THE ROCK: FIAT MONEY OR RESUMPTION
Thomas M. Nicol, Secretary of the Honest Money League published in October 5 - 1878 Boston a little booklet with the title “FIAT Money or Resumption”, let me cite a few words from that old booklet:
“The rock is a fitting symbol of the position of gold and silver as money. For thousands of years they have stood ‘the money of the world,’ as nothing else has stood. Often and often the inflated waves of paper, blown by the windy words of ignorance and fanaticism, have dashed against and over this monetary rock, at times completely obscuring it from view. And in their madness they have wrecked ships, ruined hopes, and destroyed lives in trusted to their keeping. But the rock was unharmed; and when the wind of words had exhausted its force, and the waves of paper had settled back to their natural place and level, the rock of gold appeared again as friendly as ever. And if the credit of a nation and the money of a people are founded on gold, the wind may blow, the rain fall, and the storms beat upon them, but they will not fall, for they are ‘founded on a rock’”
Most gold-based monetary systems have been fractional reserves systems only (only fractional backing with gold and silver). This means the money supply can be inflated by credit and contracted, and during war many countries have tried to cheat on their fractional reserve system, printing even more paper than they could according to their fractional gold reserve requirements. A solid rock must probably be based on a 100% backed "commodity" money, gold and silver stand even today as clear candidates for such a monetary system. Will we see it, unlikely near term…well it do not need to be a commodity or anything physical but must be rigid and not possible to counterfight, not even legally, easier said than done I guess....
