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What Are We Using for Money?
By Carl Watner

Over the course of many years I have penned and re-published many articles on the subject of money. For those not familiar with my writing, some of them are:
  • “Hard Money in the Voluntaryist Tradition” Issue 23
  • “Private Money Firsts” Issue 36
  • “Hard Money, Soft Money, and Government Money!” Issue 38
  • “The Master Plan for Tightening the Noose” Issue 48
  • “Trust Not in Princes” Issue 51
  • “Value Me As You Please” Issue 110
  • “Paper: No Substitute for Gold!” Issue 110
  • “Fed Up with the Federal Reserve” Issue 110
  • “A Comparison of Real Money, Counterfeit Notes, & Federal Reserve Notes” Issue 115
  • “Freedom to Choose Your Own Money” Issue 156
  • “A Basic Primer on Using Gold & Silver” Issue 171
So, why add to the list?
  1. To explain that government money is false to the core.
    The government refuses to redeem “its” money except for more of its own money. That is fraud. We are so habituated to using government accounting units, the dollar, in the form of paper money, electronic bank credits, and debit and credit cards that we forget that government provision of money and central banking are among the basic tenets of communism. (See Plank V of the Communist Manifesto.) Since money is involved in nearly everything we do, it is clear that “communism is embedded in every part of our economy.” [1] The Federal Reserve is nothing less than “the monetary politburo of the United States.” [2]

    In the opening chapter of his book, WHAT ARE WE USING FOR MONEY (1952), Paul Bakewell wrote that “We have no real dollars, no real money, and no real monetary system in the United States.” The word “dollar” originally referred to a silver coin of 371.25 grains of pure silver or 416 grains of standard silver. Bakewell then relates the efforts of A. F.. Davis, who in late 1947, attempted to obtain ten dollars in real money for a $ 10 Federal Reserve Note. Davis presented the $ 10 note to the U.S. Treasury Department and received two $ 5 notes. Davis then presented one of the $ 5 notes for five real dollars and was rebuffed. No real dollars could be obtained for the $ 5 note. Bakewell concluded that “Instead of using [real] money, we are using an irredeemable inconvertible paper currency,” and that this “inconvertible paper currency … is an obligation of the government. It is part of the evidence of the greatest debt that has ever existed in history.” [3] Our government money is nothing but a promise to pay nothing. Jack Weatherford put it succinctly in his HISTORY OF MONEY:

    The dollar is simply fiat currency. The dollar rests on the power of the government and the faith of the people who use it - faith that it will be able to buy something tomorrow, faith that the U. S. government will continue to exist and to accept dollars in payment of taxes and pay them out in expenses, and faith that other people will continue to believe in it. Aside from that faith, nothing backs up the dollar.[4] <

  2. To point out the harmful consequences of artificially low interest rates.
    As Jim Rogers explained in a recent interview: “ Never in recorded history have interest rates been this low in the United States and in the rest of the world. These low interest rates have destabilized all economic decision-making. People expect these low rates will continue but when the rates return to reality the mal-investments will be exposed.” Years of low interest rates have warped the prices of nearly everything that is bought and sold for money. Artificial interest rates destroy our ability to engage in rational economic calculation and substitute falsehood for truth in the financial world. Market interest rates determine which methods of production are most profitable and advantageous. Government-determined rates not only muddy the waters but set us up for the boom and bust of the business cycle. [5]

  3. To demonstrate that negative interest rates are an anomaly if there ever was one.
    Central government banks are a coercive monopoly. They shouldn’t exist, nor should they have the power to set interest rates for entire economies. It is the height of presumption, folly, and coercive behavior for a group of men and women on government payrolls to impose their “one-size fits-all solution on millions of other people.” Furthermore, to have them set negative interest rates is to show how out of touch government bureaucrats are with reality. Negative interest rates discourage savings, deter economic growth, and act as a government tax on holding money in the bank.

    Negative interest rates violate the universal law of time preference. People always prefer the satisfaction of their wants sooner rather than later. Given a choice between an apple now or a year later, people will always choose the apple today. As Murray Rothbard explained in THE ESSENTIAL VON MISES:
    When a creditor lends a $ 100 to a debtor, in exchange for receiving $ 106 a year from now, the two men are not exchanging the same things. The creditor is giving the debtor $ 100 in a “present good,” money that the debtor can use at any time in the present. But the debtor is giving the creditor in exchange, not money, but an IOU, the prospect of receiving money one-year-from-now. In short, the creditor is giving the debtor a “present good,” while the debtor is only giving the creditor a “future good,” money which the creditor will have to wait a year before he can make use of it. And since the universal fact of time preference makes present goods worth more than future goods, the creditor will have to charge, and the debtor will be willing to pay, a premium for the present good. That premium is the rate of interest. How large that premium will be will depend on the rates of time preference of everyone on the market. [6]
    Negative interests rates would not exist except for government intervention. As Ludwig von Mises put it, “He who wants to ‘abolish’ interest will have to induce people to value an apple available in a hundred years no less than” an apple today. Governments can’t abolish time preference, but they can prohibit people from receiving interest payments. [7]

  4. To show that the ultimate end of government intervention is a totalitarian society where there is no such thing as cash.
    Twenty-five years ago in Issue 48, I quoted from an article by Fred Rowe of the House of Onyx. He described what he saw as the basic elements of the statist master plan. They were: 1) to create a cashless society where all monetary transactions are recorded electronically; 2) to develop the government’s ability to collect and process all of this information on computers; 3) to then take this data and render every citizen and resident of this country a tax return; 4) and then electronically collect that amount by deducting it from the taxpayer’s bank account. Forfeitures and legislative penalties for failure to report large cash transaction discourage the use of cash. In a cashless society money is nothing but electronic bits and bytes, subject to hackers and government seizure.

    As Tom Paine put it, these are times that try men’s souls. For all of the reasons above, plus many more, voluntaryists ought not to use government money. Government cash has little intrinsic value other than the heat it can generate as measured in BTUs when it burns. Voluntaryists are not alone in not wanting to handle government money. At various times throughout history, a few people have exhibited that same attitude. During the American Revolution, Quakers often refused to handle the currency issued by the Second Continental Congress. In their eyes the use of such money was dishonest since it did not approximate the same value when measured against gold and silver.. Furthermore, Continental Congress paper money was considered to be a covert means of taxation to finance the prosecution of the war. One Philadelphia Quaker, Samuel Rowland Fisher, once remarked “to a government official: ‘Your government, if it can be so called, is exactly of a piece with the paper bills issued to carry on the war, which are the greatest lies, deception and hypocrisy and for these reasons I could not acknowledge their authority’.” “In February 1776, as a result of their outspoken stand against the money, the two Fisher brothers (Samuel Rowland Fisher and his brother) were ‘advertised as enemies’ of the American cause, and their stores were temporarily closed down by the authorities.” [8] After World War I, Kees Boeke, a Dutch anarcho-pacifist, and his wife, Betty “abstained from using money, so as to avoid contributing to the state - since public funds [we]re also spent on weapons. They would pay neither postage, tolls, nor taxes - and they never used public transport. As a result, they were imprisoned several times, with one of their seven children being born in prison.” [9] Also see the accompanying story of “Golden Disobedience” as another example of voluntaryist resistance to unjust and inane monetary laws.

    What should voluntaryists be using for money? We know for certain that they shouldn’t be forced to use government money for the reasons enumerated above. What ought they be using for money? We can find the answer to that question in my article “Freedom to Choose Your Own Money” (Issue 156). The voluntaryist has the choice of choosing hard money or private electronic money, but in any case will eschew government legal tender when he can. Voluntaryists want everyone to be able to choose the kind of money they want to accept. The free man controls himself and decides what he shall use for money. He recognizes the right of others to choose how they will live. This includes their freedom to choose what they will use for money.

End Notes

[1] Jeff Berwick in THE DOLLAR VIGILANTE NEWSLETTER, March 17, 2016.
[2] David Stockman in “Austerity is Not Discretionary,” CONVERSATIONS WITH CASEY, July 18, 2012.
[3] Paul Bakewell, WHAT ARE WE USING FOR MONEY, New York: D. Van Nostrand Company, Inc., 1952, p. 1, and pp. 217-218
[4] Jack Weatherford, THE HISTORY OF MONEY, New York: Crown Publishers, Inc., 1997, pp. 179-180.
[5] Jim Rogers in an April 26, 2016 internet video interview with Robert Williams of WALL STREET DAILY. Also see Robert Higgs, TAKING A STAND, Oakland: Independent Institute, 2015, pp. 150-151.
[6] Murray Rothbard, THE ESSENTIAL VON MISES, Lansing: Bramble Minibooks, 1973, pp. 16-17.
[7] Ludwig Von Mises, HUMAN ACTION, New Haven: Yale University Press, 1963, p. 532, at the end of Section 2, “Originary Interest,” in Chapter XIX, “Interest.”
[8] Peter Brock, PACIFISM IN THE UNITED STATES FROM THE COLONIAL ERA TO THE FIRST WORLD WAR, Princeton: Princeton University Press, p. 208.
[9] “Kees Boeke,” from Wikipedia, the free encyclopedia. See paragraph 3 in “Biography.” I first found reference to Boeke in Peter Mommsen, HOMAGE TO A BROKEN MAN: THE LIFE OF J. HEINRICH ARNOLD, Rifton: The Plough Publishing House of the Bruderhof Foundation, Inc., 2004, pp. 34 and 37.