Most Important Concepts

Action Points

Money needs to play the roles of:
- Medium of exchange
- Store of value
- Unit of account

A one-time collapse in the value of a monetary medium is tragic, but at least it is over quickly.
- A slow drain of its monetary value over time will slowly transfer the wealth of its holders to those who can produce the medium at a low cost.

Gold has historically been the most sound money, because it is:
- rare, very difficult to produce.
- durable, existing stockpiles don’t get destroyed or corroded.
Even as central banks repeatedly declared the end of gold’s monetary role, their actions in maintaining their gold reserves ring truer.

No fiat money has come into circulation solely through government fiat; they were all originally redeemable in gold or silver, or currencies that were redeemable in gold or silver.
- It is only by holding gold that governments could get their money to be accepted at all.
If soldiers are not to cross international boundaries, goods must do so. Unless the shackles can be dropped from trade, bombs will be dropped from the sky.
The problem with government-provided money is that its hardness depends entirely on the ability of those in charge to not inflate its supply.
History has shown that governments will inevitably succumb to the temptation of inflating the money supply.
For as long as the money was controlled by anyone other than the owner, whoever controlled it would always face too strong an incentive to pilfer the value of the money through inflation or confiscation, and to use it as a political tool to achieve their political goals at the expense of the holders.
- This, in effect, takes wealth away from people who produce it and gives it to people who specialize in the control of money without actually producing things valued by society.

Since 1970 savings rates have plummeted across the western world, as fiat currencies incentivize spending in the present.
At the same time indebtedness of both government and its peoples has skyrocketed.