Sound (Hard) Money must be very hard to create.
Throughout history, many mediums of exchange have been used including seashells, beads, rare stones, cattle, metals, and government paper money.
With the exception of the last one, all of these goods have been hard to produce at the time of their inception of being used as money.
Being hard to produce / scarce was the only way that people would accept the goods as money.
However, as technology advanced over time, and foreigners with greater technologies or natural resources colonised other countries, they drastically increased the supply of these goods by importation, or using new technology to increase production.
This drove the money’s value down drastically and effectively “stole” the locals wealth, rendering the money as no longer Hard.
This is inflation and it’s what Governments and Central Banks do continuously by the printing of money.
It is thought that the main reasons Central Banks create new money are:
– To lend overspending Governments money at interest;
– To lend overspending Governments more money in order to pay back the interest on the money already borrowed;
– To purchase the real wealth (Hard Money) for themselves. This is why the vast majority of the World’s Gold is owned by Central Banks, which are all or mostly privately owned entities.
You read that correctly, Central Banks are privately owned.
Many people assume the Federal Reserve is owned and/or controlled by the US Government.
Not so. They lend money to the US Government at interest, which can only be paid by more printing of money.
In the UK, it is thought by many that The Bank of England is a privately owned.
However, the UK Government claim that it is not and that they are in fact the owners of the printing press.
Historically the central bank was privately owned like all others, however they claim to have been “nationalised” in 1946.
The Bank of England claims to be “owned by the UK government”. However, what this means is open to interpretation.
It is not clear at all why a Government with ownership of their central bank would choose to charge itself interest on the currency created. Interest which could only be paid back by borrowing and printing more currency – and thus decreasing its value – ad infinitum.
Although far from an expert on the Bank of England, this author treats claims of “government ownership” sceptically.
Regardless of ownership, if a central bank is able to print money at will, that money is not sound money.
Ownership of the most World’s Central Banks is obfuscated and there are different theories about who owns and controls them.
Many believe that it’s the same families who control all of the Central Banks around the World.
It is unclear to this author why Governments do not choose to control their own money supply, although there are many theories about it being the Worlds real “elite”, ruling class who own the Central Banks.
