Can Paper Store Wealth?

Thomas Jefferson himself was quoted as saying "Paper is poverty". Milton Friedman disagreed, saying anything can be money. In fact, Friedman argued in his book "The Optimum Quantity of Money" that if the Federal Reserve did not allow the quantity of money to drop by 1/3 that the Great Depression, as we know it, couldn't have occurred.

So who's right?

Both are right. But Friedman makes arguments on how to keep a paper system afloat, while Jefferson sees paper as inherently flawed. Jefferson's long-term view of government can be well understood by his quote “The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure.”

In essence, Jefferson understands that gov't, regardless of the intentions, will become corrupt and/or ineffective. Paper money may work for a while, but eventually greed and power will overpower the systems inherent flaw - the ability to print whenever you want. Jefferson may not have the economic stature of Friedman, but he understood something Friedman didn't - something academics can't seem to grasp - that human nature will over come the best designed systems. More regulations, more oversight, more laws will never fix an inherently flawed system. Paper money is flawed.

But wait, you ask - "Wouldn't the Great Depression have been just as bad if Jefferson was in power, because he never would have advocated devaluing the dollar by 50% as the Federal Reserve did in 1934?"

The question is moot, because Jefferson never would have allowed the Federal Reserve to exist in the first place. And if it wasn't for the FEDS easy money policy of credit creation in the 1920's, the Great Depression never would have occurred.

Jefferson passed away before Lord Acton wrote "Power tends to corrupt, and absolute power corrupts absolutely.", but I believe Jefferson would have whole heartedly embraced the phrase. Intellectuals and academics, like Friedman, believe they can put rules and laws in place to keep powerful institutions from corrupting themselves and society.

Based on what we have seen through the course of human history, the economic genius of Friedman fails the most basic test, that of man's love of power and self righteousness.

FAT AND HAPPY?

It's an amazing correlation. The top 10 fattest states measure a happiness average of 41.8, while the 10 slimmest states have a happiness average ranking of 13.1.

It sure appears that the fatter you are the LESS happy you are. Of course, correlations don't prove anything, but there is a pretty strong correlation between weight and happiness (at least on a state-by-state measure).

[Scroll down to see table]

2008	State	Happy
FAT Rank		Rank
1	Mississippi	48
2	West Virginia	50
3	Alabama	33
4	Louisiana	40
5	South Carolina	26
6	Tennessee	42
7	Kentucky	49
8	Oklahoma	43
9	Arkansas	46
10	Michigan	41
11	Indiana	45
12	Georgia	23
13	Missouri	44
14	Alaska	20
15	Texas	21
16	North Carolina	34
17	Ohio	47
18	Nebraska	16
19	Iowa	27
20	South Dakota	39
21	North Dakota	28
22	Delaware	36
23	Kansas	22
24	Pennsylvania	32
25	Virginia	15
26	Wisconsin	24
27	Illinois	31
28	Maryland	6
29	Oregon	18
30	Minnesota	5
31	Idaho	11
32	Washington	7
33	Wyoming	3
34	Maine	29
35	Nevada	38
36	New York	35
37	New Hampshire	13
38	Florida	30
39	Arizona	10
40	New Mexico	17
41	California	9
42	New Jersey	25
43	Utah	1
44	Montana	12
45	Rhode Island	37
46	Vermont	14
47	Massachusetts	8
48	Connecticut	19
49	Hawaii	2
50	Colorado	4