My 1985 thesis from George Washington University Economics Department examines the factors contributing to and culminating in the
political appropriation of the monetary unit by outlining the stages of
the politicizing or nationalizing process.
Wednesday, March 18, 2009
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{Below, I post thoughtful comments from a friend.}
ReplyDeleteJon;
Thank you for referring me to your 1985 work on the monetary unit, which I have now read (and enjoyed). Following please find a few of my comments on your work:
On page 5, you relate to “non-political monetary unit based on mutual trust or the intrinsic value of the unit”, under which the latter must fall gold and silver coin. You then detail that this “monetary unit” is “eventually transformed into a political monetary unit based on State authority”.
Monetary Laws was written precisely to answer such a question as to which you next relate: “Precisely how does this complete transformation occur?”
Monetary Laws answers that our transformation from the intrinsic value of our monetary unit to a “political monetary unit based on State authority” was performed through mere deceit and trickery. We first (in 1862) began using the monetary unit (based solely on State authority) of another political jurisdiction (the District of Columbia), and later (1933 and 1965, respectively) imprudently cast aside use of our gold and silver.
Under the whole of the Constitution, save for Article I, Section 8, Clause 17, our federal government has no proper “prerogative” to issue a monetary unit without intrinsic value. Within the seat of government, however, since Congress may enact law in excess of normal constitutional restraints (since they are enacting local laws as would elsewhere be handled by States), Congress may here issue a arbitrary monetary unit based upon government authority (since the prohibitions of Art. I:10:1 which apply to States do not apply to Congress acting in their local capacity for the government seat).
Thus, since this masquerading of the District of Columbia dollar in place of the U.S.A. dollar of gold and silver is certainly not done with full disclosure, we have merely been deceived into using a paper currency which has anything but a stability in the measure of value, which you state would then rarely come into question if there was such stability.
On page 15, you detail that the State’s task and assumed responsibility (and I might add its constitutionally-imposed duty [by way of Art. I:8:5]) is to certify the “weight and purity of the metallic materials which circulate as money”. How sad it is that Congress have failed at such a simple and proper task.
On page 16, you relate of the State’s “new prerogative of political issuance” to “extend the power and influence of the political authority”. This is precisely the reason I have written Monetary Laws, to expose the exact deceptive nature by which the State has surreptitiously assumed this “prerogative of political issuance” and to remove that weapon from their arsenal when dealing with the whole country.
On page 24, you state “Banks should not be prevented from failing”. While other countries seem to work from the viewpoint of preventing business from succeeding, ours seems to have adopted the mantra of keeping them from failing. Of course, both are detrimental to freedom.
On page 27, you state that Lawful Money “refers to the types of assets that banks may legally count as reserves against their deposits”. I am unsure that they isn’t more to it than that. The term “Lawful Money” did not show up until the February 25, 1862 legislative act which instituted the Civil War greenbacks as a legal tender and lawful money. It wasn’t until the February 25, 1863 act, however, when the national banking associations were created and allowed. Thus it seems there must be more to the term, since it was a full year before national banks came into existence that there was a lawful money.
{Part 2}
ReplyDeleteOn page 28, I would caution against a blanket statement that the “dollar” is now an “intangible unit of value”. I would certainly admit that the dollar in common circulation in the U.S. is such, but I also have, for instance, a 1995 commemorative dollar coin with 412.5 grains of silver 9/10ths fine, or the same 371.25 grains of silver as found in the dollar since 1792 (in the same purity since 1837).
The dollar of the United States of America remains only a coin of either gold or silver, we simply have been using the dollar of the District of Columbia, an intangible unit of the alternate jurisdiction for which Congress may enact legislation (only here not with the Constitution’s normal restrictions [which were meant only for Congress when enacting law for the whole country]).
Also on page 28 you state that “value is only momentary, so the standard measurement unit must always be changing”.
With latter statement, I would emphatically disagree, but I think our differences stem primarily from different viewpoints for the term “value”. I guess what you consider “value”, I would hold as the “purchasing power” of that monetary unit.
I certainly agree that the purchasing power of the dollar monetary unit would be momentary, and thus always changing, but I hold the monetary unit itself, the dollar, should be fixed as a given quantity and purity of silver or gold.
The dollar was instituted in 1792 as America’s monetary unit of value, its fixed measure of and for value. How much purchasing power that fixed measure of value contained at any given time would necessarily change with the changing market conditions, but the meaning of the value unit—the dollar—was fixed (as 416 grains of silver 1,485/1,664ths fine [changed in 1837 to 412.5 grains of silver 900 fine, for the same 371.25 grains of fine silver]).
Your comment on page 15 about the government’s sole role to certify the weight and purity would seem to agree with my viewpoint, though we seem to give different meanings to the same term (value).
Your statement on page 36 that “political” money “necessitates a fixed standard of value” has the effect of “artificially maintaining a constant measurement of value for everyone” has thrown me somewhat for a loop, for I do not know if by “political” money you include gold and silver coin which has been held by the State to be money.
Just as Art. I:8:5 delegated power to Congress to coin money, it also delegated power for Congress to establish a standard system of weights and measures. Thus the dollar was later established as the monetary unit for the measure of value (which was fixed in 1792 as 371.25 grains of fine silver, with a gold equivalency).
I cannot tell from what I read of your work if you have a problem with that establishment as a fixed standard of value (with the dollar’s purchasing power varying over time).
Your statement on page 36 about the “conscious and deliberate strategy to appropriate the monetary unit and employ it as an instrument of power” that I have sought in Monetary Laws to “dis-appropriate” from the government which improperly appropriated it in the first place.
Thanks for referring me to your article, I thought our works complemented each other quite nicely, regardless of the difference in time which they were written and despite the differences of the foundations from which they were written (yours based more upon economics and political philosophy, mine from the basis of America’s monetary laws).
In liberty,
Matt Erickson