when we left you yesterday, we were carrying out exploratory surgery on the Frankenstein-like modern money system. Here is where the going gets tough. So many ugly organs… so much revolting internal plumbing. But let us cut to the heart –  pull it out – and have a closer look.

At the heart of any economy is money. Money is the measuring stick. It tells us what things are worth, how much we can afford to invest, what is worth doing and what is not.

Money – especially the rate of interest it earns – tells us when to expand and when to contract. It tells us when to work harder and when to ease off. It tells us which direction to go.

Money is not just something you use when you need to buy a pack of cigarettes. Money provides the key information that a free economy needs. Without honest money, we all might as well be a member of Congress or a Fed governor – hopelessly lost and misinformed. Well, in fact, we are.

In 1971, Nixon ended the direct convertibility of the U.S. dollar to gold. The post-1971 dollar looked for all the world like the pre-1971 dollar. But it was an imposter. A fraud. It no longer represented real wealth or real savings.