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Continue reading →: Does Gresham’s Law Prevent Gold From Being Used As Currency?Photo by Zlaťáky.cz on Unsplash. Gresham’s law states that bad money drives out good. If you have the option to pay for something with either a really valuable coin (good money) or a worthless coin (bad money), you would prefer to part with the worthless coin. The valuable coins would…
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Continue reading →: How To End The Fed From First PrinciplesPhoto by Alex Bierwagen on Unsplash. “End the Fed” may be more popular now than ever. Representative Thomas Massie just introduced H.R. 1846 which would repeal the Federal Reserve Act – the 1913 law that created the Federal Reserve System. The goal of the “End the Fed” movement is to…
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Continue reading →: What Do You Think of Goldbacks?Photo by BShaffer under CC BY-SA 4.0. Several folks have asked me what I think of Goldbacks. The short answer is that I really like them! The long answer is more complicated, because the existence of Goldbacks raises some questions. Let’s define some terms: The 1 oz American Gold Eagle…
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Continue reading →: A Lesson in Sic Semper Tyrannis From 13th Century IranIn 1294 AD a ruler named Gaykhatu issued a decree that all the inhabitants of the city of Tabriz begin accepting paper money. Paper money was first introduced in China during the 11th century, but this was the first time its use was attempted in the Near East. Tabriz was…
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Continue reading →: Are Banks Counterfeiters of Fake Warehouse Receipts?Photo by Live Richer on Unsplash. Many have argued that fractional-reserve banking is fraudulent and should be illegal. Their main argument can be stated like this: Others claim that there is no fraud. George Selgin has argued, quite persuasively in my opinion, that banks have a long history going back…
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Continue reading →: Do Banks Create Money Out Of Thin Air?Let’s skip the discussion about the the legality of Fractional-reserve banking (at least for now), instead let’s focus on its consequences. Does fractional-reserve banking cause any problems? Does anybody get hurt? Consider a simple illustration consisting of 4 players: Depositor, Bank, Borrower, and UsedCarDealer. From what I can gather, there…
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