By Cliff Johnson
Money is a representation of someone’s personal production or accumulation of wealth that is accepted as a medium of exchange for goods or services.
Money is a representation of production, and in most cases, production is a result of manual labor.
For thousands of years, Gold and Silver have been widely accepted as money. Why? Of course its desirable beauty must be taken into account, but the real reason is because it represents labor or production. Gold and silver are rare metals where the ore must be mined, processed and worked into a finished product. See Gold Mining
What gives gold its value?
Being that gold and silver are physical representatives of actual labor, its value is based on the labor and resources that were expended to produce the final product.
Gold and Silver acquisition (of the past)
When a person worked or labored to earn money, many were paid in gold or silver. When that person accumulated the gold and silver as their earnings, it became a representation of their past labor and accumulated wealth and could be used as a currency. Some people were compensated with more gold or silver based on intensity of labor or difficulty of expertise. Based on the individual, they saved or spent their earnings, as they saw fit.
The Banker’s Scheme
There were several inconveniences of accumulating gold and silver; among them were two obvious instances: Portability and protection. To protect their wealth, people would deposit their gold and silver into a bank for safekeeping and when they needed funds, they would make a withdrawal.
When someone made a deposit, the bank would issue a certificate or receipt acknowledging the deposit and the receipt was redeemable for their gold or silver on demand.
Before long, people became accustom to accepting these receipts and were trading them instead of the actual gold and silver that they represented. This was a more convenient and secure way to transport and trade their money. After all, if the bearer of the certificate wanted the gold or silver, they would simply go to the bank and redeem.
Simple enough, right? Well the bankers began to realize that very few people were ever redeeming these certificates for the actual gold and silver. They ended up having large reserves of gold and silver on hand so they decided to take advantage of that situation. They began lending bank “notes” to people beyond the gold and silver reserves they had on deposit. A “Note” is a representation of “Debt”, not money. In fact the complete opposite of money. This practice is known as Fractional Reserve Lending. They began to write bank notes that were not secured by actual gold or silver deposits, and then lend them at interest. This is counterfeit money because it is “debt” being represented as “money”. They were actually lending counterfeit money and charging interest. However, no one would know the difference. The banks had enough gold and silver to cover the occasional certificate redemption, and the “bank notes” they were creating, that were not backed by deposits, looked strikingly similar to the previous certificates that were backed by deposits. With the public confidence in the banks, there would never be any question or any issue, and the people unknowingly continued trading these counterfeit bank notes amongst society as if it were money.
By the bank creating this counterfeit money, “bank notes”, they expanded the “Currency” supply by putting more bank notes into circulation than there was actual money (gold and silver) on deposit in their banks. This is known as “Inflation”. They compounded this problem by charging interest on bank notes. After all, where was the money coming from that would be used to pay the interest on the bank note? You must remember, that the money did not exist in the gold or silver deposits to begin with; therefore it had to be created from somewhere. So the banks just created more bank notes “counterfeit money” to cover the interest on the bank notes they had loaned out. The banks literally began creating bank notes (currency) out of nothing. They had no gold and silver securing the bank notes they were creating. As a result of “Inflation”, prices seem to be higher. What actually happens is the currency is loosing value because there is so much of it in circulation. The actual “value” of the goods and services remain the same. The “value” of a hamburger has never changed, it still provides delicious nourishment today just as it did 50 years ago. What has changed is the amount of dollars needed to purchase the same hamburger. There are TRILLIONS more dollars in circulation today. If you think things cost more money today, you are right, but you haven’s seen anything yet. Soon you will start seeing the effects of monetary inflation from tarp, bank bailouts, insurance company bailouts, auto bailouts, $8000 Government funded “Tax credits” to new home buyers, government funded Cash for Clunkers, etc. As I said, you ain’t seen nothing yet.
And so it continued in a vicious cycle that has spiraled so far out of control that we have landed where we are today. Understand that this process is no different than someone making Xerox copies of hundred dollar bills and using them at the grocery store. Or better yet, lending them to people at interest!
Over time, our central bank, The Federal Reserve, has changed the currency to look different and have different wording. But due to the abundance of public ignorance, most Americans are none the wiser that they are trading pieces of paper that represent “debt” not “money”. Our coins (Dollars, Halves, Quarters, Dimes) actually were made with 90% silver prior to 1965. They were actual “Money”. Now all we have is a worthless metallic alloy jingling in our pockets. They began making coins from a worthless alloy that looked the same and switched them out with our silver coins. Effectively robbing all of us of our silver. Let’s not forget FDR’s Executive Order in 1933 making it ILLEGAL for Americans to own gold. He ordered Americans to take their gold (Real Money) to the nearest Federal Reserve Bank and turn it in for paper money (Counterfeit Money).
FDR 1933 Gold Confiscation Act
So you think you have money?
Well, I am sad to say my friend, you don’t. You simply have pieces of inked paper or meaningless electronic digits that populate a computer screen that are now traded for goods and services out of ignorance and fear. The ignorance comes from the people who have no idea what money is, or even the purpose of money. The fear comes from our government who is perpetuating this illusion that the paper dollar is worth something. This scheme has been going on in the US for nearly a century and the Federal Reserve’s ultimate goal of total control of the money supply is nearly complete. The Federal Reserve, a private bank, was chartered in 1913 by The Big Bankers and the Progressives of the US Congress. The Federal Reserve, with the blessing of our federal government, has printed TRILLIONS of bank notes (AKA “The US Dollar”). The current US dollar in your pocket is worth less than 4 cents when it is compared to its value in 1912. We are talking the manifestation of TRILLIONS of counterfeit dollars. In the end, the banks end up with all the real money (gold and silver) and the unwitting depositors are left with nothing more than inked paper. This is how the international bankers have robbed the people of the world of their wealth. These are the bankers that laugh at us as we toil about our daily lives in pursuit of more of their counterfeit money while they hold the real money, gold and silver.
To reverse this a lot must be done. But the first step is to End the Federal Reserve System. The ability of the bankers and our government to print counterfeit money MUST be stopped. We must return to a sound currency of gold and silver and allow for competing currencies. Every state has the Constitutional right to COIN their own money provided that it is created from silver and gold.
America’s general lack of knowledge of monetary policy must also be reversed. Educate as many people you can. Start with yourself and your children. Money is common sense. If your gut is telling you that something is wrong with government monetary policy, trust your instincts.
Guy Tries to Sell Gold Maple Leaf for Face Value ($50)
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January 22nd, 2010 at 8:58 am
This is a question I tend to struggle with. I understand just enough to appreciate the banking model, but disagree that money must be backed by gold or silver; they have no more intrinsic value than a glass of water, which could be more valuable in the right circumstances.
Consider a barter society. I may trade you some beer for some wheat for example. No gold or silver involved. And wealth is created by our labor, not by the quantity of gold or silver available. Wealth is unlimited. That hamburger may cost more in dollars today but is actually worth even less because it is produced more efficiently than 100 years ago.
I do agree we are passing around a lot of genuinely counterfeit tokens of trade thanks to our government. The Federal Reserve is a part of the problem. I don’t really have much of a solution to offer, so I find myself being critical without contributing much. Not something I like to do.
January 19th, 2010 at 5:25 pm
Cliff
This is a very good over view of where we are today with our money. I agree with you we must return to the Gold standard. When we left the Gold standard in the late 70’s this country has only gone down.