CURRENCY

The Fiat World

Jeff Berwick

Today, the power of the state has corrupted society absolutely, and not just at the upper echelons. It’s everywhere. Not only that, but most people today don't even realize that almost everything has been stolen from underneath them and they are left holding worthless items instead.

The Olympics were held in the UK this month and the number of items we can point out about the country that provided the inspiration for the book 1984 are lengthy. Look no further than the British pound sterling. No one seems to see the irony of calling a piece of paper with no backing a "pound" of sterling.

The original pound was made up of 240 silver pennies that equaled one pound. The pennies were made with the purest silver available and were as much as 99.9% silver. Debasement came during the 1500s. The pound was redefined as a "troy pound," which contained just 12 ounces of silver.

At today's silver price, the value of one pound sterling (assuming 92.5% silver) is £262. Instead, the modern paper "pound" is only worth its £1 face value and there is no silver or gold backing it. It is literally worth only 1/284 or so of the original pound, less than the original silver penny.

The same goes for many other things, including Olympic medals. The last time the gold medal was made out of gold was in 1912, a year before the financial coup of the US and the institution of the Federal Reserve.

In 2012, the gold medals are 1.34% gold; the rest is silver and copper. The resulting medallion is worth about $500. The silver medal is a $260 make-up of metals. The bronze medal is worth about $3, worth less than most trinkets.

Of course, in the fiat world we live in, winning a gold medal also comes with a fiat currency prize. For winning gold, US athletes are awarded $25,000. Not only do they have to pay $8,750 in a "prize tax" to the IRS, but also a "medal tax" of $236 on a "gold" medal worth only $500!

Of course, the fact that all the gold is gone from backing currencies (and even from Olympic medals), and that people think gold-colored plastic credit cards are something with which to impress others, are signs that we are nearing the end of the monetary system as we know it

source: gold-eagle