Central Ura Reserve Limited

The Fight for Asset-Backed Money

In recent years, there has been a growing movement among economists and financial experts advocating for a return to asset-backed money. This push is driven by concerns over the instability and inflationary tendencies of fiat currencies, which are not tied to any physical assets. Advocates argue that an asset-backed money system can provide greater economic stability and reduce the risks associated with fiat money.

Advocates for Asset-Backed Money

Judy Shelton

  • Background: Judy Shelton is an economist known for her advocacy of sound money and asset-backed currencies.
  • Perspective: Shelton argues that a return to a gold standard or a similar asset-backed system would provide more monetary stability and discipline, curbing inflation and reducing the propensity for excessive government debt. In her book Money Meltdown: Restoring Order to the Global Currency System, she outlines the potential benefits of such a system.
  • Quote: “A sound money system backed by tangible assets can provide a stable foundation for economic growth and prevent the kind of speculative excesses that have led to financial crises.”

Ron Paul

  • Background: Former U.S. Congressman Ron Paul is a vocal critic of the Federal Reserve and a proponent of returning to a gold standard.
  • Perspective: Paul believes that fiat money leads to irresponsible monetary policies and inflation. He has argued that an asset-backed monetary system, such as one backed by gold, would limit government spending and provide a stable store of value.
  • Quote: “The case for gold is the case for a stable and sound economy. Without a gold standard, there is no way to protect savings from confiscation through inflation.”

Lewis E. Lehrman

  • Background: Lehrman is a monetary historian and investment banker who has written extensively on the gold standard.
  • Perspective: Lehrman advocates for a return to a gold standard, asserting that it would constrain government spending and inflation and promote long-term economic stability.
  • Quote: “A gold standard would provide a self-regulating and balanced monetary system, eliminating the risks associated with fiat currencies.”

Steve Forbes

  • Background: Steve Forbes is the editor-in-chief of Forbes magazine and a proponent of free-market economics.
  • Perspective: Forbes argues that fiat currencies are inherently unstable and that a return to a gold standard would stabilize currencies and economies.
  • Quote: “A gold standard is the best way to ensure that governments do not overspend and devalue their currencies. It would provide a stable foundation for economic growth.”

Arguments for Asset-Backed Money

Stability and Trust

  • Argument: Asset-backed money is seen as more stable because it is tied to tangible assets. This linkage reduces the risk of inflation and currency devaluation, as the money supply cannot be increased arbitrarily.
  • Example: The stability provided by gold-backed money in the past is often cited as evidence of its effectiveness in maintaining purchasing power over time.

Inflation Control

  • Argument: By tying money to a fixed asset, governments and central banks are limited in their ability to print money excessively, which helps control inflation.
  • Example: During the Bretton Woods era, inflation rates were generally lower and more stable compared to the post-gold standard era.

Discipline in Government Spending

  • Argument: Asset-backed money imposes fiscal discipline on governments, as they cannot easily finance deficits through monetary expansion.
  • Example: Advocates argue that this discipline could prevent the accumulation of large national debts and promote more responsible fiscal policies.

Global Economic Stability

  • Argument: A universally accepted asset-backed monetary system could reduce exchange rate volatility and promote international trade and investment.
  • Example: The predictability and stability of gold-backed money in the past facilitated smoother international economic transactions.

Economic Stability and Asset-Backed Money

One significant point of contention since the abandonment of the gold standard is the volatility and inflation associated with fiat currencies. The transition to fiat money, particularly following President Nixon’s decision in 1971 to sever the dollar’s ties to gold, has led to various economic challenges. This shift allowed for greater flexibility in monetary policy but also paved the way for higher inflation and financial instability.

Quote: “We are all Keynesians now,” President Nixon famously declared, indicating a shift towards economic policies that favored fiat money over the gold standard.

Post-Gold Standard Era: A Mixed Bag

The immediate aftermath of abandoning the gold standard saw significant economic turmoil, including the oil shocks of the 1970s and subsequent stagflation—a combination of high inflation and stagnant economic growth. Inflation rates soared as governments found it easier to print money without the discipline imposed by a gold standard.

Source: Paul Volcker, who served as the Chairman of the Federal Reserve from 1979 to 1987, implemented high-interest rates to combat the rampant inflation of the late 1970s and early 1980s. His actions highlighted the difficulties of managing an economy without the constraints of an asset-backed monetary system.

Seeking Stability: The Need for Asset-Backed Money

In light of the volatility and inflation experienced in the fiat currency system, many economists argue that a return to asset-backed money could provide the stability and confidence needed for sustainable economic growth. Governments are constantly looking for reserve assets to stabilize their money. The recent interest in cryptocurrencies like Bitcoin, which some consider “digital gold,” reflects a broader search for stable, asset-backed financial systems.

Source: In a report by the World Gold Council, it is argued that gold remains a critical reserve asset for central banks worldwide. The report states, “Gold plays an important role as a diversifying asset in the reserves of central banks, providing stability and confidence.”

How Central Ura Money Addresses This Problem

Central Ura Money emerges as a modern solution to the challenges posed by the fiat system. By being backed by real assets and operating on a credit-to-credit model, Central Ura Money combines the best of both worlds: the stability of asset-backed money and the flexibility needed for modern economic transactions. Unlike traditional fiat money, which can be printed at will, Central Ura Money’s issuance is tightly controlled, ensuring that each unit is backed by tangible assets. This approach not only prevents inflation but also fosters a stable economic environment, making it a viable option for both reserve and complementary money use.

Asset-Backed Stability

Central Ura Money is underpinned by tangible assets, primarily US dollar-denominated receivables, ensuring its stability and reducing the risk of devaluation. This asset-backed nature provides a reliable store of value, protecting against the inflationary pressures often seen in fiat currencies.

Credit-to-Credit Nature

Central Ura Money operates on a credit-to-credit basis rather than a debt-to-credit basis. This system ensures that money issuance is directly tied to existing assets, preventing the uncontrolled expansion of the money supply and maintaining the currency’s value over time.

Controlled Issuance

The issuance of Central Ura Money is meticulously regulated, with each unit backed by tangible assets. This tight control over money creation prevents inflation and ensures a stable and reliable medium of exchange.

Use as Reserve and Complementary Money

Central Ura Money serves as both a reserve money for governments and complementary money for communities and businesses. As a reserve money, it provides a stable monetary base that enhances economic stability and investor confidence. As complementary money, it supports local economies by facilitating trade and investment.

Meeting the Standards of Money

Central Ura Money meets all the critical criteria of a robust monetary system:

  • Store of Value: Central Ura Money retains its purchasing power over time, protecting savings and reducing human suffering by ensuring people’s hard-earned money is not eroded by inflation.
  • Acceptability: Widely accepted within the Central URA Monetary System and increasingly recognized globally.
  • Divisibility: Easily divisible for various transaction sizes.
  • Durability: Backed by tangible assets, ensuring its value over time.
  • Portability: Transferable both digitally and physically.
  • Uniformity: Each unit holds the same value and is interchangeable.
  • Limited Supply: Issuance is tightly controlled and backed by real assets, preventing inflation.

Conclusion

The debate over fiat versus asset-backed money continues to shape economic policies and financial systems worldwide. Advocates for asset-backed money like Judy Shelton, Ron Paul, Lewis E. Lehrman, and Steve Forbes highlight the potential for greater stability, inflation control, and fiscal discipline. The post-gold standard era has demonstrated both the flexibility and the risks of fiat money, leading many to reconsider the value of tying money to tangible assets.Central Ura Money offers a compelling solution to the problems associated with fiat currencies. By combining the stability of asset-backed money with the flexibility needed for modern economies, Central Ura Money provides a reliable and robust monetary system. Its credit-to-credit nature, controlled issuance, and dual role as reserve and complementary money make it a viable option for enhancing global economic stability and promoting sustainable growth. As governments and financial institutions seek ways to stabilize their economies, Central Ura Money stands out as a forward-thinking and innovative solution.


References:

  1. Shelton, Judy. Money Meltdown: Restoring Order to the Global Currency System. Free Press, 1994.
  2. Paul, Ron. End the Fed. Grand Central Publishing, 2009.
  3. Lehrman, Lewis E. The True Gold Standard. The Lehrman Institute, 2011.
  4. Forbes, Steve. Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It. McGraw-Hill Education, 2014.
  5. World Gold Council. Gold Demand Trends. World Gold Council.
  6. Federal Reserve. “What is Money?” Federal Reserve Education.
  7. European Central Bank. “The Role of Central Banks.” ECB.
  8. Investopedia. “How Cryptocurrencies Work.” Investopedia.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top