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  • Writer's pictureBen S

Good Money vs Bad Money

Gresham's law is a monetary principle stating that "bad money drives out good." It is used for consideration and application in currencies worldwide. Gresham’s law initially focused on the composition of minted coins and the value of the precious metals used in them. For example, in the early 1960's U.S. coins like the Quarter went from silver to a primarily copper alloy composition, which degraded it's true value.

Years later, in 1971 the U.S. dollar went from being a partially gold-backed currency to a fiat currency with just the backing of the strength and capacity of the U.S. government.

For the next 50+ years, money creation became infinite because of the move from asset/precious metal-backed currency to fiat currency. This happened worldwide giving governments a blank check to spend in the form of national debt. Currently, the U.S. is strained with over 31 trillion dollars of debt because of this.

Bad money drove out the good. If the monetary system remained gold, or silver backed with gold or silver certificates as opposed to federal reserve notes (current dollars), the U.S. would not be burdened with insurmountable debt, billions would not be given away in the dead of the night to other corrupt countries, pork spending bills would never pass as legislation, and corruption would be restricted because of a finite monetary supply.

The root of worldwide problems and corruption is the result of the extreme oversupply of bad money driving out the good money. With a world going off a cliff with monetary policy, a return to real money can save those that understand this. Monetary change is coming because the system cannot be sustained on its current path.

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