From Sandeep Jaitly
We tend to forget in the modern day that silver and gold are money : the universally acceptable ultimate extinguishers of debt. The use of silver as the medium of exchange and unit of account dates back countless millennia. The very names of ancient currencies like the rupee or pound sterling are testament to this. Silver and gold have what is termed constant marginal utility – the personal satiation point of these two metals is so far removed as to be infinitely far away. As a consequence of this, the above ground stock of silver and gold is many multiples of the amount mined annually.

Prior to the turbulent and forced introductions of gold standards throughout various countries across the world in the 19th century, financial obligations – such as bills or bonds- were denominated in a weight of fine silver. Interest rates: that market rate which amortises the principle of a bond, were quoted with reference to silver. The universal acceptance of silver allowed the natural social interaction – or economics – to flourish. Were it not for this substance there would have been no mutually acceptable measure with which to conduct business.

What does it mean to have ‘fiat money’ as we do today? Strictly, this is a misnomer and the term should be ‘fiat credit.’ It means that credit can be extended without due respect to the mutually acceptable measure of the credit – the concept of credit only being possible a posteriori with a universally acceptable substance like silver or gold. Credit has been totally fiat on a global basis since 1971.
Is there any limit to the volume of fiat credit that can be extended without due regard to silver or gold? There is indeed and it is measured by the extent of the backwardation in the bullion markets.

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  1. It’s easy to forget the insane fundamentals for silver …such as this time around, the whole world will be chasing a very small pile of investable silver, EROI issues, sheople being the last to know, etc…

    When the sun finally does shine on silver, it will blind the masses and slay the giants.  Stay tuned.

    At this point, I am extremely grateful to be alive and maybe live long enough to have a chance to see the biggest change in human society in over 500 years. 

  2. “The universal acceptance of silver allowed the natural social interaction – or economics – to flourish. Were it not for this substance there would have been no mutually acceptable measure with which to conduct business.”
    A sound money system is required for economies all over the world to flourish.  Silver is sound money.  The use of sound money puts a limit on the amount of debt that can be generated.  And when debt is paid off, silver is still money.
    Too much debt causing the current financial crisis is just a symptom of the problem the world faces.  The root cause of the problem is the use of a fiat debt money system.  The root cause of the problem is the lack of a sound money system.  Until the monetary system is transformed, the current financial crisis will never be solved.
    Where in the mainstream media are people criticizing and blaming the fiat debt monetary system for the world’s financial woes?

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