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The history of Gold as money in modern coin form spans 2630 years, from 700 BC to about 1930 AD. The history of nothing but paper and base metal and silver coin in circulation spans about 40 years from 1930 to 1970. And the history of paper and base metal coin as “money”, with no connection to Gold (or silver) anywhere on earth also spans a period of over 50 years – from 1970 to date.

The only people who have seen Gold as money in its “natural state” are very old indeed. In the U.S., no one has carried Gold in his or her pocket as spending money since 1933. That memory grows dim.

In a fiat money system, money is not backed by a physical commodity (i.e.: gold). Instead, the only thing that gives the money value is its relative scarcity and the faith placed in it by the people that use it.

In a fiat monetary system, there is no restrain on the amount of money that can be created. This allows unlimited credit creation. Initially, a rapid growth in the availability of credit is often mistaken for economic growth, as spending and business profits grow and frequently there is a rapid growth in equity prices. In the long run, however, the economy tends to suffer much more by the following contraction than it gained from the expansion in credit. This expansion in credit can be seen in the Debt/GDP ratio.

In most cases, a fiat monetary system comes into existence as a result of excessive public debt. When the government is unable to repay all its debt in gold or silver, the temptation to remove physical backing rather than to default becomes irresistible. This was the case in 18th century France during the Law scheme, as well as in the 70s in the US, when Nixon removed the last link between the dollar and gold which is still in effect today.

“We naturally imagine that the spot on which we ourselves stand is fixed, and that the things around us move. The man who is in a boat seems to see the shore departing from him, and it was the doctrine of the first philosophers that the sun moved round the earth, and not the earth round the sun. In consequence of a similar prejudice, we assume that the currency which is in all our hands and with which we ourselves are, as it were, identified, is fixed, and that the price of bullion moves; whereas in truth, it is the currency of each nation that moves, and it is bullion, the larger article serving for the commerce of the world, which is the more fixed.”

Henry Thornton

An Enquiry Into the Nature of the Paper Credit of Great Britain, 1802

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There are few things in life that are as bad as they seem at first. Dealing with adversity begins with analyzing and accepting your situation for what it is. When you realize that things are not nearly as bad as they might have been, you have taken the first step toward working your way through the problem. It is a truism that you will never be asked to carry a heavier load than you can bear, but it sometimes helps you better appreciate that fact if you volunteer some of your time to help those who are less fortunate than you are.

In today’s “everything is negotiable” society, we are bombarded with messages telling us that we get what we demand, not what we deserve. You may temporarily achieve success by demanding more than your due from others, but it will not long endure. “Squeaky wheels” may initially receive the most attention, but the wise wagon master eventually replaces them. It’s easy to create problems and dissension but very difficult to lead others in a spirit of cooperation and harmony. Which type of individual do you think is most valuable to the organization? The greatest rewards in life-both financial and personal-will always accrue to the peacemakers of the world.

When you do something to or for another, whether your deeds are good or bad, people feel compelled to “retaliate” in kind. If you are a kind and decent person, you can expect to be treated well in return. If you use others for your own advantage without giving anything in return, you will soon find that they have little use for you. People like working for and with positive, considerate people. Start now to develop the habit of going the extra mile.

Ralph Waldo Emerson once observed, “Our chief want in life is somebody who will make us do what we can.” Although children doubtless do not recognize it at the time, they crave discipline, particularly during their formative years. Discipline defines boundaries for them, provides security, and is an active expression of a parent’s love. Most important, it prepares them for the challenges of adulthood. If your childhood was less than perfect, you are in good company. Most of us have experienced difficulties at one time or another, and we all make mistakes from time to time. The good news is that while your environment as a child will have a profound influence upon the person you become, it is not the sole determinant. The person you choose to be is entirely up to you. Only you can decide who and what you will become in life.

One of the often unappreciated benefits of adversity is that it accelerates the process of identifying your true friends. Most of us have many acquaintances and associates, but we are indeed fortunate if we have a handful of real friends. You will very quickly identify yours when you ask them for help. The wise individual is the one who, when asked for assistance, recognizes that he may one day find himself in the same situation.

There are a few occasions during our brief time on earth when most of us experience great flashes of insight, great moments of truth that forever change the course of our lives. Most of those experiences result from spectacular failures, not from outstanding successes. It is from the failures that so chagrined and dismayed us that we learn the most lasting lessons. When you are the unwilling recipient of a great moment of truth, extract the useful lessons and then put the entire episode behind you. Learn from your failures, forget about them, and move on to better things.