MONEY

 

Genesis 13:2 And Abram (Abraham) was very rich in cattle, in silver, and in gold.

 

Commodity money can be cattle, silver or gold (or any other item of value).

 

Deuteronomy 25:15 But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have: that thy days may be lengthened in the land which the LORD thy God giveth thee.

 

CONGRESS AND MONEY

We started with a precisely defined dollar; the dollar was defined in the 1792 coinage act as 24.1 grams of pure silver or 27.0 grams of standard silver. Section 19 of the Act established a penalty of death for debasing the gold or silver coins authorized by the Act.

 

PROBLEM OF VALUE

From our beginning, the banks were allowed to create money in the loan making process; thus, with money creation, the money supply is increased. Usually, with the newly created money the wealth of the economy is also increased. When the wealth of the economic increase equals the money supply increase, there is no inflation.

 

When the money supply is increased and there is no increase in goods and service; the inflation of the money supply cause the price of goods or services to increase over time.

 

For most of United States history the Bank Reserve Rate has been held at 10% which history has shown, almost always produces inflation.

 

To do this job better, the “Constant Value Dollar” is proposed.

 

CONSTANT VALUE DOLLAR PROPOSAL

A constitutional amendment is proposed to define a “constant value dollar.”

·       As the economy grows and now I have ten times as many buildings as before, and if the money supply stays constant the dollar value of the increase supply of buildings must drop as there are now 10 times as many buildings to be bought by the original amount of dollars.

·       So it appears that we must allow the number of dollars in the system to grow so that the per building price will stay constant.

·       To accommodate a downturn of the economy and keep prices we would decrease the number of dollars in the system.

 

THE PROPOSED AMENDMENT

The “Bank Reserve Rate must” must be controlled by the congress and must be adjusted as needed to bring about a CONSTANT VALUE DOLLAR. The VALUE of the CONSTANT VALUE DOLLAR must be tested and shown from time to time to be probable that the DOLLAR’s VALUE remains within the limit of plus or minus one tenths of one percent of the Constant Value. And it must be improbable that the DOLLAR’s VALUE would exceed the limit of plus or minus one tenths of one percent.

 

BANK RUN

Banks are required to carry a “reserve” of 10%; if they have a million dollars on deposit they must have $100,000 on hand; (in reserve).

 

Banks always create money in the process of issuing a loan, and almost always their “spread sheet” of deposits is greater than the banks supply of gold or silver or paper money.

 

If that bank’s customers, in mass, line up to withdraw all their money; the bank will be forced into bankruptcy. https://en.wikipedia.org/wiki/Bank_run

 

The Congress “fix” (more of a bandage) was the creation of the “Federal Deposit Insurance Corporation” FDIC which is a promise that the government will cover your losses – up to their artificial limit.

 

GOVERNMENT GAINS POWER FROM INFLATION

Example, grandpa, at age 20 buys property for $30,000; 60 years later he sells the property for 90 times what he paid for it. The capital gain: $2.7 million minus costs. If grandpa had made no improvements the gain would be $2.4 million.  ALL of the gain in this example was from inflation.

 

Grandpa pays 15% capital gain tax of $360,000. If we had zero inflation grandpa would pay zero tax.

 

This is a made up example of how government gains power from inflation.

 

The people are mostly better off with no inflation, although it is comforting when every year you count your blessings and you look at your house and say my house is now “Worth” double what I paid for it.

 

When sold, some may be subject to the capital gain tax and the money left over is about half the value of the money was worth when the house was purchased. The primary thought is to understand why some entities love inflation.

 

The idea is that we are better off with no inflation. I will work for zero inflation.

 

WHAT IS MONEY? 

Money is an article of “value” (or promise of value) that can be easily and precisely traded for other valuable materials. Money can be made of paper, or junk metal, or can be a number on a signed check (each of the three representing a promise of value), or precious metal which has intrinsic value. If there is integrity; the substance does not matter.

 

To prepare for the revolutionary war the Continental Congress borrowed what they could, were subsidized by France and printed paper “Continentals” as needed. The Continental had a Promise statement on the note that is was redeemable in gold or silver (dollar for dollar).

 

The expediency of the war needs inflated the supply of the “Continental” and partly accountable to the lack of understanding of the Congress of the “Continental” instrument, it became virtually worthless at the end of the war. The silver and gold coins existing then maintained value because they have value in themselves. (Commodity Money)

 

During our many years before about 1965 we mostly used precious metal coins and silver certificates and checks; and the people endured the inflation; and as time moved we developed faith in the silver certificates and the idea that our money was backed by precious metals.

 

The Shift To Fiat Money 

In 1965 the government ended circulation of the silver certificates and in 1968 it terminated redemption of silver certificates for silver and silver certificates are treated as federal reserve notes. Since 1970 all coins minted for circulation as currency are clad coins with no silver content.

 

Since the termination of precious metal backing of our money we have possibly completed the circle and are coming close to repeating the “Continental” which people lost faith in and it lost almost all of its value.

 

The government, between 1981 and 2016 has inflated the M2 money supply, from $1.6 trillion in November of 1980 to $13.8 trillion in December of 2017. That is approximately a 5% per year increase in the money supply. With these huge increases in currency it moves a person to think of Weimar, Republic, now known as Germany and the possibility of hyperinflation here.

 

There nothing intrinsic about gold or silver that makes one form of money more preferable over the other. The real issue is the control of how many dollars exist and the integrity of the government. Our Congress has failed the integrity test; therefore, the above constitutional amendment is p

roposed.

 

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