The first step in
replacing the Federal Reserve System is for Congress to require the Federal
Reserve to buy back all of its paper dollars with silver dollars because Paper
alone results in endless inflation. However, inflation eventually runs out of
values. When that happens the only viable solution is to return to “a hard
money” standard.
To start with, one must
keep in mind that money is simply a certificate for hours of work.
The only question, and
it is a difficult question, is how to make the change from paper back to gold
and silver coins.
History
Our current, Federal
Reserve System of paper money, is the third time our Nation has gone the paper
money route. The first time our Nation, as a Nation, went the paper money route
was the “Continentals” of our War for Independence The “Continentals” wee
issued as a debt. (Article VI “All Debts contracted and engagements entered
into , before the Adoption of this Constitution, shall be as valid against the
United States under this Constitution, as under the
Confederation.”)
. The Second time were
the “Greenbacks “ that were issued during our Civil War. The third time is our
current experience with the Federal Reserve notes.
Each of these times is
about 100 years apart, or 4 or 5 generationsapart. It seems that it takes three
generations to forget the problems of paper money, and one or two more
generations to again succumb to the “Sirene call” of a “free”paper money
system.
Despite all the
derivative ways in which money can be handled, such as in various investments,
eventually the only use of money is to buy hours ofwork from someone else.
All un-backed paper
money systems (such as the current Federal Reserve System) ultimately fail and
eventually have to be replaced by “hard money”, silver and gold. Because with
paper money, any time Politicians from time to time “want” money; the temptation
to “run the printing presses” overwhelms the politicians. What they leave out is
that an additional run of the printing presses is a form of stealing, stealing
hours of labor from the workers who worked those hours of labor. Eventually the
workers become
aware that they are not
getting full value for their hours of labor and they use their vote to elect a
different set of office holders to office.
Per Ludwig von Mises,
“Human Action” , The main advantage to a “hard money” system is that it keeps
the politicians from cheating the workers out of their hours of labor. Per
Ludwig von Mises, hard money also tends to eliminate corruption. Hard money
prevents the politicians from “living off the sweat of someone’s else’s brow”.
“Hard money” prevents politicians from stealing someone else’s hours of
labor.
Since silver coins (and
the supporting gold coins) are extremely heavy, certificates for silver have
been known at least since Biblical times. Not only have silver certificates been
known for at least a couple of thousand years, silver certificates, paper backed
by silver, with silver coins available to be exchanged for the paper on request;
and “gold certificates”, backed by gold coins have worked
well.
To get from where we
are, back to a “sound money system” , there are only two questions; ‘When’ to
make the changeover and “How” to make the changeover.
WHEN
?
When ? whenever those
who are workers, realize that they should change whom they are voting for and
they decide that they would like to make the changeover.
HOW
?
Historically, in the
United States, the changeover has been made by buying back the paper dollars
with silver dollars. At the time of our War for Independence, 1776 to 1789,
the, “not worth a
Continental”, dollars were issued as a debt against the Continental Congress.
Along with the adoption of the Constitution of the United States of America, the
“Continental Dollars” were purchased back from the citizens of the United
States.
Reference: the
Constitution of the United States of America; Article VI Section 1, “All Debts
contracted and Engagements entered into, before the Adoption of this
Constitution, shall be as valid against the United States under this
Constitution as under the Confederation.” and so the “Continental” dollars were
bought back at the rate of a silver dollar for a paper dollar., and the ensuing
financial well being of the Nation’s workers increased at the phenomenal rate of
about 20% per year peryear.
At the time of the
Civil War, Congress again issued un-backed paperdollars which were printed with
green ink on one side, so they were called “Greenbacks”. Along about 1876
Congress passed an Act to buy back the Greenbacks. The “Greenbacks” were
purchased back from the people during the years 1876 to 1879. Beginning in about
the year 1880 with a money system backed by silver, reportedly, the financial
well being of the
Nation’s people again
increased at the the still phenomenal rate of about 20% per year per year. The
“Fed” was formed in 1913. Initially the “Fed” did not issue paper money. All the
dollar bills and five dollar bills from 1913 onward into the 1940′s and later
were US
Treasury “silver
certificates” “payable in silver to the bearer”, or in the larger
denominations, up until 1933, gold certificates payable in gold to the bearer,
at any bank.
As everyone knows, with
out any backing, the value of our paper money has fallen, and in the opinion of
some people, the value of our paper money has fallen
precipitously.
Ludwig von Mises in his
book, “The Theory of Money and Credit” published in 1971 by the Foundation for
Economic Education, Part Four, Chapter III “The Return to Sound Money” pages 435
TO 460,lists perhaps a dozen or more things needed for a return to sound money.
Included in those things are the following:
1.
The
first step is an unconditional and absolute prohibition on issuing any
additionalpaper money.
2.
The
Fed to create a “conversion agency” using “specie” to buy back existing Fed bank
notes.
3.
During
the buy-back period, the “old” Federal Reserve notes can remain in circulation,
just that an equal value of Federal Reserve notes are to be removed from
circulation and to be destroyed to balance out all newly issued gold and silver
coins or certificates.
4.
Reestablish
a free market in gold.
5.
Imperative
that the individuals in policy making positions associated with the Fed should
be released from their positions, and not hired back into policy
positions.
Just Abandoning the
Paper Money Devastates The People
All of the alternate
programs that I have seen advocate just abandoning the current paper money, and
reverting to gold and silver forms of money.
However, as history
shows us, just abandoning the currently circulating paper money devastates the
financial well-being of the people. For example::
At the time of the
French Revolution, The French revolutionists hasseized all of the many
properties of the Catholic Church in France.Initially the value of those seized
properties were assigned to back the monetary value of the “Assignats” and for
the first year or two of that system, when there was no increase of the number
of Assignats issued, there were no problems with Assignats
In January 1790, the
value of the first issue of 1,860 million Assignats were equal in value to the
seized Church properties. Then January to May 1792, without any appreciable
number of added properties, an additional2,200 million more Assignats were
issued. In June to December 1792 another 2,750 million Assignats were issued. In
January to August 1793 4,950 more Assignats were issued. In September 1793 to
July 1794 another 8,450 millionAssignats were issued, for total of about 20,210
livres in Assignats. At about that time it became obvious that the paper money
Assignats were not being accepted and that a return to gold and silver must be
arranged.
In France the French
Revolutionary Government, in effect, simply discarded the Assignats. And the
financial well -being of the French people was devastated , and according to
some reports, it took about the next two generations for the French people to
recover from the financial losses of simply discarding all the paper
Assignats.
then in
circulation.
(Reference: “The
Assignats” by S.E. Harris, published by the Harvard University Press
1930)
Eliminating the Federal
Reserve Notes
Congress passed a
series of laws that established the Federal reserve system, therefore Congress
can pass a law, or laws that requires the Fed to buy back their paper with gold
and silver coins, (or fully backed certificates for gold and silver).
One of the uses of the
Federal Reserve was for them, directly or indirectly, to print the money needed
to to pay for the “Marshall Plan”.
The Marshall PLAN
began in April 1948. It was followed by a series of similar “give-aways”. For
example, in the mid 1960′s BF Goodrich supplied the “pickle line” tanks for two
(in the Philippines and in Turkey) of the five steel mills that were being
“given” to other Nations. For another example, in 1998 “we” “gave” a $1,800,000
paper-making complex to Indochina, and at about that same time we gave a 7
billion dollar steel making plant to Shanghai China. The estimates are, that in
the years since 1948 we have given 42,000 manufacturing plants to other nations.
Using an estimated cost of a billion dollars per gift, that comes out to be
approximately 42 trillion dollars that we have “given” to other nations in the
past 63 years. We have very little to show for those give-aways other than
approximately 42 trillion in “IOU’s” . Those IOU’s are held by the Federal
Reserve Bank.
If the Federal Reserve
Bank were to apply the the approximately 42 trillion dollars in “IOU’s”held by
them, the Fed would have theresources to buy back all of their paper at the rate
of a silver dollar for a paper dollar, and in addition, pay off essentially all
of our 13 trillion National debt.
Bill collecting is not
“nice” work, and the Fed will not “like” to do that kind of work.
However collecting on
loans, (being bill collectors), has always been part of the banking business.
Therefore collecting for the IOU’s they hold would be a normal thing for the
Federal Reserve Bank to do.
As the experience in
France with Assignats shows, merely canceling 42 trillion dollars in credits
woulddevastate the American economy for many decades into the
future.
Fini
Submitted by Robert
Kingsbury
Mr. Robert Kingsbury is a WW II veteran who served as a rifleman for General Patton. He is a first-term member of the New Hampshire House of Representatives and a speaker at Camp Constitution
