From the June 2000 Idaho Observer:
Money: Are we ready for the Real Thing?
by Hari Heath
Henry Ford once stated that if Americans ever understood the money system there would be a revolution by morning. My own experience has shown him to be right -- most Americans don't have a clue when it comes to understanding the nature of our money. Since 1933, we have been compelled to participate in a negative economy. An economy of debt created from debt. We don't pay anything anymore, we just make credit transfers. That's right, a dollar is not a dollar anymore, it's a dollar bill. Like all good communist indoctrination methods, by slowly introducing the concept over several generations, and eliminating the alternatives, it is eventually accepted without question.
How many people remember the reason behind the runs on banks in March of 1933 and FDR's emergency banking holiday? Do you remember when paper notes could be redeemed in gold? Very few people have a clue what real money is anymore, but there appears to be some indication that people are hungry for the real thing again.
The Almost Real Thing
The U.S. Mint has introduced the new Sacajawea golden dollars this year and what has been the public reaction? Hoarding. You would think they were made out of gold.
According to an Associated Press report, H. Robert Campbell, president of the American Numismatic Association and owner of All About Coins in Salt Lake City, said, People are hoarding them. They get them in change and because they haven't seen them before, they'll save it, they are almost spellbound by the coins.
Customers are paying $2 each for uncirculated golden dollar coins at Campbell's coin store.
The coin's physical makeup is a three-layer composite construction -- pure copper sandwiched between and metallurgically bonded to outer layers of manganese brass. Including the copper core, the Golden Dollar's overall composition is 88.5 percent copper, 6.0 percent zinc, 3.5 percent manganese and 2 percent nickel. Four months after its introduction, 500 million Sacagawea coins were in circulation, according to the U.S. Mint. By this summer, shipments of the new Golden Dollar coins are expected to exceed 1 billion, with 6 million new coins being minted each day. In the past 21 years, only 921 million Susan B. Anthony dollar coins have been minted. The U.S. Mint has been trying to persuade people to circulate the dollars with a $40 million ad campaign.
A Cheap Education?
For several years now, I have been converting that green paper we call money into quantities of our modern dollar coins. Many banks will sell the Susan B. Anthony dollar for a dollar (imagine that). Once I was able to acquire about a thousand of the Eisenhower dollars from a bank. They of course are not really worth a whole dollar because they aren't silver. Even our coins have been reduced to a nickel-clad copper facsimile of the real thing.
Why would I want to carry around heavy coins when I could just use the paper bills like everyone else? One, a Federal Reserve Note is evidence of the debt our nation has fallen into when we allowed private foreign bankers to take over our economy by loaning our government their notes in trade for Treasury Bills and government securities -- a debt made from a debt. Two, we perpetuate the fraudulent insolvency of our nation by passing these debt-based paper instruments between us. And three, by using coin instead of bills I am occasionally able to cause some people think about the nature of money. It's rare, but there are a few Americans who are willing to give some thought to our money system.
Paying with coin often creates a conversation and an opportunity for our modern money changers to be educated about the nature and history of the commodity they routinely deal in. It's amazing how many bank tellers actually think the Federal Reserve is part of the government. Nowhere is the mindlessness of our modern age more echoed than in the number of professional cashiers who have asked me, is that a dollar, after looking at a coin that's been in circulation for over 20 years and says One Dollar right on it.
The Original Real Thing?
How did we conduct our business in earlier times? Robert Batemarco describes the limitations of our early economy and the gold and silver solution:
An economy without money, a barter economy, is grossly inefficient because of the difficulty of finding a trading partner who will accept what you have and who also has exactly what you want. There must be what economists call a double coincidence of wants. The difficulty of finding suitable partners led traders to seek out commodities for which they could trade which were more marketable in the sense that more people were willing to accept them. Clearly, perishable, bulky items of uneven quality would never do. Precious metals, however, combined durability, homogeneity, and high value in small quantity. These qualities led to wide acceptance.
Our Constitution gave Congress the power to coin money. There was no power granted to print money because our founders knew well what happens when a nation is based on an economy made of printed paper. Wealth made from nothing more than ink and paper is not wealth at all, and leaves room for all manner of corruption, as history and our current adulterated economy exemplify.
Coins minted from a rare metal provide for an economy of substance between the people of a nation. Congress standardized our original economy by enacting the Coinage Act of 1792. It declared a one ounce silver coin to be a dollar and a one ounce gold coin to be 20 dollars. Both coins were 10 percent copper alloy for durability. These values remained unchanged until 1933.
The Crime of the Century
During the first 20 years of its existence, the private Federal Reserve banking scheme had printed notes, redeemable in gold and loaned our national credit many times in excess of the gold supply, causing a panic once the ugly truth of the crime of the century became obvious. Gold ownership was banned and all were compelled to accept paper notes as money to protect the fraud of the private banker's scheme. When Congress unconstitutionally turned over its sole power to manage our economy to the Federal Reserve Bank in 1913, our nation began its stormy descent into whirlwinds of the paper-and-ink economy, as Robert Batemarco explains:
Are inflation, currency depreciation, and business cycles inevitable facts of life? Are they part of the very laws of nature? Or do their origins stem from the actions of man? If so, are they discoverable by economic science? And, if economics can teach us their origins, can it also teach us how to avoid them?
The particular need which all money serves, even fiat money which we now use, is to facilitate exchange. People accept money, even if it is not backed by a single grain of precious metal, because they know other people will accept it in exchange for goods and services. But people accept the U.S. dollar today in exchange for much less than they used to. Since 1933, the U.S. dollar has lost 92 percent of its domestic purchasing power [1933-1995].
Other things being equal, if the quantity of anything is increased, the value per unit in the eyes of its users will go down. The quantity of U.S. money has increased year in and year out every year since 1933. The narrow M1 measure of the quantity of U.S. money (basically, currency in circulation and balances in checking accounts) stood at $19.9 billion in 1933. By 1940, it had doubled to $39.7 billion. It surpassed $100 billion in 1946, $200 billion in 1969, $400 billion in 1980, $800 billion in 1990, and today  it stands at almost $1.2 trillion. That is over 60 times what it was in 1933.
For all practical purposes, the quantity of money is determined by the Federal Reserve System, our central bank. Its increase should come as no surprise. The Federal Reserve was created to make the quantity of money flexible. The theory was that the quantity of money should be able to go up and down with the needs of business.
In the 141 years that we were on the gold standard, in fact the standard was gold coin, a dollar was a dollar. In the 62 years following our departure from the gold standard, the paper dollar became devalued to eight per cent of its former value. This is what happened when the needs of the citizenry for a stable sovereign economy was replaced with the needs of business -- the big bank business. We've been indentured to the money powers ever since.
The Real Thing Again?
Some have suggested the remedy to the FED fraud is a return to the gold standard or gold and silver coin. This is not a simple issue, as Batemarco explains:
The practical issues involved in actually returning to a gold standard are complex. But one of the most common objections, determining the proper valuation of gold, is fairly minor. After all, the market values gold every day. Any gold price other than that set by the market is by definition arbitrary. If we were to repeal legal tender laws, laws which today require the public to accept paper Federal Reserve Notes in payment of all debts, and permit banks to accept deposits denominated in ounces of gold, a parallel gold-based monetary system would soon arise and operate side-by-side with the Federal Reserve's fiat money. A more difficult problem would be how to get the gold the government seized in 1934 back into the hands of the public.
In all likelihood, the biggest problem gold proponents face is that people simply aren't ready to go back to gold. Most people aren't aware of the extent of our monetary disarray and many of those who are, don't understand its source. Two generations of Americans have known nothing but unbacked paper as money; few realize that there is an alternative. The desire to get something for nothing dies hard. Governments use central banks with the unlimited power to issue fiat money as their way to get something for nothing. By sharing some of that loot with us, those governments have convinced us that we too are getting something for nothing. Until we either wise up to the fact that governments can't give us something for nothing or, better yet, when we realize the moral folly of taking government handouts when offered, we will continue to get money as base as our desires.
There is one rather significant problem to a return to a gold based economy: Our nation's gold has been stolen. The American people's gold was first confiscated, then exported. Congressman Louis T. McFadden addressed Congress in 1934 -- as Hitler began his rise to power:
Immense sums belonging to our national bank depositors have been given to Germany on no collateral security whatever. The Federal Reserve Board and the Federal Reserve Banks have issued United States currency on mere finance drafts drawn by Germans.
Billions upon billions of our money has been pumped into Germany -- and money is still being pumped into Germany by the Federal Reserve Board and the Federal Reserve Banks [prelude to W.W.II].
Her worthless paper is still being negotiated here and renewed here on the public credit of the United States Government, and at the expense of the American people.
On April 27, 1932, the Federal Reserve outfit sent $750,000 belonging to American bank depositors, in gold, to Germany. A week later, another $300,000 in gold was shipped to Germany in the same way. About the middle of May, $12,000,000 in gold was shipped to Germany by the Federal Reserve Board and the Federal Reserve Banks. Almost every week, there is a shipment of gold to Germany. These shipments are not made for profit on exchange -- since German marks are below parity against the dollar.
How did Germany recover from a major depression and become a formidable war power in the span of a decade? Who are these bankers at the Federal Reserve? Why would they send our gold to Germany in trade for paper and ink? And more importantly, after being well informed of the situation, why did Congress allow the Federal Reserve to continue to manage our national economy?
With our positive economy of substance (gold and silver), both stolen and replaced by a negative economy of debt based upon debt, there doesn't appear to be much light at the end of the tunnel. However, we Americans can be resourceful.
E-gold.com provides a 100 percent precious metal backed on-line banking service. Although not a bank in the conventional sense, customers using their metals based economy can conduct their commercial affairs similar to those using the paper and plastic banks, only with greater privacy and at the speed of a modem.
Some will argue that there isn't enough gold to be used in our modern era. Remember, our current dollar values are based on a paper and ink economy that has been expanded sixty-fold in 62 years while being devalued to 8 percent of its original worth, compared to when it was gold based. By returning to a gold standard the real value of paper and ink could be revealed, causing the appropriate adjustments to the value of a dollar. A brand new car might only cost a handful of coins -- if we returned to the real thing.
Gold and silver have been the standard for coinage, but other rare metals such as platinum can also be used in coins. Platinum and other metals can expand the opportunities for a coin based economy of substance. Don't hoard those golden dollars, they're only tokens compared to the real thing. By spending them we can start a quiet revolution -- educating those who don't have a clue -- one coin at a time. With a little revolution and a war against ignorance, America can be ready for the real thing again.
Batemarco, Robert; Central Banks, Gold, and the Decline of the Dollar;
McFadden, Louis T., Congressman; Congressional Record, May 23, 1934. The full text of Congressman McFadden's enlightening expose to Congress of the Crime of the Century can be found at:
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