With some free time today, I thought it would be interesting to visit the Philadelphia Federal Reserve - specifically its “Money in Motion” exhibit. It felt good traipsing around the displays laughing at the content while proudly wearing my Hans-Hermann Hoppe “Privatize Everything” t-shirt. There was even one area that asked people to determine if a federal reserve note was “real money” or counterfeit - I slapped the “fake” button every time. After a while, though, I needed to get out as my nausea was beginning to overtake me.
The exhibit was… whatever the opposite of “honest and enlightening” is. Notably, and of course predictably, the “What is inflation?” display defined inflation as merely “an increase in the overall level of prices,” instead of what it actually is: an expansion of the money supply and that price inflation is purely a consequence of monetary inflation. This, as I have noted many times before, is a purposeful shift in definition to obscure the cause (monetary policy) from the consequence (price increases): “By divorcing the word from its literal origins, [central planning apologists] cloud the direct effect between money printing and the value of money. This is not unlike suddenly using the word dog to instead refer to dog piss.”
But amidst the half-truths, misinformation, and outright lies there was something I found ironically honest, if only the average observer would be able to piece the truth together. In the “Early Money in America” display was a short nugget on wampum:
“Small, rounded shells with holes drilled through their centers were threaded onto strings and used as a primitive medium of exchange between Native Americans. The first colonists soon learned to use this Wampum as money, and they also learned to manufacture it cheaply, causing the first “inflation” in America.”
There it was, the truth about inflation: “they also learned to manufacture it cheaply, causing the first “inflation” in America.” Even those who would believe the obfuscation offered by the Fed’s “What is inflation?” display, if they weren’t mindless, would have to pause and consider this statement - particularly in light of what they likely held in their hands.
You see, upon entering the exhibit, every visitor is handed a small bag of shredded federal reserve notes (which, according to the packaging, “represents about $100”).
In its shredded form this “currency” is useless - which means its lack of value is revealed. Federal reserve notes, which gain their usability only through fiat (or decree), lack the hallmarks that emergent money has shown for millennia. A stable currency has these characteristics: it (1) must be relatively imperishable (retain its value over log periods of time - thousands of years - without decay), (2) must be easily divisible without losing value, (3) must be malleable and ductile, able to be shaped into more convenient and portable forms, (4) must remain stable in a wide range of temperatures and climates, (5) has never been worth nothing (has intrinsic value, or rather value as something other than an intermediary of exchange), (6) must be fungible (an ounce from one source would be equal and identical to an ounce from another source), (7) supply is finite without being so rare as to be difficult to use (relative scarcity), (8) new supply is relatively uncommon and difficult to acquire, (9) has a long-standing history of being used as currency, and above all else (10) free people have used it as a medium of exchange or intermediary of trade.
Federal reserve notes, like the wampum those many years ago, is manufactured cheaply and ultimately worthless on its own - triggering the same inflationary consequences.
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