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The Significance of Quality in Money

By: Hugo Salinas Price

-- Posted 20 August, 2007 | | Discuss This Article - Comments:

Originally published at on August 13th

The project to monetize the silver ounce centers on the importance of quality in money.

The present money of Mexico, as of the whole world, satisfies all possible requirements with regard to quantity. We are seeing quantities of money in circulation around the world, which surpass all possible adjectives regarding quantity.

If it is quantity we want, if that is the only thing and the important thing – to have plenty of money in circulation, and always more of it – then silver money has no place by its side.

Mexico’s money today, and the world’s money, is subject to no limits with regard to quantity. Its potential quantity of the whole world’s money is unlimited and can grow according to the free judgment of its masters, the Central Banks of the world and their related banking systems. There is nothing left to wish for, nothing is missing, as far as quantity is concerned; all economic needs, in so far as quantitative, are satisfied by the money that presently exists in the world.

We must point out that though Mexico’s money, as well as all the rest of the world’s money satisfies all needs with regard to quantity, this does not hold with regard to quality, for our peso, just like the dollar, the euro, the yen, the pound sterling, the Russian ruble, the Chinese yuan and the rest of the world’s currencies, is totally devoid of quality. Our peso – like all monies today - is only a number, a digit in computers, a piece of paper or a bit base metal alloy.

It is precisely because our Mexican money - as well as the rest of the world’s money - is exclusively a number, whether printed on a paper, engraved upon a piece of base metal alloy or electronic digits in a computer, that this money must inevitably lose all its value, as its quantity increases without limit.

The monetized silver coin - the “Libertad” ounce - will be a high-quality money; its merit will not reside in the sphere of quantity and its effects will not be primarily or principally detectable in the sphere of what is quantifiable, but rather in the sphere of quality, where we find such values as love of country, national pride, confidence, reasons to save, satisfaction and personal peace of mind, and therefore, social stability – none of which can be measured.

These are the values that are the moving force of all human life, and it is upon these values that the silver coin operates: in the realm of quality, which is not measurable or quantifiable.

The sphere of quantity is the not the sphere in which we must judge the silver coin. Any study with regard to the quantitative impact of the silver coin on our country is inadequate to the subject matter of such a study, the silver coin. As inadequate as it would be to judge fiat money, digital, paper or metal, in the sphere of quality, since it is devoid of any quality at all.

Initially, the quantity of silver money in circulation will be negligible. However, the importance of the project to monetize silver, does not reside in the quantity of that money in the hands of the public. The Mexican Central Bank knows this and that is why, in spite of the fact that the amount of silver to be monetized is truly minute, the Bank is adamantly opposed to the institution of silver in circulation, in parallel with fiat pesos.

The transcendent importance of silver money in circulation, lies in its unsurpassable quality, not in its quantity. The silver coin possesses quality because it incorporates precious metal substance; its monetary value would correspond mainly to the precious metal substance which gives it a real existence. The present Mexican peso has a value that is exclusively numeric and imaginary.

Over the span of a generation – 25 years – of coining silver and placing it in circulation, the quality of the silver money will have produced a radical change in human life in Mexico. The process will be lengthy but sure, and it will begin the moment the silver coin is turned into money, because this measure will  inspire (another non-quantifiable factor) the Nation and fuel the desire to work for the realization of its purposes.

In the meantime, during the next 25 years, Mexicans will go through economic, social and moral crises as a result of the use of fictitious money, fiat, paper, digital or base metal.

At present, the world is subject to one of its periodic fits of fear; suddenly, fear has taken hold of the financial markets, as anyone who reads the papers knows. 

The silver coin in circulation, will help Mexico undergo the coming crises with confidence and well-founded hope for a better time – confidence and hope are non-quantifiable values.

What will be important when the silver coin is monetized, is that Mexicans will know that the silver coin is in circulation as money, that every day there will be more of this money in circulation and that anyone will be able to acquire this coin for savings which do not depreciate. Then Mexicans will know that their future is one of shining hope because we have taken a transcendent step with regard to public health. I may add that “public health” is not only control of physical disease, but also implies psychological health, severely affected by depreciating fiat money.

-- Posted 20 August, 2007 | | Discuss This Article - Comments:

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