Tuesday, August 29, 2017

Poor on Huskisson

Poor on Huskisson
Thomas Allen

    In 1877, Henry Varnum Poor (1812-1905) wrote Money and Its Laws: Embracing a History of Monetary Theories, and a History of the Currency of the United States. He was a financial analyst and founder of a company that evolved into Standard & Poor’s. Poor was a proponent of the real bills doctrine and the classical gold-coin standard and, thus, the quality theory of money. He gave little credence to the quantity theory of money — especially if credit money, such as bank notes, were convertible on demand in species. Also, he contended that the value of money depends on and is derived from the value of the material of which it is made and with paper money, its representation of such value.
    In the latter part of his book, he discusses leading monetary theorists from Aristotle (350 B.C.) to David A. Wells (1875). Most of the economists whom he discussed were proponents of the quantity theory of money. We will look at his discussion on William Huskisson. My comments are in brackets. Referenced page numbers enclosed in parentheses are to Poor’s book.
    William Huskisson (1770-1830) was a British statesman, financier, and member of Parliament. He wrote “Question Concerning the Depreciation of Our Currency” (1810), which Poor reviews. Huskisson wrote his pamphlet during the Napoleonic wars when the English pound was not convertible into gold or silver. His and Poor’s comments reflect this condition.
    Huskisson states that in the popular sense, money is often considered to have only purely arbitrary and conventional value. Sometimes, it is defined as “the representation of all other commodities, and sometimes as the common measure of them” (p. 216). He concludes that these definitions are incomplete “because they are equally applicable to every description of currency, whether consisting of the precious metal, of paper, or of any other article” (p. 216). Huskisson continues, “It is of the essence of money to possess intrinsic value” (p. 216). Moreover, “The quality of representing commodities does not necessarily imply intrinsic value; because that quality may be given either by confidence or by authority. The quality of being a common measure does not necessarily imply intrinsic value” (p. 216). He adds, “Money, or a given quantity of gold or silver, is not only the common measure and common representative of all other commodities, but also the common and universal equivalent” (p. 216). Although paper currency has no intrinsic value, promissory notes in whatever form and from whatever source can represent value. “It does so, in as much as it is an undertaking to pay, in money, the sum for which it is issued” (p. 216) “The money, or coin of a country, is so much of its capital. Paper currency is no part of the capital of a country: it is so much circulating credit” (p. 216). Huskisson adds, “Whoever buys, gives, whoever sells, receives, such a quantity of pure gold or silver as is equivalent to the article bought or sold; or, if he gives or receives paper instead of money, he gives or receives that which is valuable only as it stipulates the payment of a given quantity of gold or silver” (pp. 216-217). Paper money remains at par with gold if it is convertible to gold coin. Both money (gold coin) and paper promissory money (bank notes) “are common measures and representatives of the value of all commodities. But money alone is the universal equivalent; paper currency is the representative of that money” (p. 217). He identifies two types of paper currency: “the one resting upon confidence, the other upon authority” (p. 217). Paper currency resting upon confidence is circulating credit. Bank notes are of this type of currency. Paper currency resting upon authority is paper money [government notes and bank notes made legal tender by the government] are of this type of currency (p. 217). [Huskisson was a Bullionist. That is, he believed that paper money ought to be a warehouse receipt for gold. For each dollar, pound, or franc of paper money in circulation, there ought to be a dollar, pound, or franc of gold stored in a vault to back that paper money.]
    Poor objects to Huskisson’s notion that confidence or authority can give quality to representing commodities. Poor remarks, “That a person believes that a note which he takes represents commodities does not make it the representative of them, any more than the belief of the Alchemists made the baser metals in combination the representatives of gold, into which they so long sought to convert them. If confidence would create values, the silliest dunce would be the Croesus of the race” (p. 217).
    Some people believe that if the government can declare the length of the foot or meter for measuring distance, it can declare that a bank note [or a government note] can measure value: “Intrinsic value is no more necessary in one case than in the other” (p. 217). To this belief, Poor replies that owners of land would not accept for their sales the instruments by which their acres are measured. To them, a surveyor’s chain is only worth its value as scrap metal. “When men buy and sell, they exchange, or intend to exchange, articles possessing equal values” (p. 217). [Actually, exchanges only take place when both parties perceive that they are receiving something of greater value to themselves than what they are giving up.]
    Poor continues citing Huskisson. According to Huskisson, if a country’s circulating currency consists exclusively of gold and if the quantity of gold in that country doubles while the quantity of gold and the demand for it remained the same in all other countries, then the value of gold in such country would fall. This loss of value would appear as a rise in the prices of all commodities. However, since gold is much cheaper in the country in which its quantity has increased, it would be bought and exported to other countries until its value is again equal in all parts of the world (p. 218). If a country’s circulating currency consists of both gold and paper and if a paper currency were doubled while the quantity gold remains the same, prices will rise. The value of gold as a commodity will rise in price and in the same proportion as other commodities; that is, its value compared with other commodities will remain the same. Such an increase in paper currency causes the exportation of gold coin because gold’s value as currency remains the same while its price in that currency has increased, i.e., the gold content of the coin is worth more than the denomination stamped on the coin. This exportation decreases the currency in circulation and thus supports the value of the currency remaining. Thus, “[a]n excess of paper has, in the first instance, the same effect upon prices as an excess of the precious metals, to the same amount, would have, in any particular country. But it does not admit of the same relief: it cannot right itself by exportation” (p. 218).
    Huskisson identifies two ways that the currency of a country can be depreciated:
        1. If its standard coin contain less of gold or silver than it is certified to contain. In that case, the paper, as representing the coin, is also depreciated, and precisely in the same degree as the coin.
        2. If the standard coin being of full weight, and the paper which represents that standard coin, and is, or purports to be, exchangeable for it, is not exchangeable, at the same time, for so large a quantity of gold or silver as is contained in the coin which it represents. In that case, the coin, though undiminished in value, must, as part of the currency, partake of the depreciation of the whole (p. 218).
    Poor remarks that if the currency of a country consists of gold coin and paper and if the two were equal in value, then the paper must be symbolic. Contrary to Huskisson assumption, a doubling of the currency would not be inflationary.  Poor writes:
Prices would, in reference to money, remain unchanged. So long as gold and paper possessed the same value, an increase, or, rather, an inflation, of the currency, would not inflate or increase the price of gold bullion, — gold as merchandise, — while it might increase the value of all other kinds of merchandise, for the very good reason that gold cannot rise in value in reference to itself; that is, a sovereign after the inflation would purchase the same amount of bullion as before” (p. 219).
    Moreover, Poor remarks, “So long as coin would purchase no more than an equal nominal amount of paper, gold would have no more tendency to go abroad than before such increase. Indeed, its tendency would be inward to provide adequate reserves for the increase of paper” (p. 219).
    He continues, “If adequate provision, either in merchandise or coin, were not made for its [paper currency’s] redemption, it [paper currency] would become depreciated: it would not be exchangeable for an equal quantity of gold, nor would it command an equal amount of merchandise with gold, no matter whether it rested upon confidence or authority” (p. 219). Moreover, he adds, “The value of gold would not be influenced in any degree by the amount or value of the paper outstanding” (p. 219).
    According to Poor, if paper currency rests on authority and was issued in large amounts, “it would, in great measure, drive the coin previously in circulation out of the country. But this fact would not tend, in any degree, to raise the value of the currency ‘resting on authority’” (p. 220). Furthermore, contrary to Huskisson’s assertion, “[t]he exportation of coin would tend to reduce the value of such currency, instead of raising it, by rendering it all the more difficult to resume, from the impoverishment of the people, which would be measured by the amount of gold — capital — that had been drawn from them” (p. 220). [Also, the government has no power to create value on which the currency must rest except to declare the monetary unit to be a specific weight of a commodity, such as gold or silver, to which paper currency is convertible on demand. Many proponents of fiat paper money do believe that government fiat can actually give value to that which has no value.]
    According to Poor, Huskisson believes that paper currency resisting on confidence or authority is equal to gold as a measure of value. A decline in the value of paper currency brings down equally the value of gold, “for the reason that one competent measure of value must be equal in potency or effect to any other competent measure” (p. 220). However, the opposite is true. Poor writes “that the paper money of the country, though declared to have a value equal to that of an equal nominal amount of gold, did not possess such value; that the values of the two, though equally supported by authority, had no necessary relation the one to the other; and that their wide divergence was well calculated to excite the most profound alarm” (p. 220).
    Poor concludes,
He [Huskisson] could not go into the market to make any purchase, without having thrust into his hand two scales of prices, — one in paper, the other in gold; yet, in the face of all this, he was so tied to tradition as to assert that money resting upon authority — the assignats of France and the Revolutionary Currency of the United States — was as competent a measure of values as gold and silver (pp. 220-221).
    [Many fiat money reformers believe that the Continental and assignat failed because the government did not follow the right scheme in issuing them. Also, the flaws of today’s paper monetary system, including its electronic equivalent, result from following the doctrines of Keynes and Friedman instead of the scheme that the fiat money reformers promote, who disagree with each other on the proper scheme. Examples of these schemes are:
    – the Social Credit scheme, which requires the government to give the people enough money to  fill the gap between national income and gross domestic product (GDP);
    – the American Monetary Institute’s scheme, which has the government creating and issuing government notes directly without banks {v. “Analysis of the American Institute’s American Monetary Act” by Thomas Allen};
    – Richard Cook’s scheme, which is a combination of the Social Credit scheme and the American Monetary Institute’s scheme {v. “Analysis of Richard Cook’s Monetary Reforms as Presented in We Hold These Truths” by Thomas Allen};
    – the Money Reform Act scheme, which promotes the government issuing government notes and an end to banks converting loans to money {v. “Analysis of the Monetary Reform Act” by Thomas Allen};
    – Arnold Leese’s scheme, which is a fascist monetary scheme {v. “Analysis of Money No Mystery” by Thomas Allen};
    – Byron Dale’s scheme, which has the government printing and spending government notes to finance the construction and maintenance of roads {v. “Analysis of Byron Dale’s Monetary Reforms as Presented in Bashed by the Bankers by Thomas Allen};
    – Charles Norburn’s scheme, which has the government creating and spending government notes into circulation and an end to issuing interest-bearing government securities {v. “Analysis of Charles Norburn’s Monetary Reforms as Presented in Honest Money” by Thomas Allen};
    – the Foundation to Restore and Educated Electorate scheme, which is similar to Norburn’s scheme {v. “Comparison of Three Monetary Systems” by Thomas Allen};
    – Gertrude Coogan’s scheme, which has a trusteeship answerable to Congress issuing government notes to match productiveness and to maintain stable general prices {v. Reconstruction of America’s Monetary and Banking System: A Return to Constitutional Money by Thomas Allen, pp. 232-233};
    – Silas Adams’ scheme, which has the government owning most of the country by buying all bonds, promissory notes, and other debt securities and corporate stock and other securities with government notes {v. Reconstruction of America’s Monetary and Banking System: A Return to Constitutional Money by Thomas Allen, pp. 233-235};
    – K.S. Kenan’s scheme, which reduces the Federal Reserve mostly to a clearing house for banks and makes the Department of the Treasury responsible for issuing the country’s currency and replacing all interest-bearing U.S. securities with non-interest-bearing government notes {v. Reconstruction of America’s Monetary and Banking System: A Return to Constitutional Money by Thomas Allen, pp. 235-238}.
For fiat money reformers, the problem is not fiat money itself; the problem is how the fiat money system is administrated.]

Copyright © 2016 by Thomas Coley Allen.


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Monday, August 21, 2017

Diversity American Style

Diversity American Style
Thomas Allen

    Welcome to the new America, the land of diversity. It is the land of inclusion, tolerance, love, and equality for all races, religions, cultures, and perversions — except for Confederates, Southerners, Whites, and real Christians — the deplorables. In the name of inclusion, all races, religions, cultures, and perversions must be included — except for Confederates, Southerners, Whites, and real Christians — the deplorables, who must be excluded. In the name of tolerance, all races, religions, cultures, and perversions must be tolerated — except for Confederates, Southerners, Whites, and real Christians — the deplorables, who cannot be tolerated. In the name of love, all races, religions, cultures, and perversions must be loved — except for Confederates, Southerners, Whites, and real Christians — the deplorables, who must be hated. In the name of equality, all races, religions, cultures, and perversions are equal — except for Confederates, Southerners, Whites, and real Christians — the deplorables, who are inferior. In the name of diversity, the deplorables must be hated and excluded. Moreover, they cannot be tolerated and are inferior. For that reason, all that is Confederate, Southern, White, and real Christianity must be destroyed.
    We are witnessing this destruction today. Americans do not have to go to the Middle East to witness the Taliban and ISIS in action. Their kindred are trying to destroy Confederate monuments and everything else with which they disagree. Like the Taliban and ISIS, they want to destroy everything that they find repugnant. Just as the Taliban and ISIS display hatred for everything that is not Islamic, so their kindred in American display hatred for everything that is Confederate, Southern, White, and real Christian.
    As the Taliban and ISIS have no room in their hearts for inclusion, tolerance, or love for anything that is not Islamic, so their kindred in America have no room in their hearts for inclusion, tolerance, or love for anything resembling the Confederacy or even the South, Whites, and real Christianity. Such is diversity American style.
    What would one expect from a country and society that has dethroned the central figure of Christianity and Western Civilization, Jesus Christ, and has replaced him with a new deity? This new deity to whom all Americans must bow before and worship is a Marxist who left a trail of destruction and blood as he fornicated across the country: Martin Luther King.
    Proof! People may blaspheme Jesus with immunity. Furthermore, they will often receive support and accolades from governments and the old media and often receive indifference from the new media. However, to tell the truth about King brings condemnation and ostracization from nearly all spectrums of society — from right to left. Moreover, those who fail to worship King are universally vilified as racists.
    Thus, diversity American style can include, tolerate, and love all races, religions, cultures, and perversions except for Confederates, Southerners, Whites, and real Christians — the deplorables. All that is Confederate, Southern, White, and real Christian must be eradicated.

Copyright © 2017 by Thomas Coley Allen.

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Saturday, August 12, 2017

One Thing Your Pastor Will Not Tell You

One Thing Your Pastor Will Not Tell You
Thomas Allen

    In the March/April 2016 issue of Grace in Focus, Phil Congdon had an article titled “10 Things Your Minister Will Never Tell You (If He Believes the Bible!)” He identifies these ten things:
    1. Creation is a myth;
    2. Our purpose is not to glorify God;
    3. The Bible is full of errors;
    5. We are saved by works;
    6. The role of women (he is referring to teaching current social norms that are destroying society is the correct role for women instead of teaching wives to submit to their husbands and women not to teach men or to have authority roles over men, which the Bible teaches);
    7. People are born gay;
    8. Other religions lead to God;
    9. No eternal hell (see comment below);
    10. Jesus made mistakes.
He explains why a Biblical pastor will never tell his congregations any of these things.
    Mr. Congdon omits one item from his list of things nearly all ministers will never tell his congregation if he believes the Bible. That is interracial marriage and mating are acceptable to God. This item is so politically taboo that I would be surprised that even Mr. Congdon would ever teach the Biblical condemnation of miscegenation.
    From Genesis to Revelation, the Bible condemns interracial marriages and mating. Here are some of the verses that condemn or at least argue against miscegenation: Genesis 6:1-7, Genesis 24:1-4, Genesis 26:34-35, Genesis 28:1-2, 6-7, Genesis chap. 34, Exodus 11:7, Exodus 33:16, Exodus 34:10-16, Leviticus 19:19, Leviticus 20:26, Leviticus 21:14, Numbers chap. 23, 24, and 25, Deuteronomy 7:1-4, Deuteronomy 23:2, Joshua 23:12-13, Judges 3:5-8, 1 King 8:53, 1 King 11:1-8, 1 King 16: 30, 31, 1 King 21:25, Ezra chap. 9 and 10, Nehemiah 8:1-18, 9:1-3, Nehemiah 10:28-31, Nehemiah 13:1-3, 23-31, Psalm 106:28-35, Isaiah 2:1-9 (esp. v. 6), Jeremiah 2:19-25, 29, Ezekiel 16:15-39, Ezekiel 44:6-23, Hosea 5:3-7, Hosea 6:7-10, Hosea 10:1-10, 1 Corinthians 3:16-17, 1 Corinthians 6:18, 1 Corinthians 10:1-11 (esp. v. 8), Hebrews 12:12-17, Hebrews 13:4, 2 Peter 2:9-16, Jude 3-11, Revelations 2:12-14, Revelations 2:18-23, Revelations 5:9, 7:9, 11:9, 13:7, 14:6, 17:15, 21:24, 22:2. Deuteronomy 23:2 summarizes this whole issue: “No half-bred may be admitted to the assembly of the Yahweh; not even his descendants to the tenth generation may be admitted to the Assembly of Yahweh” (The New Jerusalem Bible).
    Extremely rare is a pastor who does not believe the Bible who will teach that interracial marriage and mating are wrong. Almost as rare is a pastor who does believe the Bible teaching that interracial marriage and mating are wrong.

Comment to item 9.
    Although Mr. Congdon does not state in his article whether unsaved people are punished (tormented) forever in hell, other writers for Grace in Focus do. Yet, all the writers for Grace in Focus teach that one achieves eternal life by believing in Jesus for eternal life. According to John 6:47 (“. . . He that believeth on me hath everlasting life”), those who believe in Jesus, the saved, receive eternal life. If the saved believe in Jesus for eternal life, in whom or what does the unsaved believe for eternal life if they are punished (tormented) forever in hell?
    If man’s consciousness, soul, spirit, essences, or whatever is naturally immortal such that it can endure eternal punishment (torment), then Jesus is misleading us with his claim in John 6:47 that belief in him is the source of eternal life. If man’s consciousness or whatever is immortal, then he has eternal life whether or not he believes in Jesus. Consciousness or whatever has to be eternal if an unsaved person is to be punished (tormented) forever. Thus, death is not the cessation of life, but a metamorphosis from one form to another. Faith in Jesus does not determine whether one has eternal life or not, as man, being immortal, naturally has eternal life. It merely determines where he will spend that eternal life. If Jesus meant that, why did he not say so? His statement suggests that those who do not believe in him are not immortal and do not have eternal life. Only those who believe in him become immortal by that faith.

Copyright © 2016 by Thomas Coley Allen.

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Thursday, August 3, 2017

Should the Silver Standard Accompany the Gold Standard?

Should the Silver Standard Accompany the Gold Standard?
Thomas Allen

    Several important reasons exist to have the silver standard accompanying the gold standard. However, the old bimetallic standard with a legally fixed ratio or exchange rate between the two metals should not exist. The markets should determine the exchange rate between the two.
    A silver standard easily accomplishes what gold cannot. Precious metal coins should be in a convent denomination sufficiently small enough to pay the daily wage of a common labor or migrant field worker with one or more coins.
    The daily wage of a common laborer is less than a pennyweight of gold. Two pennyweights is about the practical limit of the minimum size of a gold coin. A two-pennyweight coin is about the size of a dime.
    Silver coins can easily fill this void. In silver, a day’s wage for a common laborer would be a little more than 20 pennyweights (one ounce) of silver.
    A common laborer should be paid in true, full-bodied, full-weight, money, and not in token coins or credit money, which is what he would receive under the gold standard. He should be able to carry true, full-bodied money in his pocket and have true money to spend if he so desires, and not just token coins or credit money. A silver standard provides him this service.
    Another advantage of having both standards is that one metal, silver, provides convent coins for small value. The other, gold, provides coins for large value. The tendency would be to price cheap items in silver and expensive items in gold. Sliver coins are likely to circulate more than gold coins.
    Historically, silver has been better suited for trade (buying and selling of goods and services), and gold, for commerce (large-scale exchanges of goods). Silver seems more suited for industrial and agricultural areas, and gold, for the commercial and financial arenas. However, the markets should determine which products and services are priced in terms of silver and which in terms of gold. To allow coins of both metals to circulate freely gives the people the advantage inherent in both metals.
    If only gold were money, then token and paper money would be needed to buy most items. Most common items are priced below two pennyweights of gold. Gold coins could not be used to buy these items individually, or if used, the change would not be in gold coins. However, if silver were money, silver coins (as silver money and not as subsidiary coins for gold) could be used to buy most of these items. Some items would be priced below two pennyweights of silver, and token coins would be needed to buy then individually.
    Perhaps the most important reason for having both the gold and silver standards is that together they make replacing commodity money with fiat money more difficult. When the silver standard accompanies the gold standard, it protects the gold standard from deteriorating into fiat currency. “Gold must be priced in something other than gold, otherwise every sale of gold would have to end up as exchange of amounts of gold. . . .”[1] To maintain an honest monetary system, this something has to be a monetary metal in its own right. Silver is the most appropriate commodity money for this purpose. When both metals are money, each metal in the form of bullion can be priced in terms of the other metal. Otherwise, under a monometallic standard, the monetary metal in bullion form is priced in paper notes or token coins, which introduces a fiat unit of accounts. The gold and silver standard is much more effective at protecting the integrity of the money than either standard alone.
    A historical example of a dual monetary system occurred in the United States between 1862 and 1879. During this era both U.S. note (greenback) dollars and gold dollars circulated as money. Both were used for purchases and wages. Because U.S. notes were not redeemable in gold, no fixed exchange rate existed between fiat U.S. notes and gold coins. However, in most of the United States, U.S. notes were used for the payment of debt because they had legal tender status and were less valuable than gold.
    Moreover, many third world countries operate with a dual monetary system. Many use the U.S. dollar and a local currency; sometimes a relatively strong regional currency is also used. They function with little difficulty going between currencies even without modern technology. Also, stores along the U.S.-Mexican border accept both Mexican pesos and U.S. dollars. With today’s technology, conversion between gold and silver should be without difficulty. If an item were priced in silver, it could easily be bought with gold and vice versa.
    To ensure that both full-weight silver and gold coins circulate and that one does not become subsidiary to the other, the government needs to undertake several actions. First, it should levy some taxes, fees, and fines in silver and others in gold. Furthermore, it should not accept the payment of gold for taxes, fees, and fines levied in silver and vice-versa. Also, it should not fix, either formally or informally, a ratio between gold and silver or even give the appearance of setting such a ratio.

Endnote
1. J.N. Tlaga, “Gold Standard = Fiat in Disguise,” Jan. 19, 2002, http:// www.gold-eagle.com/editorials_02/tlaga011902pv.html, Aug. 8, 2007.

Copyright © 2011 by Thomas Coley Allen.

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