Sound money is the hallmark of a prosperous society. Fraudulent money impoverishes and enslaves societies, and history teaches it commonly rips them apart in blood-soaked wars. Sound money not only imposes fiscal discipline upon government, impeding reckless federal spending and imprudent warfare, but it also provides a stable unit of account, store of value, and medium of exchange for entrepreneurs, businesses, and individuals.
The inflation of newly-created money redistributes more purchasing power from the American people to government bureaucrats, the military-industrial complex, recipients of foreign aid, and bailouts to corporations like AIG, GM, and Goldman Sachs. These select groups then have the advantage of using it first – paying higher wages, creating jobs that have either less (or no) economic benefit to society, investing (or leveraging) money at different times and places, et cetera. Sound money not only disciplines government from committing reckless spending but prevents these gross economic imbalances from ever occurring.
The United States does not have sound money, despite the fact that the Constitution, the supreme law of the land, mandates this. The founders well knew about the failures of paper currency after the Revolutionary War where the curse “worth less than a Continental” referred to the worthless script currency used to pay the army.
For money to be sound, it must be durable and not easily destroyed. It must be portable for convenience. Sound money must be easily divisible into smaller units, recognizable and uniform. Sound money must be reproducible. Above all, sound money must be scarce, and it must also have a relatively stable purchasing power.
Fiat currencies – like the dollar and all other national currencies – can never truly fulfill the scarcity and purchasing power requirements. For example, let’s use our own currency. In 1964, all dimes, quarters and halves were 90% silver by mass. Four silver dimes in 1964 would buy a good loaf of bread. In 2010, the dimes would certainly not be enough at a bakery, but exchanging at a jeweler or coin shop for its worth in silver would yield about $5 today – quite sufficient to make the exchange.
Today the dollar is a bill of credit not backed by gold or anything else – even though the Constitution still forbids the power to emit bills of credit for use as money. The government’s monetary role is to mint money and maintain the integrity of the monetary unit, not to commit fraud by debasement or to substitute paper counterfeits for the constitutionally-specified forms of lawful money, gold and silver coins. Individuals should be free to trade and exchange as money any mutually agreeable commodity or item as they wish.
As of January 1st, 2010, the dollar has devalued against gold by 98.3% since the Federal Reserve was begun in 1913. Since 1933 when the country left the gold standard, the dollar has lost >94% of its purchasing power versus goods. The central bank’s function is to slowly devalue the currency in a way that few can detect except by viewing long periods of time. Your current Congressman is a willing accomplice in this theft.
Over the long term, a negative real interest rate signifies America’s savings and capital is being destroyed. This graph explains why our jobs, factories, and equipment have been driven overseas – and why most consumer goods are from China. To a large extent, this explains the rampant American consumerism of the past decade – why present-day goods are preferred to future goods! The government is responsible for the capital destruction of our society.
This is why we are living in a Depression and unemployment is at 22% - you didn’t really believe the government unemployment figures of 10%… right??
This explains why the American consumer “saved” in the stock market and “saved” in the real estate market; we all instinctively recognized that leaving dollars in the bank would not generate enough purchasing power in our child-raising and retirement years, so as a society we invested and speculated in these markets.
This explains why Social Security recipients find it hard to get by – the inflation adjustments to their monthly checks should be almost twice as large to make up for the purchasing power they were promised by the government.
This explains why families now need two wage-earners instead of one, why our children spend more and more time in day care while Mom and Dad struggle to make ends meet.
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We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings of this article to your blog or anywhere else in order to promote the Restoration of our Republic.
Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.
Tu ne cede malis sed contra audentior ito. Do not give in to evil but proceed ever more boldly against it.
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In November 2009, a speech in front of the Federal Reserve Bank and a talk “End the FED… Then What? – The Transition to Sound Money“
In December 2009: The Government’s “War” on Main Street
I like this info.
I’m sorry most of our elected officials lack the knowledge or will to think and make the hard choices for the next generations in America.
You have my support Jake !