Sound money is money that is not likely to suddenly appreciate or depreciate over the long-term. It is helped by the self-correcting means that are a part of a free-market system. Central Banks around the world can manipulate money in ways that are supposed to stabilize or grow depending on what they want the money to do for the economy. Sometimes this movement has the opposite effect on the economy and causes more problems than it solves. This is a problem that is worldwide and can only be fixed if the world goes back to sound money.
The bad thing about the central banks controlling the money is that there is a detachment between the money supply and the demand for money. Downturns in the economy happen when changes in the need for money is not met with an adjustment in the supply of money. You can get a sound money review from BMOGAM and read what they have to say about it.
They may have more information for you. If they do not have the information that you seek, you can also do more research to see what you can find. There are many sites that will give you more information that may be a little easier to understand.
In the United States right now the money system is adversative to sound money. The money and its supply are completely controlled by people who are not elected that are running a banking cartel backed by the government that puts no real constraints on their power.
Gold used to be the linchpin of the money system in the United States but that changed with Nixon’s act in 1971. That act basically said that the US currency was no longer backed by gold or silver. This changed the way money has been looked at ever since, and the dollar has not been stabilized since then.
History of Sound Money
At one time in history, Americans would carry gold coins in their pockets and pocketbooks. We still want to carry the history of gold and silver with us. Sound money emits images of the musical ring of gold as it falls onto any hard surface, such as a table, floor, or concrete. Sound money really refers to the real wealth that is authentic and natural and not the money that is in the paper, plastic, and electronic debt mechanics that we know today. Today’s money is not backed by gold and silver as it once was and therefore is more volatile than it once was.
The term sound money comes from Ancient Rome where they used small silver coins in everyday trading to pay the Roman soldiers or to trade for foreign goods and services. When Rome began wasting its wealth, they decided to devalue the silver coins by cutting the silver with other precious metals until the silver was only five percent silver. This, of course, did not fool anyone for long and the Roman soldiers became upset when they found they were being paid with worthless money. Therefore, when a soldier was given a silver coin, they would drop it on the ground. Pure silver gave a different sound from the cut silver so they could tell the difference most of the time.
What is Money?
In the beginnings of trade, people could barter with just about anything. For example, a farmer could trade corn for medical assistance. Pretty soon, the doctor or other medical assistant would get more corn than they would have use for and the value of the corn went down. Therefore, a unified system was started, and coins were first used. Coins had the same value and could be broken down into smaller amounts. Coins became common and every merchant wanted them so that they could trade them for more goods and services. Gold and silver became the go-to coins to use for trade, and it stayed that way for many years to come.
What is Fake Money?
Less than one hundred years into being a country, the United States entered the Civil War. Because war is so expensive, President Lincoln signed the Legal Tender Act of 1862 that allowed the country to print $150 million in money that was not backed by gold or silver. Because it came from the government, this currency was eventually legitimized. Lincoln made this paper money legal tender and hoped that it would soon be used by everyone to pay for their goods and services. His wishes became facts in the years to come.
Because paper money was marked with legal tender, the money became more popular for people to use. By the end of the war, over a half billion dollars of paper money had been put into circulation. But soon, the Greenbacks were losing their value – $100 in gold was being sold for $265 in Greenbacks. Creditors became furious when people began to pay back their loans with Greenbacks that were worth less than what the original debt was. The creditors were losing money and they wanted something done about it.
Because of this, Chief Justice Chase said that the Greenbacks were only used to finance the war and that since the war was over, the Greenbacks were no longer legal tender. The Legal Tender Act issued a new decision in 1871 that said printing paper money that was unbacked by gold or silver was no longer unconstitutional even when there was no war or other emergency. This made the Greenbacks legal tender once again.
In the next sixty years, the sound money system was destroyed, and the Federal Reserve System was established. This caused the implementation of income tax and the confiscation of gold by executive order. This also led to the annulment of gold clause contracts. This led to a large debt in the United States that is still in existence today.
Sound money is backed by gold, silver, and other precious metals. The money that we use today in America is backed by the Federal Reserve and has no precious metals to back it. This has caused the government to print money up to a more than twenty trillion-dollar debt. Although gold and silver are still sound money, we no longer use it as legal tender in most cases. There are a few instances when precious metals are legal tender in some countries, but it is not the norm.
You can still buy precious metals such as gold and silver and it is still valuable, but you cannot use gold to buy a home or a car in most cases. You must liquidate the metals and then buy the objects that you want. This is not an easy system, but people still choose to buy gold, silver, and other precious metals to invest in because they hold their value when paper currency loses its value.
Precious metals are truly the only sound money left in the world today, because almost everyone has switched to the Federal Reserve model of Legal Tender. There are movements in some countries to have their money backed by precious metals, but it is only in a few countries. Many people feel that this is what America should do, as well.