Well Keith, you seem to be saying that it is unnecessary for there to be some real value at the foundation of your currency. When push comes to shove, that currency needs to be “worth” something. Just because the paper exists it does not mean it represents a consistent relationship to a fundamental such as food. The fact that a government can simply print more money has been proven to be economic quick sand. More than one money-printer has sank into it’s depths.
In the early 1920’s, the post-WW1 German government found itself without enough Marks to pay it’s bills. Their answer was to simply print more Marks. The problem was that their currency had no underlying value, so the more they printed the less “value”each mark represented. Eventually a 2 mark loaf of bread demanded about 2 trillion marks. The value of the bread did not change. It was the printed paper of their currency that did.
Today, the currencies of the world have little to do with real value. Each is essentially an instrument of credit, a promise of a future ability to pay. They “move” against each other either by the sensitivities of the “market” or by direct manipulation of a government. Competitive manipulation of currencies be between governments is considered a hostile act. Yet the underlying value, the ability to feed oneself, remains constant. The real currency of life is the calories you need to survive each day; which brings us back to the farmer. If I am hungry and can convince the farmer to give me food in exchange for my labor then both he and I gain from that contract. I avoid starvation and he produces more corn, which is essentially his currency of commerce.
Most of the people that starved in post-WW1 Germany did so not because of a lack of bread, but because the currency in their pockets had little value relative to that bread. Bread and currencies are so tightly associated that money is sometimes referred to as “bread” or “dough”. “Hey, you got any bread man?”…. or “give me some dough and I’ll go get some beer”. These terms are synonymous with meeting your daily needs.
When push comes to shove, I’ll take a garden full of food (and a good relationship with a fisherman and a wine maker) over a pocket full of paper any day.
