What should your currency be backed by? Deposits of gold, silver, land, food, and knowledge.

Like most of us, I had been fooled into believing that the accumulation of paper money equated to wealth. Wealth itself, as defined today, is a troublesome concept. I define wealth as the ability to live off of the residuals of a promise to pay i.e., a bond, where you, the holder of the debt, collect monthly payments from the issuer of the bond. The borrower is obligated to you for the term of the contract and literally and figuratively lives in bondage to you.

But this current model, where the relationship is based primarily on the exchange of paper, trust, and obligation is severely faulty. We need to ask, what is the basis of the lender’s strength? Is it simply based on the lender sitting on a mountain of cash? What does his cash represent?

For the borrower, what is their promise to repay based on? What is the recourse? Is the promise based primarily on an asset that the lender can claim in case of a default and if so, what is the true value of that asset?

As I share in my book, “Take It from a Black Man: WASPs Need to Take Back Their Country”, money is private. Money started out as private and should go back to that status. The only reason humans engage is to trade value, and as a medium of trade between private individuals, money should be private.

But what is money? Money is energy. It represents the output of the energy that you expend to extract, process, and package deposits of resources, including food commodities, land, silver, gold, knowledge, etc. We engage other individuals for the purpose of trading some or all of our deposits of “money.” But how do we exchange these deposits? We exchange money over a payment infrastructure or system via an application that we call currency.

Currency derives its value from the underlying money we spoke of earlier. Currency is a promise that per one unit of this derivative we receive some portion of the underlying money. Currency not only is a derivative, it’s a bond, a promise to pay real money, but in this case, a promise that is not backed by real money.

In most cases, individuals exchanging currency are sitting on deposits of currency versus sitting on deposits of real money. This means that should one party determine that they want solid value or real money instead of a paper currency, the other party has nothing to offer. This is because real money is held by a small minority of individuals and associated individuals on this planet.

But why is this a problem? If two people choose to exchange paper currencies and they determine the paper they receive provides them with value, why should we be concerned? Their marginal utilities are at equilibrium and the exchange occurs, yes? This is true, but the problem is that they do not control the price of that currency.

While individuals control the supply of the energy they expend in generating real money, they do not control the supply of paper currency. The supply of paper currency is controlled by a central bank and its member commercial banks. If the central bank engages in policy that increases the supply of the paper currency, the paper currency becomes devalued. In other words, the price of buying goods and services increases as, all things being equal, the amount of goods and services remain the same as the supply of dollars chasing that fixed level of goods and services increases. The individual who has no knowledge or commodities to trade is otherwise stuck with worthless cash.

How do we solve this problem? First, the problem will have to be solved on the household level. Households will have to develop their own deposits of useful and forward thinking “know how”; move more cash into gold and silver; and grow more of their own food.

You will receive no help from government because this approach means abandoning the payment systems that government endorses. You will have to develop your own sound money backed currency.

Alton Drew

25 February 2023

Alton Drew

My goal is to provide alternative views on our political economy. Your support is necessary for the maintenance of this blog and is greatly appreciated.