When I was “little-Amber”, I found it strange how simple pieces of paper (dollar bills) seemed to offer such a great sense of security to those who held them, namely, the adults. On some level I understood what these dollar bills represented… more mysteriously valuable paper that could be used to buy things like candy, Barbie Dolls, tickets to Disneyland, Cabbage Patch Kids, glittery things, Underoos, games, and more candy… but I really wondered what made these odd (yet common) pieces of paper so valuable. What was the value actually based on? It certainly wasn’t aesthetics, otherwise my pretty pastel-colored Monopoly money could have made me one wealthy little girl! Whatever the basis, its value seemed to be inconsequential as long as you held onto that seemingly magic paper.

Eventually I learned about the universal banking practice known as “fractional reserve banking.” In layman’s terms, this is when bankers print receipts above and beyond the amount of actual precious metal and/or other liquid assets that they actually have on deposit, which many quantity theorists and monetarists view as being the main cause of inflation. During the nineteen and much of the twentieth centuries these receipts were backed by a promise to be redeemed for a given weight of precious metal, such as gold. President Nixon basically eliminated the gold standard in 1971. Our magic paper (previously and commonly referred to as “bank notes” or “receipts“) is now technically referred to as “fiat money,” which is neither backed by a commodity nor anything that can be converted into a commodity. In fact, our US dollar in and of itself is no longer backed by anything of tangible value (hence my intuitive childhood fascination with the elusive value of this magic paper). The same is true of all of the other major currencies in the world today. Ironically, Alan Greenspan, an American economist and the Federal Reserve Chairman from 1987 to 2006, and an early critic of fiat money, once argued in an essay that he wrote in 1967 entitled, Gold and Economic Freedom, “This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” Ah, yes and Ayn Rand’s voice has also come to mind, “Gold is an objective value, an equivalent of wealth produced. Paper money is a mortgage on wealth that does not exist, backed by guns aimed at those who are expected to produce. Paper money is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims.” ~Atlas Shrugged (1957).

No longer “little-Amber”, I began to grow out of inexpensive department store training bras and into Victoria ’s Secret lace cups while brimming with the desire to become a young woman! Lessons on how to achieve this were hinted through the laughter of painted lips whispering secrets to batting false eyelashes on fast bobbing heads that I could never quite hear, but enviously tried to descry. Needless to say I began paying much closer attention to adult conversations. The conversations that I found to be the most curious were those conversations that mixed money and love. These trenchant cocktails were readily served on the rocks, but were unexpectedly too stiff for my innocence to swallow. It seemed peculiar to me that whenever a woman mentioned how she was newly engaged, then the next immediate topic was her engagement ring, or more specifically, the diamond. I wondered whether the diamond somehow made the announcement, the engagement (and/or quite possibly the groom) more valuable. Could a diamond be redeemed for love? It certainly seemed to offer a sense of promise and security to anyone excited by these squealing intoxications, but what, I wondered, was the security of these high-priced tokens actually based on? Are there such things as “fiat diamonds” or “fiat engagement rings”? Is love susceptible to inflation? I hoped that these high-pitched delights weren’t due to that mysterious paper because I still hadn’t come up with a satisfying answer that could explain my enigma concerning the value of magically printed numbers.

In light of the current economic struggles it seems that our currency appears to be mocking its own evolution, or is it mocking our greed? Perhaps it is mocking our dreams. Today, as the economy desperately scrambles for stability, more and more people seem to be desperately yearning for love and for lasting companionship. Yet how can we find either one without first committing to the temperance and purity of solid value? Gold and love both seem to evoke similar emotions in us, especially our desire for security. On the dark side of this matter, gold and love can also evoke fear and the feelings of regret. The value of gold and love cannot be nullified. Eventually we all want to redeem what is rightfully ours and it is during these inevitable moments of redemption when the value of what we have or have lost can easily be measured.

“Inflation” is not a term that means rising prices although society and the media often misuse this term. The general rising price level is a result of inflation, not inflation itself. Inflation is the process by which governments print up money (magic paper) to pay for ever-increasing expenditures without ever truly paying for it (due to the nature of this intrinsically worthless paper). This reminds me of when someone who is in a relationship with a person whom they do not truly love, inevitably finds themselves in a position where they have to fake or prove their “love” or else lose their overall control of the relationship. What does a person who cannot offer genuine love do? They create illusions of love straight off the printing press. They inflate their “love” by way of vacuous declarations, empty promises and/or thoughtful manipulation (eh hem) “gifts”… which of course can never really be enough and so the prices go way up! Have you ever witnessed a human being who has “put themselves up for auction,” or a bidder who is attempting to make the impossible purchase?! Going once, going twice… Sold! Or, so they would like to think. On the other hand, gold, like true unadulterated love, is pure and carries with it an intrinsic value so noble that its mere presence validates its self-worth.

Now that I no longer need a fake I.D., and have graduated to La Perla and Agent Provocateur (it’s been a long time since I’ve worn Underoos although I still make an occasional visit to Victoria ’s Secret), when it comes to the “representative” of anything that is truly inherently valuable I am extremely skeptical if not out and out incredulous. Cheez Whiz and grape juice, for example, just aren’t the same as a potent Pecorino Romano paired with the taste of Sangiovese grapes swimming through splendid sips of an exquisite Tuscan Chianti Reserva. So, diamonds may well be “a girl’s best friend” as famously sung by the sparkling Marilyn Monroe. As far as I’m concerned though… a woman’s best friend is a heart of pure gold.

Amber Guidara Copyright © 2009

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