Message no. 1

From:	Dave The Shade <IZZYUX2@*******.BITNET>
Subject:	Money wrongs
Date:	Fri, 10 Sep 1993 16:38:00 PDT

Actually, it is not true that the only thing backing up currency is faith.
The U.S. government does not print money based on what value it can deliver,
but rather it prints money based on the value of production of goods and servic
es made in the U.S.
In other words, the idea is that the U.S. Fed prints up and maintains enough
money to be proportional to all the goods and services produced in the U.S.
The backing of the currency is the very value of all goods and services produce
d in the U.S. If all our currency got into foreign hands, and they decided to
reddem dollars we could redeem them by supplying goods and services produced
domesticly within the country. Whenever the Fed makes the money supply greater
than the real value of all goods and services in the US, thats called inflation
. Thats because there is more currency than needed to buy US produced stuff -
so the value of the currency falls.


David A./KHANx