[PLUG-TALK] Fair Use, etc.
J.A.Henshaw
jhenshaw at dsl-only.net
Thu Mar 28 22:23:25 UTC 2002
Wil Cooley wrote:
>>
>>"I can perfectly well understand how inflation decreases the
>>value of the money I have on hand."
>>
>>Apparently not *perfectly* well; but I won't criticize your
>>choice of words, sentence structure, or provide Merriam
>>Webster's definition of *perfectly* because it's not
>>important, and I would be an ass.
>>
>
> You would be correct to do so; as I said, I mispoke.
Wil;
Is this what you expect me to paraphrase for you:
The Economic Rape of America - Chapter One
WHAT IS MONEY?
Abraham was very rich in livestock, in silver, and in gold.
Genesis 13, verse 2
"The definitions, or descriptions, that have been applied to
money are legion. They range from those which carry the
implication that [the love of] it is the root of all evil to
those who regard it as manna from heaven. Some have argued
that it does not matter, others that it matters too much.
Money has been described as a political, or sociological,
phenomenon, as a mechanism, as a mirror, as a religion, as a
myth, as a means of communication which reduces complexity
and as a distortion which increases it, as the curse of the
miser and the elixir of the spendthrift, as a means to all
ends and as an end in itself, as barren and as all-powerful,
as inert or neutral and as "the drink which stimulates the
economic system to activity," as the tool of social progress
and as an obstacle to it."
-- S. Herbert Frankel, 1977
To properly understand the extent of the economic rape of
America, how it is being perpetrated, and who does it, we
need to understand a few things about this curious thing or
phenomenon we call "money."
ANDREW CARNEGIE'S EXPLANATION
"I suppose everyone who has spoken to or written for the
public has wished at times that everybody would drop
everything and just listen to him for a few minutes. I feel
so this morning, for I believe that a grave injury threatens
the people and progress of our country simply because the
masses - the farmers and the wage-earners - do not
understand the question of money. I wish therefore to
explain "money" in so simple a way that all can understand it."
So wrote Andrew Carnegie, the steel magnate, around the turn
of the century - I guess. I have an undated 28-page booklet
by him called The A B C of Money. The booklet is not
copyrighted, so I shall quote from it extensively. First,
Carnegie explains why "money" comes about and what it really is.
In "primitive" societies barter develops because some people
have things that others want, and some people do certain
things better than others. Specialization and division of
labor occur. One person becomes a shoemaker, another a
farmer. The farmer exchanges ten bushels of wheat for a pair
of shoes. Both parties gain from the transaction. It would
take the farmer five times as long to make a pair of shoes,
compared to the shoemaker, and it is not even practical for
the shoemaker to attempt to grow his own wheat.
As society develops, someone gets the idea of becoming a
"barter specialist" and opens a store. His store becomes a
center for barter. Spontaneously, in every society, some
article becomes the "basis-article" that turns out to be
most convenient for exchange and for expressing the value of
other articles. In Pennsylvania that article was wheat; in
Virginia, Maryland, and North Carolina it was tobacco. There
was a saying, "As good as wheat." Tobacco remained a basic
money in Virginia and its neighboring colonies for nearly
two centuries.
Our modern word "pecuniary" comes from "pecunia," the Latin
word for "cow." Our word "fee" comes from the German word
"Vieh," meaning cattle. In several societies cattle
spontaneously came to serve the function of money. In other
societies salt, silk, dried fish, feathers, stones, cowrie
shells, beads, cigarettes, cognac, whiskey, sheep, goats,
and horses have been used as money. The early American
settlers used the "wampum," a form of shell, to trade with
native Americans. Now back to Carnegie:
"... [I]n all cases human society chooses for that
basis-article we call "money" that which fluctuates least in
price, is the most generally used or desired, is in the
greatest, most general, and most constant demand, and has
value in itself... An article is not first made valuable by
law and then elected to be "money." The article first proves
itself valuable and best suited for the purpose, and so
becomes of itself and in itself the basis-article - money.
It elects itself.
We take one step further. The country becomes more and more
populous, the wants of the people more and more numerous.
The use of bulky products like wheat and tobacco, changeable
in value, liable to decay, and of different grades, is soon
found troublesome and unsuited for the growing business of
exchange of articles, and they are therefore unfit to be
longer used as "money." You see at once that we could not
get along today with grain as "money." Then metals proved
their superiority. These do not decay, do not change in
value so rapidly, and they share with wheat and tobacco the
one essential quality of also having value in themselves for
other purposes than for the mere basis of exchange. People
want them for personal adornment or in manufacture and the
arts - for a thousand uses; and it is this very fact that
makes them suitable for use as "money." Just try to count
how many purposes gold is needed for, because it is best
suited for those purposes. It meets us everywhere. We cannot
even get married without the ring of gold.
... We have proceeded so far that we have now dropped all
perishable articles and elected metals as our "money"; or,
rather, metals have proved themselves better than anything
else for the standard of value, "money." But another great
step had to be taken. When I was in China, I received as
change shavings and chips cut off a bar of silver and
weighed before my eyes in the scales of the merchant, for
the Chinese have no "coined" money. ... [Y]ou can well see
how impossible it was for me to prevent the Chinese dealer
from giving me less than the amount of silver to which I was
entitled... Civilized nations soon felt the necessity of
having their governments take certain quantities of the
metals and stamp upon them evidence of their weight, purity,
and real value. Thus came the "coinage" of metals into
"money" - a great advance. People then knew at sight the
exact value of each piece and could no longer be cheated, no
weighing or testing being necessary. Note that the
government stamp did not add any value to the coin. The
government did not attempt to "make money" out of nothing;
it only told the people the market value of the metal in
each coin, just what the metal - the raw material - could be
sold for as metal and not as "money."
But even after this much swindling occurred. Rogues cut the
edges and then beat the coins out, so that many of these
became very light. A clever Frenchman invented the "milling"
of the edges of the coins, whereby this robbery was stopped,
and civilized nations had at last the coinage which still
remains with us, the most perfect ever known, because it is
of high value in itself and changes least...
Although one would think that in coined metal pieces we had
reached perfection, and that with these the masses of the
people could not be cheated out of what is so essential to
their well-being - "honest money" - yet one way was found to
defraud the people even when such coin was used. The coins
have sometimes been "debased" by needy governments after
exhausting wars or pestilence, when countries were really
too poor or too weak to recover from their misfortunes. A
coin is called "debased" coin when it does not possess metal
enough to bring in the open market the sum stamped upon the
coin by the government. There is nothing new about this
practice, which always cheats the masses. It is very, very
old. Five hundred and seventy-four years before Christ the
Greeks debased their coinage. The Roman Emperors debased
theirs often when in desperate straits. England debased hers
in the year 1300. The Scotch coin was once so debased that
one dollar was worth only twelve cents. The Irish, the
French, German, and Spanish governments have all tried
debased coin when they could wring no more taxes directly
out of their people, and had therefore to get more money
from them indirectly. It was always the last resort to
"debase" the coinage. These instances happened long ago.
Nations of the first rank in our day do not fall so low. I
must pause to make one exception to this statement. I bow my
head in shame as I write it - the republic of the United
States. Every one of its silver dollars is a "debased coin."
When a government issues "debased coin," it takes leave of
all that experience has proved to be sound in regard to
money. Sound finance requires the government only to certify
to the real value possessed by each coin issued from its
mints, so that the people may not be cheated. Every time the
government stamps the words "One Dollar" upon 371 1/4 grains
of silver, it stamps a lie; disgraceful, but, alas! too
true, for the silver in it is worth today not a dollar, but
only seventy- eight cents.
Another delusion about money has often led nations into
trouble - the idea that a government could "make money"
simply by stamping certain words upon pieces of paper, just
as any of you can "make money" by writing a note promising
to pay one hundred dollars on demand. But you know that when
you do that, you are not making "money," but making "a
debt"; so is any government that issues its promise to pay.
And there is this about both the individual and the
government who take to issuing such notes on a large scale:
they seldom pay them. The French did this during their
revolution, and more recently the Confederate States "made
money" at a great pace, and issued bonds which are now
scarcely worth the paper they are printed upon. Every
experiment of this kind has proved that there can be no
money "made" where there is not value behind it...
But I am now to tell you another quality which this
basis-article of metal has proved itself to possess... The
whole world has such confidence in its fixity of value that
there has been built upon it, as upon a sure foundation, a
tower of "credit" so high, so vast, that all the silver and
gold in the United States, and all the greenbacks and notes
issued by the government, only perform eight percent of the
exchanges of the country. Go into any bank, trust company,
mill, factory, store, or place of business, and you will
find that for every one hundred thousand dollars of business
transacted, only about eight thousand dollars of "money" is
used, and this only for petty purchases and payments.
Ninety-two percent of the business is done with little bits
of paper - checks, drafts. Upon this basis also rest all the
government bonds, all state, county, and city bonds, and the
thousands of millions of bonds the sale of which has enabled
our great railway systems to be built, and also the
thousands of millions of the earnings of the masses
deposited in savings-banks, which has been lent by these
banks to various parties, and which must be returned in
"good money" or the poor depositor's savings will be
partially or wholly lost.
The businesses and exchanges of the country, therefore, are
not done now with "money" - with the article itself. Just as
in former days the articles themselves ceased to be
exchanged, and a metal called "money" was used to effect the
exchanges, so today the metal itself - the "money" - is no
longer used. The check or draft of the buyer of articles
upon a store of gold deposited in a bank - a little piece of
paper - is all that passes between the buyer and the seller.
Why is this bit of paper taken by the seller or the one to
whom there is a debt due? Because the taker is confident
that if he really needed the article itself that it calls
for - the gold - he could get it. He is confident also that
he will not need the article itself, and why? Because for
what he wishes to buy the seller or any man whom he owes
will take his check, a similar bit of paper, instead of gold
itself; and then, most vital of all, everyone is confident
that the basis-article cannot change in value...
... The question is, How long could you get people to take
these slips for dollars? How soon would some suspicious man
suggest that you were issuing too many? And then these slips
would lose reputation; people would begin to doubt whether
you could really pay all the dollars you promised if called
upon; and from that moment you could issue no more. Just so
with governments: All can keep their small change afloat,
although it may not contain metal equal to its face value;
and it is a poor government which cannot go a little further
and get the world to take something from it in the shape of
"money" which is only partially so... Every nation has had
eventually to recoin its "debased" coin or repudiate its
obligations, and go through the perils and disgrace of loss
of credit and position. In many instances the "debased" coin
never was redeemed, the poor people who held it being
compelled to take the loss.
... Upon the solid rock of gold as our basis-article we have
built up the wealthiest country in the world, and the
greatest agricultural, manufacturing, and mining and
commercial country ever known. We have prospered beyond any
nation the sun ever shone upon. In no country are wages of
labor so high or the masses of the people so well off. Shall
we discard the gold basis, or even endanger it? This is the
question before the people of the United States today."
All the above quotations are from Andrew Carnegie's The A B
C of Money. The following section is partially based on The
Biggest Con: How the Government is Fleecing You by Irwin A.
Schiff.
THE FUNCTIONS OF MONEY
According to Schiff, "Money, like the wheel, was one of
mankind's most important inventions... Because of the
development of money, which facilitated and accelerated the
exchange of goods and services and made specialization and
division of labor possible, productivity increased and thus
living standards rose. The sounder a nation's money, the
more efficient would be its economy and the faster would its
standard of living grow."
Sound money performs four basic functions:
1. It serves as a standard of value or a unit of account. At
present the U.S. Dollar still performs this function. When
we see something priced at $10 we have an idea of its value
and how that value compares to the value of something else.
Companies keep their accounting records and issue their
financial statements, using the dollar as unit of account.
2. Money serves as a medium of exchange. As Carnegie and
Schiff explained, money facilitates exchange. The U.S.
Dollar also still performs this function. There are several
reasons why the dollar is still used as a medium of exchange:
"Legal tender laws" that say we must accept the dollar;
"Everybody" uses the dollar - banks, shops, everybody;
Ignorance of the true nature of the dollar;
Confidence in the dollar;
Most other currencies lose their value even faster than the
dollar - in comparison the dollar seems "strong";
Most Americans spend their money as fast as they get it, so
they don't notice its loss of value from day to day;
Habit;
Anyone who attempts to introduce an alternative currency is
branded a counterfeiter and criminal.
3. Money provides mobility of value. Because of our superb
communications, the dollar can be wired almost
instantaneously to any part of the world - value being
"transported" from one place to another. Money also makes it
possible to obtain value in the present in the form of a
loan or credit, and to repay the value in the future -
another aspect of mobility of value.
4. Money serves as a store of value; it makes it possible to
"transport" value into the future. Because of the rapid rate
at which the dollar loses its value, it no longer serves as
a store of value into the future. Every month the dollar
loses some of its value. As we shall see in Chapter Four,
the loss of value is considerably greater than "measured" by
government statistics, like the consumer price index.
STATE, RELIGION, AND MONEY
Many of the original American settlers were religious
rebels. In England and Europe they had been persecuted for
practicing "illegal religions." For example, William Penn,
the famous Quaker who gave his name to Pennsylvania, was
prosecuted in England for preaching an "illegal religion."
The American settlers wanted to be free to practice the
religion of their choice. They certainly did not want the
state to dictate to them what their religion should be. Our
Founding Fathers established the principle called
"separation of church and state." The state has no business
interfering with people's religion or dictating what their
religious beliefs should be. This principle has been
repeatedly upheld by the U.S. Supreme Court. This is why
prayers are not allowed in state schools.
Now stretch your imagination. Imagine that the original
American settlers were "money rebels" rather than religious
rebels. They had been persecuted for using the money of
their choice. They came to America to achieve monetary
freedom. People had an inalienable right to use the money of
their choice. Our Founding Fathers established the principle
of the "separation of money and state." The state had no
business interfering with people's money or dictating to
them what their money should be.
Not so long ago, in Russia, atheism was the "state
religion." Other religions were declared illegal. People
practicing the religions of their choice were persecuted.
At the time of the Revolutionary War, the Continental
Congress considered decreeing the death penalty for anyone
who refused to accept the "lawful money" - Continental
Dollars - they issued. That is where the expression "not
worth a continental" comes from.
Today, in America, the paper dollar is the "state money."
There are "legal tender laws" which essentially decree that
people must use the paper dollar as money and other kinds of
money are illegal. People who use the money of their choice
are persecuted, prosecuted, and jailed. The members of the
National Commodity and Barter Association use gold as money.
During the past few years their branches across the country
have been raided by armed government agents. Their gold,
equipment, and records have been confiscated; their members
persecuted, prosecuted, and jailed...
Hans F. Sennholz, author of Age of Inflation, was asked in
the context of currency reform after World War II in
Germany, what he would do if he had the power to reform the
currency. His reply:
"When pressed for his proposal for a currency reform, this
writer must confess that he would have conducted the
simplest reform of all. He would pass no reform law, seek no
conversion or parity, and offer no government cooperation.
He would merely cease and desist from interfering with the
inalienable rights of man. In particular, he would
immediately restore all economic freedoms and repeal all
legal tender laws. The freedom to trade and hold gold, the
freedom to use gold in all exchanges, and the freedom to
mint coins would bring forth the ideal currency to which all
others would repair."
WHAT, THEN, IS MONEY?
In this report the term "money" will be used to refer to
whatever people freely choose to serve as their medium of
exchange. The term "fiat money" will be used to refer to
what people are forced by government decree to use as medium
of exchange. The Latin word "fiat" means "let it be done."
The U.S. dollar is fiat money. (Similarly, in Russia atheism
was the "fiat religion" people were forced to adopt by
government decree.)
The term "currency" will be used to include all the items
people use in practice as a medium of exchange. It includes
money, fiat money, checks, drafts, bonds, etc. I will use
the term "currency supply" (where most people say "money
supply") to refer to the total currency in circulation.
In a free market people choose their money. There is
competition between different kinds of money. Over time,
people come to prefer and use as money that which best
fulfills the functions of money outlined above.
Historically, people have chosen gold and silver as money.
The Bible is replete with examples.
It is quite possible that monetary theorists, such as C.H.
Douglas (Social Credit), Sylvio Gesell (The Natural Economic
Order), Henry Meulen (Free Banking), and E.C. Riegel
(Private Enterprise Money), will devise forms of money that
will prove superior to gold and silver. In a free market all
such "advanced moneys" will have the opportunity to prove
themselves. However, as workable money, only gold and silver
have passed the test of history.
"I deny the power of the general government to making paper
money, or anything else a legal tender."
-- Thomas Jefferson
"The terms 'lawful money' and 'lawful money of the United
States' shall be construed to mean gold or silver coin of
the United States." (12 USC 152)
"Legal tender is quite different from lawful money. In no
U.S. law are Federal Reserve notes declared to be "lawful
money." Lawful money is that money described in the Coinage
Act of 1792 and in Article I, section 10 of the U.S.
Constitution: gold and silver... the only money the Supreme
Law of the Land allows states to make legal tender."
-- Tupper Saussy, 1980
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