Hard Money Is Based on the Rule of Law; Soft Money Is Monopoly Money and Is Based on the Rule of Man

Hard money is intended to be as stable and reliable as possible. It is represented as a definite, inviolable, mutually agreed-upon contract, such as the definition of the currency as a specified amount of gold. It is thus said that hard money is based on the rule of law, although any naturally occurring commodity money, such as cowrie shells, are also hard monies.

Soft money is usually intended to be adaptable to short-term policy goals, and because it is subject to the changing whims of its managers, soft money is said to be based on the rule of man. Soft money has no definition. Soft money is really only possible when the monetary system has been monopolized, since, if given the choice, citizens will naturally conduct their business in terms that are definite, inviolable, and mutually agreed upon. The only entities that have been able to monopolize the monetary system are governments and private entities in collusion with governments. (Most central banks today are privately owned.) Soft money is, literally, monopoly money. History has produced a natural cycle between hard and soft money, which has also typically been a cycle between government and private market control over the monetary system. The world is now in a soft money cycle; there are no hard currencies today.

--Nathan Lewis, Gold: The Once and Future Money (Hoboken, NJ: John Wiley and Sons, 2007), 19-20.