Wednesday, January 20, 2010

Fiat Currencies = Zero

"Fiat currencies don't usually start out that way, and those rare cases when they have were very short-lived. Societies usually start with high value commodity money such as gold and silver. Gradually, the government hoodwinks the population into accepting fiat currency by issuing paper demand notes that are redeemable in precious metals. These demand notes (currency) are really just "certificates of deposit", "receipts" or "claim checks" on the real money that is in the vault....

1957 Silver Certificate: (One Dollar in Silver Payable To The Bearer On Demand):



Once a government has introduced paper currency, they then expand the currency supply through deficit spending, printing even more of the currency to cover that spending ….. Then, usually due to war or some other national emergency, like foreign governments or the local population trying to redeem their demand notes (bank runs) the government will suspend redemption rights because they don't have enough gold and silver to cover all the paper they have printed, and poof! You have fiat currency."

Modern day Federal Reserve Note: (Paper & Ink:



- Michael Maloney from GoldSilver.com

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