Only Criminals Use Honest Money

not some kind of fiat money like US dollar.

Only Criminals Use Honest Money (6/3/09, Ludwig von Mises Institute, Mises Daily) [emphasis is by me]

"Since money is banned in prisons, the historical use of cigarettes by prisoners as money avers that money requires alternative value (i.e., value apart from its use as money) and proves that our present system of fiat currency (and fractional-reserve banking) is eventually doomed.

"Prisoners exchange cigarettes for sex, drugs, gambling, and the killing of other inmates (all other recreational activities being provided free of charge by taxpayers). The cigarettes hold alternative value through their direct consumption (smoking).

"And what happens to the experiment when cigarettes are banned? Like a free market moving from a gold to a silver standard, prisoners switch to the next best good that possesses the qualities demanded of money: portability, durability, homogeneity, and divisibility.

"The article "Mackerel Economics in Prison Leads to Appreciation for Oily Fillets" published in the October 2, 2008 issue of The Wall Street Journal, revealed the new monetary system in prisons: cans of mackerel, or "mack" in prison nomenclature. Just as a various goods (e.g., gold, silver, copper, rice, salt, peppercorns, large stones, etc.) have long competed in the marketplace to be the standard of currency, so mack had to fend off books of stamps, PowerBars, and cans of tuna.

"Fiat money does not exist in prison. Prisoners do not dye sheets of paper green and attempt to circulate them as money. No inmate would accept this as money, not even if the penal equivalent of a Bretton Woods agreement existed between the toughest gangs.

"Why is it that criminals continue to use real money in their transactions? Because they have not been fooled otherwise. In The Case Against the Fed, Murray Rothbard detailed the process by which people have been fooled into thinking those green pieces of paper are a proper store of value (the key purpose of money). Once government changed the law to recognize monetary warehouse receipts (dollar bills) as a debtor relationship instead of that of a bailment (the temporary possession of another's property), fractional-reserve banking was born. Fractional-reserve banking is inherently fraudulent.

"In contrast, a penitentiary does not include a warehouse issuing receipts for cigarette packs or cans of mack.If they ever do, we know what will follow: fraud (the warehouse issuing notes in excess of deposits), then government-sanctioned fraud, then government-imposed fraud, and finally — The Big House Reserve (perhaps consisting of notes with the warden's picture and Latin phrases).

"Incredibly, it is those outside of prison who are truly institutionalized. "

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