SO, WHAT IS MONEY? PART 4

by Dr. James W. Jackson

Founder, Project C.U.R.E.
Author, The Happiest Man in the World: Life Lessons from a Cultural Economist

The first paper money in America came not from banks but from the governments of the new colonies.  In 1690, Massachusetts issued paper money, but it had no tangible asset to back it up, only a promise to redeem it later. That privilege was soon abused, and the market was flooded with the junk paper money trying to purchase any available goods. Prices soared.

The paper money drove the metal coins out of circulation simply because everyone began hoarding the metal coins.  By 1751, Britain demanded that no more paper money could be issued. The Mint Act of 1792, that has survived almost intact until the present, adopted the dollar as the standard unit of currency and the decimal system of counting. But what has backed up the U.S. dollar and given so many people the confidence in it as a secure store of wealth?

Some folks would tell you that the reason for the confidence is that there is one dollar worth of gold in Ft. Knox, KY for every dollar that is placed into our money system by the Federal Reserve Bank. Sorry, but that hasn’t been the case since the U.S. abandoned the gold standard in 1933. By August, 1971, we had sloughed off over $12 billion of the gold reserve in Fort Knox.

Saying that our currency was backed up by the equivalence of gold in Fort Knox was a sick joke. To make things even worse, it was agreed that if we owed a debt to any sovereign government, they could demand and receive our payment in gold from our reserve. In 1971, President Nixon realized that when the U.S. had trade imbalances with other countries, and we bought more from them than they bought from us in traded goods, they could and were demanding payment from us in gold out of our reserves in Fort Knox.  We possessed less than one penny at that time in reserves for every dollar issued.

On August 15, 1971, President Nixon closed the gold window. That severed the critical link between international currency and real gold. From that time on the U.S. would pay their balance of international payments in dollars. That was the first time that link had been broken in 1,500 years! Since that time the world has accepted the U.S dollar as the international standard of payment.

Other countries are now demanding to know how much real gold the U.S. has stored in Fort Knox to back up our standard of currency. That’s another sick joke. There isn’t enough there to even make a quantifiable difference. There is really only one thing that gives any form of money acceptance and usability: confidence! People will only accept U.S. dollars as long as they believe that someone else will have confidence enough in the currency to take it from them in true form of payment. That national and international confidence is very quickly melting away.

       (Research Ideas from Dr. Jackson's new writing project on Cultural Economics)

Dr. James W. Jackson often describes himself as "The Happiest Man in the World." A successful businessman, award-winning author and humanitarian, Jackson is also a renowned Cultural Economist and international consultant, helping organizations and governments to apply sound economic principals to the transformation of culture so that everyone is "better off."

As the founder of Project C.U.R.E., Dr. Jackson traveled to more than one hundred fifty countries assessing healthcare facilities, meeting with government leaders and "delivering health and hope" in the form of medical supplies and equipment to the world's most needy people. Literally thousands of people are alive today as a direct result of the tireless efforts of Project C.U.R.E.'s staff, volunteers and Dr. Jackson. 

To contact Dr. Jackson, or to book him for an interview or speaking engagement: press@winstoncrown.com

SO, WHAT IS MONEY, Part 3

by Dr. James W. Jackson

Founder, Project C.U.R.E.
Author, The Happiest Man in the World: Life Lessons from a Cultural Economist

Money can be any article agreed upon as a store of wealth by any number of people and used as a common medium of commerce to exchange what they have for what they want. Whenever the article fails to maintain people’s confidence in its power to purchase, it fails to remain money.

Whatever is agreed upon and used as money is relied upon because of convenience and accepted because of confidence. If something new comes along that is more convenient, and can still retain the confidence of the people as to its purchasing power, it has the possibility of becoming a new form of money.

The desire for convenience motivated people to begin to use pieces of paper as money instead of lugging around bags of heavy metal bars or clumsy coins. That took a huge leap of confidence until people began to trust in the fact that other people would accept their pieces of paper as payment for goods or to satisfy debts.

In the beginning, paper money looked a whole lot more like a receipt. For safety and convenience, people would take their gold or silver to a business (like a goldsmith) that was equipped to store the metal there for “safe keeping.” Sometimes, they would place the metal in a local bank vault.

The goldsmith or banker would give the owner of the metal a receipt to prove ownership. When that person wanted to make a purchase or pay a debt he would simply sign off the receipt and hand it over to the new recipient. Should the new owner of the receipt want to take physical possession of the metal he would go exchange his receipt for the real metal. Or, for convenience sake, he might simply sign the same receipt over to another person when making a purchase or paying a debt.

Over the years we have moved in the direction of a cashless society, but certainly not a moneyless society. Convenience and confidence will always determine what will be used as money. Is each article used as money always backed up by gold or silver somewhere in a vault? 

         (Research ideas from Dr. Jackson’s new writing project on Cultural Economics) 

Dr. James W. Jackson often describes himself as "The Happiest Man in the World." A successful businessman, award-winning author and humanitarian, Jackson is also a renowned Cultural Economist and international consultant, helping organizations and governments to apply sound economic principals to the transformation of culture so that everyone is "better off."

As the founder of Project C.U.R.E., Dr. Jackson traveled to more than one hundred fifty countries assessing healthcare facilities, meeting with government leaders and "delivering health and hope" in the form of medical supplies and equipment to the world's most needy people. Literally thousands of people are alive today as a direct result of the tireless efforts of Project C.U.R.E.'s staff, volunteers and Dr. Jackson. 

To contact Dr. Jackson, or to book him for an interview or speaking engagement: press@winstoncrown.com

SO, WHAT IS MONEY? Part 2

by Dr. James W. Jackson

Founder, Project C.U.R.E.
Author, The Happiest Man in the World: Life Lessons from a Cultural Economist

It might be possible to imagine a cashless society, but not a moneyless society. People will always fabricate some kind of money in order to help them facilitate trading the things they have for the things they want. What’s your preference to use as money?

Historically metal has been used most. It is a whole lot easier to make change with pieces of metal than with raw eggs. Economist Adam Smith said in the mid 1700s: 

    Metals cannot only be kept with as little loss as any other commodity, scarce 

        anything be less perishable than they are, but they can likewise without any loss,

be divided into any number of parts,  as by fusion those parts can easily be

       reunited again; a quality which no other equally durable commodities possess, 

       and which more than any other quality renders them fit to be the instruments of 

commerce and circulation.

It became inconvenient over the centuries, however, to stand in line at the marketplace and pull out your bar of gold and whack off an amount for your purchase and weigh it with accuracy. So, the usage of coins became more convenient. Minted coins were easily identifiable and had their weight and purity stamped on them.

It was also common for the coins to bear the image and guarantee of some governmental leader. Sooner or later the governments have always taken over the sovereign control of the minting of coins. Even in the US, under the Mint Act of 1792, the debasement of coins by an individual was made illegal and a crime punishable by death. The government likes to have control of the monetary system. Down through history, however, sovereign governments have repeatedly abused their rights of minting coins.

Would some people accept commodities to be used as money? Yes. Would most people accept precious metals to be used as money? Yes.

But why would any reasonable person accept a small printed piece of paper as money?

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics) 

Dr. James W. Jackson often describes himself as "The Happiest Man in the World." A successful businessman, award-winning author and humanitarian, Jackson is also a renowned Cultural Economist and international consultant, helping organizations and governments to apply sound economic principals to the transformation of culture so that everyone is "better off."

As the founder of Project C.U.R.E., Dr. Jackson traveled to more than one hundred fifty countries assessing healthcare facilities, meeting with government leaders and "delivering health and hope" in the form of medical supplies and equipment to the world's most needy people. Literally thousands of people are alive today as a direct result of the tireless efforts of Project C.U.R.E.'s staff, volunteers and Dr. Jackson. 

To contact Dr. Jackson, or to book him for an interview or speaking engagement: press@winstoncrown.com