What is Money?

I'm having fun with these old films. This one is about Money (Windows Media File). When you watch this you'll hear the narrator tell you that money has to be something of value, and that our money is backed by gold and silver in the treasury. Folks, our money is simply a promissory note based on the faith in our government to redeem it for it's face value. Our fractional reserve system has diluted the gold and silver backing to 10% of the face value. I have even heard that it is possible that those reserves no longer exist, and the currency is simply backed by faith. The gold and silver are supposed to be collateral for the certificate we use to exchange it for goods and services. It has turned into a promissory note instead. Our money is based on debt. That debt is never really paid, and is cancelled, in part, by printing more money.

Why has the government done this? So they can print more money when they need it, and use a hidden tax called inflation that everyone pays equally, rich or poor, in the dollars they spend. By printing money, they skim off the value of the money already in circulation. That is the problem with a fiat currency, which is what this is called.