Do Goldbacks solve sound money's biggest problem?

What Then Must We Do?

Goldbacks are shiny! But what else makes them special? I ask founder Jeremy Cordon.

We talk about the practicalities of Goldbacks, how they are made, how to use them, and how to know they are what they say they are. We talk about why Goldbacks are legal, and how they are different from other atempts at implementing sound money. And Cordon points out that these bills go a long way to solving the age-old problem of divisibility into small denominations.

Which is huge. But even more impressive: Goldbacks could potentially solve the problem of Gresham's Law.

Let me back up. At around 38:00 we talk about this, but I realize that we don't really explain what we're talking about. So here's the explanation:

Those of us who oppose fiat money do so because it is essentially a mechanism for stealing the wealth created by individuals in a society. Governments that "create money out of thin air" are engaged in a kind of counterfeiting, whereby they "print" money that they can spend with the same purchasing power of existing money. Only later - after the state and its cronies have benefited - does their inflation of the money supply result in price inflation (theft) for society as a whole.

You would think that the solution to this costly corruption of money would be for someone to come up with competing forms of money that cannot be counterfeitied or otherwise inflated. But the problem - aside from any legal barriers - is Gresham's Law.

Gresham's Law tells us that "bad money drives out good." What this means is that when there is "bad" (inflatable) money in an economy, people will want to spend that money, and hold on to any "good" money they may have. If the dollar is inflating, then there is very little incentive to spend your precious metals. The sensible thing to do is to hang on to precious metals and spend your dollars.

And so, because of Gresham's Law, it becomes very difficult to introduce sound money into an economy where unsound money is already circulating. (An aside: Until hyperinflation hits. Here's where I saw that happen many years ago.)

Well Goldbacks may have just solved that problem. How? It's all in this episode!
Learn more about Goldbacks here.