Petro Dollar Jitters

No Money—Simply Paper
excerpt from Conversation with disciples, December 31, 1973, Los Angeles

Money Sense

The Inflation Game Hansadutta das

Inflation means the government is printing paper money [or issuing bonds] without sufficient gold in reserve. During inflation, money is abundant, but it is worthless. If we buy something at a fixed price this year, 10 years from now, if money has inflated 20 times, we shall have got the same thing for practically nothing. Soon the economic bubble will burst, and all the paper money will become completely worthless. The public will lose its faith in paper money. People will start bartering—"I have a banana, and you have an apple, so let's trade." The more money inflates, the easier it is to pay off debts. During inflation, the debt collector loses while the debtor is getting ahead, because the debt collector is getting nothing; whereas the debtor is getting something in tangible goods. more

Prabhupada: It is very simple. Don't accept paper currency. It must be gold or some metal worth. Just like one dollar, it must be worth one dollar metal. Then it is solved. But they want to cheat. How it can be solved? Because if I pay you one dollar, I must pay you value for one dollar. But it is the cheating process is going on, "I pay you one dollar, a piece of paper. That's all." So you accept cheating, and I also cheat. Government allows. So how the problem can be solved? It is cheating. But the government allows it as law. And you accept, I accept. Then how they can be solved, solution? This is the solution.

Prajapati: In the economy itself there isn't actually enough money to, that's even in the banks...

Prabhupada: That is cheating. Therefore I say cheating. I have no money. I give you simply paper. I promise to pay hundred dollars. What is the use of that promise if I have no money? But you want to be cheated. I cheat you. That's all. You are satisfied of being cheated by me; so I take the advantage and I cheat you. I give you a paper. That's all.

Bahulasva: Real money is gold and silver.

Prabhupada: Any... It must be value. According to the market price, it must be value. Whatever it may be. Gold is taken, because gold is the most valuable metal. A small piece of gold, it can carry two hundred dollars. But if I give you iron, then you have to bring another, what is called, bus, to carry it. [laughter] So therefore gold standard is accepted everywhere. There is a standard price of gold, so when I pay you money, it must be, carry the value in gold. That's all. Then there is no inflation. The people want to be cheated, and people cheat. That's all.