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Monetary Reform!

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Author Topic: Monetary Reform!  (Read 15538 times)
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« on: August 31, 2010, 09:05:56 am »

If you attend a Tea Party rally and bring up the issue of monetary reform to the people you meet there, then regardless of whether it's a "Republican-hijacked" Tea Party rally or not, you'll probably discover that nearly everyone in attendance has been literally indoctrinated (if not outright brainwashed) by Austrian School propagandists, and that their minds and intellects are consequently enslaved within the ridiculously narrow confines of the false Austrian School-vs-Keynesian School paradigm -- and hence within the equally false gold money-vs-debt money paradigm.

If there's one thing these propagandists all have in common, it's that they continually obsess over the "fiat" and "paper" aspects of the current money system. And the reason they do so is obvious: because deep down they know full well that if they openly acknowledged the fact that it's actually the debt aspect that is doing all the damage, then many if not most of the people to whom they're attempting to peddle their economic snake-oil would naturally gravitate towards the "Greenback" alternative.

One of the Austrian School's absolute worst nightmares is hundreds of millions of people awakening to the fact that -- contrary to Austrian School dogma -- there is a fundamental difference between (a) debt-based fiat paper money that, as such, is loaned into circulation at interest, and (b) debt-free fiat paper money that is spent in at no interest, because they want desperately for everyone to blindly assume that the only alternative to the current debt-based system is a deflationary gold-based system.

So, in effect, what they're essentially exclaiming to anyone foolish enough to listen is:

     "Pay no attention to that usury behind the curtain! Paper is the source of all monetary evils!"

Thus, whenever I see an Austrian Schooler wrap himself in the American flag and mindlessly insist that "unbacked paper money" (regardless of whether it's issued free of debt or not) is an assault on the principles of the Founding Fathers and thus an affront to "liberty," I always correct him by explaining that, if the Founders had taken the Goldbugs' advice and not employed the use of such money, then there would never have been a United States to begin with!



The skirmishes at Lexington and Concord are considered the start of the Revolt, but the point of no return was probably May 10, 1775 when the Continental Congress assumed the power of sovereignty by issuing its own money.

Congress authorized a total of $200 million; and though at first, they had no legal power to do so, had no courts or police, or power to levy taxes; the Continental currency functioned well in the early years and became a crucial part of the revolution. In 1776, it was only at a 5% discount to coinage, when General Howe took over New York city and made it a center for British counterfeiting. Newspaper ads openly offered the forgeries:

    "Persons going into other colonies may be supplied with any number of counterfeit Congress notes for the price of the paper per ream. They are so neatly executed that there is no risque in getting them off. ... Enquire for Q.E.D. at the Coffee House from 11 PM to 4 AM."

Congress did not exceed its authorized issue of $200 million (except to replace worn out notes), but the British certainly did. We don’t know how much they counterfeited, but it could have been billions; and yet the Continental currency continued to function! In March 1778 after 3 years of war, it was at $2.01 Continental for $1 of coinage.

General Henry Clinton complained to Lord George Germaine that "The experiments suggested by your lordships have been tried, no assistance that could be drawn from the power of gold or the arts of counterfeiting have been left untried but still the currency ... has not failed."

Finally it did fail, but not before providing the foundation for delivering the nation, carrying the revolution over 5 years to within 6 months of its victory. Thomas Paine wrote:

    "Every stone in the bridge that has carried us over, seems to have a claim upon our esteem. But this was a corner stone, and its usefulness cannot be forgotten." (p. 116)


Yet by the time of the Convention, the great benefits of the Continentals was nearly ignored; along with much of the rest of our hard won monetary experiences. Many wanted to emphasize that the Continentals became worthless; placed all abstract money under that cloud, and rejected the idea of paper money altogether.

They ignored the fact that paper money was crucial in giving us a nation; that abstract money usually requires an advanced legal system in place; that the normal method of assuring its acceptability is to allow the taxes to be paid in it. And then there was the little matter of a War against the world’s strongest power!

Tom Paine would say it best:

    "But to suppose as some did, that, at the end of the war, it was to grow into gold or silver or become equal thereto was to suppose that we were to get $200 millions of dollars by going to war, instead of paying the cost of carrying it on." (p. 117)


The Convention met from May to September, 1787, but the money question was not taken up in earnest until August 16! When we think of the "Founders" at the Convention, we should remember that Jefferson and Paine were not there; and Franklin was so advanced in age that someone else had to deliver his closing speech for him. Van Buren was 6 years old.

In addition to ignoring the nations rich practical experience with money, the convention paid little heed to the brilliant writings of John Locke and Benjamin Franklin on money. The delegates didn't bother to find out why Locke in 1718 wrote:

    "Observe well these rules: It is a very common mistake to say that money is a commodity ... Bullion is valued by its weight ... money is valued by its stamp."

Locke viewed money as a pledge for wealth, rather than wealth itself:

    "For mankind having consented to put an imaginary value upon gold and silver by reason of their durableness, scarcity and not being liable to be counterfeited; have made them by general consent, the common pledges ... they having as money, no other value, but as pledges ... and they procure what we want or desire only by their quantity, it is evident that the intrinsic value of silver and gold, used in commerce is nothing but their quantity."

They didn't consider the reasons Ben Franklin gave in his 1729 "Modest Inquiry Into The Nature And Necessity Of A Paper Currency, for agreeing with Locke’s view: "Silver and gold...(are) of no certain permanent value..." and "We must distinguish between money as it is bullion, which is merchandise, and as by being coined it is made a currency; for its value as merchandize and its value as a currency are two distinct things ..."


Unfortunately the delegates were more influenced by a crude and primitive theory which heavily supported the Bank of England, and contained several crucial monetary errors, which tended to "legitimize" the Bank’s system of finance. This theory of money was part of Adam Smith’s WEALTH OF NATIONS, published in 1776, and quoted by delegates to the Convention. Smith wrote very little about money, but his monetary mistakes and inconsistencies have had such a bad effect on mankind’s money systems, that we’ll devote a full chapter to him later. His book promoted the idea that only gold and silver are money, and never mentions the legal concept of money, as put forward by the philosophers and jurists Bishop Berkeley, John Locke, Julius Paulus, Plato, Aristotle, and others.

In 1786, anticipating the Convention, a very curious book, "ESSAYS ON MONEY" was published anonymously in the US Its entire thrust was to "theoretically" attack the idea of government paper money:

    "State bills are an absurd form of money and not money at all."

Why? - no answer. It turned out to be written by the Clergyman, John Witherspoon. Referring to Locke and Franklin’s views, he misrepresented their point on money, saying:

    "They seem to deny the intrinsic value of gold and silver."

Discussion? - none.

Then, using a rhetorical device, he stated some arguments for government paper money, and stonewalled them, pretending they didn't matter. Concerning those with personal knowledge of some of the colonies paper money systems:

    "We are told by persons of good understanding that (paper money) contributed to (the colonies) growth and improvement."

Rebuttal? - none.

Concerning the fall of the Continental Currency:

    "(Some say it was due to the) Counterfeiting ... of our enemies".

Disagreement? No germane discussion.



I then explain that the problem is not that our paper currency isn't "backed" by a commodity or precious metal, but that it's issued as an evidence of interest-bearing debt expansion instead of as an evidence of interest-free wealth expansion; that it vanishes from the money supply whenever bank loans are repaid; and that the money needed to pay the usurious interest on these inherently fraudulent loans is never created in the first place (the consequence of which is that there's always a built-in shortage of money).

William Jennings Bryan said it best:

    "Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold."


Those who value humanity more than a piece of metal must stop letting monetary flat-earthers from the Austrian School fool people into believing that the only "alternative" to enslaving mankind within a prison of debt is to crucify mankind upon a cross of gold. It is a lie and a fraud, and must be exposed as such.
« Last Edit: February 17, 2011, 01:10:13 pm by Geolibertarian » Report Spam   Logged

"For the first years of [Ludwig von] Mises’s life in the United States...he was almost totally dependent on annual research grants from the Rockefeller Foundation.” -- Richard M. Ebeling

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