The debate over the very nature of our monetary system continues to gain traction. With Utah’s historic passage of their Sound Money Act, it is certain that more people will begin to pay attention to the issue. As they do, they will discover two terms that are often used interchangeably to describe a constitutional alternative proposed to compete with our current central bank/fiat monetary system.
The terms “sound money” and “honest money” convey a common principle – that money should serve as a reliable store of value and that people who use it should be able to trust that it will remain so. There are differences in the terms however, when they are used in their proper context.
The term “sound money” is the favored term within academia (economic think tanks) and by politicians. This is understandable since these two groups focus primarily on the economic impact of monetary systems. After all, a “sound” economic system using “sound money” conveys trustworthiness and stability. These are noble and necessary goals for any free market monetary system.
The term “honest money” goes one step further. It includes the idea of an ethical check and balance along with all of the goals and attributes of “sound money.” It includes the idea that the consequences of a monetary system on “we the people” must be considered.
These additional attributes can only be accomplished by using money that has a self-contained mechanism by which it maintains its integrity. By logical extension, the term “honest” must also apply to the people given the privilige of overseeing our monetary system. A monetary system that is “sound” will only remain so if both the money and people within it have integrity.
In the end, whether the term “sound money” or “honest money” is used, those working to restore it are moving toward the same goal. In this era of massive corruption in our financial institutions and the self-corrupting fiat money we now are forced to use, many people are relieved to discover that our monetary system can be restored upon a value that our nation once held in high esteem - honesty.
(portions of this article are excerpted from the Honest Money Center’s Informed Citizen Course: HMLC 101 – Glossary of Terms).
