Fiat money in the real world

I read an article by a bleeding heart journalist who was scolding fiscal conservatives on their worries over how much fiat money the privately owned Federal Reserve is printing or declaring into existence. I don't have an exact quote from this guy but he was basically making the case that printing money can feed and house the poor and so forth.

The journalist in question happens to have his picture above his column and his face is always frozen in a look of deep thought as you read his shallow cogitations and I guess it is arrogance on his part that makes his columns interesting. He does fish a bit deeper into some issues that most writers see as backwaters and he is arrogant enough to think that he understands them well enough to speak with confidence on them.

This is what is interesting and revealing because on this issue he was unwittingly playing the role of the child making observations on the naked emperor. We have lived so long with fiat money that most people never give it a second thought. At best they are barely familiar with how it works; they might know that it is based on supply and demand, but it doesn't register that it is also dependent on trust.

American culture is a youth culture, or rather a culture that worships youth I should say as we all watch the spectacle of the boomers growing old without the grace of dignity. Youth culture despises history so nobody can listen for ten minutes while you try to explain how usury was not allowed in The West until after the Protestant Reformation.

In the old days usury involved actual loans of gold backed by hocked jewels and so forth, but eventually the lenders found they could just issue papers called banknotes and that they could issue more money out in notes than they had in gold. They kept making their system run leaner and leaner until they only had a small amount of actual gold compared to how much they had out in the form of banknotes.

Countries have always issued coins with less gold in the coin than the face value declares it to be worth, and people had long become accustomed to the practices of usury which we now call banking.F.D.R. with his fascist tactics finally broke the thin connection between gold and money in the American mentality so it was easy for Nixon to stop trading silver for all those now worth less dollars that other countries were trying to cash in the 70's.

The reason that Nixon had to refuse the practice of exchanging silver for paper dollars, a practice that made our paper dollars "good as gold" was because the Fed had printed too many of them. Too many dollars were chasing to few ounces of silver. Instead of "silver certificates" we now have dollars backed by the "full faith and credit" of the Federal government.

If your only commodity that you have left that you are exchanging for dollars is "full faith and credit" you had better at least act like that means something lest folks start pondering that little phrase. In other words the reason the government jolly well better not keep printing money past a credible amount is that nobody will buy those dollars with real goods.

In the real world people trade real things of value only for other things they think have equal or greater value. Right now the dollar is the most convenient way to store wealth, pay employees, buy goods; it is the only way to pay taxes.Because the United States is bigger than 1930's Germany it would take quite a bit to get to the point where a wheelbarrow of cash was traded for a loaf of bread, Children played with paper money in the streets and employees were paid daily and even twice daily.

But it is Titanic-sinking hubris to think that we are too big to have to go around icebergs or rather that we are so big and grand that we can proceed as though what happened in Germany can't happen to us. So in the real world printing infinite amounts of fiat money will not feed and house the poor - it will only destabilize our confidently balanced house of cards and cause a world wide panic that will make their previously small sufferings look like they were eating cake.

In the end we need a new way of storing wealth, exchanging value and paying employees. We need families to provide the bulk of charity and Christian love to do the rest.