The Federal Dollar is actually backed by the greatest commodity of all, US labor.

(Warning: This article is pro “interest based fiat” a term recently coined ;-)

Many people say that our US dollar is a fiat currency and is not backed by anything. Rather it is only guaranteed by the US government as legal tender.

This is not entirely true.

“What horsepower is to the car, human labor is too Currency.”

Essentially the calculation of value stored in a unit of currency is how much labor (service), or goods (already done labor) you can get for it.

Still in what way is the US dollar backed by US labor? The answer is quite beautiful.

The secret is in how the Federal reserve Does Not distribute the newly minted money. Taking a closer look, the feds don’t just give the money to the 12 privately owned federal banks.

They loan it out. With interest. This is how the magic happens.

Since the money loaned requires interest to pay it back, essentially the money is given with a requirement of labor to pay it back. (On top of the principal you need to some how earn the interest to pay it back).

Meaning that every time the feds give out the US dollar, it’s given with a demand for added labor in our US economy. This interest (labor) is then placed in the National treasury which is a fund backing the value of the US dollar.

Based on this logic, the Value of the dollar can be based on the interest divided by the Dollars loaned. Thats the amount of labor backing the dollar.

Some very obvious questions:

Currently the Feds aren’t really asking for much interest, sssoooo what backing those dollars?

Thats a good Q, but read the answer to the next question for the answer to this one.

I thought the feds used the interest rate to control how much cash is free flowing in the economy, since when is it to back the dollar?

This is true, and why I don’t think the feds see the interest rate in the way it’s laid out in this article.

However recently because the private banks are able to get liquidity for cheaper than the feds interest rates. The feds started to use the private banks purchasing T-bills as a way to control cash on hand. This would leave the interest free for its proper use in the future.

Again I don’t think the feds see the interest rate as stated above, but this does not mean it’s objectively untrue. (Or does it…. I don’t know)