Understanding the Crisis - by Llewellyn H. Rockwell, Jr.
• Llewellyn H. Rockwell, Jr.What caused this? It is a simple question, and yet answers are all over the map, as you might expect. Here's mine in two words: fiat money. The word fiat means: out of nothing. Money out of nothing is money that is eventually worth nothing.
Money points:
1. Fiat money doesn't usually have much value in itself, but only in what it may represent (if that even);
2. Real money - money that has value in itself, such as gold and silver - can be virtually anything of value, from land to salt to metal to food - you name it;
3. The real value of money is in the eye of the user - the grocer values fiat paper greater than the groceries he has in his store; the grocery consumer values the groceries more than the fiat paper; a transaction comes about;
4. When money that has real value in itself - gold coin, silver coin, land, salt, produce, clothing, cars, etc. - is swapped, it is called barter;
5. When fiat money - no real value in itself - is swapped for some form of money with value in itself, it is called buying and selling;
6. Money is really stored up labor - labor of human beings who are willing to work for the money. Intentional inflation is really theft of human labor by those who cause the inflation.