Sound as a Dollar

The spiritual and intellectual roots of the Coinage and “weights and measures” clause of the Constitution lies directly in the Old Testament. Consider for example, the following Old Testament references:

Deut. 25:13–16 ¶ Thou shalt not have in thy bag divers weights, a great and a small. Thou shalt not have in thine house divers measures, a great and a small. 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. For all that do such things, and all that do unrighteously, are an abomination unto the LORD thy God.

Lev. 19: 36 Just balances, just weights, a just ephah, and a just hin, shall ye have: I am the LORD your God, which brought you out of the land of Egypt.

Ezek. 45: 10 Ye shall have just balances, and a just ephah, and a just bath.

Amos 8: 5 Saying, When will the new moon be gone, that we may sell corn? and the sabbath, that we may set forth wheat, making the ephah small, and the shekel great, and falsifying the balances by deceit?

Prov. 20: 10 Divers weights, and divers measures, both of them are alike abomination to the LORD.

Micah 6: 10 ¶ Are there yet the treasures of wickedness in the house of the wicked, and the scant measure that is abominable?

In order for both buyer and seller to deal justly with one another there has to be standardized weights and measures. The same thing applies to money, it can’t be fluctuating in its value, if both buyer and seller are to be justly treated.

Yet, today, we have a managed currency under the Federal Reserve System. It is a debt money system. Every “dollar” that is in circulation exists because it was borrowed, from someone, at sometime, somewhere, into circulation. Because it was borrowed into circulation then it represents a debt and needs to be repaid, with interest. Look at your paper money. At the top it states: Federal Reserve Note. It is just that, a note, and represents debt.

When that debt is repaid it extinguishes those particular notes, and they no longer exist. When debt repayment is large and widespread the money supply shrinks overall and a deflation occurs.

Provide easy and unrestricted credit then artificial booms become the norm. Inflation of the money supply (as well as the price of everything else) results. Either way, it is a managed currency and can be manipulated in certain ways, and it is a fluctuating medium of exchange.

Former Congressman Charles A. Lindbergh Sr. figured it out. He figured out that, “From now on, depressions will be scientifically created.” The depression of the 30′s was caused by the credit expansion of the 20′s and then a contraction, all of it engineered by the Federal Reserve. Since then, all of the recessions and periods of inflation have been caused by the credit expansions or contractions of the Federal Reserve. Every recession and periods of inflation are caused by the Fed. They either expand or contract credit.

Contrast this Federal Reserve debt system with a credit money system. Under the original Constitution, and due to the 1st Coinage Act of 1792, anybody could take their gold and silver bullion to the mint, have it coined, and then returned back to them. It was a system where the people (along with the cooperation of the mint) created the money, so they were in control, not the government. It was a positive, wealth building, credit money system rather than its opposite a negative wealth destroying (through inflation) debt based money system.

A friend once asked me, “how [then does] a finite quantity of gold handle an expanding economy, [which] expand[s] at an increasing rate, up to [an ever expanding] point?” To which I answered, “supply and demand.” The supply of gold and silver doesn’t fluctuate, except at the rate at which new gold or silver is mined, which when compared to the total supply of gold or silver in the world is relatively negligible (except for very rare occasions such as the Spanish conquest of Mexico, Central and South America).

Since the supply of gold and silver is relatively stable it’s “value” can fluctuate only according to the demand of it. In an ideal world where only gold and silver coins were money, and there was no such thing as paper money, an “expanding economy” would place more demand for gold and/or silver coins. Because in an “expanding economy” there are more things to buy each coin could buy more things than they did last year or ten years ago.

There is no need for paper money to meet the demands of an expanding economy. And it is one of the biggest lies and myths that somehow there is not enough gold and silver in the world to be money. If there is more demand on money (gold and silver coins) then the value of money (gold and silver coins) goes up to meet the demands of the economy. If there is less demand on money (gold and silver coins) due to whatever reason, then each coin buys less. It’s actually pretty simple, but economists have pretended to make it more complicated then it actually is. The reason gold and silver (and everything else) go up in today’s economy is because there is more and more paper money being made.

Paper money needs to be demolished and done away with. There is no need for paper money. If a private citizen or group of citizens wants to use checks drawn upon a local bank (remember only gold and silver coins are money) that is perfectly permissible. If a private citizen or group of citizens wants to use credit or debit cards issued by a local bank (remember only gold and silver coins are money) that is perfectly permissible. There is really no need to carry a big bag of gold coins to the car dealer to buy a car since a check, credit or debit card, or perhaps some other kind of financial instrument, will suffice. Besides, in reality, because of the great demand for gold and silver coins in an expanding economy, you’d probably only need a few gold coins to buy that fancy new car, and not a big heavy bag.

Many have also asked me questions like, “why can’t we use paper money backed by gold and silver coin?” Here why. Under the original Constitution, the power to issue “Bills of Credit” or otherwise “redeemable notes” was a power denied to the Federal Government on August 16th 1787. Money was simply gold and silver coin. Period. No paper notes. Nada. Zilch. There was no crack left open by our founders for government thieves to sneak in.

The Constitution gave Congress the power to fix a standard of weights and measures. Interestingly enough this power was granted right after the power to Coin Money, etc. Under the 1st coinage act of 1797 it was a silver standard. The Dollar was defined as 371.25 grains of silver. And the official  unit of account of the United States was the Dollar. Further, the standard, just like the standard for the mile, inch, yard, pound, gallon, or ounce etc., was to be “fixed and certain.” I’m not saying that Congress could never change it, but it probably should not changed for light and intransitory causes. Otherwise why even have a standard at all?

Not by accident but by design, the Constitution gave Congress the power to also “regulate the value” of not only our domestic gold and silver coin but also foreign coin. This meant that all other coins besides the “Dollar” were to regulated against that standard. So if you had a silver coin that had 3712.5 grains of silver in it it would be of the value of Ten Dollars. Congress was also to determine the free market ratio between Gold and Silver. In 1792 the ratio was 16:1. So if a gold coin contained 1/16 of 371.25 grains of gold (a little over 23.2 grains of gold) it would be of the value of one Dollar. It didn’t matter if the gold or silver coins were domestic coins or foreign, all were regulated according to the standard.

Very simply really. Too bad so many think the founding fathers, who setup such a great system, were economically and politically backwards.

About Steven Montgomery

Steven Montgomery is a happily married, fifty-seven year old father of four (2 natural sons, 1 step-son, 1 step-daughter) and is an active member of the Church of Jesus Christ of Latter-day Saints. Steve has taught at a private secondary school, is a published journalist, and operates (on an occasional basis) the Perfect Law of Liberty website.
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9 Responses to Sound as a Dollar

  1. Thanks Steve for another great article!

  2. Steven Montgomery says:

    Thanks Greg.

  3. The have two problems with an all metal money system.

    Most of the known gold in the world is currently in the control of the Rothschilds. THat means they can manipulate its value just as they do today.

    2nd: Science will soon allow us to change iron or lead to gold. When that occurs what will the back up plan be?

    Also:

    When Cortez and other Europeans plundered America and shipped the gold booty back to Europe… inflation resulted because the supply of gold currency increased in relation to goods and services.

    In the 1860’s when the mines of Virginia City, Nevada were in peak operation the gold and silver backed currencies of Europe were destabilized because of the huge and rapid increase in the supply of these metals internationally.

    Franklin Roosevelt also inflated the money supply by manipulating the value of gold and decreasing the value of the dollar. Before Fraudlin Deficit Russiavelt instituted his money manipulations $20.00 would purchase an ounce of gold… after F.D.R. it required $35.00 to buy an ounce of gold. Fraudlin went so far as to deprive sovereign citizens the right to own gold.

    Gold is not God. It is subject to manipulation and fluctuations and will not buy redemption from dereliction of duty, fraud, conspiracy or stupidity. Scripture reminds us, “When the wicked rule, the people mourn.” The cost of Liberty is eternal vigilance. Congress has the power to create and regulate the value of money and Sovereign Citizens have the duty to see that wise and honest men are elected to Congress.

    When tyrants are in control it is our Christian duty to throw the Rascals out as did our Founding Fathers.

    AS long as the Rothschilds control Congress and the Presidency as they have for over 100 years (with the exception of Kennedy) we will still be ruled by the wicked.

    Mormons are, for the most part, practicing Marxists since they do not know what a dollar is, take their children to Marxist government schools, have Social Security Number cards, pay the VOLUNTARY Marxist tithing called the Income Tax and because they support either Democrats like Harry Reid or Republicans like Orrin Hatch. The Democrats are essentially Marxists and the Republicans are essentially Financial Fascists.

  4. Steven Montgomery says:

    Christopher,

    When you compare the increase in supply of gold or silver to the overall economy the fluctuations in value are negligible compared to the fluctuations that happen under our current debt money system. That’s like comparing apples to gold. ;-)

    Even if man can transmute certain elements into gold or silver the energy, and hence the amount of money needed to do so, required to do so is prohibitive. Still far out in the future, if at all.

    Practicing members of the Church of Jesus Christ of Latter-day Saints (Mormons, as you call them) have been commanded to eschew Communism and socialism, and to avoid false philosophies of the world such as that preached by Karl Marx. When the wicked rule, the people suffer.

  5. Kerry Watson says:

    Mr Montgomery,
    Thank you for the article. Good topic.

    I would be interested in your perspective on a some questions for consideration:
    1) How is issuing paper currency redeemable in metal (gold/silver/copper) any different than writing a check or payment through an electronic transaction such as a credit/debit card that is likewise redeemable in metals?

    I don’t see the real difference between paper currency, checks, and electronic (debit/credit cards) currency as each is a substitute for metals. Seems as though each form of transaction would be at risk for counterfeiting. On the other hand, the benefit would be that in each case, it makes the transaction easier as I don’t have to carry around metal coins and it is easier to divide the currency to an exact amount.

    A related point not addressed in this article is the fallacy of fractional reserve banking. Have you done any writing on this point? This is also a fundamental flaw that enables inflation and manipulation.

    Finally, what options do we have to return to sound money or honest money? Any thoughts on how we can move away from the Federal Reserve and fractional reserve banking system for transacting business?

    Thanks.

  6. Steven Montgomery says:

    Kerry: Thanks for the questions. Let me try to answer them.

    If I understand you correctly and can paraphrase, you ask why can’t we use paper currency redeemable in gold or silver coin? And then you ask about fractional reserve banking. Let me tie these two questions together in my answer.

    First of all the founders wanted to shut and bar the door against paper currency and so they prohibited the federal government from the power to issue bills of credit. On August 16th 1787 during the Constitutional Convention the delegates voted this power down and denied the power to the federal government. Then on August 28th 1787 the delegates not only prohibited the states from issuing bills of credit but also made it imperative that the states could not make “any Thing but gold and silver Coin a Tender in Payment of Debts.” Roger Sherman was reported by James Madison to have said, “We are making these measures absolute. This is a favorable crisis for crushing paper money. If the consent of the Legislature could authorize emissions of it, the friends of paper money would make every exertion to get into the Legislature in order to license it.” So paper money was outlawed by the founders.

    Second, Joseph Smith, because of his experience with paper money stated: “I consider that it is not only prudential, but absolutely necessary to protect the inhabitants of this city from being imposed upon by a spurious currency…I think it much safer to go upon the hard money system altogether. I have examined the Constitution upon this subject and find my doubts removed.” (Feb. 25, 1843. Documentary History of the Church 5:289-290)

    I have not written anything specifically regarding fractional reserve currency, but I have written this article regarding the founders intent regarding a monetary system:

    http://www.ldsliberty.org/eagles-and-dollars-a-case-of-monetary-apostasy/

    Regarding your last question, we simply need to abolish the federal reserve system and return to gold and silver coin. Congressman Ron Paul has tried to do exactly this. We need to get more Congressmen that have the founders understanding before any real changed can be effected in this area.

  7. Steven Montgomery says:

    Kerry Watson asked, “Any thoughts on how we can move away from the Federal Reserve and fractional reserve banking system for transacting business?”

    To which I respond: In February Seth Lipsky, who is the founding editor of the newspaper, The New York Sun as well as many other achievements, gave an address at Hillsdale College where he addressed this very question of a floating currency and how we can get back to a more stable currency. Lipsky touchec on the importance of standards (weights and measures) and how those standards should be fixed and certain in order to conduct business fairly. As well as the importance for a monetary standard which is fixed and certain and does not fluctuate.

    His solution is simple. Get rid of the Federal Reserve, and a floating dollar, by overturning the legal tender laws over the issue of judges compensation. Article III, Section 1 states that the compensation for federal judges shall not be diminished while they are in office. If we have a floating dollar and the value of a dollar diminishes during the tenure of a judges appointment then that is a violation of the Constitution and a suit should be brought addressing this issue. Brilliant! A great idea to get rid of the Federal Reserve and get a standard for the dollar that is fixed and certain.

    Read Lipsky’s great article here:

    The Floating Dollar as a Threat to Property Rights

    Or download a PDF file of his talk here:

    The Floating Dollar as a Threat to Property Rights: PDF File

  8. Thanks again for the references Steve.

    Over the years, leaders of The Church of Jesus Christ of Latter-day Saints have reiterated these teachings. For example, in 1896 George Q. Cannon felt that any attempt to replace gold and silver coin as tender in payment would be an infringement upon the Constitution when silver proponents attempted to strike down gold.

  9. Kerry Watson says:

    Steve,
    thank you for your replies. I know I am slow in responding. Your other article on the history of the SILVER dollar was excellent.

    I really enjoyed the floating dollar threat to property rights article as well. easy to understand and explain to folks.

    I came across this article by Cleon Skousen (link below) where he suggests that Zion and the New Jerusalem will depend on gold/silver as the currency. Here is the quote:

    The money system will be based on gold and silver with silver as the basic medium of exchange and gold circulating at free market value. Paper money issued by the government will be redeemable in precious metal and have reserves in the vaults for any currency issued. Borrowed money will be based on guaranteed collateral at market value.

    http://www.latterdayconservative.com/articles/what-we-might-expect-in-the-next-twenty-five-years/

    I don’t know where this is documented. It seems as though Skousen assumes that will be the case since that is how it is outlined in the Constitution.

    Thought you might find it interesting. I will check back to see you if have any further insight on skousen’s comments.

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