fiat money - ThisIsCommonSense.org

By now, most people are probably OK with Treasury’s plan to oust Andrew Jackson off the face of the $20 Federal Reserve Note and replace him with Harriet Tubman.

I certainly am. Ms. Tubman was a great hero of freedom. President Jackson has a more … mixed legacy.

The original plan to rotate Alexander Hamilton off the ten spot met with pushback as a result of his rising popularity from the Broadway play, Hamilton. Besides, Hamilton deserves blame — er, placement on the nation’s official paper money. Hamilton devised the first national banking system. Andrew Jackson, decades after Hamilton’s death, nixed that insider-mercantile scheme by refusing to re-authorize the central bank of the day, setting up a very different system for the Treasury and America’s banks.

Less than a century later, Hamilton’s idea was revived in the form of the Federal Reserve. Which we benefit/suffer from to this very day.

But in a bizarre twist, Jackson was not simply replaced. He was demoted. Tubman is to be placed on the note’s obverse, and Jackson moved to the back of the bus, er, note. The reverse.

I would have preferred to revive Old Hickory years from now, after the Federal Reserve dissolved, to be featured on a private bank’s note. After all, private banks did that for years between Jackson’s time and the modern period.

Bank notes don’t need the imprimatur of government.

That would allow us to place, on the flip side of the sawbuck, a more suitable image — of the Big Dipper, which served escaped slaves as a direction, to go north: “follow the Drinking Gourd.”

Additionally, the Big Dipper suggests bailouts, doesn’t it?

We’ll have plenty more before the system is changed.

This is Common Sense. I’m Paul Jacob.

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Who Wins With Faith-based Money?

A fascinating Wall Street Journal profile of one of this age’s pre-eminent investment advisors, Jim Grant, provides more than the usual “business interest.” Mr. Grant proves to be a very thoughtful man, not given following the Yes Men crowd.

He notes, for example, how deflation fears have unhinged the minds in charge of the financial sector. “The Fed, in assaulting a phantom deflation, precipitated an actual one.”

And this “inflation/deflation” problem is only the tip of a very large and scary monetary iceberg. He calls our fiat money system a marvel — “astounding,” in his exact wording — but that’s not necessarily a good thing:

That a currency of no intrinsic value is accepted as money the world over is an achievement that no monetary economist up until not so many decades ago could have imagined. It’ll be 40 years next month that the dollar has been purely faith-based. I don’t believe for a moment it’s destined to go on much longer. I think the existing monetary arrangements are so precarious, so ill-founded and so destructive of the economic activity they are supposed to support and nurture, that they will be replaced by something better.

Let’s hope so.

But why has the system survived so long?

Mr. Grant has an answer: It serves Wall Street and “its supporting ‘interest group’” of “nimble, market-savvy, plugged-in folks.”

Exactly: Many of our biggest institutions don’t serve “the people” so much as the select few.

This is Common Sense. I’m Paul Jacob.