Not the Free Market #2: Fiat Money

One of the largest distortions in the market is our use of fiat money, i.e. money that has no intrinsic value. In the free market a commodity such as gold or silver would be used as the medium of exchange. There are natural limits on how much gold and silver can be mined at any given time, which is not the case with the government-created money we have today. Whether you think a return to a gold standard is a good idea or not, the current system is not market based. Many economists who accurately predicted the current depression point to government manipulation with the money supply as the primary cause of our current predicament.