Everyone’s Talking About Currencies: 21 Points

July 24, 2023

by Charles Hugh Smith Of Two Minds

The ideal ‘sound money system’ is one in which many currencies, both state-issued and privately issued, compete in a transparent global marketplace.

Everyone’s talking about currencies, but often without much context. Here are 21 points about currencies that it’s good to keep in mind during any discussion. Richard Bonugli and I discuss these in our latest podcast on currencies (29:36 min).

1. Currencies are the foundation of a nation’s economy and financial system. History may offer examples of currency collapses benefiting the few, but there are no examples of currency collapses benefiting the many.

2. Ultimately, every currency reflects (i.e. is “backed” by) the economy and institutions of the issuing nation. Nations with diverse, adaptable, productive economies with deep, transparent markets have the means to pay interest on their bonds and offer productive investments for other nations holding surpluses of their currency. The meme on fiat currencies is that they’re “backed by nothing.” But currencies issued by nations / central banks that issue interest-bearing bonds are backed by the interest-bearing bonds.