Our founding fathers Madison, Jefferson, Paine, Jay and Franklin to name a few, provided the perfect blueprint for societal and economic failure as well as a comprehensive “how to” guide for tyrants and despots. Such a blueprint can be seen on the photographic negative of their wisdom; in other words if we do the opposite of their advice we beg for failure.
Thomas Jefferson said,
“The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.
The situation Thomas Jefferson described is going on before our very eyes. Over the past couple of years, in the real estate and construction markets, we have watched one of the largest evaporations and transfers of wealth the world has ever seen. Children are waking up homeless. I think we can all agree our central bank; The Federal Reserve and the Congress of the United States are largely complicit in this melt down. They have done this by printing money out of thin air which devalues in kind the money in circulation, and by manipulating the rate the money can be let out (controlling interest rates); as consequence great fiscal moral hazard was encouraged and further supplemented by altruistic lending laws and government loan insurance i.e. Fannie May and Freddie Mac.
The very keystone or should I say ace of spades in this house of cards is the departure from the use of an universally valued and accepted intermediary good (such as gold or silver) as currency, replaced by a manipulated fiat currency; the US dollar. The manipulation of the dollar by the Federal Reserve and the efforts of the Congress to stimulate usually yield either temporary results that merely delay the inevitable, or the inverse of their goal. This leads us to two possible conclusions on the actions of our financial overlords; they are involved in devious collusion or they are incompetent, neither should be tolerated. Returning to a silver standard as an intermediary good used in trade would heal much of these ills.
The government has always been involved in our currency. The Coinage Act of 1792 defined the first American Dollar,
The money of account of the United States shall be expressed in dollars or units … of the value [mass or weight] of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure … silver.
Or .7734375 troy ounces.
Our government’s initial involvement in money was one to define a tangible standard of weight and quality, easily measured, in order to prevent fraud and establish a standard of trade. They gave the dollar no value; they left that to the free market. To this we must return.
We departed from the Gold/Silver standard, largely under FDR based upon the guise that it was a temporary and due to a national emergency. Nixon finished the job with his declaration that we had entered the Keynesian age; an economic theory of governmental control and subjective ambiguity.
It is too often the case in times of national emergency we give up bits our liberty, for safety. Sometimes Liberty is restored, sometimes exchanged for license, sometimes lost forever. Accordingly in a time of economic emergency we gave up our secure standard of wealth for an ambiguous one, the paper dollar. We lose our Liberty in times of crisis, with laws like the Patriot Act and the departure from the gold/silver standard. We lose our Liberty in times of plenty via governmental altruism. Both examples infringe upon our Inalienable Rights and break the Natural law.
The growing popularity of a not particularly handsome nor dazzlingly eloquent, Ron Paul as evidence that the message of a backed currency has hit main street; the common man is getting it. So I ask each of you to consider, who would you rather take advice from, Ben Bernanke, Timothy Geitner and Barney Frank or Thomas Jefferson. We must return to the ways of our fore fathers. We must return to a currency backed by a universaly valued durable good; gold or silver.