor paper motes,nor even digital media are as durable as gold.
12.	Gold serves as a store of value and a preserver of purchasing power.  Its value,in terms of real goods,is about the same today as it was 2000 years ago.	Measured in fiat money, prices inexorably rise.  Fiat money inevitably loses value because the supply always increases in excess of population growth and sustainable economic activity.
13.	Under a gold standard,economies can enjoy stability and sustainable growth.  Of course they are not automatically immune to economic disruptions,e.g.,due to exogenous shocks.	Money based on debt causes a never ending boom and bust cycle of credit expansion and contraction.  Economic disruptions are directly caused by the monetary system itself.
14.	Central banks,sovereign nations and investors of all sizes buy gold because its value is more stable than that of fiat money.	The value of fiat money inevitably degrades over time,thus the wealth of fiat money holders is eroded (by inflation).
15.	Gold has been regarded by virtually all peoples as the highest form of money throughout history (for at least the past 5000 years).	Fiat money became the de facto international standard after 1971,only four decades ago.
16.	As a currency,gold cannot fail because it is a real,physical commodity.	Fiat money systems always, eventually fail.  All fiat currency schemes throughout history failed.
17.	Over thousands of years, gold has remained a de facto global standard largely outside the control of central banks or governments.	Fiat money was created because it can be centrally controlled and manipulated by banks and governments to suit their own particular needs.
18.	Gold enables people to shield their wealth from the collapse of governments and financial institutions.	If a government collapses, its currency becomes worthless.  Governments cannot truly guarantee the wealth of citizens against a banking system collapse.
19.	Gold enables people to protect the fruits of their labor from confiscation by governments or banks through inflation and,therefore,to pass their wealth down through generations.	Inflation is like a breach of contract where holders of fiat money are robbed of its value over time through inflation.  If cash is passed down through generations it becomes less and less valuable over time.
20.	Gold safeguards economic freedom and allows people to hold their wealth outside the reach of governments and banks.	Fiat money allows governments or banks to arbitrarily decide the value of money and the financial fate of every person dependent on the currency.
21.	Gold distributes wealth and financial power to the people.	Fiat money concentrates wealth and financial power in banks and in the government,opening the door to limitless abuses.
22.	Under a gold standard, governments cannot expand disproportionately relative to the underlying economy.  The optimal size of government is perhaps 20% of GDP.	Central banking was conceived in part to allow governments to expand,e.g.,to fund foreign wars through debt.  Fiat money allows governments to grow to unsustainable levels.  In the United States,combined government at all levels is equal to roughly 45% of GDP.
23.	Gold prevents the banking industry from expanding disproportionately relative to the underlying economy.	Fiat money allows the banking industry to expand to a point where it dominates the economy and government, and is a crushing,economic rent seeking burden on the economy.
24.	Gold makes it relatively difficult for countries to pursue military adventures or to fund a large military-industrial complex.	Fiat money allows governments to engage in wars and to build military empires as long as their currencies and debts are accepted.
25.	Gold is a real commodity and naturally supports the free market.	Fiat money entails central planning of the economy,i.e.,“monetary policy,” which opposes free markets.

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