As important as money is to most people, most of us take for granted this valuable resource without giving thought to what it really is, where it comes from, or how it works.
We earn it, we spend it, we save it, and some may complain they don't have enough of it, but few really know much about it. For most people, money, finances, monetary policy, etc. are pretty confusing and as a result they surrender the subject to others.
Many assume the bills stuffed in their wallet is money. But, is it?
Throughout history, money has taken on many forms and there hasn't been much agreement on what "object" money is. It really is nothing more than a symbol that represents the value of something. Practically speaking, the value of money represents what it will buy - or its purchasing power.
Whatever form it takes, it is used as an intermediary for trade - or medium of exchange, in order to avoid the inefficiencies of a barter system.
Money is generally considered to have the following four characteristics:
- a medium,
- a measure,
- a standard, and
- a store.
That is, money functions as a medium of exchange, a unit of account,
a standard of payment, and a store of value.
Think about those characteristics for a moment.
Does the money in your wallet work like that?
The Bible tells us, "My people are destroyed from lack of knowledge." (Hosea 4:6).
Having knowledge combined with wisdom can empower you with tools for survival and provide you greater prosperity. This is why knowledge about the true nature of money has been withheld from you. There are over 2,000 passages in the Bilbe that refers to the use of money, and nearly two-thirds of Jesus's parables make some reference to money. The Bible considers money important because God revealed to its writers both the postive and adverse effects money has on us.
Not only are you ultimately destroyed from lack of knowledge but you are also manipulated by those who do have the knowledge and control of money.
Give me control of a nation's money and I care not who makes her laws. [Mayer Amschel Rothschild]
Sadly, even those financial professionals
who should know about money, don't. It's not a subject taught in our schools.
Ask a recent college graduate with a degree in finance or economics about the
true nature of money and they will only blankly stare back at you without a
clue. Next time you're at the bank and the teller asks you how you want your
cash, tell them you want it in Federal Reserve Notes. They won't know what
you're talking about.
Keep reading below to learn what the "educated" finance professionals do not know. Hopefully, by the time you finish reading this article, you will have more knowledge about money and begin to experience more of the benefits it can bring. Particularly, this article is going to explore the devolution of our Biblical form of money in America as established in the U.S. Constitution, how it has lost most of the above characteristics (a medium of exchange, a unit of account, a standard of payment, and a store of value), how it is presently being used to destroy us as a people, and what you can do to create and preserve your wealth.
Money is a broad term that has come to refer to any financial instrument that can fulfill the above four functions of money. Money can further be described among different types of monetary aggregates, using a categorization system that focuses on the liquidity of the financial instrument used as money.
- A commodity money is a
medium of exchange the units of which are fixed amounts of an actual
commodity that has value other than as money alone. Many items have been
used as commodity money such as conch shells, barley, beads etc., as well as
many other things that are thought of as having value.
Historically, silver and gold coins of known, standard
weights and designs have emerged as the preferred commodity monies of the
entire civilized world. Gold and silver have been used as money throughout most
of recorded history, even as far back as Abraham [Genesis 23:12-16]. In the
case of a commodity money, the actual commodity - silver or gold - is both the
medium of exchange and the standard of value (that is, the unit in which prices
are stated in the marketplace).
For those of us who use the Bible as our foundation, it's interesting to note that throughout Scripture silver and money are pretty much synonymous. The Hebrew term that means "silver" is found 403 times in the Old Testament, and depending upon the context, the KJV translators translated it into either silver or money 399 times. In essence, silver and money were the same idea, the same concept, the same thing, as it were. Thus, Biblical money is Silver.
- A fiduciary money (or
representative money) is a medium of exchange composed of some intrinsically
valueless substance (such as paper)
the issuer promises to redeem on demand in a commodity money (such as silver or
gold coin) or in a monetary commodity (such as silver or gold bullion). The
paper promise to pay is the medium of day-to-day exchange, but the
actual money and the ultimate standard of value remains the promised medium of
payment, the silver or gold coin with which the note is to be
- A fiat money is a medium of exchange composed of some intrinsically valueless substance which the issuer does not promise to redeem in a commodity or a fiduciary money. The money itself is given value by government fiat (Latin for "let it be done") or decree. Because a fiat money has no direct legal connection to a commodity money (in terms of redemption) and, therefore, no real economic cost to its production, the supply of a fiat money can never be self-limiting; and the value of a fiat money is always largely a matter of public confidence in the economic or political stability of the issuer. For these reasons, historically every major fiat money have self-destructed in what is popularly called "hyperinflation" (that is, extreme decreases in purchasing-power) caused by either unlimited increases in the supply of that fiat money by the issuer or accelerating loss of public confidence in the continued value of the money or the economic or political fortunes of its issuer, or both.
America was founded amidst one of the largest economic crises we've experienced. There was raging inflation along with a massive depression that had followed the emission of bills of credit and other forms of paper currency issued by the Continental Congress and many of the state legislatures. The founding fathers recognized their responsibility of putting these paper monies into circulation and took actions to prevent this from ever happening again.
The founders of American independence also intimately understood the
tyranny imposed by those who control and manipulate the money and went to great
lengths to ensure America would never again be enslaved to the moneyed vultures
again who desire to set themselves above mankind in order to arrange, organize,
and regulate it according to their fancy.
In writing the U.S. Constitution, the authors included the monetary powers of this new nation and outlawed what James Madison in the Federalist papers denounced as "the fallacious medium and improper and wicked project of paper money".
The Congress shall have power... To coin money, regulate the
value thereof, and of foreign coin, and fix the standard of weights and
measures; - U.S. Constitution Article I, Section 8, Clause 5
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.- U.S. Constitution Article I, Section 10, Clause 1
Money - A Brief History Of The American Dollar
The U.S. Constitution established commodity money as the only lawful medium of exchange in America and empowered Congress to coin silver and gold coins the values of which are to be "regulated" using a fixed standard of weights and measures. The value of the US dollar represented a certain equivalent weight in silver and could be redeemed in silver coins. The Constitution did not authorize printing paper money (Bills of Credit) - or Federal Reserve Notes circulating as money today. Only gold and silver coins were considered legal tender as a standard of payment.
What is a
The Coinage Act enacted in Congress in 1792 fixed the monetary unit of the United States as the silver "dollar" and defined the dollar as a unit of measure of 371.25 grains of pure silver or 416 grains of standard silver. Similarly, a dollar of gold is 1/20th of an ounce of gold. Look at a $20 Liberty or Saint Gaudens and you will see the face value defined as $20 which corresponds with the weight of 1 ounce of gold.
The U.S. had adopted the decimal system [dollars and cents] for measuring the weight of money rather than the Avoir du pois, [Troy or 'shekel'] used elsewhere. As a measurement, the U.S. dollar consisted of 100 equal cents, or ten dimes to a dollar, or 4 quarters to a dollar. All of the minor coins were defined in terms of percentages of the primary coin the dollar such that a half dollar contained 1/2 as much silver as a dollar, quarter dollars, 1/4th etc.
41 3/5 grains
Most people today consider the dollar a tangible thing, rather than a 'dollar' unit of WEIGHT MEASURE. Just as concrete is denominated [or expressed] in cubic yards and milk is measured in quarts, so too silver and gold were expressed/weighed in dollars. There is, therefore, no such 'thing' as a concrete cubic yard, a milk quart, or a silver [gold] 'dollar'. There is, on the other hand, a cubic yard of concrete, a quart of milk, and a dollar of silver or gold.
Ever since establishing a sound biblical monetary system (Deut.
25:13-16; Lev. 19:35-36) in the Constitution and further guaranteeing American
citizens life, liberty, and property in the Fifth, Ninth, Tenth, and Fourteenth
Amendments, there has been a struggle between the ungodly power of the elitist
bankers and those who choose liberty. That struggle can be characterized as the
debauchery - or corruption - of the monetary system in America and throughout
the world from commodity money, to fiduciary money, and to ultimately fiat
Article 1 of the U.S. Constitution has never been repealed, however, a number of unconstitutional laws have been passed that has destroyed our national currency.
Read What Is A "Dollar"? by Edwin Vieira, Jr.
In 1791, Alexander Hamilton, the Secretary of the Treasury, made a deal to support the transfer of the capital from Philadelphia to the banks of the Potomac in exchange for southern support for his Bank project. As a result, the First Bank of the United States was chartered by Congress in that same year. The First Bank of the United States was modeled after the Bank of England, partly owned by foreigners, who would share from its profits. The Bank was bitterly opposed by several founding fathers, including Thomas Jefferson and James Madison, who saw it as an engine for speculation, financial manipulation, and corruption.
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." - Thomas Jefferson
Public outrage over the abuses of the First Bank of the United States, including its practice of fractional lending at a 10:1 rate (ten dollars of loans for each dollar they had on deposit) was such that its charter was not renewed and the bank ceased to exist in 1811.
The war of 1812 again left the country in economic chaos, putting
the United States in significant debt. This debt led to an increase in
banknotes among new private banks, and as a result, inflation increased
greatly. Seeing another opportunity for easy profits for bankers, the Second
Bank of the United States, chartered in 1816 was founded out of desperation to
stabilize the currency by President James Madison.
The Bank aided a real estate boom through its 10:1 fractional lending, which encouraged speculation in land. This lending allowed almost anyone to borrow money and speculate in land, sometimes doubling or even tripling the prices of land. With such a boom, hardly anyone noticed the widespread fraud occurring at the Bank as well as the economic bubble that had been created. In the summer of 1818, the national bank managers realized the bank's massive over-extension, and instituted a policy of contraction and the calling in of loans. This recalling of loans simultaneously curtailed land sales and slowed the U.S. production boom resulting in the Panic of 1819.
The Second Bank of the United States had thrived from the tax revenue that the federal government regularly deposited and served as the depository for Federal funds until 1833, when President Andrew Jackson instructed his Secretaries of the Treasury to cease depositing the funds. Jackson saw the bank as an instrument of political corruption and a threat to American liberties. In Jackson's veto message, the bank needed to be abolished because:
- It concentrated the nation's financial strength in a single institution.
- It exposed the government to control by foreign interests.
- It served mainly to make the rich richer.
- It exercised too much control over members of Congress.
- It favored northeastern states over southern and western states.
The Central Bank's money-lending functions were taken over by the
legions of local and state banks that sprang up, leading to an expansion of
credit and speculation. At first, as Jackson withdrew money from the Bank to
invest it in other banks, land sales, canal construction, cotton production,
and manufacturing boomed. However, due to the practice of banks issuing paper
banknotes that were not backed by gold or silver reserves, there was soon rapid
inflation and mounting state debts.
At one time in the 19th Century, there were more than 5000 different types of bank notes issued by various commercial banks in America. Only the notes issued by the largest, most creditworthy banks were widely accepted. The script of smaller, lesser known institutions circulated locally. Farther from home it was only accepted at a discounted rate, if it was accepted at all. These banknotes could be converted into gold or silver by application at the bank. Since banks issued notes far in excess of the gold and silver they kept on deposit, sudden loss of public confidence in a bank could precipitate mass redemption of banknotes and result in bankruptcy.
On January 8, 1835 withdrew all government funds from the Second Bank of the United States using it to pay off the national debt. Then, in 1836, Jackson issued the Specie Circular, which required buyers of government lands to pay in gold or silver coins. The result was a great demand for gold and silver, which many banks did not have enough of to exchange for their notes. These banks collapsed, and was a direct cause of the Panic of 1837, which threw the national economy into a deep depression.
Debasing the Currency
Debasement is the practice of lowering the value of currency. A coin
is said to be debased if the quantity of gold, silver, copper or nickel is
reduced. Debasement occurred when unscrupulous users shaved off small amounts
from the edges of the coins, thereby reducing the actual silver content of the
coin. In order to prevent this, silver and gold coins began to be produced with
The main reason a government will debase its currency is financial gain. Throughout history, governments have been known to create more coinage than their supply of precious metals would allow. By replacing some fraction of a coin's precious metal content with a base metal (often copper or nickel), the intrinsic value of each individual coin was reduced (thereby "debasing" their money), allowing the coining authority to produce more coins than would otherwise be possible.
The consequence of debasing the currency will inevitably be ever-increasing prices (inflation), which is simply the markets way of saying that the currency is falling in value in comparison with everything else. The advantage to public officials of debasing its currency is that the masses usually have no idea that government is behind the rising prices and so join the governments chorus blaming the rising prices on rapacious businessmen, profiteers, and speculators.
"Lenin was right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." - John Maynard Keynes
less than 50 years of establishing the dollar as the currency of the United
States, the debasement began. In an act passed on January 18, 1837 the alloy
was changed to 90% pure and 10% alloy thus having the effect of containing the
same amount of silver but being reduced in weight from 416 grains to 412.25
grains of standard silver. Seated Liberty Dollars were introduced in 1840 and
contained 90% silver, 10% copper with its silver content of 0.77344 troy oz. By
1853 the silver conent of the Seated Liberty Dollar was worth more than their
face value, and later issues through 1873 were not seen in circulation but were
used mainly in export trade.
On February 21, 1853 the Constitutional mandate of fixing the standard of weights and measures (U.S. Constitution Article I, Section 8, Clause 5) was abandoned when the amount of silver in the fractional coins was reduced so that it was no longer possible to combine the fractional coins to come up with the same amount of silver that was in the dollar.
Besides providing the basic framework on which all subsequent coinage production was based, Chapter XVI, section 19 of the Coinage Act of 1792 provided the penalty for debasing the coinage by officers or persons employed at the U.S. Mint as a felony punishable by death. To my knowledge, no person has been executed for this coin debasement.
The system of gold and silver backed money evolved into a system of fiduciary money - or representative money - as banks would issue a paper receipt to their depositors, indicating that the receipt was redeemable for whatever precious goods were being stored. This system was much more convenient than lugging around gold and silver and was widely accepted because everyone knew the paper receipts were "as good as gold". Ther paper was not the dollar, instead, it is 'worth', not 'is', 1 dollar (as in the U.S Silver certificate.)
Abraham Lincoln battled for the right of Congress and the Treasury to hold the awesome power of coining money. He knew that to surrender this power to private banks was ultimately to surrender the sovereignty of America. The use of bank notes issued by private commercial banks as legal tender was gradually replaced by the issuance of bank notes authorized and controlled by the national government.
During the American Civil War, the Union government did not have
enough silver or gold bullion to mint enough money [dollars] to pay the costs
of the war in Lawful Money, so began to issue paper notes to pay its debts. In
1862, Lincoln issued fiat paper money known as Greenbacks, without the backing
of precious metals.
These pieces of paper were NOT real money; but were conditional Promissory Notes (a Negotiable Instrument); i.e., a Promise to pay to the Bearer limited by the condition that the bearer may redeem the Note in lawful money at the United States Treasury in New York.
To be legally valid, a Promissory Note must be in writing and must have these necessary elements:
- A firm promise to pay [by the payor];
- A Definite sum of money;
- A recipient [the payee];
- A definite date when such definite sum of money is due and payable; and
- The signature of the Note maker [the payor].
When people refused to accept the paper notes in payment, Congress adopted the Legal Tender Act of 1862, compelling them to do so, and thus began circulating the first national United States currency. These bills of credit were known as Legal Tender Notes because of the inscription on each obverse face stating "This Note is a Legal Tender." Legal tender or forced tender is payment that, by law, cannot be refused in settlement of a debt.
Remember, the U.S. Constitution prohibits any government from
issuing what the Founding Fathers called "Bills of Credit" (and what we today
would understand as paper currency redeemable in silver or gold), and outlaws
any form of "legal tender" except silver and gold coins.
Art. I Sec. 10 Cl. 1, states, in part: "No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; ..."
This departure from the Constitution resulted in just as Frederic Bastiat predicted...
"When plunder has become a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it." - Frederic Bastiat in "The Law"
In 1868 the Supreme Court unanimously said that nothing other than coined money had been recognized by the legislation of the national government as lawful money. (Bank vs. Supervisors, 7 Wallace, p. 30.) In Hepburn v. Griswold (1870), the Supreme Court found the acts creating the greenbacks to be unconstitutional, ruling that forcing a creditor to accept payment in inflated currency was a violation of the 5th Amendment, protection of property under due process. That decision was later reversed following the appointment of two new judges by President Ulysses S Grant.
Following the Civil War, Congress recalled the Greenbacks from circulation and re-authorized the minting of silver and gold Dollars. The Coinage Act of 1873 placed the United States on the gold standard, which replaced the bimetallic (silver and gold) standard that had been created by Alexander Hamilton. Many saw this as a "crime," and on February 28, 1878 the Bland-Allison Act was passed by Congress requiring the United States Treasury to purchase between $2 million and $4 million of silver bullion from mining companies in the West, to be minted into coins that would be legal tender for all debts, like gold.
Like the earlier Seated Liberty Dollars, the Morgan Dollar also contained 90% silver, 10% copper with its silver content of 0.77344 troy oz. The dollar was continuously minted from 1878 until 1904 when the supply of dollars in circulation was high and there was an shortage of silver bullion. Then in 1918, the Pittman Act called for over 270 million coins to be melted for silver content. In 1921, the coinage of the Morgan Dollar resumed for that year and was replaced by the Peace Dollar commemorative that would become standard issue.
however, were quite heavy, so the government applied their gold certificate
strategy to the silver. Suppose that there were five silver dollars in the
treasury. The government would print a $5 Silver Certificate against the
dollars, providing a somewhat easier medium of exchange.
Gold VS Dollar
The classic gold standard prevailed during the period 1880 and 1913 when a core of leading trading nations agreed to adhere to a fixed gold price and continuous convertibility for their currencies. The gold standard was only a system for exchange of value between national currencies, never an agreement to redeem all paper notes for gold. Gold was used to settle accounts between nations.
The Federal Reserve
Early in 1907, New York Times Annual Financial Review published Paul Warburg's (a partner of Kuhn, Loeb and Co.) first official reform plan, entitled "A Plan for a Modified Central Bank," in which he outlined remedies that he thought might avert panics. Early in 1907, Jacob Schiff, the chief executive officer of Kuhn, Loeb and Co., in a speech to the New York Chamber of Commerce, warned that "unless we have a central bank with adequate control of credit resources, this country is going to undergo the most severe and far reaching money panic in its history." "The Panic of 1907" hit full stride in October.
In classic Hegelian dialectic style, JP Morgan engineered the Panic of 1907 where the stock market fell nearly 50% from its peak in 1906, the economy was in recession, and there were numerous runs on banks and trust companies. Complete ruin of the national economy was averted when J.P. Morgan saved the day by stepping in to organize a team of bank and trust executives who redirected money between banks, secured further international lines of credit, and bought plummeting stocks of healthy corporations. Morgan gained numerous holdings, as well as his bid to be the Rothschild's number-one American agent. J.P. Morgan's real feat and service to Rothschild in the Panic of 1907 was that he created a mood in America to believe that a central bank would prevent such a panic from occurring again and thus became receptive to a central bank.
Following the manufactured scare of 1907
the same bankers who created the crisis demanded reform from Congress who
established a commission of experts to come up with a nonpartisan solution.
Rhode Island Senator Nelson Aldrich, the Republican leader in the Senate, ran
the Commission personally, with the aid of his team of economists.
In 1910, Aldrich and executives representing the banks of J.P. Morgan, Rockefeller, and Kuhn, Loeb, & Co., secluded themselves for 10 days at Jekyll Island, Georgia where they wrote the primary features of the Federal Reserve Act or Glass-Owen Act, as it was sometimes called at the time. The executives included Frank Vanderlip, president of the National City Bank of New York, associated with the Rockefellers; Henry Davison, senior partner of J.P. Morgan Company; Charles D. Norton, president of the First National Bank of New York; and Col. Edward House, who would later become President Woodrow Wilson's closest adviser and founder of the Council on Foreign Relations.
In violation of Article I, Section 8 of the U.S. Constitution, the
Federal Reserve Act, signed into law on December 23, 1913 by President Wilson
allowed a cartel of private bankers to create, buy the shares, and own the
Federal Reserve System.
The new owners of America's treasury include the Rothschilds of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman, Sachs and the Rockefeller families of New York.
The privately owned Federal Reserve Bank was granted a monoploy for
the issuance of banknotes in the USA - the Federal Reserve Note. Some people
think the Federal reserve banks are United States Government institutions. They
are not Government institutions. They are private credit monopolies which prey
upon the people of the United States for the benefit of themselves and their
foreign customers; foreign and domestic speculators and swindlers; and rich and
predatory money lenders. As the Fed creates new money, it is then loaned back
to the government charging interest. The government in turn levies income taxes
to pay the interest on the debt.
Coincidentally, both the Federal Reserve Act and the sixteenth amendment, which gave congress the power to collect income taxes, were both passed in 1913. Further, the FED is the only for-profit corporation in America that is exempt from both federal and state taxes. The FED takes in about one trillion dollars per year tax free for the benefit of the banking families listed above. The money you pay in taxes does not go to the US Treasury to pay for the expenses of the government. It goes to those private banking families, commonly known as the FED, tax free.
Wilson, on his deathbed, admitted his error, saying that allowing the Federal Reserve to be founded was a betrayal of his country.
"A great industrial nation is controlled by it's system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world-- no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men." -- President Woodrow Wilson
With the outbreak of World War I, Britain was forced to abandon the
gold standard and other nations quickly followed suit. The Fed quickly issued
money to help pay the costs of WWI, as they were better positioned than the
Treasury to issue war bonds, and so became the primary retailer for war bonds
under the direction of the Treasury. After the war, the Fed, led by Paul
Warburg and New York Governor Bank President Benjamin Strong, convinced
Congress to modify its powers, giving it the ability to both create and destroy
Weight 26.73 grams; composition, .900 silver, .100 copper (net weight .77344 oz. pure silver).
The Peace Dollar was the last silver dollar minted for circulation
in the United States from 1921 to 1928. It was created to celebrate
Americas victory in World War I, these silver coins helped establish the
status of the U.S. as a major world power. The obverse features the profile of
Miss Liberty, while the reverse depicts the majestic image of a perched
American eagle with an olive branch in its talons as a symbol of peace. Like
the earlier Morgan Dollar, it contained 90% silver, 10% copper with its silver
content of 0.77344 troy oz. By 1928, the US Mint had struck enough silver
dollars to satisfy the requirements of the Pittman Act, and since public demand
for silver dollars did not materialize, the mint halted production of the Peace
Dollar that year (with fewer than two million struck).
By this time the Federal Reserve had taken over much of the currency market, and throughout the 1920s, they experimented with a number of approaches, alternatively creating and destroying money and, in the eyes of many scholars (notably Milton Friedman), helping to create the late-1920s stock market bubble. After a brief attempt to revive the gold standard during the 1920s and the stock market crash in 1929, it was finally abandoned by Britain and other leading nations during the Great Depression.
After Franklin D. Roosevelt took office in 1933, the Fed became subordinated to the Executive Branch, where it remained until 1951, when the Fed and the Treasury department signed an unconstitutional accord granting the Fed full independence over monetary matters while leaving fiscal matters to the Treasury.
In 1933, as part of Roosevelt's New Deal, the U.S. Congress enacted
a package of laws that essentially declared Article I, Section 10, Clause 1 of
the Constitution dead and made Federal Reserve Notes, alongside Silver
Certicates, legal tender for all debts, public and private and rescinded the
requirement that those notes be redeemable in gold coin, quiety placing the
U.S. on a silver standard. Now our currency was backed with actual wealth in
the form of silver, which is more plentiful than gold. Gold was removed from
circulation as money, and private ownership of gold in the U.S. (except for
coins in collections or jewelry such as wedding rings) was made illegal. All
gold in circulation was seized by the government in exchange for dollars at the
fixed rate of $20.67 per ounce. Gold was then re-valued from $20/oz up to
$35/oz., allowing foreign banks to redeem paper dollars for gold.
On May 12, 1933, the Agricultural Adjustment Act was passed, which included a clause allowing for the pumping of silver into the market to replace the gold. In 1934, a law was passed in Congress that changed the obligation on Silver Certificates so as to denote the current location of the silver. This law also allowed the government to exchange silver bullion for the certificates, not just silver dollars.
The Peace Dollar returned briefly in 1934 and 1935, as the government needed additional backing for Silver Certificates. That wealth was also to be short lived.
In 1945 Congress debased the currency even further, reducing the backing to only 25 percent. The amount of Silver Certificates in circulation depended directly upon the amount of silver bullion in the Treasury vaults, and unless more silver could be produced, they were quickly losing their backing and could not be recirculated. Silver Certificates began to disappear from circulation during the 1940s and 1950s. In 1957 the U.S. Treasury produced the last silver certificate and it was quietly replaced with Federal Reserve Notes. These Federal Reserve Notes are fiat currency, which means that the government is not obligated to give the holder of a note gold, silver, or any specific tangible commodity in exchange for the note.
On June 4, 1963,
President John Kennedy signed Executive Order 11110 in defiance of the Federal
Reserve (Central Bank) which held a monopoly on American currency, returning to
the federal government, specifically the Treasury Department, the
Constitutional power to create and issue currency without going through the
privately owned Federal Reserve Bank. The order gave the Treasury Department
the explicit authority: "to issue silver certificates against any silver
bullion, silver, or standard silver dollars in the Treasury." As a result, more
than $4 billion in United States Notes were brought into circulation in $2 and
$5 denominations. On November 22, 1963, Kennedy was assassinated and the United
States Notes he had issued were immediately taken out of circulation. It seems
obvious to some that President Kennedy challenged the "powers that exist behind
U.S. and world finance," and his assassination was likely a warning to all
future presidents not to interfere with the private Federal Reserve's control
over the creation of money.
Within days of Kennedy's assassination, the Federal Reserve issued its new notes with the obligation clause, "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank," replaced with only, "This note is legal tender for all debts, public and private."
|1964 Kennedy Half Dollar
Weight 12.5 grams; composition, .900 silver, .100 copper (net weight .36169 oz. pure silver).
Ironically, the 1964 Kennedy half dollar was the last silver coin
produced for circulation in America. The Kennedy half-dollar design, however,
continued to be minted in a 40 percent silver-clad composition from
Lawful money is any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds.
"The terms 'lawful money' or 'lawful money of the United States' shall be construed to mean gold and silver coin of the United States. - Title 12, U.S. Code, Section 152.
Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves. Fiat money includes legal tender such as paper money, checks, drafts and bank notes.
Death of the Dollar
On March 25, 1964, the Secretary of the Treasury announced that
Silver Certificates would no longer be redeemable for silver dollars.
Subsequently, another act of Congress dated June 24, 1967, provided that Silver
Certificates could be exchanged for silver bullion for a period of one year,
until June 24,1968. This left only fiat Federal Reserve Notes in circulation
with the government no longer obligated to give the holder of a note gold,
silver, or any specific tangible commodity in exchange for the note.
Our pre-1934 gold coins, were weighed using the decimal [dollar/cents] system. The pre-1965 silver coins [and pre 1935 'dollar'coin] illustrates a similar harmony - except for using a different decimal system than for measuring gold. When the government allowed the Federal Reserve to violate the Constitutional basis of the dollar and finally divorce it from gold and silver, the dollar ceased to exist. We still had an object we called 'dollars,' but now the unit of measurement changed to an intangible CREDIT - no lawful money remaing in general circulation. And, intangible credit needs no system of weights and measures. Since noTHING is used as money - you'll notice tax, bank and sales statements often display raw numbers [quantity symbols] only!
Silver dollars almost made a return in 1964, when Congress approved the mintage of 45 million new silver dollars to fulfill the needs of the booming casino industry in Nevada. 316,076 Peace Dollars dated 1964 were struck at the Denver mint, however Congress later reversed itself and demanded that production cease. All the coins produced to that point were ordered to be melted. None of the coins were preserved or released for circulation.
Because of a critical silver shortage in 1965, Congress passed the Coinage Act of 1965, which authorized the removal of silver content from circulating coinage (except for the Kennedy half dollar) minted after December 31, 1964, replacing it with a clad composition of 75 percent copper and 25 percent nickel. From 1965 to 1969, the half dollar coins were debased and adulterated by reducing the silver content to 40% silver, while in 1968 Congress repudiates redemption of all forms of "lawful money" in silver, thus turning Federal Reserve Notes into a fiat currency domestically for the first time.
|1974-S Eisenhower Dollar
Weight 24.59 grams; composition, outer layers of .800 silver, .200 copper bonded to inner core of .209 silver, .791 copper (net weight .3161 oz. pure silver.
Production of dollar coinage did resume in 1971 with the Eisenhower
Dollar. The circulated coin, however, has no silver content. The
Eisenhower Dollar was struck with a copper-nickel composition for circulation
and was the first United States dollar coin to not be struck in a precious
metal, although special collectors' issues were struck at the San Francisco
Mint in a silver-copper composition (40% silver clad). Likewise, the Susan B.
Anthony, Sacagawea dollars, and Presidential dollars that have been minted
since the Eisenhower dollar contain no silver, making the Peace Dollar the last
true silver dollar struck for circulation.
When the U.S. was on a gold standard, every dollar was backed by actual wealth in the form of gold bullion. The paper dollar was a paper promise, a contract, to pay in gold. The law originally required that 40 percent of all federal reserve notes be backed by gold. Until 1934 the promise on our paper currency to pay "dollars" in "lawful money" meant exactly what it said. Today we continue to use the words dollars and lawful money out of habit and custom, and overlook that we no longer have either dollars or lawful money.
Severing it's last tie to the U.S. Constitution, the Treasury Department, on January 21, 1971 stopped issuing United States notes and none have been placed into circulation since that time because United States notes serve no function that is not already adequately served by Federal Reserve notes. According to the U.S. Treasury, Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933. The notes have no value for themselves, but for what they will buy.
"All the paper money issued today is Federal Reserve notes.The real backing for the nation's money is faith in the strength, soundness and stability of the American economy." - The Hats the Federal Reserve Wears, FRB of Philidelphia, pg. 4
The ONLY value the
American dollar has is our confidence
and belief that it does have value!
Now, our fiat paper money is totally worthless. There is nothing of real value backing it up. Federal Reserve Notes are not backed by any single specific asset, but are backed by all asset debts held in collateral by the Federal Reserve (that's right the FED considers debt to be an asset), and by the power of the government to collect taxes paid in, you guessed it... fiat currency. If all this sounds like nonsense, you're beginning to understand the Federal Reserve and our current monetary system.