The Mystery of Money and the Fraud of the Gold Standard

THE MYSTERY OF MONEY

With economics riddled with aged and unavailing doctrines and practices, reflection and profound examination of the ideas that form its foundation and of the instruments currently within its arsenal shall propel us forward in the urgent search for a prosperous and harmonious world.

It is best to commence the discussion with that most celebrated and desired of objects: Money. For some, this obscure tool becomes a life’s obsession, displacing the enjoyments of friends and family and forming the principle by which one measures and conducts one’s life. For others it represents the principal source of evil in our world: corruption, avarice, and temptation. Banish it and, they assert, the human race shall leap towards a peaceful and joyous existence. Retain this retarding and repugnant influence, and eventually the world shall consume itself.

Whatever sentiments money may evoke, it is the cornerstone of the modern economy. This fascinating instrument compels mankind remorselessly forward. It functions as the chief mechanism for assessing value in the ranking and distribution of goods and services and in the materials and labour that comprise their manufacture. It drives the financial, commodity, and labour markets, and consequently every individual, corporation and nation. It spurs man to industry and achievement, to creation and innovation, to erect from dust, and extract from the barren and remote. Money is an astonishing creation and its appeal irresistible.

But what illusions radiate from this incomparable, formidable, and seductive tool! As marvelous as money is, it resists comprehension. Most embrace and employ money in their daily activities, but very few can produce an explanation as to why. It is certainly convenient and beneficial, and it facilitates exchange with ease, but the overtly worthless paper, either currency or bank records, has an inexplicably intrinsic value that confounds both bearer and observer.

Money is a fiction, an artificial device. The quantity is not fixed, but variable. Time it seems relentlessly erodes its value. The quantities of objects it appraises are variable. It requires estimable objects for its existence, but isolated it is worthless, simply units denominated of itself. And its creator, the human mind, often confusedly transfers its flaws of misappraisal, greed, thoughtlessness, cruelty, and immorality to its creation. Some, mostly economists, attempting to define this obscurity have subscribed to the notion that, “Money is what money does”; That explicit functions determine its definition; That money consists in performing three valuable services: a store of value, a standard of account, and a medium of exchange. We certainly possess knowledge of what money does, but the notion of what it is, its essence, remains a mystery.

Though sufficient for the interim, the functional definition will always remain unsatisfactory. Were a person to define himself by the functions he performs, he may provide an accurate description of his abilities, but a faulty and limited illustration of his capabilities. To enumerate a daily list of undertakings: that one rises at 7:00 a.m., prepares and attires himself, enters the office at 9:00 a.m., attends to the numerous demands of the occupation, settles up the day’s business and departs homeward, may provide the reader with an honest depiction of one’s habits and duties, but it shall certainly leave in doubt the essence of the person and his possible achievements. As we cannot peer into the mind of an individual and discern its comprising intellect and attributes, so we cannot peer into an object, discern its principle properties, and apply them for our benefit. Developments emerge exceedingly slowly and rarely. So it is with any object or subject upon which one feels confident and competent to propound.

A HISTORY

To better comprehend the essence and function of money, a brief stroll down its path of development will assist. The peoples of many ages have developed advanced ideas and forms of money, but it is with its modern state and attributes that this discussion is concerned.

Money as a medium of exchange has from its inception held divers forms. In primitive times, money took the form of prized or valued goods and articles such as food and weapons. Thence, items of ornamentation such as beads or shells. Improvements in metallurgy spurred the development of coins composed of copper, lead, silver and gold. The coins possessed their value from that subsisting in the constituent metal. The dazzling appearance of gold and silver coupled with their rarity ensured dominance in use for trade and store of value.

With precious metals the advantage of scarcity in low mine yields ensured retention of value. However, the general scarcity of the metals begat a great disadvantage such that existing quantities were unresponsive to changes in the volume of transactions. With trade flourishing the dearth of medium greatly hindered enterprising endeavors. Thus, one could discover notable divergences in the quantities of goods obtained by a fixed quantity of the metal in different regions. Acute increases in the supply of precious metals did occur rarely, as during the Spanish colonial incursions into North and South America, but resultant inflation through the lack of alternatives and limitations of the disorder did little to dissuade the people from employing metals as money.

The metals were cumbersome to transport over distances, and conveyances always attracted the attention of the criminally minded. The solution led to a momentous development. To counter the threat posed by the criminal element, the goldsmiths, those offering the fearfully affluent fortified facilities for security of valuables, provided formidable protection from theft. The goldsmith issued a note for the deposit of gold or silver and in turn collected a fee for its storage. The bearer, formerly burdened by having to claim, withdraw, and convey gold for the purpose of payment, preferred to exchange the note rather than the actual deposit of gold. He left it to the goldsmith, upon presentation of the issued note by the new bearer, to transfer his former holding to the recipient’s account at another facility.

The goldsmiths, bristling at the lamentable sight of idle deposits of precious metals, felt emboldened to lend them for a fee. The lending of deposits marked the modern beginnings of bank money or credit. The goldsmiths, deluged with requests for credit, lent stored amounts repeatedly and enjoyed the lucrative fees such enterprising activities produced. Unfortunately, the simultaneous appearance of an excess of depositors seeking reclamation of holdings placed great strains on lending operations. Several note holders discovered the promise of redemption barren or protracted, and these occasional miscalculations of depositors’ requirements perhaps resulted in limited crises and, in the extreme, insolvency and ruin.

To prevent such calamities, the goldsmiths offered a premium, of which Interest is now the common term, of the metal held to induce depositors to forego use for a contractual period. They returned the original deposit with the stipulated premium as reward for the original note holder’s restraint.

Notes and coins swiftly became the dominant medium of exchange as bank money or credit flourished. When one deposits money into an account, a bank can lend up to 100% of that amount. If a monetary authority possessed 100 pounds of silver and issued 100 currency notes each with a claim to one pound of silver, the banking system through numerous cycles of deposits of currency, loans made upon those deposits, withdrawals and disbursements from the borrowers’ credited accounts, and deposits into the accounts of recipients with funds then aligned for a new cycle, could create a vast amount of money. The initial amount of silver, 100 pounds, and the currency notes assigned to it would remain the same, but the actual money or bank money created through the loans process depending upon the swiftness of the completed cycles would be far greater, perhaps 2000 pounds in a brief span of time. Thus, the claims of currency to pounds of silver, 1 pound note to 1 pound of silver, still holds, but the claims of money, or bank money, to currency or silver, 2000 pounds of money to 100 pounds in currency or silver, has been rent forever.

Bank customers with the stock of money greatly augmented eventually demanded greater amounts of currency to fulfill the growing number and breadth of financial transactions. The production and circulation of new currency notes thence rendered even the currency to silver standard a nullity.

With promises in notes having greatly outstripped precious metal reserves, the banks, formerly known as the goldsmiths, in failing to predict and balance depositors’ demands for precious metal redemptions, consequently revisited the unfortunate calamities of crisis in elevated withdrawals and bankruptcy.

Incipient regulatory agencies, sanctioned by the state or by the member institutions themselves, mandated a reserve to prevent failures. Thenceforward, a lender kept silver or gold stocks or a percentage of deposits, say 10%, within a designated reserve institution or central bank to treat periods of abnormally high withdrawals. If miscalculation occurred, a loan could be advanced by the reserve or central bank to its troubled member to quell any rumoured or emerging crisis. Thus a deposit of $100 with a reserve requirement of 10% will yield credit, if fully utilized, of $100 divided by 10% and less the original $100, or in total $900. Such a reserve requirement still naturally permits through the loans process the production of currency notes and money, or claims upon precious metals, of 9 times the initial gold or silver deposit.

Thus, with expanding credit and interest, the precious metal standard shrank from all forms of money 100% backed by the redeemable commodity to simply currency, that is notes and coins in circulation, 100% backed by redeemable commodity; thence to currency 100% backed by unredeemable commodity, and to the present where in Canada the currency is backed by a negligible amount of the precious commodity. In fact, central banks have long divested their holdings of gold in favour of interest bearing financial instruments denominated in domestic or foreign currencies.

Several decades ago, the Bank of Canada eliminated the official reserve requirement, though banks still maintain currency reserves to satisfy depositors’ withdrawals and a money reserve with the central bank to satisfy transfers of deposits to other banks.

A precious commodity, which held its value by scarcity and difficulty of extraction, was gradually supplanted by an artificially created commodity of theoretically unlimited supply and possessed of little manifest value. Precious metals had advantages. No-one trusted paper that could be reproduced swiftly by the issuing authority or counterfeited, a concern which gradually diminished when the state or a state sanctioned agency assumed the duty of maintaining the integrity of the currency.

The difficulty of enlarging the supply of gold through mining did aid in maintaining its value, but it greatly restricted its ability to function as a medium of exchange. Transactions could not be completed because of a frustrating lack of metals when economies thrived, and because of a superfluity of the metals when economies contracted. With the advent of an artificial currency and the severance of the link with an official precious metal standard, the economies of the world benefited immensely. Today, the interest rate is the lever which controls the money markets, not the certainty, but scarcity of a metal.

There is a market determined exchange rate between precious metal commodities and money. One may freely buy as much gold and silver as they wish with a rate that is fixed by the varying forces of supply and demand. As the forces vary, so shall the settlement price. During periods of inflation, the price of an ounce of gold or silver shall rise. Otherwise, it remains the same or declines. As determined by central bankers, the official exchange rate, far removed from market forces and subject to numerous political and bureaucratic influences, can never provide a better nor immediate standard or measure than that found in the financial arena. Yet so many persons fully expert in financial affairs repeat demands for a return to this insupportable fiction. As this entire exposition has detailed, with the creation of bank money in the financial markets, no such link can ever be maintained. After fixing a standard weight of a precious metal to a sum of money, one loan shall rent the relationship forever.

The invention of Interest created a revolution in economics. Instead of the notes and coins of currency concealed precariously in mattresses and vaults, out of the hands of merchants and industrialists, Interest induced the holders to transfer the use of their money for a period of time for competent return. Idle money earns no return whereas money easily deposited within banks does. So why would one ignore the near guaranteed returns offered by bankers astutely engaged in lending at a premium?

SUBSTANCE OR FICTION

It is a difficult question as to whether or not money, unallied with gold, silver, or platinum, is tangible or intangible? Some perceive money to be a material substance, palpable before the eye. It is either currency – gold, silver or physical notes and coins, or it is bank records or bank money denominated in currency. Others suggest the money has no material form: that a bank record, though denominated in currency, bears little similarity to the actual physical currency of a gold or silver coin or a representative note. A note entitling the bearer to two dollars, a Spanish gold coin, or even 2 cats is not equivalent to holding in one’s possession two dollars or cats.

Nevertheless, most persons think of money naturally as currency, possessing form in notes and coins and bound to some precious metal reserve if there be one. They view the figures attached to individual bank accounts as the right to claim the equivalent amount in currency. However, the amount of currency in circulation can only cover a marginal portion denoted by the amounts in bank accounts. If all depositors were to demand the money held in accounts be converted into currency, momentarily suspending the riotous effect upon the banking network in fulfilling the request and barring any attempt to increase the supply of paper currency, the financial institutions would be able to satisfy only a small fraction of the demands. The majority of would have to be transferred by cheque, money order, or electronically.

Money is unlike any tangible commodity. Its physical representation in coins and notes denotes a paltry amount of the aggregate. To summon all the gold in the world and place it in one location is a feasible undertaking. With money, only currency or notes and coins, generally about 5% of the money supply, would find placement in a similar repository.

Money is both tangible and intangible, both substance and idea. With the advent of new technologies and electronic transfers, the trend is unceasingly towards intangibility. Money is quickly discarding its material form and approaching an ideal existence. The only obstacles to complete eradication are the state of technology and illegal and illicit activities. As good as our technology may be, it is still subject to outages, human errors, and system vulnerabilities. Those having fully discarded currency often find it has no substitute when electrical disruption, bank collapse or domestic monetary crisis arise.

Currency permits anonymity of ownership and use whereas the new technologies do not. Those persons participating in illegal or illicit activities will endeavor to conceal their identity by retaining the use of currency and resisting measures to curtail it. Yet, the future is clear and irrevocable. Whatever impediments emerge, the new age and devices shall prevail. Money shall become an idea, numbers given official status and stored in paper or electronic records.

BEWILDERING FORM AND NATURE

Money does have 3 distinct features whether currency, money order, or plastic card with a magnetic band affixed. They are all printed upon a scrap of paper or plastic. They have a number of figures written or stamped upon them. Lastly, they possess the seal of a corporation, institution, or nation. Hence, money consists of figures inscribed upon worthless paper or magnetic strips bearing some official seal confirming authenticity. Hence, the real worth is to be found within this seal.

The basis from which all money springs is currency. When received as payment there is often no hesitation for the recipient as to its worth nor hesitation among others in turn to accept it. Currency is so readily accepted because of the efforts made to properly manage and control its supply. For any nation it is crucial that the issuing authority protect the integrity of the currency by thwarting counterfeiters, thieves, and excessive supply. This responsibility, if ignored or neglected, would be the ruinous. The currency and, consequently, all derived money is the creation and child of the state. In currency we have confidence because we have great confidence in the seal that it bears, that of the Government or sanctioned agency.

As has already been mentioned, currency inclines towards the same fate as gold. With the new technology, the bearing of currency by a purchaser tends to obsolescence. Why carry bulky notes, risking misplacement and theft, when a debit card permitting swift and immediate access to funds and better protected against such hazards exists?

Currency is a non-interest bearing note. Thus, the less currency in circulation, the greater the money available to earn interest. The banks usually store great amounts of currency to serve the needs of its depositors, but it does come with a cost in forgone interest earned on loans. The banks in Canada maintained until very recently a compulsory money reserve with the Bank of Canada to settle movements of money to other institutions. As the reserve earns little or no interest, it is also a costly measure.

The primary methods of transferring funds between accounts deserve some detail and examination. The methods and components differ somewhat, but the fundamentals do not change.

The bulk of money resides in bank records or statements. It consists simply in figures inscribed upon paper or on electronic storage disks. Damage to such records can easily bring down nations. Thus, the authorities and institutions themselves employ an astonishing array of devices and services to protect those records from destructive efforts. Such money held in bank accounts, unlike currency, earns the bearer interest, the spur which draws idle money to industrious bankers. The central banking authority is the appointed agency that manages the banking system, acting as a reserve bank for its troubled members and as the clearing authority for all transfers among them. If not recognized as a member institution of the central bank, the entity, firm, secondary lender, or person must maintain a bank account at a member bank to facilitate transfers.

There are many methods of transfer between accounts within and among member banks. Cheques, long the principle means of transfer, bear the name of the individual upon whose account it is drawn, the institution where the account is located, and the amount of money to be transferred. As there is a delay in transfer, the reputation of the payer is dominant, that of the institution secondary. We trust mainly in the seal of the bank upon the cheque, and less so the signature of the payer as it is probable that if the transfer should fail, the culprit would be more the individual than the bank.

Viewing it differently, if the government were to issue a cheque, the stated amount should be transferred without reservation. If a banking institution or corporate entity were to issue a cheque, the stated amount should be transferred with negligible reservation. If a cheque were issued by an individual, the stated amount should be transferred with a measure of apprehension. In any nation where the order of faith has been inverted or perverted, doubtless anarchy pervades all.

Debit cards transfer money almost immediately from the account of the purchaser to that of the vendor. If the transfer fail, if the funds held in the account are insufficient for completion of the transaction, it is communicated rapidly to both vendor and buyer. This means of payment shall come to dominate all others in the proximate future. The vendor must rely, contrary to the case of the cheque, chiefly upon the reputation of the institution for completion of the transaction. The vendor must accept the word of the financial institution that the funds have been credited to the appropriate account. If the financial institution fails repeatedly in its obligations, then the seller will cease transactions with the bank or discontinue this means of payment.

Money orders are instruments issued by a corporation such as a bank, corporation, or Post Office. The company, having received the money from the first party, issues the order and redeems it when the recipient presents it for processing. For the service of financial intermediary a fee is collected. With the introduction of credit cards and debit cards usage has declined.

If we examine other financial instruments such as guaranteed investment certificates, bonds, and treasury bills, we observe similar patterns and features, though the workings of these items differ.

G.I.C.’s permit the issuer, often a financial institution, the use of funds for an express period and return the purchaser interest as compensation. The document bears the seal of the issuer and its reputation determines the rate of interest. Treasury bills, sold through the Bank of Canada on behalf of the Government of Canada, again bear the seal of the issuer and the stated amount to be remitted when the bill expires. Such instruments, issued by a government possessed of a sovereign currency make default nearly impossible. Government bonds bear the seal of the government and make repayment similarly unquestionable. Because of such certainty, the rate of interest remitted is usually the near the minimum permissible.

Corporate bonds work similarly. If the financial health of the company is exemplary, the risk of default appears low and the rate of interest charged shall approach a minimum. If the health of the company is dubious, risk of default is high and the rate of interest charged shall approach a maximum. Corporations recently established and requiring major investments find access to such capital prohibitively expensive.

If money exists and operates in this fashion, then I conclude it is an illusion, a fiction created to order our world. It is not tangible gold or silver with which we treat, but figures inscribed upon different sorts of ornate paper. We rely upon it and, if we doubt or question, collapse and ruin must follow. How frail and precarious is our modern world! If the currency depreciates because the state has significantly enlarged its supply, trust and assurance in our governing body must decline rapidly. If the cheque of a purchaser fails to clear because of an insufficiency of funds, confidence in such a man dwindles. If all the merchants were to refuse to accept money as payment and demand an article or service of equal value, the entire system of trade would collapse. The only barrier to precipitous and catastrophic outcome is our reliance upon the signatures and seals stamped upon the symbolic paper and plastic we offer and accept as payment throughout our brief lives.

Money should not receive the acceptance that it does. I challenge any person to explain why one should accept scraps of paper in return for assiduous labour and concrete goods. Provide one with a tool or service of roughly equivalent value, then the transaction appears sound and proper. But an offer to exchange paper for a new automobile or home is an absurdity that none should or could defend before an audience alien to the idea. We accept money as payment without hesitation, yet our intellectual self should impel hesitation, scorn, and rejection.

Money can never be tied to any concrete substance. It is an imaginary object that must rise or fall in quantity with the strokes of a lender’s pen. Binding it to a tangible object only perplexes the fiction. Severing the link reveals its intangible truth and nature.

Theologians and the religiously devout lament the unwillingness of people to believe in God. Many in the western world and elsewhere question mysterious and irrational religious concepts and ideas, ridicule religious explanations of our origins, disparage the devotions of those steadfastly allied with church doctrine and principle. Yet where are the criticisms of the foundations of the financial systems of the world. The entire field of commerce and the present means for distribution and exploitation of resources should surely crumble and cease were similar scrutiny applied and belief withheld. Figures and seals upon cheap paper and plastic, this is the foundation of our modern world, an absurdity as profound as it is mortifying.

The Fraud of the Gold Standard

A few persons desire a return to the gold standard. They proffer the stability of prices and the stability of international currency exchange as justifications for and consequences of swift reversion to the former glory of gold supported monetary instruments. They argue politicians, covetous of power and of dispensing rewards, and heedless of financial principles, can never be trusted with such delicate instruments of monetary and fiscal policy: That management of the money supply should be left to dispassionate formulas and mechanisms bereft of human frailties. Thus, armed with the gold standard, unshakable value in the nation’s currency shall be ensured and preserved.

I can only consider the resurgence of this ancient notion a regression. Devaluations are experienced with frequency and haste these days. Some fret about these precipitous and erratic monetary fluctuations. But many do not. When trust in an ill-starred economy and nation diminishes by perceptible gradations, sooner or later capital and human flight shall occur.

Devaluations are symptoms and consequences of turmoil and imbalances in the economic climate unaddressed or arrogantly dismissed by prevailing governors. When complaints are steadfastly ignored or complainants reproached, then catastrophe steps forth. Devaluations occur because superior numbers of those possessing the monetary issue of a nation no longer trust in the management or in the prospects of that nation to remedy its accumulating defects. And when the financial vultures discern carrion, they strike swiftly and amplify the intensity of the turbulent and astounding spectacle.

Why prevent the inevitable and the merited? In Canada, a country that has seen its currency depreciate against that of its neighbor to the south, many clamour for a redress of the oppressive tax rates, an officious and malignant bureaucracy, corruption, as well as a host of other salient ills.

Unfortunately, many do not. They, especially in the province of Ontario, continue to elect a government whose leader partook of and gloried in the degeneration of this country from prosperity and vibrance to debilitation and lethargy. As you cannot aid an alcoholic who refuses to discern or acknowledge the illness afflicting him, so you cannot help a proverbially ignorant electorate insensible to impending or existent doom.

But the advocates of the gold standard suggest its employment shall curb the desires to squander the nation’s wealth. Shall the gold standard have such an effect? No, for the gold standard is an unnecessary, perplexing, confining, and profound deception. The gold standard has never worked because it is unworkable. It is fundamentally flawed.

Whatever the marvelous instrument money may be, it comes inextricably and innately fused with another complex concept: Credit and its inherent Interest. The invention of interest created a revolution and an enormous advance in economics. It impels the holders of monetary issue or precious commodity to place their share with another for a term to earn a premium. Therefore, the amount of money in circulation grows each year through satisfaction of the demand for credit. Idle money, held in mattresses and the like, shall decline in value. Thus, to increase the value of one’s money, one endeavours to augment one’s holdings by placing it into the hands of those better able to extract profitable returns with a bank as intermediary. If an enterprising individual or firm is able to garner a return superior to all costs including the charges upon borrowed funds, then what should stand in the way?

We can define a good or service in terms of money, financial instrument as a bond and similarly the share of a corporation. We can define most things in terms of money, though there are many shortcomings in the conversion. But in what terms do we define money? One may say you can define a currency by another currency. But then how is the second currency defined? Eventually one shall arrive at the point of initiation. The definition becomes circular and worthless.

Those seeking the re-introduction of the gold standard say that the world can define money in terms of the commodity Gold, a tangible commodity of relatively fixed quantity. One Canadian dollar shall possess the value of a certain amount of gold, and, they maintain, the equivalence shall hold for eternity.

But there is an insoluble problem. The amount of money created through credit and the rate of interest earned fluctuates, sometimes frenetically. The amount of newly mined gold would have to proportionally and precisely match the total amount of credit created and the interest paid to the depositor every second, minute, hour, day, week, and year. But this as we all must immediately admit is an impossibility. Substitute any tangible commodity and the same result shall emerge.

Different factors determine the rates of growth of most commodities. Absurdly, the value of gold expressed in terms of money decides the efforts to be made in extracting it from existing sources or seeking new sources. Thus, the fixed and coerced relationship among bank money or credit, the interest rate, and the growth of gold eventually shall fracture and disintegrate. Hence, the coerced relationship of the artificial commodity of money and the tangible commodity of gold, so alien to each other, soon collapses, as it has throughout history, beneath inherent contradictions.

One could argue that the rate of credit creation and interest charged shall be reckoned so as to match the rate of growth of mined gold from the previous year. But who shall settle for 1/4 of 1% on loaned capital when the recipient is earning 15% or 10% or 6% on invested funds? And who shall await the extraction of new gold before credit can be granted to complete borrowed investment?

One might argue that they have developed a formula or mechanism to account for all the discrepancies and fluctuations in order to maintain the fixed relationship. I would argue that such a thing must be a fiction or as good as one. If such a formula or mechanism exist, then it would be pregnable to every form of human manipulation and corruption, thereby rendering it valueless and amusing.

One might suggest that only the currency, the form of money that does not obtain interest, need be backed by the gold reserve. This is feasible, but the currency represents only a meager portion of the monetary aggregate, and that small fraction is all that would be rigidly maintained. How would one decide the value of their holdings of money when separated from their holdings of currency?

But again, though the proportion of currency to money may wane, the amount of currency circulating does not. Soon, the currency would surpass the amount of gold held in reserve as its value.

To bind an artificial commodity of theoretically unlimited supply to a tangible commodity of comparatively fixed quantity is an erroneous and unworkable undertaking.

Many think that there is no value in the nation’s currency as it is paper that can be easily reproduced. They surmise that the value is held in a commodity kept in reserve such as gold. But there is value in the paper and it is found in the reputation and resources of the entity whose seal the money bears. In this country, that seal belongs to the Bank of Canada, an agency of the Government of Canada, which is the appointed agency of the People of Canada. That the nation’s money is backed by reserve of gold or copper or diamonds matters little, because it can only represent a negligible portion of the true value supporting the monetary issue, that is the combined assets, wealth resources, and reputation of the People of Canada.

In conclusion, an artificially created currency of variable quantity has one advantage over a relatively fixed and tangible commodity: It possesses the treasured feature of variable quantity in face of market forces. Money because of its components credit and interest, must have this feature. If the gold standard were once again adopted, as has been stated, a gulf between the quantity of money and the demand for money shall quickly occur and inexorably widen. The gold money supply remains stagnant while the demand for money grows. And unsatisfied demand generated by the dearth of a medium of exchange constrains economic activity, innovation, and suffocates prosperity.

And there can be no fixed or immutable relationship between the monetary issue of one country and of another because as time passes neither marches synchronously with the other and never shall. Fixed exchange rates are as much a fiction as a fixed rate established between the supply of currency, money or credit and some precious metal standard.

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