As we discussed yesterday in Issue #18 Bills of credit issued by the people can only hope to circulate as a monetary medium based on the markets faith in their value. This is quite different from the unconstitutional legal tender bills of credit printed and circulated by the Federal Reserve.
There was a time, after America’s founding where sound monies were primarily circulated (either made from or backed by gold and silver) and the economic effects were resoundingly successful. In fact between the years 1793 and 1808 the nation experienced a vast prosperity. The exports of the country reached $19 Million in 1791 and then climbed to $93 Million in 1801.
The federal deficit which was 28% of expenditures in 1792 had entirely disappeared by 1802, and been replaced with a surplus almost as large as government spending altogether. In midst of this prosperity Washington said:
“We may one day become a great commercial and flourishing nation. But if in the pursuit of the means we should unfortunately stumble again on unfunded paper money or any similar species of fraud, we shall assuredly give a fatal stab to our nation’s credit in its infancy.”
Unfortunately, paper money and central banking was never far behind the coat tails of America’s economic prosperity. I recorded an interesting podcast on this topic here. And with this, came the silent levying of America’s wealth, in the form of a hidden tax known as inflation. As such, the lessons learned by the constitutional colonies of pre-constitutional America were repeated…there is nothing new under the sun.
On this point Thomas Jefferson once said:
“I wish it were possible to obtain a single amendment to our constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the general principle of the constitution. I mean an additional article taking from the federal government their power of borrowing.”
And also said:
“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them , will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”
What a sick tragedy it is that these same men’s faces are plastered all over the very paper monies they warned against so vehemently. And now their statues are torn down as economic inequality is worse than ever before, for the future generations refused to heed their wisdom. History is a cruel mistress.
Book of the Month:
The Dao of Capital: Austrian Investing in a Distorted World
-“To win a hundred victories in a hundred battles is not the highest excellence; the highest excellence is to subdue the enemy’s army without fighting at all.”
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