CRAIGforCONGRESS

Missouri's 7th District, U.S. House of Representatives

  
 

 

 

Congressional Issues 2012
MONEY AND FINANCE
Banking with Integrity



Your Congressman must take an oath to support the Constitution, yet 99% of all politicians do not support what the Constitution says about money and banking. (If they went to government-run schools, it's likely that they don't even know or understand what the Constitution says.) The principle of "Liberty Under God" is as relevant today as it was 200 years ago, and the old-fashioned morality embodied in the Constitution's principles on money and banking can be applied in tomorrow's world of financial cryptology and digital cash.

In an introduction to his notes on the Constitutional Convention's deliberations in Philadelphia, James Madison, the "Father of the Constitution," noted that one of the defects the Convention was assembled to remedy was that

In the internal administration of the States, a violation of contracts had become familiar, in the form of depreciated paper made a legal tender.

If you're like 40% of all government-school graduates who are functionally illiterate when they finish schooling, you probably don't understand that statement, or appreciate its full significance. If you don't understand the importance of Madison's statement, click here.

What Madison is saying is that the economy can't prosper if people can't depend on their contracts. Imagine that you're a home-builder, and you enter into a contract with a homebuyer to build a home for $100,000. Now imagine that the buyer has "connections" with a judge or some other "public servant," and he gets that politician to pass a law that changes the amount due in the contract from $100,000 to $10,000. You just built a $100,000 home and you only get paid $10,000. Your attorney now tells you that no court will enforce any contract you write. Will you be more likely or less likely to enter into a similar contract in the future?

Only 1 out of 100 Americans understand what Madison means about "depreciated paper." Until recently, paper currency was backed by gold or silver. A "Silver Certificate" used to say, "This certifies that there is on deposit in the Treasury of The United States of America One Dollar in silver payable to the bearer on demand." Today all you can redeem your paper money for is more paper money.

"But I can buy things!" some will say.

Nobel prize-winning economist Milton Friedman has described the mythical, circular reasoning surrounding paper money:

. . . each accepts them [the pieces of paper] because he is confident others will. The pieces of green paper have value because everybody thinks they have value, and everybody thinks they have value because in his experience they have had value.

In the final analysis, emphasizes Friedman, acceptance of paper money "is a social convention which owes its very existence to the mutual acceptance of what from one point of view is a fiction."

Fed urges secrecy on banks in bailout programs | Reuters

Your children may learn this lesson the hard way.

* Of course, printing pieces of paper is not necessary -- "money" is just blips in a bank's computer.

The Social Security system is bankrupt. There may come a day when the government will simply have to print up enough paper money to pay social security recipients.*  If enough paper money is created to pay all social security obligations, the value of everyone else's paper money will decline. The government says everyone will get their benefits, but admits the benefits may not be worth anything when they get them. This is the evil of paper money.

Accordingly, Madison and the other delegates included a provision in the U.S. Constitution that prohibits paper money, or the emitting of "bills of credit." (Art. 1, ß 10, ∂ 1) That provision reads:

No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make any thing but gold and silver a legal tender in payment of debts; pass any bill of attainder, ex-post-facto law, or law impairing the obligation of contracts; or grant any title of nobility.

In Federalist Paper No. 44, possibly the most authoritative source for constitutional interpretation, Madison explained the provision:

The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity. The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it. ... No one of these mischiefs is less incident to a power in the States to emit paper money, than to coin gold or silver. The power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on the same principle with that of issuing a paper currency.

After the Constitution was ratified, THE COINAGE ACT OF 1792 was passed, specifically defining the "dollar" as a certain amount of gold or silver.

Any politician who takes a solemn oath to "support the Constitution" should be committed to the following goals:

In the next Two Years, Congress should:

  Long-term Goals:
  • uphold its constitutional duty to maintain the purchasing power of the dollar by enacting legislation that makes long-run price stability the primary objective of Federal Reserve monetary policy;
  • recognize that the Fed cannot fine-tune the real economy but can achieve monetary stability by following a rule that confines nominal growth of gross domestic product to a noninflationary path;
  • recognize that all prices should naturally be going down, and hold the Fed accountable for achieving zero expected inflation over a reasonable time frame;
  • pass the Honest Money Act.
  • abolish the Exchange Stabilization Fund, since the Fedís role is to achieve zero inflation, not to stabilize the foreign exchange value of the dollar by intervening in the foreign exchange market; and
  • offer no resistance to the emergence of digital currency and other substitutes for Federal Reserve notes, so that free-market forces can help shape the future of monetary institutions.
 
A Guide to Digital Cash Articles

What is Money?

Pull a quarter out of your pocket. Note the orange ring around the edge. This is copper. Prior to 1965 coins like dimes and quarters were made out of silver. Today they are nickel-coated copper, not silver. Even pennies have been "debased." According to the U.S. Mint

The [pre-]1982 copper cent weighs 3.11 grams and is 95% copper and 5% zinc. The current copper-zinc cent weighs 2.5 grams and is 97.5% zinc and 2.5% copper.

Who do you think profits from the substitution of less-expensive copper for silver and cheaper zinc for copper? Answer: not you

And if you think there are profits to be made by debasing coins, think about how much can be made with paper money and the government printing presses! Then consider that most of our money is nothing more than electronic blips in the bank's computers.

By debasing the currency, our government has engaged in systematic theft on a massive scale.

And whenever the government and its friends create new money, it makes each dollar you have worth less.

The government steals purchasing power from you and redistributes it to its supporters.The government buys votes with your future.

"Debasement of the currency" has always been understood to be immoral, the strategy of an unethical and imperialistic government. Our nation's monetary system is immoral to the core.

We need Honest Money. We need Just Weights and Justice. We do not need a government-imposed "Gold Standard," however.


The Limits of Monetary Policy 


next: Financial Deregulation

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