Economics for High School Students
Money, Banking and the Current Mess
Money originates by free markets via barter and gold and silver, not by governments via fiat. A story of Halloween candy demonstrates this. The double coincidence of wants is solved by money. Money that will last will be six things: generally marketable, divisible, high value per unit weight (portable), durable, recognizable, and homogeneous. Gold and silver have always met these six criteria.
Money is the single commodity that if you had more of you would not be better off. Paper money has not been backed by any gold since August 1971 when Nixon closed the gold window. Government since then has had no restriction on creating money for any and all expenditures like warfare and welfare. Zimbabwe's recent hyperinflation led to one hundred trillion Zimbabwean dollars buying less than a Happy Meal at McDonald's. This was similar to Germany's hyperinflation in 1923.
Presented by Douglas E. French at the "Economics for High School Students" seminar. Recorded at the Mises Institute in Auburn, Alabama; 20 November 2009. Sponsored by Jeremy S. Davis.