December 27, 2018 - A Preamble
When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
In 2011, I published a book about the United States Debt - it went on to become a national best seller. Well, not really. I did publish a book, but it wasn’t a runaway success; who knew that a historical and technical analysis of federal spending didn’t appeal to the masses?
In any event, I used the preamble of the U.S. Declaration of Independence to point out how America has become similar to the same tyrannical government it sought to separate itself from. And perhaps no power a government has is more potent than the power to control the money supply; given its history, America should know better.
Inflating money is nothing new. Earlier civilizations like the Romans didn’t have a printing press, so they simply debased their coins. The American colony of Massachusetts, following in the “innovative” thinking of the Chinese (whose government issued paper notes appeared in 9th century), printed large amounts of promissory notes in the 1690s to help finance raids on French settlements; after the raids failed, the notes were followed by several issues of fiat paper money. By the 1750s, all the colonies had joined in the fiat money game, leading to rising prices and the familiar boom/bust business cycle which are still experienced today.
By 1764, Parliament outlawed the new issue of colonial paper money. But with Pandora’s Box now open, the colonies would return to paper money to help finance the Revolutionary War. What started as $2 million of "Continental" paper in 1775 would eventually reach $225 million; by 1781, the “not worth a Continental” money was worthless.
With the painful lessons of past history as a guide, the new U.S. government attempted to prevent any future printing presses through Article I, Section 8 (giving the federal government the right to coin, but not print, money) and Section 10 (which expressly prohibited States from coining money, emitting bills of credit i.e fiat money, or making anything by gold and silver coins a tender in payment of debts) of the U.S. Constitution. Interestingly, nothing was said about the private issuance of credit or coining money - both of these practices were in place and allowed.
Fast forward to 2018. America has long forgotten its own advice - and our money has lost about 98% of its original value. Government issued fiat paper money is a disaster that cannot be contained; it leads to rising prices, economic booms and busts, loss of freedom, and ultimately to the demise of its creator. It is time to remember what the Founders learned, and consider a return to gold and silver money - money issued by private organizations.