Let's End the Money Racket (VIII)
The value of the US dollar would stabilize "over night".
Last time we examined what needs to be done to restore the value of the US dollar, to put an end to statutory counterfeit, to undermine the greatest theft in the history of humankind, and to diminish greatly all of the social ills to which this theft and associated corruption contributes. In addition, we explained that we can keep the convenience of paper, plastic, and electrons without sacrificing the integrity and value of the dollar. In fact, all of the paper, plastic, and electrons currently in existence would remain in circulation with one major exception: each time a Federal Reserve Note were paid into a bank it would be replaced by a new and different note that on its face would read something to the effect:1
This note is redeemable for 15.3 grains of silver.
or, but not both
This note is redeemable for 0.18 grains of gold.
These new notes would be issued by the Bureau of Engraving and Printing at the direction of the Office of the Comptroller of the Currency. For each new note issued an old note will be destroyed.
Like the Bureau of Engraving and Printing (BEP) the Office of the Comptroller of the Currency (OCC) is a subdivision of the US Treasury. It would become responsible for the oversight of a greatly transformed Federal Reserve System whose new job would be to insure that statutory counterfeit is not issued among its member banks. (We will discuss this matter in greater detail later on).
In the long run these new paper notes would likely become obsolete as American citizens become increasingly accustomed to conducting their daily affairs with plastic and electrons. We have only to insure that these latter, modern currency forms are not used to track our purchases by any government organization. For, this would be an infringement on our privacy as individual citizens of the United States of America and a breach of the principles of American governance at their core.
Because the creation of all forms of counterfeit — including statutory counterfeit and money surrogates such as the current Federal Reserve Note — would be forbidden, the number of dollars in circulation no matter their form would not change. The market for BitCoin could remain as the US dollar would be declared legal tender and in a court of law a defendant who holds BitCoin could be compelled by the plaintiff to pay in US dollars. In this regard, BitCoin would be just another tradable commodity that is priced against the US dollar.
This proposal is not an assault on crypto-currency. As promised we will discuss this matter in greater detail later on.
Important is that the purchasing power of the dollar would vary with the supply and demand for the selected metal and the overall demand for the dollar, and that this price variation would be slight because the demand for the dollar is so great and the change in the supply of the underlying metal is trivial as a proportion to its total supply. In other words, the wide swings in the price of precious metals that we witness today could not occur.
Let us explore this latter notion in some depth.
Firstly, precious metal is rare and holds its energy content well across time. Accordingly, it does not behave as do most other goods that are readily consumed and easily replenished. In effect, the supply of precious metals is forever increasing, but it increases at a constant or even diminishing rate. This is because the annual addition to the already abundant supply is slight. By way of example, even if the entire gold industry were run by a single monopolist, which it is not, the monopolist would have very little effect on the total supply of the metal. Consider the following:
To measure the rate of increase of anything we need three values: a time interval, an initial value, and a final value.
In the above expression (t + 1) - t equals one interval of time. Let us assume that the interval is one year. Furher, let
represent the addition of newly refined metal to the total supply of the metal between the years t and t + 1. Dividing this change by the total supply of the metal in year t and multiplying by 100 yields the percent rate of change (or growth) of supply for the period t to t + 1.
By way of example, between 1972 and 2022 the average annual increase in the supply of gold was between 2,300 and 2,500. The estimated global supply of gold in 2022 was 205,238 metric tons. If we divide 2,400 by 205,238 and multiply by 100 we obtain an average annual rate of increase of 1.17 percent.
For the same 50-year period the average annual increase in the supply of silver was between 18,000 and 20,000 metric tons and the estimated global supply of silver was 1,740,000 metric tons. If we divide 19,000 by 1,740,000 we obtain an average annual rate of change of 1.09 percent.
Both of these values are well below the average annual rate of increase in real global GDP that was between 3.3 and 3.5 percent for a similar period. In other words, the supply of silver and gold in the world is increasing at approximately the same rate, and both rates vary with little fluctuation. As the amount of precious metal associated with each dollar would not change across time (recall that we will have fixed the quantity of metal associated with each dollar) the purchasing power of each dollar would increase at a rate of about two percent every year, and the prices of goods and services would decrease by approximately the same amount. In effect, three percent minus one percent equals two percent.
The advocates of the “effervesce-up” system of theft that destroys the “trickle-down” theory of real wealth creation typically recommend an incremental price increase of two-percent a year. It makes no sense that we should prefer a two-percent general increase in prices with a two-percent decrease in the purchasing of our money supply, when we can enjoy a two-percent increase in the purchasing power of our money supply and a two-percent decrease in our general price level without the theft and the absolutely deteriorative effect that this theft has on our social fabric.
Deflation is only bad,
when your goal is to transfer real-wealth from the bottom to the top via inflation.
Downward price spirals only occur, because there are upward price spirals.
These spirals cannot take place across entire economies
when the money supply is fixed to the real economy!
Secondly, there are currently about 20 trillion US dollars in circulation throughout the world. This money is in the form of physical cash, bank deposits, and financial instruments — these latter are primarily in the form of US Treasury bills, notes, and bonds. Approximately 8.4 trillion of these 20 trillion US dollars are held overseas. This leaves approximately 11.6 trillion in circulation in the United States. The demand for these dollars is neither industry specific, nor particularly undemocratic. Everybody needs them to participate in the market place. Furthermore, because gold and dollars — or alternatively silver and dollars — are now substitutable in their use as money, there is little that individual speculators — even foreign governments — could do to effect the relative price of either metal on the open market. In effect, the instability that we currently experience in the market for these metals would largely disappear.
There is still one more important point that we can make before we close this aspect of our study of the ramifications of fixing the value of the dollar to some amount of precious metal. (There are still several more aspects that we should consider before we close this series of articles). At some point it would become clear to everyone — certainly those who are very knowledgeable about the markets for precious metals and money in general — that the amount of metal associated with each dollar were now enshrined into the US constitution, and that all forms of counterfeit including statutory counterfeit were constitutionally forbidden. At this point the US dollar would become the most valued money in the world, the future of the American dollar would be secure, and the fear of a sudden drop in the value of the US dollar overseas and the wisely believed, associated implosion of the US economy would disappear without a trace.
In liberty,
Roddy A. Stegemann, First Hill, Seattle 98104
Author of Mount Cambitas - The Story of Real Money and “A Call for the Restoration of Monetary Order (Parts I and II)
A grain is a measure of weight. Four hundred eighty grains make one Troy ounce. A Troy ounce is slightly larger than an ounce used to measure weight in the United States. There are approximately 15.4 grains in a gram. The Troy ounce once formed a part of a system of weights and measures that dates back to the beginning of the Holy Roman Empire in a small city of France called Troyes. Troyes, France is located to the southeast of Paris along the Seine river.
Selecting this system of weights and measures to count the metal content of the new US dollar would be particularly appropriate for two reasons: one, the system predates the founding of the Bank of England and the institutionalization of statutory counterfeit; and two, it would celebrate the founding of Western civilization as we know it today — namely, the merging of the Greek and Roman systems of governance and the culture of the Christian faith under the Holy Roman Empire.
Yes, we are Americans, and we can go our own way, but our way of life is under attack, and we should charter our future course carefully. The metric system would play into the hands of the globalists, and the US pound system would isolate us from those cultures with which we share the greatest affinity.