4 votes

Easy way to explain Sound Money

Since the concept of Sound Money seems to be so hard for the sheeple to understand here is a very simple way to illustrate the point.

In and around 1970 a person could buy a gallon of gas for a quarter, today a pre-1965 quarter will buy 2 gallons of gas. Relative to the value of silver, the value of gas has gone down. That is Sound Money.

Sound Money also means that the value of the dollar you earn today retains the same value in the future, and that is the definition of stable currency.

Sound Money = Stable Currency = Zero Inflation = Zero Loss of Value



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I explain it like this

Inflation comes from printing money. How much money do you need for your retirement? How much money is it going to cost to send your kids to school? The number is unknown because we don't know what the value of money is going to be.

If you save a dollar when you are 18, it may be worth 5 cents or less when you are fifty, so what are you saving for? By creating inflation and dropping interest rates, savings is impractical.

For a more critical and thoughtful discussion, I destroy Keynesian thought by the following arguement.

Keynes was right, savings and reduced consumption create recessions. By eliminating savings, you can prevent recessions. Keynes theory was and is correct, so I can understand its appeal. Savings are the basis of capitalism. Without savings, we don't have capitalism. So by making it illegal, or impractical to save Keynesian theory has forced/encouraged us into a debt laden society where growth industries are controlled by the only lenders in existence, banks.

Capitalists invest savings, or entrepreneurs often borrow money from savers. Society as a whole no longer borrows from savers, because the bank will print the money at a rate that they can't possibly compete with. As society stops saving, the quality of life of each individual gradually deteriorates.

The government controls entrepreneurs because they control access to the capital. The government eliminates the benefits of savings because money loses value faster than interest can let it grow. They make us investors and force us to send money to Wall Street. They essentially are taking everything from us. Our savings go to wall street, and any capital investment we seek to make forces us to become beholden to banks.

This structure could continue to exist if competing currencies were legal. We can still borrow money from banks, but we wouldn't have to send our savings to Wall Street, and our savings would be protected from inflation. So we would know what we need to retire, we would know what we need to send our kids to school and our careful planning for the future wouldn't be beholden to Wall Street.

Then that dollar you saved when you were 18 would still be able to buy you a coke when you are 60, even if that coke cost 20 dollars at the time. The difference is, you wouldn't be charged tax on your savings. So when you buy that 20 dollar coke...you shouldn't have to claim $19 as income and pay the associated tax.

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I am giving a small presentation on sound money this Saturday and would love if someone could take a look at my below speech and offer suggestions on how I can improve it.

"I would like to take a few minutes to talk about the subject of Sound money . This is a very important subject and it affects almost every aspect of our lives yet it is one that many people may not have even heard of. The basic definition of Sound money from the Meriam Webster dictionary is “money not liable to sudden appreciation or depreciation in value. It is stable money or a currency based on or redeemable in gold. This is compared to what we currently have which is soft, paper money or fiat.

Under our current monetary system the soft money that we use are federal reserve notes. Unfortunately this system continues even though it is against the constitution of the United States. The constitution clearly says
"No State shall coin Money, emit Bills of Credit or make any Thing but gold and silver Coin a Tender in Payment of Debts”
Unfortunately the money that we earn is constantly being devalued by the federal reserve through the creation of credit and federal reserve notes. This is called inflation. In just the last 4 years the Federal Reserve has more than tripled our monetary base. This will lead to increasing prices on many goods and services. We have already see this in the skyrocketing costs of healthcare, education, food and many other services and products. Unfortunately the market distortions this type of system causes are rarely good for the middle and lower class as those who have access to the credit first will always benefit more than those that are on the downstream end of this inflation pyramid. Those that get these special benefits include banks and large corporations who will get this money at close to 0% interest and either loan it to middle and lower class citizens at very high interest rates or they will buy government bonds or other financial instruments that guarantee higher returns. Some of these banks and corporations will also gamble on the stock market with these funds. This distortion will also cause big jumps and big falls in the stock market with those in the “Know” being able to manipulate stock prices to their own advantage. We have also seen new tools used by the federal reserve such as the TARP bailouts that were passed even though the vast majority of Americans were united in their opposition to the bailouts.

The steps that we will need to take to try and remedy the situation we are in is to pass legislation such as Audit the FED which has passed Congress but is currently being held up by majority leader Harry Reid in the Senate. We will also need to pass legislation that repeals legal tender laws so that Americans can use competing currencies without fear of being put in federal prison. The demise of the dollar is inevitable as all fiat currencies will inevitably fail. But if we can get these 2 pieces of legislation passed we will be on a road of understanding and preparation for when that time comes.

For more information on sound money, monetary policy and the free markets please visit the Ludwig Von Mises Institute at Mises.org where you can take free online courses, get free information and tools that will help you gain a better knowledge on this very important subject."

I think you're over the average person's head

Most of those terms, while technically correct are unnecessarily complex. Why say things like 'monetary base' when to most people it just means 'amount of money' and the rest will know what you really mean? For me, the trick is to get every single person (especially the teenagers) on your side. They will learn the lingo in their own time.

I've found that putting things in terms of their neighborhood kids' lives hits home the fastest and generates the most questions and anger at the system. "Would you let your kids lie or cheat each other, then fight over it, then gang up with bigger weapons to ensure they constantly win?" "Why you a dozen people stranded on an island just give the task of selecting what to use as money to one person, knowing they will only 'rent it' to the other eleven forever?" "Why would those eleven people allow this 'banker' any influence on what rates and regulations the eleven abide by in their private transactions?"

There are other concepts that sound money affects in our society that many people never realize. To see more of them, see my latest post.

I like what you have, but what about adding a couple of props

(visual aids), as many in the audience may respond and remember that better.

I think Ron Paul has used a pre-64 silver dime to illustrate that it usually still buys now what it could when it was coined.

I might choose to hold up a $100 FRN and a $100 Monopoly bill, and ask which is worth more? Once the audience provides the easy answer, ask the kicker, "Both are printed on paper by private corporations and denominated in dollars. Why is it worth more?". Then you can launch into the explanation of legal tender laws and currency devaluation.

Get their attention first, ask them a question, make them think, then give your speech.

Good luck with it.