Let’s talk about faith for a moment.
What is the thing we place the greatest faith in today, as a civilization? It isn’t a particular deity. It isn’t the notion of country. It isn’t ourselves.
What we place the greatest faith of all in is money. We believe that money has value. When we fork over a Lincoln, a two-ney, or a Shureimon, we believe that it has a shared, agreed-upon value. In exchange for said value, we purchase something – a piece of food, a roof over our head, or a favorite song.
But when you stop to think about it, nothing underpins the value of that currency. In the United States, we used to have something called the Gold Standard; you could have, in the distant past, walked up to any Federal Reserve bank and traded in your Federal Reserve Note (the fancy name for our paper money in the US) for the equivalent in gold. The value of the money was backed by a precious metal, one which you could take across borders and exchange for value there.
We haven’t had the Gold Standard since the 1970s, when President Nixon removed the United States from it.
So, what backs the value of our currency? Faith. The belief that our money means something. In contracts and official debts of the United States, we even say that – a debt obligation is backed by “the full faith and credit of the United States”.
Thus, the greatest danger that situations like recessions and depressions pose is not the economic impact, but the loss of faith. When your monetary system is based on faith alone, and that faith breaks, then your monetary system collapses – and your society shortly thereafter.
When we talk about what the United States government can do during the pandemic to underwrite people and businesses, to keep the economy from crashing into a Depression, we’re talking about placing a bet. We’re placing a bet that causing substantial inflation today (by effectively creating an extra trillion dollars, something we can do because money is fundamentally faith-based and therefore imaginary) that will do more to keep faith in the dollar than reining in inflation and having the population lose faith in the currency and government.
I’m firmly in the camp that says print the money now, and tax it out of circulation later, once the crisis has abated. Because the government controls how much money exists, creating the illusion of financial security now with what’s effectively a universal basic income will do far more to keep America operating than nearly any other measure. Once the crisis has abated, the government can simply delete the money as it takes it in through taxes, restoring the balance afterwards.
Above all else, we cannot afford to have citizens lose faith in the overall system, as unequal as it may be, because the alternative – outright collapse – is much, much worse.
Keep the faith.
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