Forum Post: hard money favors creditors and fiat money favors debtors?

The idea that maintaining a flexible supply of paper money served the interests of working people, whereas paper money backed by specie (hard money, like gold or silver) benefited only the rich, had been advanced by Edward Kellogg as early as 1841. In the 1860s, Alexander Campbell popularized Kellogg's ideas, but greenbackism did not develop a significant following until the panic of 1873, when low prices and tight credit gave Campbell's writings new appeal, especially to farmers. Many people, however, passionately opposed greenbackism, arguing that an inflated supply of paper money was immoral. In addition, of course, creditors as a group stood to lose from inflation, since debts could be repaid with less valuable dollars than those originally borrowed.

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