Remembering The Fed's Definition Of "Sound Money"
Nothing quite like hearing it from the printer's mouth. From a 1961 FRB of Chicago paper:
“In the United States neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face value. What, then, makes these instruments - checks, paper money, and coins - acceptable at face value in payment of all debts and for other monetary uses? Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so."
It is handy to be reminded every now and then that the only thing people transact in is symbolic confidence in the truly stable financial system.
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