The meaning of quality in money

Monday, 13 August 2007

Hugo Salinas Price

The project which aims at the monetization of a silver ounce coin is centered on the importance of quality in money, and not on the quantity of money.

The present currency of Mexico, like all currencies in the world today, satisfies all possible requirements with regard to quantity. Today, the world is witnessing the creation of quantities of money that surpass all possible adjectives of quantity.

If it is quantity that we are looking for, and if quantity is all that matters and all that is important regarding money, then a silver coin is irrelevant.

The present money of Mexico, like all the rest of the world’s monies, faces no limit in so far as quantity is concerned. The quantity of money in the world is virtually unlimited; it grows continuously, according to the will of its masters, the central banks and their related banking systems. There is nothing left to be desired, nothing is lacking in the sphere of quantity, since every economic need in so far as it is quantitative is satisfied by the money that exists at present.

If Mexico’s money, like all the world’s monies, satisfies all needs with regard to quantity, the same cannot be said with regard to quality, since our peso, like the dollar, the euro, the yen, pounds sterling, the Russian ruble, the Chinese yuan and all the rest of the currrencies, is completely devoid of quality. Our peso is only a number, a digit in computers, a paper bill or a junk metal coin.

Because Mexico’s currency, along with the world’s currencies, is exclusively a number, which is either printed on a bill, engraved upon a coin of steel, zinc, nickel, etc., or alternatively, electronic digits in computers, its inevitable destiny must be vanishing value, as its quantity in circulation increases inexorably.

The “Libertad” silver ounce coin, once monetized to circulate permanently alongside paper money and banking digits, is a coin of quality and its merit does not reside in the sphere of quantity; its effects are not going to be  primarily or principally detectable in the sphere of what is quantifiable, but rather in the sphere of quality, which is where we find such values as sense of nationality, national pride, confidence, the incentive to save, and personal satisfaction and peace of mind – values which, when shared by the whole population, must produce a stable and peaceful society.

These values are the foundation of all human societies and this is where the silver coin operates: in the sphere of quality, in the sphere of what is not quantifiable. Conversely, money with no quality destroys society by undermining all these values which sustain it.

The silver coin cannot be evaluated in the sphere of quantity. For this reason, all studies with regard to the quantitative economic impact of the silver coin upon our country are inadequate, just as it would be inadequate to evaluate fiat currency, digital or paper, from the point of view of quality, for our present money is totally lacking in any quality at all.

The quantity of silver coinage at present held by Mexicans, and which could be monetized, is negligible and insignificant from a quantitative standpoint. The importance of the project to monetize the silver coin has very little to do with the quantity of silver held by Mexicans; the Mexican Central Bank knows this and in spite of the insignificant amount of silver that might be monetized, it is adamantly opposed to the institution of a silver coin in circulation as money. Why? Because it is the principle of quality in money that terrifies the Central Bank!

In the span of a generation of minting silver and placing it in circulation, the quality of the silver coin will have produced a radical change in social and human conditions in Mexico. The process will be slow but sure, a process which will start immediately upon monetization of the silver ounce, because of the inspiration (another non-quantifiable value) which this transcendent measure will produce in the Nation, a call to efforts toward the realization of its most cherished objectives.

In the meantime, in the coming 25 years Mexicans will be suffering great economic, social and moral upheavals produced by fictitious money, fiat junk made of paper and base metals, or imaginary money banking digits. The world is already feeling upheavals in money; suddenly, fear has taken hold of financial markets, as anyone reading the papers well knows. The silver coin in circulation will help Mexicans deal with the coming upheavals with confidence – confidence, another non-quantifiable value.

It will be the dawning of a new day for Mexicans when they know that the silver coin is in circulation as money; that every day there will be more of this money in circulation and that each one of us may acquire this coin for his non-depreciating savings. Mexicans must know that the future holds promise (a non-quantifiable concept) because a transcendent measure has been taken with regard to public health. We wish to emphasize that “public health” cannot be circumscribed to physical health, but must include psychological health, which has been seriously undermined by the forced use of a currency that depreciates the value of savings.

The silver coin in permanent circulation alongside fiat money is a measure that operates in the sphere of quality; in time, it will also operate in the sphere of quantity. With regard to the world’s present-day money: its quantity will increase, but not its real meaning, which will diminish until it reaches zero.