...At the center of this political upheaval is the quality of money itself. “Is gold money?” is a show stopper because it raises the questions: “What is money and what power should government have to manipulate its value?Read the rest here.
The answers to these questions reveal how our most basic trust in government has been betrayed.
When you or I accept dollars in exchange for providing goods and services, we do so trusting that when we spend those dollars, they will be accepted for an equivalent amount of goods and services. That’s how money frees us from a barter economy.
Trust is always an assessment of some future action. Making a grounded assessment requires us to understand who is making the promise, what action they are promising, and whether they are sincere and competent to fulfill their promise.
When an individual, company or government has a good credit rating, we are saying that we trust they will keep their promise to pay off their debts in the future.
So it is with the value of money. Today Bernanke is making the promise effectively to “do his best” to achieve the Fed’s dual mandate of achieving maximum employment and stable prices.
I do not doubt that Bernanke and his colleagues at the Fed have done their best. Here are the results: