Definition of hard money

The term hard money is broadly used to describe money, or financing, which is backed by collateral, or financing terms, that people trust. It is therefore used in a number of different settings.

Historically, governments were said to have been pursuing a hard money policy when their currencies were backed by bullion, such as gold. These days, hard money advocates at government level would like to see budget surpluses and a currency backed by reserves of liquid tradable securities. 

Hard money is also sometimes used instead of the term hard currency and is used to describe a globally traded currency that can serve as a reliable and stable store of value.

In the US, the hard money is also used to describe certain loans in the real estate industry. Hard money loans are extended to a borrower who secures the loan by offering real estate assets as collateral.

Hard money is also sometimes used to describe regulated US political campaign donations that can be used to fund campaigns that make direct pleas for votes. Soft money, in contrast in this context, describes money donated for party building or educational purposes.


hard money in the news

In April 2013, the FT published an analysis of a book called: The Great Deformation: the Corruption of Capitalism in America by David Stockman which looked at hard money policy (or the lack of it in recent years in developed countries). The reviewer commented that over the years, Mr Stockman's concerns about governmental debt had grown to encompass all forms of debt. "His new book," the reviewer said, "is really an extended screed against corporate, financial, housing and personal debt."

"In this respect, Mr Stockman has aligned himself with monetary cranks who have long denounced 'fiat money' and demanded the return to a rigid gold standard. Indeed, his publisher distributed a blurb from one of the crankiest monetary cranks in America, Lew Rockwell of the Alabama-based Mises Institute, named after the Austrian economist Ludwig von Mises, whom all hard-money people worship."

FT Articles & Analysis

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