The Dirty War: America’s Race War

The Dirty War: America’s Race War
Thomas Allen

[Note: The following is an excerpt from a manuscript originally written in 2000-2002. Although some of the statistics may be dated, more recent statistics continue to support the conclusion of this paper. Some minor editing has been done to omit references to sections of the manuscript not included here.]

The War
On January 14, 1995, a young white man and his wife were finally enjoying an evening together after the birth of their twins five weeks earlier. When they left a gas station in Kentucky, three carloads of black teenagers began chasing them and finally shooting at them. The chase ended when a bullet struck the young man’s heart. He died of the wound the following day. He was assassinated for the high crime of being so proud of his Southern Aryan heritage that he was flying a Confederate flag, which was also the emblem of his high school football team, on his truck. Two of his assassins were convicted of murder and sentenced to life in prison. One irony of this tragedy was that one member of this gang of killers had been a guest in this young man’s home as part of a Bible study group.

The assassination of this young man can be laid at the feet of the NAACP. At its 1991 national convention, the NAACP declared war on the Confederate flag and everything that it symbolizes—liberty and the Aryan race.[1] Since then, it has ceaselessly ejaculated abhorrent and false diatribes against this flag and all that it symbolizes.

In 1993, about 16 months before the assassination, the Kentucky unit of the NAACP demanded that eight school systems in Kentucky cease all usage of the Confederate flag and the "rebel" mascot. One of these schools was the high school from which this young white martyr had graduated. This ultimatum of the Kentucky NAACP came right after the young man graduated high school and married his sweetheart.

One of the first items acquired by the newlyweds was a pickup truck with a metal toolbox in the back. After they purchased the truck, the young husband attached a metal post to the toolbox and affixed a Confederate flag to the pole. The truck also had a battle-flag car tag on the front bumper. At that time Confederate flags and emblems were common in Kentucky and Tennessee.

After being married for a little over a year, the couple had twins. As the twins were born premature, they remained in the hospital for several weeks. Just before New Year’s Day, they brought the twins home.

On January 14, 1995, the couple left their two children in the care of the wife’s mother and went out to dinner. After dinner, they did some shopping. On the way home, they stopped for gas.

While he was filling his gas tank, a carload of Negroes pulled into the gas station parking lot. One of the male Negro passengers leaned out the car window, pointed at the young couple, and laughed. Then the car moved beside another carload of blacks.

After the young couple left the station, the young man, who was driving, noticed two cars following them. When he realized that the cars were chasing them, he pushed his wife to the floor and sped away. The blacks chased after them. Finally, one car pulled alongside the truck. A black teenager pulled out his pistol and fired seven shots. A bullet found the young white man’s heart.

He did not know that the bullet hit him until he saw the blood. He told his wife that she would have to drive. While still running from the Negroes, they switched seats.

Then the car with the black gunman pulled in front of their truck to force them to stop. As the gunman pointed his pistol at the wife, she swerved off the road, drove up two embankments, and escaped. She drove to a hospital where her wounded husband was treated. The bullet had hit his heart, and he died of his wound the next day.

Although this crime was never treated as a hate crime, it was a hate crime in the truest sense. This young man was assassinated for only one reason: He was flying the Confederate flag on his truck. He was assassinated to honor Martin Luther King. Not unexpectedly, black leaders and liberal whites who suffered terminally from negrophilia-albuphobia[2] tried to blame the victim for the crime.

As the above story illustrates, a race war is being fought in America. The unspoken evidence of this war is everywhere. The massive exodus of whites from the larger cities evidences this war. It is seen in the previously unheard-of security measures that people are taking. Blinding lights flood parking lots. Wealthy neighborhoods are gated and guarded. Alarm systems have become a common household item. Everywhere are neighborhood watch signs. Rare is the store that does not have closed-circuit cameras. Clerks taking in money behind the protection of bulletproof glass are growing. Most stores limit the cash in their cash registers. All these security measures show that Aryans are at least vaguely aware that they are in the midst of a war and that they are the targets. Unfortunately, because of the anti-white lies with which the albusphobes have inculcated them, most do not, or at least refuse to do so openly, recognize and acknowledge that they are involved in a race war. The objective of this race war is the extermination of the Aryan race.

A race war is being waged in the United States, and most people do not even know it—or at least they refuse to acknowledge it. Although this war has been going on for four decades, it has mostly been concealed from its victims. Well, this statement is not exactly true. The truth is worse. The war has not been concealed so much as it has been described such that the victims are presented as the perpetrators.

Anyone reading newspapers, watching television, or listening to the radio would soon conclude that America is engaged in a race war. They would conclude that white America is trying to annihilate black America. Whites are the perpetrators. Blacks are the victims.

The truth is the opposite. Contrary to the propaganda, whites are not seeking to destroy blacks. On the contrary, blacks are seeking to destroy whites. Far more whites are victims of blacks than blacks are victims of whites.

This war, which Paul Sheehan calls the "Dirty War,"[3] has been going on for 40 years. It has claimed 25 million victims and has taken almost as many lives as the Vietnam War.

This war is not a conventional war where the opposing sides are identifiable by their uniforms. It is more like a guerrilla war and a civil war, yet it is not like either. Unlike a civil war, the overthrow of the established government is not the objective. It is worse than the traditional civil war, for the government has allied itself with the enemy to wage war against its citizens. The guerrillas in this war are not irregular militias who are mostly organized to overthrow the established government or drive it from a particular territory. The guerrillas in this war are primarily criminal thugs who have no intention or inclination to overthrow the established government. They wage this war out of hate. They hate their victims—not necessarily personally, but because they are members of an identifiable race. Thus, Negroes hate Aryans and seek their destruction.

This war is not fought like a conventional war or even as a guerilla war. It appears as crime. The casualties appear as victims of crime. For nearly the last 40 years, black Americans have waged this criminal war against white Americans.

This rise in black crime against whites began in the 1960s with the civil rights movement. As integration replaced segregation, Negroes began their war against Aryans. As whites have made more concessions to blacks and as society has become more integrated, this black war against white America has escalated and intensified. Between 1964 and 1994, Negroes killed 45,000 Aryans. This number of deaths exceeds the number of Americans killed in the Korean War (34,000) and is closing in on the number killed in the Vietnam War (58,000).[4]

Since 1965, blacks have committed at least 170 million crimes against white Americans. This Dirty War is destroying America, yet the major news media and political parties are covering it up.

Governments at all levels, especially the federal government, and the news media have made a concerted effort not only to conceal this war but also to make the victim race appear as the perpetrator. One almost never hears of a black being tried for a hate crime. Yet whenever a white viciously attacks a black, the crime is presented as a hate crime against blacks even when race is not an issue. The myth that all Aryans are by nature racists with uncontrollable hatred for Negroes and other colored people and lust to kill them at every opportunity must never die. Hand in hand with this myth is the myth that the Negro is a mild-mannered, peace-loving being who would never harm anyone if it were not for white oppression.

The following crime statistics clearly show that blacks are warring against whites.

Crime Statistics
The crime statistics prove the existence of the Dirty War. They show that Aryans are much more often victims of black criminals than Negroes are victims of white criminals.

Since 1975, violent crimes have grown more than four times faster than the population. Young blacks are twelve times more likely to be arrested for murder than young whites. About 20 percent of the more than 6.6 million violent crimes[5] are interracial, i.e., about 1.3 million are interracial crimes. (In 1985, 629,000 interracial crimes occurred.[6] Thus, in 10 years interracial crime has increased, more than 12-fold.) About 90 percent of the victims of race crimes are white. (Why does the United States Justice Department only concern itself with the 10 percent against blacks?) In 1994, blacks murdered, robbed, assaulted, or raped more than 1.1 million whites while whites murdered, robbed, assaulted, or raped only about 135,000 blacks. The United States have seven times more whites than blacks. Blacks commit 7.5 times more violent interracial crimes than whites. On a per-capita basis, blacks commit 50 times more violent crimes than whites. Blacks murder whites at a rate 18 times greater than whites murder blacks. Blacks murder more than 1600 whites per year. Blacks are truly waging a war against white Americans.[7]

The same disparity appears with nonviolent crimes.[8] In 1992, 27 million nonviolent crimes were committed. Of these crimes, blacks committed 31 percent against whites. Whites committed only 2 percent against blacks.[9]

According to Walter Williams,[10] a black economist, in the United States blacks commit 54 percent of the murders, 42 percent of the forcible rapes, 59 percent of the robberies, and 38 percent of the aggravated assaults.[11] Yet blacks make up only about one-eighth of the population.

Most of the time blacks are the victims of black criminals. Of murdered blacks, 93 percent were murdered by other blacks—so much for white racists killing blacks.[12]

Nevertheless, blacks commit more crimes against whites than they do against blacks. Blacks commit 1.58 million crimes per year against whites as compared to 1.34 million crimes per year against blacks.[13] Thus, black criminals choose white victims more than half the time.

Pat Buchanan affirms Williams’ assertions. Buchanan presents statistics[14] that show that blacks commit eight times more assaults than whites, blacks commit nine times more rapes than whites, blacks commit 14 times more murders than whites, and blacks commit 19 times more armed robberies than whites. Black neighborhoods are 35 times more violent than white neighborhoods.

The 1991 Justice Department statistics show that blacks committed 20,204 rapes against whites, but whites committed only 100 rapes against blacks. For robberies, 167,924 whites were victims of black robbers while only 7031 blacks were victims of whites. Blacks assaulted 431,670 whites; whites assaulted only 49,800 blacks. For all other violent crimes, 572,428 involved black perpetrators and white victims while only 55,301 involved white perpetrators and black victims.[15]

To state crime statistics another way, whites commit 63 crimes per 100,000 whites against blacks. Blacks commit 3494 crimes per 100,000 blacks against whites. Thus, the typical Negro is 56 times more likely to commit a violent crime against an Aryan than is the typical Aryan against a Negro.[16]

A majority of the victims of black perpetrators are white. Aryans are the victims in more than 56 percent of the violent crimes committed by Negroes. On the other hand, Negroes are the victims in less than 3 percent of the violent crimes committed by Aryans.[17]

[Editor's Note: The original contains a table that summarizes the percentage of young adults under criminal justice control. That table has been omitted.] Black males account for the largest fraction of the people between 20 and 29 years of age who are under criminal justice control. Yet this age group accounts for less than 1 percent of the American population.[18]

In the age bracket 18 to 34, one-third of the Negroes are in the criminal justice system.[19] That is, they are in prison or on probation or parole or out on bond.

The incarceration rate for whites nationwide rose from 116 per 100,000 in 1984 to 203 per 100,000 in 1993, a 75 percent increase. The rate for blacks increased from 723 per 100,000 to 1432 per 100,000, or a 98 percent increase, during the same period.[20]

[Editor's Note: The original contains a table that shows that crime rates of whites in the United States are similar to crime rates in Europe. That table has been omitted.] Blacks commit far more crimes on a per-capita basis than whites.[21]

Negrophiles use these statistics to argue that the criminal justice system is biased against blacks. Yet the opposite is true. The criminal justice system favors blacks over whites because blacks are convicted less often than whites.

Racism in the court system favors blacks, not whites. In 12 of 14 felony categories tracked by the U.S. Bureau of Justice Statistics, conviction rates are lower for blacks than they are for whites.[22] Black jurors are much more inclined to let an obviously guilty black defendant go free than white jurors are to let a white defendant go free.

According to the standard liberal prattle, poverty causes black crime. Williams refutes this claim. He shows that the murder rate between 1900 and 1929 rose from 1.2 per 100,000 people to 8.4. During the Great Depression of the 1930s, the murder rate fell to 6.3. By 1960 it was down to 4.7. However, as integration began to grow rapidly, the murder rate rose. It had reached 9.5 per 100,000 in 1993.[23]

According to the 1993 U.S. Justice Department survey, "Highlights from Twenty Year Surveying Crime Victims," 1.3 million white Americans were victims of violence by blacks. Only 130,000 (or about one-tenth as many) blacks were victims of white violence. When these numbers are adjusted for the relative differences in population, they show that blacks are about 60 times more likely to engage in interracial violence than are whites. This survey also showed that blacks murder whites about 18 times more frequently than whites murder blacks.[24] Blacks are 325 times more likely to participate in a gang robbery attack on a white than a white is on a black.[25]

As the crime statistics show, a large-scale race war is being fought in America. The aggressor in this Dirty War is the Negro; the victim is the Aryan.

Immigration
If having to war against domestic Negroes was not enough, the albusphobes have opened the borders to colored immigrants. Although most of these immigrants, legal and illegal, are Turanians and mestizoes from Latin America and Turanians and Melanochroi from Asia, they are just as destructive of the Aryan race and Aryan society as are Negroes. A million or more of these immigrants are pouring into the United States annually. They are destroying white communities. By significantly contributing to crime and mating with Aryans to breed them out of existence, they are part of the genocidal war against whites. They provide an important cadre in the Dirty War to annihilate the Aryan race.

Presently, one million legal immigrants enter the United States annually. Another 300,000 enter illegally. By 2050 immigrants will outnumber native Americans two-to-one.[26] In 1996 more than one million immigrants were naturalized. Nonwhites account for 85 percent of these immigrants. Before 1965, about 85 percent of the immigrants came from Europe. Today about 15 percent come from Europe.[27] At the present rate of increase in the nonwhite population, barely a majority of the population of the United States will be Aryans in 2025.

Most of these immigrants are non-Aryans, i.e., they are Turanians, Melanochroi, and Negroes, and hybrids. Most of them are from countries alien to the Western Civilization of Europe. Even most of those from Latin America, which Western Civilization has heavily influenced, find it alien. Such a culture is foreign to the vast majority of Turanians and mestizoes who are flooding the United States.

Most of these immigrants are unskilled and have a high birth rate. As their numbers increase, the living standard of the common American will decline. The more their numbers grow, the more their Third World culture of poverty and corruption will prevail.

To aid in the Dirty War against Aryans, the Immigration and Naturalization Service (INS) has unlawfully granted thousands of criminal aliens citizenship. These new citizens are free to stay in the United States and prey on their fellow citizens. They are just more troops in the war against white America.

Evidence of the INS hostility toward white America is found in Chester County, Pennsylvania. The police released illegal aliens when the INS refused to pick them up for processing or deportation. The objective of the INS is no longer to protect America from undesirable or illegal immigrants. Its objective has become to help transform America into a Third World country. Its objective is to destroy white America and the Aryan race.

To obfuscate the number of nonwhite immigrants, the Census Bureau classifies all people from the Middle East, North Africa, and Egypt as white. True, many of these people are white (of the Aryan species). However, many are brown (of the Melanochroic species[28]).

Furthermore, the Census Bureau generally counts Mexicans as white, although no more than 10 percent are white. Ninety percent are Indians and mestizos.

The albusphobic controlled United States government has opened the borders to nonwhite immigrants. Nonwhite immigrants are an important source of troops in the Dirty War to destroy white America. Immigration is leading to the genocide of the Aryan race in America.

Hate Crimes
Robert Patterson correctly defines a "hate crime" as "violence done to the black race or any individual thereof."[29] This definition is the one used by the liberal media, the political elite, and other albusphobes although they would not state it so bluntly or clearly. Proof that this definition is the correct one is that whenever a Negro is the victim of a crime and the assailant is unknown, the assailant is assumed to be white, i.e., Aryan.

Under this definition of "hate crime," hate crimes seldom occur. Blacks are rarely victims of white criminals. However, if "hate crime" meant a crime against a person of another race because of race, then hate crimes would be common events. Many blacks attack whites because they are white.

In 1995, 7947 hate crimes were reported; of these crimes, 4831 (or more than 60 percent) race was the motivation. Blacks were victims of 2988 (61.9 percent) racially motivated hate crimes. Whites were victims of 1226 (25.4 percent) racially motivated hate crimes.[30] These statistics give the impression that whites commit far more hate crimes against blacks than blacks do against whites. What goes unsaid is that about six times more whites live in the United States than blacks. Consequently, when adjusted for population, a white is 2.6 times more likely to be the victim of a hate crime than is a black. (As these statistics deliberately underreported the number of whites who are victims of hate crimes, the likelihood of a white person being a victim of a hate crime is higher.) Thus, blacks commit proportionally more hate crimes than whites.

Another important item concealed by these numbers is how perpetrators and victims are counted. Perpetrators are classified by race. Victims are classified not only by race, but also by ethnicity, religion, and sexual orientation. Thus, if a white attacks a black, it counts as a white hate crime against a black. If a white attacks a Hispanic, it counts as a white hate crime against a Hispanic. However, if a Hispanic attacks a black, it counts as a white-on-black hate crime. (Actually, it should count as a Turanian on Negro hate crime for about 90 percent of the crimes because at least 90 percent of the non-Cuban Hispanics are Turanians [Indians] or mestizoes [Turanian-Aryan hybrids] and not Aryans [white].) Thus, lumping Hispanic Turanians and mestizoes with Aryans deliberately skews the statistics against Aryans.

Another fact that the gross hate crime numbers conceal is the severity of the crime. Most people associate murder, rape, aggravated assault, and other violent crime with hate crimes. However, about 41 percent of the recorded hate crimes are "intimidation," which may be no more than using a racial slur.

A war is being waged in America. Lawless Negroes and Mexicans are terrorizing whites. A reign of terror exists in America, and the United States government is orchestrating it.

This Dirty War against white America is destroying the power of middle-white Americans. The decline in the power of middle-white America has led to moral decay, more crime, more illegitimate births, more taxes, more welfare, more government, more drugs, deteriorating schools, and deteriorating communities.

Negroes and other races feel a great deal of hate for Aryans. Racial hatred underlies many (most) of the crimes against whites. Yet seldom are any of the crimes committed by Negroes against Aryans considered hate crimes. Albuphobes who control the government, media, big business, religion, and academia claim that a Negro cannot hate an Aryan because of race. If, by happenstance, such hatred does exist, it is the Aryan’s fault.

With a few exceptions, the national news media (along with governmental officials, business and religious leaders, and other albusphobes) have ignored most of these sadistic crimes. Perhaps these hideous crimes of Negroes violently attacking Aryans have become so common that such incidents are no longer news. Or is the national news media trying to cover up "America’s dirtiest little secret: black-on-white violence" as Earl Holt writes?[31]

The news media is quick to broadcast news about white crimes against blacks. Is it that these crimes are so rare that they are newsworthy? Possibly, for they are rare.

Perhaps it is also the Marxist framework guiding the news media. Under the Marxist way of thinking, whites are the exploiters, and blacks are the exploited. This is how the news media generally treat race relations: Whites oppress blacks. The news media typically ignore racial relations that do not fit this ideology. The news media are incapable of perceiving whites as treating blacks any other way. They are incapable of seeing blacks acting violently out of racial hatred. If a black does commit a violent crime against a white, it is nothing more than an oppressed slave rebelling against his oppressor. Thus, the news media ignore or downplay crimes committed by blacks against whites while broadcasting ad infinitum and ad nauseam crimes committed by whites against blacks.

The way that the news media report white-on-black crimes inspires black-on-white crimes. Interracial crime reporting gives the impression of large-scale white-on-black crimes with little black-on-white crimes, which is the opposite of the truth. Such reporting creates black animosity toward whites. It creates a desire to get even. Many black criminals have admitted that a motivation for their crime was a desire to "even the score" against whites.

The press has taught blacks to hate whites. It exaggerates crimes of whites against blacks. It rewrites history to present Aryans as greedy, vile oppressors and Negroes as innocent victims. The history of America is nothing but 500 years of white oppression of blacks. If it were not for white oppression, blacks would rule the planet and own all its wealth—so the liberal elite teaches.

A primary factor that contributes significantly to white victims of black criminals is ignorance of racial differences. Races have different temperaments. In general, Negroes tend to be impulsive, childlike, and cruel. Their most unspeakable crimes occur without prior planning. Like animals, they see a victim and attack without thought.

The media are not the only ones waging a genocidal war of words and concealment against Aryan America. Tax-supported universities and colleges are also important weapons in the annihilation of the Aryan race. They are the vanguard of the war, for they train the reporters and the leaders of government, business, and religion.

In the name of diversity, colleges and universities have become massive reeducation and indoctrination camps. They reeducate and indoctrinate whites to hate themselves. They teach nonwhites to hate whites. They inculcate their students with the lie that whites are the cause of all the world’s problems. If it were not for whites, the Earth would become the Garden of Eden. The only thing standing in the way of paradise is the Aryan race. The sole purpose of the Aryan race is to oppress people of color. Aryans are parasites living off the other races. Every great accomplishment credited to whites was stolen from another race. Elimination of the white race will fill the Earth with harmony, peace, and love. Universities, businesses, governments, and churches expend enormous resources teaching whites to despise themselves and teaching nonwhites to despise whites.

All this indoctrination serves one purpose: annihilation of the Aryan people, i.e., genocide. What is happening to the Aryans of America, happened to the Jews of Nazi Germany and various classes in communist Russia.

Black crime is changing the face of America. It will only become worse with time. The United States are at the threshold of a colored crime wave, the likes of which neither this country nor any other country has ever before seen. Hundreds of thousands of colored teenagers, the most violent age, are flooding the country. These children come from broken homes in crime-ridden neighborhoods, mostly in the inner cities. (An unofficial, but deliberate, policy of the United States government has been to create these broken homes and crime-ridden neighborhoods through the welfare state.) They are the progeny of low-intelligent parents. The religion of the secular humanists has inculcated them with hatred of the Aryan people. This breed of adolescents is much more violent than any who have come before them. They lack remorse and consciousness. The violence of their crimes was unthinkable even a decade ago. These are the new troops whom the albusphobes are employing to annihilate the Aryan race.

The purpose of this essay is not to instill or promote racial hatred or racial conflict. It is to inform open-minded whites (Aryans) about a war that is being deliberately waged to destroy them and their race. It is to inform them of genocide—the deliberate and systematic destruction of the Aryan race. This genocidal war is being concealed as crime.

Endnotes
1. Aryan is synonymous with white, and Negro is synonymous with black.
2. See Integration Is Genocide by Thomas C. Allen for a description of this disease.
3. Paul Sheehan, "The Race War of Black against White," The Truth at Last, 395, p. 9. (Originally published in The Sydney Morning Herald, May 20, 1995.)
4. Ibid.
5. Violent crimes are murder, rape, assault, and robbery.
6. "Statistics Prove Blacks Far More Violent," The Truth at Last, 402, p. 8.
7. New Century Foundation, The Color of Crime: Race, Crime, and Violence in America (Oakton: New Century Foundation, 1999). Paul Sheehan, "The Race War of Black against White," The Truth at Last, 395, p. 9. (Originally published in The Sydney Morning Herald, May 20, 1995.)
8. Non-violent crimes are burglary, larceny, car theft, and personal theft.
9. Paul Sheehan, "The Race War of Black against White," The Truth at Last, 395, p. 9. (Originally published in The Sydney Morning Herald, May 20, 1995.)
10. Williams’ explanation of these crime statistics probably disagrees with mine. However, I think we both would agree that if black leaders taught blacks to admire and respect the Aryan people and Western Civilization instead of despising and envying them and if the myriad of social and economic policies that inhibit the growth and development of blacks were abolished, black crimes would noticeably decline.
11. Walter Williams, "Black Writer on Black Crime," The Truth at Last, 403, p. 9.
12. Ibid.
13. National Association for the Advancement of White People, The Black War on White Americans: An Overview of U. S. Crime! July 13, 1999, http://naawp.com/popop.htm, Feb. 2000.
14. "Statistics Prove Blacks Far More Violent," The Truth at Last, 402, p. 8.
15. Charley Reeves, "Black Racism Is More Prevalent Than White Racism," Middle American News, December 1998, p. 15.
16. New Century Foundation, The Color of Crime: Race, Crime, and Violence in America (Oakton: New Century Foundation, 1999), p. 2. "Clinton ‘Hate Crimes’ Law Sets Up New Secret Police," The Truth at Last, 415, p. 3.
17. New Century Foundation, The Color of Crime: Race, Crime, and Violence in America (Oakton: New Century Foundation, 1999), p. 3.
18. "In the System," The Truth at Last, 386, p. 9.
19. "Racial Equality—Man’s Most Dangerous Superstition," The Truth at Last, 389, p. 7.
20. Robert B. Patterson, "The Africanization of Sports and Public Schools," Citizens Informer, vol. 25, winter/Dec. 1994, p. 12.
21. "U. S. White Crime Very Low," The Truth at Last, 401, p. 10.
22. Charley Reeves, "Black Racism Is More Prevalent Than White Racism," Middle American News, December 1998, p. 15.
23. Walter Williams, "Black Writer on Black Crime," The Truth at Last, 403, p. 9.
24. Earl P. Holt III, "The Undeclared War," Citizen Informer, Vol. 29, spring 1998, p. 1.
25. Jarad Taylor, Paved with Good Intentions: The Failure of Race Relations in Contemporary America (New York: Carroll & Craf Publishers, Inc., 1992), pp. 93-94.
26. "Immigration Turning America into Colored Nation," The Truth at Last, 400, p. 9.
27. "Clinton Floods U. S. with Aliens, The Truth at Last, 395, p. 3.
28. Although Melanochroi have many Caucasoid features, they also have many Negroid features. Physically they frequently resemble Negroes more than some mulattos classified as Negroes.
29. Robert B. Patterson, "Hate Crimes," Citizen Informer, summer 1997, p. 12.
30. Samuel Francis, "Truth about ‘Hate Crimes,’" Middle American News, vol. 3, no. 2, Feb. 1997, p. 18.
31. Earl P. Holt III, "The Undeclared War," Citizen Informer, vol. 29, spring 1998, p. 1.

Copyright © 2009 by Thomas Coley Allen.

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Analysis of Charles Norburn’s Monetary Reforms

Analysis of Charles Norburn’s Monetary Reforms as Presented in Honest Money
 Thomas Allen

This paper is my analysis of Charles S. Norburn’s monetary reforms as presented in his book Honest Money: The United States Note (New Puritan Library, 1983). His words and my paraphrases or summaries of his words, I have italicized. My commentary is in roman letters. I have provided references to pages in his book and have enclosed them in parentheses.

Norburn advocates following Lincoln’s example and having the U.S. government print U.S. notes without the restrictions placed on Lincoln’s notes. He claims that his monetary system eliminates high interest, overwhelming debt, and high taxes (p. xi).

He proposes (1) to abolish the Federal Reserve and replace it with a system run by honest men who place the interest of the country above personal gain, (2) to cease issuance of interest-bearing U.S. government securities, (3) to have the U.S. government to print its own money to pay its expenses and to lend it at interest, (4) to replace all existing money with new money, U.S. notes, and (5) to cancel interest as it is paid in (pp. 123-124). U.S. notes are to replace federal reserve notes and be the only paper money in circulation (p. 127).

Norburn’s proposal is a typical fiat monetary reform. He differs from others in some details, but not in fundamental principles. Like all other fiat monetary reformers, he believes that politicians, bureaucrats, and "experts" can manage the country’s money better than the people as a whole. Thus, he trusts politicians, bureaucrats, and "experts," but distrusts the people. As do most fiat money reformers, he highly distrusts, if not despises, bankers and wants to abolish the Federal Reserve. Like other fiat money reformers, he wants to transfer the powers of central banking vested in the Federal Reserve to the U.S. government. Unlike many fiat money reformers, he does not offer any real criteria or guidelines for the money managers to use to control the money supply to prevent inflation or deflation. He seems to allow Congress to create and spend money on whatever it desires. As are all fiat monetary systems, his proposal is unconstitutional.

Norburn expresses his belief that before an item can function as money, governmental compulsion is necessary. He does admit that gold and silver were used as money centuries before any government minted the first gold and silver coins (p. 4). Gold and silver have been used as money until recent times even without a government’s seal on it. Before World War I in parts of Asia, purchases were made by cutting silver from a bullion bar of silver.[1]

When the value of the money equals the value of the material of which it is made, such as silver coins under the true silver standard or cigarettes in prisons, governmental coercion is not needed. When a government mints coins, it makes the circulation of coins easier as it certifies the metal content of the coin—assuming that the government is honest. Force is only needed to get people to accept overvalued (underweight) coins. Thus, force is needed to get people to accept irredeemable paper as paper money has no substances or value in and of itself.

Norburn gives a lengthy discussion of Lincoln’s U.S. notes as this is the primary model of his proposal (19-27). When Lincoln could not borrow money at a low enough interest to finance his unconstitutional war to destroy the U.S. Constitution, he resorted unconstitutional money in the form of noninterest bearing, irredeemable forced loans[2] called U.S. notes or greenbacks.

When the government issues notes for use as money, e.g., U.S. notes, it is forcing a loan on the people. It is borrowing from the people just as surely as it would have if it had sold them bonds and took their money. This forced loan of government notes falls on the poor and rich alike. When the government borrows by selling bonds, it takes money only from those who can afford the investment. It takes the capital that can best be spared from the country’s wealth. With notes it takes capital from all classes and disturbs, at least temporarily, the normal conditions of every business.[3]

According to Norburn, U.S. notes were printed as notes: "Because these notes were obligations of United States government—promises to eventually pay for the goods and services the government would buy on credit. On each note was printed the exact amount of dollars government owed its bearer" (p. 20). Gold or government bonds did not back them. They were merely a promise to pay (p. 20). To pay what? If the government were to pay them in dollars, it would have paid the bearer upon redemption, 371.25 grains of pure silver[4] for each U.S. note dollar presented. Lincoln had no intentions of doing this.

Norburn asserts that "they we authorized by the Constitution and were backed by wealth, strength and integrity of the nation" (p. 20). Whatever these U.S. notes were, the U.S. Constitution definitely did not authorized them—at least not in the minds of the writers of the Constitution. The writers of the Constitution actually discussed granting Congress the power to print and issue paper money and voted against giving it that power. Thus, the writers of the Constitution never delegated Congress any authority to print or issue paper money of any kind[5]

If the "wealth, strength and integrity of the nation" backed these U.S. notes, that backing was a meaningless, nebulous intangible. If something really backs money, the issuer can redeem it on demand for whatever it represents. Thus, a silver certificate is redeemable on demand in the amount of silver specified on the certificate. A bank note under the gold standard is redeemable on demand in the amount of gold specified on the bank note. How could one redeem a U.S. note on demand in the "wealth, strength and integrity of the nation"? He could not. He could pay excise taxes, but not tariffs (tariffs could be paid with Norburn’s U.S. notes) with it. He could force his creditors to accept it in payment of debt. The debt paying attribute was a windfall for bankers who got to pay depositors who had deposited gold dollars with heavily depreciated U.S. note dollars. This "wealth, strength and integrity of the nation" seems to be no more than the ability to pay taxes and to cheat lenders and creditors, including bank depositors.

Norburn remarks, "The notes were enthusiastically accepted at face value" (p. 20). If they "were enthusiastically accepted," why did Congress have to declare them to be legal tender so that debtors could force their creditors to accept them as payment of debt?

U.S. notes traded at face value, but they did so because the North replaced the gold-dollar standard with the U.S. note-dollar standard. Items were priced and wages paid in the U.S. note-dollar standard instead of in the gold-dollar standard. If someone bought an item with gold, the sales price was discounted.

The opposite was true on the West Coast. Unlike the North, men of integrity and honor inhabited the West Coast. They did not tolerate a debtor cheating his creditor with cheap money. The West Coast remained on the gold-dollar standard. If some bought an item with U.S. notes, he paid a premium above the list price.

U.S. note dollars did depreciate against the gold dollar. The table below, which is from Johnson, shows the price of gold in U.S. notes and the price of U.S. notes in gold. (Johnson uses “greenbacks”; I have changed greenbacks to “U.S. notes.”) The price of gold is the average for each year.

Norburn claims that one virtue of "the government’s issue of its own notes was that all this took place without a middle man" (p. 21). Except the insignificant cost of printing, no costs were involved. These notes were interest-free loans. "No extra taxes had to be collected to pay a profit [interest] to the bankers" (p. 21). At least here he does admit that U.S. notes were interest-free loans although he seems to deny it elsewhere.

If the government were to live within its means, it would never have to collect extra taxes "to pay profit to the bankers." It would never have to borrow. If Lincoln had the testosterone to levy sufficient taxes to fight his war, he could have fought his war to destroy the Constitution without debt and without resorting to unconstitutional forced loans in the form of U.S. notes. He issued U.S. notes because the people in the North would have rebelled against him if they saw how much the war cost. Like most "great" leaders, Lincoln concealed the cost of war by resorting to the inflation tax. The people ended up paying for the war as they fought it; only they did not realize it because much of the cost was concealed from them.

Norburn objects to the prohibition against using U.S. notes to pay tariffs and interest on U.S. government securities (pp. 21-22). If, as Norburn claims, U.S. notes were really accepted at full face value, no difference would exist between the face value of a $10 U.S. note and a $10 gold coin. Thus, these prohibitions should have not mattered. However, they did because a $10 U.S. note always traded at a discount against a $10 gold coin until 1879 when it became redeemable in gold at par.

Norburn blames the bankers for the depreciation of U.S. notes (p. 127). If he were a true fiat money adherent, he would claim that his beloved U.S. note did not depreciate. They never changed value. Gold appreciated; it changed value. (Being true fiat money adherents, Friedman and Schwartz assert in A Monetary History of the United States that gold traded at a premium to U.S. notes.[6])

Norburn contends that among the 7000 different kinds of bank notes in the country then, only U.S. notes carried an inscription that they could not be used to pay import duties or interest on U.S. government bonds. He implies that these restrictions contributed to, if not out right caused, their lost in value (p. 127). Norburn is being disingenuous. He is deceiving with a half truth. True, these 7000 bank notes did not declare that they could not be used to pay import duties or interest on U.S. government bonds. However, he does not mention that unlike U.S. notes, they were not legal tender. No one had to accept them as payment for anything including import duties and interest. With the two aforementioned exceptions, U.S. notes were legal tender for all debts. Thus, a debtor could force a creditor to accept them as payment. A debtor could not do that with bank notes.

Norburn is also being disingenuous by implying that U.S. notes were unsecured, i.e., not backed by gold (p. 127). Again, he deceives with a half truth. Gold did not back U.S. notes between 1862 and 1879. In 1879 U.S. notes became redeemable in gold on demand. In preparing for this redemption, the U.S. government accumulated enough gold to redeem (back) about a third of the outstanding U.S. notes. In 1932, gold backed about half the outstanding U.S. notes. U.S. notes remained at par with gold between 1879 and 1933 not because of anything inherent in U.S. notes or that the U.S. government issued them. They remained at par for the same reason that national bank notes issued by national banks remained at par between 1879 and 1933 and federal reserve notes remained at par between 1914 and 1933. All remained at par with gold because all were redeemable in gold on demand.

If U.S. notes possessed any inherent property that gave them value in and of themselves as gold and silver coins do, they would have traded at a premium to federal reserve dollars after 1933. They never did. They always traded at par. If being issued by government and being accepted as payment for taxes gives money certain inherent properties that give it value, why were not U.S. notes more valuable than federal reserve notes? After all, the evil bankers and Federal Reserve issued federal reserve notes. After 1933 the quantity of federal reserve notes (and their electronic equivalent) steadily grew. The quantity of U.S. notes remained the same or declined. As the excessive growth of federal reserve notes lead to their decline in value, why did U.S. notes also decline in value? Could it be that U.S. notes have no inherent property that gives them value in and of themselves? Could it be that the problem is fiat money and not who issues it or how it is issued?

Norburn seems to find nothing immoral or unethical about paying a loan made in high-valued money (gold) with low-valued money (U.S. notes). If the debtor pays the nominal amount (one U.S. note dollar for each gold dollar due), no harm has occurred. The debtor has not cheated the creditor. Apparently, those who had made loans in gold believed that they were being cheated or else they would not have demanded that interest payments on U.S. bonds be in gold and later that the bonds themselves be paid in gold. (After the value of the U.S. note dollar came close to the gold dollar, the banks agreed to accept U.S. notes as payment for their U.S. government bonds.)

However, Norburn does believe that it was immoral and unethical for bankers to accumulate U.S. notes when they traded at a steep discount to gold and use them to buy U.S. government bonds and then accept payment for these bonds in U.S. notes that had greatly appreciated, i.e., traded at a slight discount to gold or in gold dollars (pp.24-25).

Strangely and somewhat hypocritically, but not surprisingly, Norburn can see the injustice in buying bonds with inferior U.S. notes and being paid with superior gold. Yet he seems not to see the even greater injustice of buying bonds with superior gold and being paid with inferior U.S. notes.

His complaint about buying bonds with U.S. notes whose exchange rate with gold is low (say $1 U.S. note equals 35 cents in gold [p. 25]) and receiving U.S. notes when the exchange rate is high (say $1 U.S. notes equals 95 cents in gold) is uncalled for and shows his ignorance or his subconscious denial of fiat money. Making such comparisons with gold shows that he truly sees gold as the monetary standard and not U.S. notes. A true adherent of fiat money would see the value of U.S. notes remaining constant and the value of gold fluctuating. By making such a complaint, Norburn, like gold standard adherents, sees the value of gold remaining constant and the value of U.S. notes fluctuating. He shows his doubts that the money that he is promoting is really honest money. A true adherent of fiat U.S. notes sees no injustice in buying a $1000 bond with U.S. notes and receiving a $1000 in U.S. notes in payment when the bond matures. If Norburn sees any injustice in this, he does not really believe in what he is advocating.

If fiat money like U.S. notes is the standard money, then its exchange rate with gold is no more relevant than its exchange rate with salt, iron, or corn. Like salt, iron, and corn, gold is just another commodity bought and sold with the fiat currency.

When he writes that U.S. notes fell to 35 cents, he is saying that the gold dollar remained constant in value and the value of the U.S. note dollar fell. A true fiat money adherent would have written that gold rose in value. He would have claimed that the value of U.S. notes remained constant. If Norburn were a true fiat money man, he would have said that gold sold for $59 per ounce instead of saying the U.S. notes sold for 35 cents. Instead of the value of U.S. notes changing, the value of gold changed.

Norburn presents the national banking system as a great coup for bankers because it gave banks the power to issue money (p. 23). Although it did give national banks the power to issue money, that power was nothing new—even as Norburn notes (p. 19). State banks had been printing and issuing bank notes since the adoption of the U.S. constitution. They continued to print and issue bank notes until Congress levied a tax on them sufficient to end them.

When all the restrictions that the National Banking Act placed on national banks are considered, this law was hardly a victory for bankers. It prevented national banks from accepting savings deposits and prohibited domestic and foreign branch banking. It limited the quantity of bank notes that banks could issue and established reserve requirements. National banks could only conduct general commercial banking business. Restrictions were placed on their lending activity. The law prevented national banks from financing exporters and importers as it prevented them from accepting drafts drawn by them.[7]

To establish a mechanism for Lincoln and the U.S. government to force banks to buy U.S. government securities was the primary purpose of the National Banking Act. The law required bankers to back their bank notes with U.S. government securities. They had to buy U.S. bonds if they wanted to issue bank notes.[8]

Contrary to what Norburn believes, the National Banking Act did give the U.S. government control of the country’s money supply albeit indirect control. It could control the money supply by controlling the quantity of its outstanding debt. It could increase the money supply (bank notes) by expanding its debt and contract it by contracting its debt. (With the various silver coinage acts that Congress enacted between 1878 and 1900, the U.S. government also acquired additional control over the money supply.)

Norburn describes the Federal Reserve (pp. 37ff, 51ff, 111ff). He supports the objectives of the Federal Reserve. These objectives were to provide an elastic currency, to rediscount commercial papers, and to supervise banking in the United States (p. 37). The country’s banking reserves were also centralized and concentrated in the Federal Reserve. Norburn contends that if the Federal Reserve "was to be the nation's central bank, operated for the benefit of all its people, the Treasury should have provided money to start operation" (p. 37). However, the Federal Reserve Act required the Federal Reserve to "be financed by sales of Federal Reserve stock to commercial banks" (p. 37).

Norburn does not object to centralized banking. His system requires it. His objection is to ownership and control. He objects to the apparent private ownership and the control that bankers have over it (pp. 38-39).

Norburn points out that the Federal Reserve’s monetary management, or perhaps more correctly mismanagement, caused the recession of 1921 (p. 41) and the Great Depression (p. 42). It expanded credit to finance the boom of the 1920s and then contracted it (pp. 41-42). A similar pattern of credit expansion and contraction is seen in other economic contractions. Norburn seems to be suggesting that once the monetary authority (either the government or its central bank) begins to expand credit, it should never stop expanding—at least not until the money is inflated to zero. To do so leads to a recession or a depression.

Norburn is absolutely right about one thing. He remarks, "In going off the gold standard, there was no honest reason to take the peoples’ (sic) gold" (p. 42). Along with stealing the people’s gold, he discusses several other monetary reforms that Congress made. One was legalizing the open market operation. With the open market operation, Congress gave the Federal Reserve control of the U.S. government bond market (pp. 43-44). The Federal Reserve can expand and contract the money supply by buying and selling U.S. government bonds. The Federal Reserve had been illegally buying U.S. government bonds since its beginning. As it was doing the U.S. government a favor, the government ignored the violations. The Federal Reserve’s declared purpose of discounting eligible bank paper, which eventually fell into disuse (p. 49), was replaced by dealing in government bonds (pp. 44, 49).

Norburn laments the death of the U.S. note (pp. 46-48). The U.S. government ceased printing $5 and $10 notes in 1968 and $100 notes in 1971 (pp. 47-48). Norburn believes that "The very perfection of the note was its undoing. Its threat to the bankers was short lived" (p. 47). It threatened the bankers, so they had to terminate it (p. 47).

As the bankers control the U.S. government as is evident by the establishment of the Federal Reserve and expansion of its powers, they controlled the issuance of U.S. notes. They also controlled the President, as Norburn notes, and the Secretary of the Treasury. (Most Secretaries of the Treasury have been bankers or connected with banking [pp. 81-83].) U.S. notes died for the same reason that national bank notes died. They died because they were redundant. Nothing important differentiated them from federal reserve notes.

About reserves held by banks after 1933, Norburn remarks that they have "neither substance nor intrinsic value" (p. 56). These reserves are "nothing more than magnetized particles (bits and bites), on computer discs" (p. 56). Norburn seems not to realize that in the monetary system that he proposes as a replacement for the current system, bank reserves will have "neither substance nor intrinsic value." In the current system, reserves are computer data based on interest-bearing governmental debt. Under his system, reserves are computer data based on noninterest bearing government debt. (The way Norburn sets up the banking system, banks may not need reserves.) Norburn does acknowledge that like the current system, most of the money in his system will be electronic money, i.e., "magnetized particles . . . on computer discs."

Norburn comments on the extravagant expenditures of the Federal Reserve (pp. 61-62) and concludes, "In reality, the Federal Reserve System is a private banker's bank, controlled by international financiers, totally independent of our government, and in its many aspects and connections, largely run for private profit (p. 62)."

The way that the system is set up, the Federal Reserve is encouraged to spend extravagantly on itself. Whatever it fails to spend goes to the U.S. Treasury. If Congress finds that the Federal Reserve is spending too much, it can always amend the Federal Reserve Act to cap its expenditures.

As for the independence of the Federal Reserve, if it fails to please the people who really control the U.S. government, it will cease to exist or be modified to make it more subservient. The Federal Reserve exists at the pleasure of the U.S. government. Congress can abolish it anytime for any reason as Norburn admits when he has Congress abolishing the Federal Reserve. The people who control the U.S. government are the same people who control the Federal Reserve. The independence of the Federal Reserve is a myth.

Norburn discusses the confusion about the ownership of the Federal Reserve and comments on the private ownership of the Federal Reserve (pp. 64-67), which he finds abominable. Economists disagree about whether the Federal Reserve is privately owned and controlled or publically owned and controlled. Economists representing the U.S. government or the Federal Reserve usually argue that it is publically owned and controlled. Most other economists who express an opinion claim that it is privately owned and controlled. A few economists contend that the ownership is irrelevant because the Federal Reserve does mostly what the U.S. government wants it to do. Others disagree about the Federal Reserve doing the bidding of the U.S. government; they aver that the U.S. government does the bidding of the Federal Reserve.[9]

As the Bank of England shows, the ownership structure of the central bank matters little. The British government nationalized the Bank of England in 1946[10 ] and made it part of the government. Not much changed.

As Norburn states, the Ninth Circuit Court ruled that the 12 regional Federal Reserve banks are privately owned (p. 64). He also notes that Marriner Eccles, Chairman of the Federal Reserve Board of Governors, and later William Martin, also chairman of the board, claim that member banks do not own the Federal Reserve (p. 65). The ownership of the Federal Reserve is confusing.[11] Is this confusion deliberate?

Norburn discusses the Federal Reserve as it stood in 1983 and the economic crisis of the early 1980s (pp. 111-115). He argues, "The Federal Reserve has ultimate control of all the wealth of this nation, and those bankers who control the system use it as their own personal tool to enrich themselves at the expense of the nation" (p. 111). He is correct about the first loyalty of the Federal Reserve is to the bankers and not to the country.

Like most fiat money reformers, Norburn condemns interest (pp. 76-77), yet his system calls for interest (p. 138, 148). As Howard Katz has explained in his blogs and articles (http://thegoldbugnet.blogspot.com/ and http://www.gold-eagle.com/ research/katzndx.html), without interest the industrial revolution would not and could not have occurred. Interest encouraged people to save and to turn their savings over to middle men, bankers, who paid them interest (the evil compound interest at that) on their savings. Banks could pool many small savings into the large sums that entrepreneurs needed to build their factories, railroads, power plants, and the like.

Like many foes of interest, especially compound interest, Norburn uses an example of a penny lent at compound interest when Jesus was born would earn an incomprehensibly astronomical amount of money (pp. 76-77). Of coarse, they never show a real case where this happened because they cannot. I am not aware of anyone showing an incident of a person receiving compound interest on a loan for a century. Too many things can happen before the person or his descendants own the universe with the interest earned. The borrower may pay off the loan or go bankrupt. The lender may call in the loan to spend it. If he does not, his heirs most likely will. Also, the lender must avoid all sorts of disasters, especially wars, and thefts, especially theft by government.

Norburn’s problem with interest, including compound interest, is not with interest itself. It is who receives the interest. He has a low opinion of the bankers receiving interest. Nevertheless, he advocates the U.S. government receiving interest (pp. 138, 148). He does, however, oppose the U.S. government paying interest (p. 138). Thus, he advocates forced interest-free loans in the form of U.S. notes and their electronic equivalent.

Norburn gives an incorrect description of the gold standard. He writes, "Its high price came about because its connection with money" (p.91). Apparently, Norburn was among those who believed that when Nixon stopped redeeming dollars in gold, the price of gold would collapse. To the contrary, it soared when freed from the chains of the dollar. Norburn knew this because he wrote his book in 1983. True, using gold as money adds value to it. However, gold had a high value per unit of weight before it was used as money. This high unit value contributed to the market choosing gold for money.

Norburn cites several examples of what he considers abuses of gold money and the gold standard. One was financiers demanding redemption in gold of large quantities of paper money issued by the U.S. government (p. 92). Apparently, people should not expect the U.S. government to keep its promises. It had promised to redeem its U.S. notes in gold and its Treasury notes of 1890 in gold or silver at its desecration. It chose to redeem the Treasury notes in gold to maintain the dollar’s standing in world commerce as most of the world was on the gold standard. Both U.S. notes and Treasury notes of 1890 were fiat money. Congress and the Secretary of the Treasury decided how much to issue instead of the markets. Furthermore, neither were fully backed by gold although the Treasury notes of 1890 were supposed to be fully backed by silver. Without these fiat moneys, the financiers could not have executed the schemes of which Norburn accuses them.

Norburn states that these financiers redeemed the notes for gold. Then when the Treasury needed to replenish its gold, they sold it the gold back at a profit (p. 92). For each $100 in Treasury notes, which were mostly what was redeemed, that they redeemed, they received five double eagles ($20 gold coins) or 2322 grains of gold (the law defined the dollar as 23.22 grains of gold). When they "sold" this gold back to the Treasury, they received $100 in U.S. notes or $100 in gold certificates for each 2322 grains of gold "sold." That is the "price" that the Treasury by law "paid" for gold. Where was the profit?

Norburn notes that when the U.S. government discontinued using silver coins, it allowed the people to keep their silver coins and allowed silver certificates to continue to circulate although they were no longer redeemable in silver. He states that should have been way to go off gold. The people should have been allowed to keep their gold coins (pp. 92-93). People with advance knowledge of Roosevelt’s theft of the people’s gold profited handsomely. They redeemed their U.S. notes and federal reserve notes at the rate $20.67 per ounce of gold. Later they sold this gold for $35 per ounce. They could not tolerate ordinary people sharing in this profit. Perhaps this was the main reason for Roosevelt’s theft. Here was their profit. It was not returning to the gold standard as Norburn surmised (p. 92).

Norburn discusses returning to the gold standard (pp. 117-121). Like many people who consider returning to the gold standard, Norburn thinks of returning with the dollar equal the approximate current dollar value of gold, which was about $500 per ounce at his writing. He comments on the absurdity of minting $5 (0.01 ounces), $10, and $20 gold coins and concludes that paper money would be used in place of gold coins (p. 118). There is no reason to fix the "price" of gold at some absurdly high level of federal reserve dollars. No reason exists even to fix the "price" of gold in the federal reserve dollar. A return to sound money does not require this fixed conversion. To return to sound money requires opening the mint to free coinage[12] of gold and silver, stripping the federal reserve dollar of its legal tender status, and letting the markets decide the exchange rates. Furthermore, the U.S. government should cease printing federal reserve notes except to replace worn out notes or if necessary to pay its obligations contracted in federal reserve notes. It should immediately cease contracting in federal reserve notes and start contracting in gold and silver and pay its employees in silver. All contracts and obligations made for federal reserve notes would be paid in federal reserve notes. After a certain date, banks would cease lending federal reserve dollars.[13]

Norburn notes that the gold standard does not limit the money issued (pp. 118-119). This is true to a certain extent. The gold standard does regulate the quantity of credit money (paper money and electronic money) issued if the issuer of the credit money has to redeem it in gold on demand.

He remarks that the gold standard did not prevent the inflation of the 1920s (p. 119). Again, this is true. However, governments had made the gold standard dysfunctional when they abandoned the real bills doctrine. Abandoning the real bills doctrine made producers the servants of the bankers instead of the consumers. Like most other governments and central banks, the U.S. government and Federal Reserve insisted on following monetary policies that were incompatible with the gold standard. When they had to choose between the gold standard and their manipulative monetary policies, they chose their manipulative monetary policies.[14]

Furthermore, the United States did not have a pure gold standard. It had a gold standard accompanied by fiat money, U.S. notes. Federal reserve notes also accompanied it. Although they were not fiat money at this time as they were not legal tender, to some extent they acted like fiat money. Because the central bank issued them, they circulate for a much longer time before redemption than a common bank note issued by a local bank would have. Thus, they could be over issued with little threat of redemption. Originally, federal reserve notes were to be issued to rediscount real bills of exchanges. That principle was abandoned at the beginning of World War I when the U.S. government wanted to finance its war effort with credit money, which the Federal Reserve provided.

Norburn erroneously believes that bankers want a return to the gold standard. He is convinced that people who want to return to the gold standard are under the spell of bankers’ propaganda (p. 120). Bankers prefer fiat money to gold. Fiat money gives them more power. Gold restricts their power. Bankers may promote a fiat monetary system that incorporates gold, but they will never promote the true gold standard. Under the true gold standard, the markets determine the quantity of money instead of bankers and governments. The true gold standard frees the people and businesses from the control of bankers.

Norburn claims that bankers perverted and destroyed the gold standard (p. 120). Bankers may have perverted the gold standard, but they did not destroy it. They had no power to destroy it. Only the President and Congress could destroy the gold standard. Only they could outlaw it. Outlawing it Congress and the President did in 1933.

Furthermore, government is as guilty, if not more so, as the bankers at perverting the gold standard. If governments had sent bankers to prison for failure to redeem their notes instead of protecting them by allowing them to suspend redemption, the corrupting influence that bankers had over money and the economy would have ceased long ago.

Norburn asked how would the country return to the gold standard? Would the government buy gold from the bankers (p. 120)? Here Norburn shows his ignorance of the gold standard. (Or does he really understand the gold standard, and is he trying to deceive people into supporting his scheme?) The government would buy gold from no one. It would merely open the mint to free coinage of gold and strip the federal reserve notes of its legal tender status. Furthermore, the government would not own any of the coins that it minted except those it received in payment of taxes and fines. If bankers wanted to convert their gold to coins, they, like everyone else owning gold bullion, would bring it to the mint for coinage. The gold after coinage would be worth no more than it was before coinage. It could, however, be easier to use as money.

Norburn seems to reject the notion of free coinage (p. 120), which is essential to the gold standard. It does not exist without free coinage. He objects allowing bankers "to coin their own tremendous hoard" (p. 120). He also seems to reject monetizing gold (p. 120). Under the gold standard gold is money. One cannot have a gold standard without gold being money.

He claims that gold cannot be free market money because a small group of men in London sets its price daily (p. 120). A small group of men in London may set the price at which they will buy and sell. However, they cannot force anyone in the United States to buy or sell at that price. If they set the price much above the market value, people will rush to sell them their gold. If they set it much below the market value, people will rush to buy their gold. The markets set the price of gold, and not a small group in London.

Norburn writes, "The amount of money issued depends upon the character of the men in charged of the system, not on hard money backing" (pp. 118-119). A fiat monetary system will work better when managed by men of integrity, but it will still fail because even men of integrity are not omniscient. A true gold standard was designed for sinful men; it does not depend on men of integrity to decide how much money to issue. The quantity of money is independent of the decisions of any one group of men.

Furthermore, this statement shows Norburn’s ignorance of the gold standard. Gold may back fiat money as it did U.S. notes between 1879 and 1933. However, under the gold standard, gold never backs the money. Gold is the money! The money is gold! It does not back itself; it is itself.

Norburn claims that the Rothschild-Rockefeller axis controls most of the world’s gold. Therefore, gold should not be used as money because the Rothschilds and Rockefellers would use their vast gold hoard to oppress the people (pp. xiii-xiv, 120-121).

The Rothschilds and Rockefellers and their associates may own large hoards of gold, but such ownership is unknown and uncertain. If they do own large hoards of gold, what will they do with it? They really have only three options. They can spend it, lend it, or hold it. If they dump (spend) large quantities in the markets quickly, they may create economic turmoil. However, any turmoil created would be short-lived if the government does not intervene to soften the crisis. Moreover, they lose control of all the gold that they dump. If they chose the lending route, they can lend no more than the markets want to borrow. As they try to lend more, interest rates fall. An economic contraction may follow as these loans are paid—especially if bankruptcy cancels them. However, such contraction is unlikely as they are lending real money, gold, instead of credit money, paper. If they used their gold to support the issuance of bank credit money (checkbook money or bank notes), they could create economic dislocation if the created money is used for things other than real bills. Nevertheless, such credit expansion is short-lived as people will soon begin redeeming the credit money for gold. The bankruptcy of some banks may result with loses to depositors. Nevertheless, the crisis will be short-lived if the government does not intervene to soften the crisis or worse intervene to suspend redemption. The bankers would lose much of their gold from the crisis. If they just hold the gold, they would not affect the monetary system. The value of gold as money would adjust to the supply available for money.

The manipulation that Norburn describes (pp. 25, 26) could not have occurred under a pure gold standard. With what could they have bought the gold? Under a pure gold standard, they could only buy gold with gold or paper money redeemable in gold on demand. Since 1862 when the U.S. notes were first issued, the United States has had fiat money accompanying gold money—until 1933 when the gold standard was abandoned. Even after 1879 when U.S. notes became redeemable in gold, they remained fiat money. Congress, not the markets, decided how many to issue, and gold never fully backed them. From 1873 when Congress abolished the silver standard until 1900 when Congress made the silver dollar a subsidiary coin of gold, silver dollars were fiat money. Congress and the Secretary of the Treasury decided the quantity issued, and the metal content was worth less than a dollar. (Between 1878 and 1900, silver dollars were legal tender in their own right and were not directly redeemable in gold.) The same is true of silver certificates and Treasury notes of 1890; they were fiat money. Without these fiat moneys, Gould, Fisk, Morgan, Rothschild, and others could not have manipulated gold. With these fiat moneys, they could "buy" gold and "sell" gold. Norburn describes what these manipulators did, but he blames the gold standard instead of the fiat moneys, as the U.S. government issued them.

A cabal could possibly manipulate gold under the gold standard with bank notes. However, manipulation with bank notes is much more difficult than with U.S. notes and is short-lived. Unlike U.S. notes, bank notes are not legal tender. No one is required to accept them. They are redeemable in gold on demand. Unlike legal tender U.S. notes, which were redeemed infrequently, bank notes are typically redeemed frequently. If bank notes were used to manipulate gold, people soon find themselves holding too many bank notes. They will redeem the excess bank notes for gold and end the manipulative expansion. The result could be a classic bank run.

When banks follow sound banking practices, gold manipulation is virtually impossible under the gold standard. Only gold and commercial money (real bills of exchange) are converted to bank notes. Only when banks issue bank notes to buy bills of acceptance, financial bills, treasury bills, and the like do bank notes become available to manipulate gold. Thus, unsound banking practices can lead to gold manipulation. However, manipulation will be short-lived as the note holders rush to convert the excess notes in gold.

On the other hand, the primary purpose of having fiat money like U.S. notes is to have a money that is easily manipulated. Furthermore, fiat money, including U.S. notes, can be manipulated cheaply and stealthy. Anyone who fears the manipulation of money should support the gold standard and oppose fiat money.

Most of the money issued under Norburn’s system would be electronic money (computer entries) as is most of today’s money (pp. 127-128).

Norburn’s proposes to strip bankers of their power, ability, and privileges of creating money and give it to the U.S. government (p. 128). Somehow this action gives the people the power, privilege, and ability to create money (p. 128). Norburn, like most fiat money reformers, confuses the government with the people. Although the proclaimed underlying principle of the government of the United States is that it is of, by, and for the people, it never has been and probably never will be. The founding fathers knew this. For that reason when they wrote the Constitution, they placed the power, privilege, and ability to create money directly in the hands of the people. They did this by adopting the true classical gold and silver standards.

Norburn quotes Article 1, Section 8, Paragraph 5 of the Constitution, which states, "Congress shall have power . . . to coin money, regulate the value thereof, and of foreign coin. . . ." He declares that only Congress can exercise the powers listed Article 1, Section 8 (pp. 133-134). If true, why did the writers of the Constitution bother with including some, but not all, of the powers delegated in Article 1, Section 8 in Article 1, Section 10, which lists powers denied the States? Norburn asserts that Congress has no implied power to delegate any of its powers (p. 134).

He cites the Supreme Court ruling in 1870 that Congress has the power to issue legal tender notes to circulate as money (p. 134). This ruling violated contracts by declaring that U.S. notes could be used to discharge debts contracted in gold or silver coins or contracted before the legal tender laws. This ruling overturned an earlier Supreme Court ruling on U.S. notes that declared that Congress could not make U.S. notes legal tender for debts contracted before the enactment of the legal tender laws.[15] This 1870 ruling was also contrary to the intent of the writers of the Constitution.

Norburn, agreeing with Supreme Court rulings,[16] declares that Congress has absolute dictatorial powers over the country’s money and may do whatever it pleases except delegate that power (134-135). He supports Congress’ possession of these dictatorial powers; his system demands such power. Not only must Congress have absolute power over the country’s money, it must also have absolute power over all financial institutions that handle money (p. 135). He asserts that all benefits of his system must go to the people (p. 135). In reality, that means that the people who really control the U.S. government get to spend this free money on their wars, vote buying welfare programs, pet projects, cronies, and self aggrandizement. Of coarse, they do it in the name of the people; thus, the benefits go to the people. Like all fiat money reforms, his reform breeds corruption.

Norburn advocates repealing the Federal Reserve Act and associated laws and by that abolishing the Federal Reserve. The U.S. government would take over all assets of the Federal Reserve. A new agency of the U.S. government called the "United States Treasury Bank" becomes the sole creator of money. Under the current system, banks create bank credit by entry in ledgers or computers and lend the credit at interest to the government or the people. Under Norburn’s proposal, the U.S. government creates credit by entry in its ledgers or computers. It prints its own notes and uses these notes and credit for its purchases. The U.S. government accepts these notes as payment for taxes (pp. 136-137).

If the government can create all the money that it needs, why would it need to tax? When the typical politician has a choice between taxing and printing money as Norburn gives them, they choose printing money. Rasing taxes can galvanize hostile opposition. Printing money seldom does. Norburn gives politicians the ability to print all the money that they need to buy votes, benefit lobbyists, and please their constituents. The temptation to open the printing presses, or worse the computers as electrons move faster, full throttle is too much for the typical politician to resist.

Norburn does recognize that politicians, bureaucrats, and citizens may see his system as an unlimited source of money for their aggrandizement (p. 147). However, he does not offer any solution to prevent this other than fill Congress with men of integrity. If that were a viable solution, he would not have written his book offering a solution to the country’s monetary and economic problems. The country would not be having monetary and economic problems. Congress would have strengthened instead of abandoning the gold standard.

Norburn’s United States Treasury Bank creates credit and money for agencies of the U.S. government interest free. Loans to States and local governments for Congress-approved needs are at low interest, and they can only borrow from the United States Treasury Bank (pp. 138-139). So much for the Tenth Amendment. Norburn wants to give the U.S. government absolute control of the States and local governments. As States and local governments do most of their construction and capital improvements with borrowed money, Norburn gives the U.S. government absolute veto over construction by the States and local governments.

Norburn’s United States Treasury Bank can lend money to banks at interest for relending. This money is the only money that banks can lend (p. 139). He does not allow banks to lend their capital or their customers’ deposits (p. 139, 170). If they cannot lend deposits, which includes savings accounts, why should they offer savings accounts? Thus, Norburn’s system seems to end traditional savings accounts.

Furthermore, other than the integrity of politicians, what prevents Congress and the President from giving their friends, lackeys, toadies, apologists, and cronies low interest loans? Norburn’s proposed bill, which he includes as an appendix (pp. 159-175), forbids the U.S. government from making such loans (p. 171). Such a statutory prohibition is meaningless against a Congress that wants to reward certain people with low-interest loans. It can merely change the law. The founding fathers strongly advised against trusting men, especially governmental officials.

The United States Treasury Bank assumes the responsibility of the Federal Reserve of providing banks with currency (p. 141). Federal reserve notes are removed from circulation and replaced with new U.S. notes (pp. 141-142).

Norburn states, ". . . the governors of the United States Treasury Department of Money have the information to control money; the power to supply money when and where needed; to withhold money when there is too much in circulation, and to calculate the tax required to keep the system in balance" (p. 142). Unfortunately, no matter how intelligent, honorable, and honest they are and no matter how much information and power they have, this group will be unable to do the task that Norburn gives them. To do this task, they have to be omniscient. They have to know the subjective evaluation of all the participants and potential participants in the markets of all items, goods and services, being offered or may be offered in the markets. They would have to know this not only for the United States, but for the entire world. Worse these subjective evaluations are continuously changing. (When a person is hungry, he places a much higher value on a meal than he does when he is full.) Otherwise, they will never know how much money is needed, when it is needed, and where it is needed.

Norburn should have known better than to believe or advocate such a scheme. A few years before he wrote his book, a United States agency decided how much gasoline was needed, when it was needed, and where it was needed instead of letting the markets decide. This system was a disaster as this group of deciders never knew how much was needed and when and where. Some places had an abundance of gasoline. Most places had shortages and long lines of cars waiting to get fuel. Money is more complex than gasoline distribution. Why should we expect some group of governmental bureaucrats to manage money any better than they managed gasoline?

The great advantage of the true gold standard, especially when it is accompanied by the real bills doctrine (commercial money principle) is that it quickly adjusts the money supply to match the real demand for money. It quickly delivers the right amount of money where it is needed and when it is needed. Whenever it fails to do so, it is because of governmental intervention. The gold standard automatically accounts for and adjusts to meet the ever changing subjective evaluations of market participants.

Norburn writes, "Under the proposed plan, the interest you might pay would be paid on your own money, used for your own benefit, and obliterated" (p. 146). This claim is pure fiction. The interest that a borrower pays does not end up in his pocket. If it did, why pay it. If the interest is used for the benefit of the borrower, it is used for his benefit as politicians and bureaucrats declare what his interests are. Rarely would their declaration correspond with what the borrower considers his benefits to be.

Norburn does make one proposal that is long overdue. He recommends eliminating most regulatory agencies of the U.S. government because most of them are unconstitutional. Such regulatory activity, if any, rightfully belongs to the States (p. 148).

He believes that the U.S. government can be adequately operated with interest earned from its loans, tariffs and taxes, and royalties from leasing mineral rights to the lands that it owns (pp. 148-149). When the vast amount of money that Norburn’s system offers is considered, believing that the U.S. government would restrict itself only to activities that this revenue could fund is difficult.

Norburn identifies some benefits that his proposal would deliver (pp. 151-155). Among these are, "A stable dollar. Never again either inflation or deflation. No more recessions or depressions" (p. 151). If his system accomplishes this, it will do something that no fiat monetary system has ever done.

Another benefit is that "interest, once paid, . . . would be canceled and the money paying them return to nothingness" (p. 152). If interest received by the government is "canceled and the money paying them return to nothingness," how can interest be considered as a source of revenue for the government as Norburn claims? One benefit that he identifies for his system is that interest paid to the government will lower taxes and the benefit will be extended to the interest payer (pp. 151-152). The statement implies that the government is going to spend the interest that it receives on something. Whatever it spends the interest on presumably will benefit the tax payers.

Norburn should have titled his book "Dishonest Money" instead of "Honest Money" for that is what he proposes to give America. Although he advocates a significant reduction in the size of the United States government, he gives those who really control the government absolute control over the American people. He gives them this control by giving them absolute control of the money, which gives them absolute control of the economy. The only good aspect of his proposal is the abolition of the Federal Reserve and most regulatory agencies of the U.S. government. Norburn promotes tyranny instead of freedom.

Endnotes

1. Carl Menger, Principles of Economics, trans. James Dingwall and Bert F. Hoselitz (New York: New York University Press, 1976), p. 281.

2. U.S. notes do not really deserve to be called loans, forced or otherwise. They were worse than forced loans. A loan implies payment sometime in the future. The U.S. government had no intension of ever paying off its U.S. notes. Only a small part was ever paid, i.e., only the notes redeemed in gold and extinguished were ever really paid.

3. Thomas Coley Allen, Reconstruction of America’s Monetary and Banking System: A Return to Constitutional Money (Franklinton: TC Allen Co., 2009), p. 240. Joseph French Johnson, Money and Currency: In Relation to Industry, Prices, and the Rate of Interest, rev. ed. (Boston: Ginn and Co., 1905), p. 325.

4. At this time the dollar was defined as 371.25 grains of pure silver. Also, at this time a dollar in silver was worth more than a dollar in gold, which is why silver dollars did not circulate.

5. Allen, pp. 74-75. George Bancroft, A Plea of the Constitution of the United States, (Rpt. Boring: CPA Book Services, Inc.), pp. 40-43. Luther Martin, Secret Proceedings and Debates of the Convention (1838; Rpt. Hawthorne: Omni Publications, 1986), pp. 55-56.

6. Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United States, 1867-1960 Princeton: Princeton University Press, 1963), p. 58ff.

7. American exporters and importers had to finance their trade through London bankers. Rothschild was the dominate London banker.

8. For a more detailed discussion of the National Banking System, see Allen, pp. 144-148.

9. About the Federal Reserve, Congressman Louis McFadden, Chairman of the Banking and Currency Committee, said, "Every effort has been made by the Fed (the Federal Reserve System) to conceal its powers, but the truth is the Fed has usurped the government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will" (p. 111). Even today, some Congressmen are convinced that the bankers and Federal Reserve control the U.S. government.

10. "Bank of England," Funk & Wagnalls New Encyclopedia (1983), 257. William Bridgwater and Seymour Kurtz, ed., The Columbia Encyclopedia, 3rd ed. (New York, 1963), p. 162.

11. For a more detailed discussion of the ownership of the Federal Reserve, see Allen, pp. 150-153.

12. Free coinage means that any private person may bring any amount of gold or silver to the mint for coinage, and the mint coins all the gold and silver presented to it.

13. For an outline of steps to take to return the gold standard, see Allen, pp. 264-268.

14. Allen, pp. 42-43, 58, 121-124.

15. Hoarse White, Money and Banking (Boston: Ginn & Co., 1896), pp. 231-232.

16. The Supreme Court is notorious for its ability to construe clear language in the Constitution limiting the power of the U.S. government to increase the powers of the U.S. government. Like all U.S. court, the Supreme Court seldom lets the Constitution stand in the way of political expedience and personal biases. Any ruling that increases the power of the U.S. government increases the power of the Supreme Court. Consequently, the Supreme Court can never be impartial when judging a State law or when an individual contests a federal law.

Copyright © 2009 by Thomas Coley Allen.

More articles on money. 

Analysis of the American Monetary Institute’s American Monetary Act

Analysis of the American Monetary Institute’s American Monetary ActThomas Allen

This paper analyzes of the American Monetary Institute’s (AMI) August 18, 2008, version of "The American Monetary Act" and AMI’s description and explanation of the Act. This Act and description can be found at http://www.monetary.org/amacolorpamphlet.pdf, which can be found at http://www.monetary.org/index.html.

I have italicized words of the Act and AMI’s explanation of the Act and my paraphrases and summaries of its words. My commentary is in roman letters. I have provided references to pages of the article containing the Act and sections of the Act and have enclosed them in parentheses at the end of the line or lines.

This Act is an unconstitutional piece of fascist legislation. Any statist would be enamored of it. It gives the U.S. government total control of the money and by that control of the economy and by that control of the people.

Like most fiat monetary reformers, AMI correctly describes the current fiat monetary system and identifies its flaws. However, like most fiat monetary reformers, AMI fails to identify the real cause of the problem. The real cause of the country’s monetary problem is fiat money. (The current banking system is a secondary problem and, as AMI notes, also needs reconstruction.)

To AMI and most other fiat monetary reformers, the problem is not fiat money itself. The problem is the entity creating and issuing the money. If the government were to create and issue the money directly instead of banks or other private entities, then monetary nirvana would be achieved.

AMI is of the school that money is a creation of government and not of the markets. Money is what the government declares it to be. Apparently, people never used money until some monarch thought of it. Money is not a market (economic) concept; it is a political concept.

AMI believes the ancient and medieval monetary philosophy that the king’s (government’s ) decree creates money and fixes its value. AMI like the peasants of old lives in superstitious awe of the government and believes that its effigy and stamp give money its value, and not the material of which it is made.

If the government’s decree really did give money its value, then debasement of coins would have worked. For example, the government reduces the weight of silver in a coin from 20 pennyweights to one pennyweight and stamps the one-pennyweight coin as having 20 pennyweights of silver. The markets, i.e., the people in their commercial activities, would soon discover that their new coins were short 19 pennyweights of silver. They would then require payment of 20 new one-pennyweight coins though they were stamped as 20-pennyweight coins to pay for items that used to sell for one 20-pennyweight coin. The government would have to use draconian laws to force the people to accept its under weight coins as having the same value as full weight coins. Even then the people would refuse whenever they could. Only with the payment of debt could the government force its underweight coins on the people at its nominal value. As its courts enforce contracts, its courts usually would allow debtors to force their creditors to accept a one-pennyweight coin stamp as having 20-pennyweights of silver in payment of a debt of 20-pennyweights of silver.

AMI acknowledges that "the power to create money is an awesome power" (p. 2). Because of this awesome power, the founding fathers did not give the U.S. government the power to create and issue money. They also denied the States such power. They dispersed the power among the people. Instead of entrusting the government with the power to create money, they entrusted this power to the people. (They did not entrust it with a banking monopoly either although the Hamiltonians corrupted the Constitution to create one.)

AMI remarks that the power to create money is like having "a ‘magic checkbook,’ where checks can’t bounce" (p. 2). As show below, AMI wants to give the U.S. government such a checkbook. However, under the monetary system envisioned by the Constitution, no person, no bank, and no government have such a "magic checkbook."

Under the constitutional system, the people acting in their individual capacities decide how many gold and silver coins are needed by the gold and silver that they have coined and by the quantity of coins that they melt for other uses. The people decide how much commercial money to create through their productivity and business activities. They, not the banks, decide how much commercial money (real bills of exchange) to convert to bank money (bank notes and checkbook money). With their consumption, they remove commercial money and bank money into which it has been converted from the economy. Thus, the supply of money automatically equals the demand for money. (See the appendix for a description of the commercial money.)

Under the monetary system set out in the Constitution, economics governs the creation and supply of money. Under fiat monetary systems, including the one that AMI promotes, politics governs the creation and supply of money.

AMI notes that when money is "controlled privately it can be used to gain riches, but more importantly it determines the direction of our society by deciding where the money goes – what gets funded and what does not" (p. 2). Does AMI really believe that politically powerful interest groups will not direct what gets funded under its system? They will follow the Israeli model. Israeli front groups lobby Congress to appropriate large sums of aid for Israel. Part of this aid is indirectly rebated to the Congressmen supporting it via campaign contributions and support, favorable reviews in the news media, and lucrative jobs for friends and relatives and even the Congressmen themselves. Likewise, private benefactors of infrastructure appropriations will use, as they currently do, similar tactics.

Furthermore, AMI implies that if money is privately controlled, it will go into warfare. Contrarily, it implies that if the government controls the money; it will not go into warfare (p. 2). Does anyone really believe that a war mongering administration will not create money to spend on its pet wars?

AMI cites Article 1, Section 8 of the Constitution and claims that it gives the U.S. government "power to issue money and spend it into circulation to promote the general welfare through the creation and repair of infrastructure, including human infrastructure – health and education . . ." (p. 2). It does not. Except for training and treating military and naval personnel, the Constitution gives the U.S. government no authority to appropriate money for health or education. The Constitution denies the U.S. government any authority to create or issue money.[1]

Moreover, AMI reduces people to the level of buildings and roads. It considers them just so much infrastructure. When the power that it wants to give the U.S. government is considered, people become slaves of those who really control the government. In that sense, the people are infrastructure like roads and buildings.

AMI claims that money "is not tangible wealth in itself, but a power to obtain wealth. Money is an abstract social power based in law; and whatever government accepts in payment of taxes will be money" (p. 2). True, fiat money like the one that AMI promotes has no tangible value. However, real money, Scriptural money (see Genesis 23:16), has tangible value. Tangible value is what gives real money its value. Its value is the value of the material of which it is made. Fiat money is an abstract based on law. Its value relies on the weapons of the government that creates it. Once its government dies, its value vanishes. Real money’s value transcends governments. Its value is independent of any government. Would people prefer to hold money that dies with their government? Conversely, would they prefer to hold money that is independent of time and place and that survives the death of their government?

When money’s value comes primarily from its use to offset tax liabilities, the country has a primitive monetary system "in the sense of being stripped of much of its usefulness and value as a medium of exchange for all transactions within society."[2] Legal tender laws are necessary to force its use in other transactions.

When money derives its value from taxation, it has been politicized. A politicized monetary system locks "the individual into a relationship with his government that smacks of economic serfdom."[3]

AMI constantly identifies flaws and abuses of the current monetary system. It asserts that the cause of these problems is that banks have privately created and issued the money (p. 2).

The current monetary and Federal Reserve banking systems are unconstitutional. With this AMI would agree. However, AMI argues that it is unconstitutional because banks are creating private money instead of the U.S. government creating the money. That is not why they are unconstitutional. They are unconstitutional because Congress does not have the authority to delegate any entity monopolistic powers that the Constitution does not give Congress. Congress has no authority to establish banks, and the U.S. government has no authority to function as a bank. The Constitution gives the U.S. government no authority to create and issue money.[4]

AMI promotes printing new money and spending it on infrastructure instead of paying for these projects with borrowing or taxation. It claims that such new money will not be inflationary (p. 2). It wants to create and spend money on education and healthcare. Also it claims that these expenditures will be noninfltionary (p. 3). Why will this new money not be inflationary? Hazlitt defines inflation as "an increase in the supply of money that outruns the increase in the supply of goods."[5][6] Thus, inflation occurs when money is created in excess of new goods being offered in the markets for sale. Inflation and deflation are monetary phenomena. A rise or fall in general prices often results from inflation and deflation. Spending money on infrastructure has no relationship to new goods being offered for sale. It does not immediately increase the volume of new items ready to be sold. More money is available to buy the same number of items. This is inflation. As more money is chasing the same quantity of goods, a rise in general prices can be expected.

If creating money to pay for roads, bridges, dikes, education, healthcare, etc. is not inflationary, then creating money to build factories, apartments, shopping centers, machinery, etc. would not be inflationary. They are all investments in capital or personnel. Why would a private entity creating money to pay for things like these be inflationary as AMI implies whereas when the government does the same thing, it is not inflationary? What can the government create and spend money on that would be inflationary?

AMI asserts that its proposal is not inflationary (p. 13). By its definition of inflation, it is not and cannot be inflationary. AMI seems to declare that any money created and spent by the U.S. government, except for warfare, is by definition noninflationary. Anyone who claims that it is, is deluded. He is having a knee-jerk reaction caused by the propaganda and mythology (the reigning error) "that government issued money has been irresponsible, and inflationary" (p. 13).

AMI claims that under its proposal, "The reason that inflation is avoided is that real wealth is created with the money spent into circulation on infrastructure, and education and health care. It results in the provision of real goods and vital services and the existence of these serves to control inflation" (p. 13).

Thus, AMI believes that printing numbers and the sacred words "legal tender" on paper can create wealth. If AMI’s money does create real wealth, which it does not, no one can convert his money into that wealth. With the true gold and silver standard accompanied by the commercial money principle (real bills doctrine), a person can convert his paper money to the real wealth represented by that paper money. He can convert his bank notes into consumer goods or into gold or silver. With AMI’s money, no one can redeem it into a few square feet of road or a hospital and use these few square feet as he pleases.

AMI does state that expenditures on warfare are inflationary. Military expenditures are inflationary in part because money is not directed to create values for life (p. 13). The creation of money spent on the military may be about the only thing that AMI recognizes as inflationary when the government creates the money. Thus, money spent to defend live and property, a primary duty of government, is inflationary. Expenditures for the police, fire departments, emergency management, ambulances, and the like appear to be inflationary. Or does AMI arbitrarily declare that one form of defense is inflationary and another form is not? Why is spending money to protect people from natural bacteria through governmental funding of healthcare not inflationary whereas spending the same amount of money to protect people from weaponized bacteria through governmental funding of the military is inflationary? Either both should be inflationary or neither should be.

Further, AMI claims that military expenditures are inflationary because it destroys the values of life (p. 13). When roads, schools, hospitals, and the like are built, they often destroy the values of life. They destroy forests, farmland, homes, and people’s lives (emotionally and psychologically if not physically although that occasionally happens) among other values of life. Sometimes they destroy whole communities as with urban renewal. (Is AMI going to oppose condemnation of property to protect these values of life?) Although their destruction is usually on a much smaller scale than war, the destruction is just as real. AMI might argue that the value of a forest, farm, or home is destroyed to build a road, but that lost value is replaced by the greater value of the road. (As value is subjective and varies with each individual, such an assertion cannot be emphatically made.) Perhaps this is true overall, but for the people forced from their ancestral home place, it is not. Likewise, warmongers could argue that their action may destroy the value of some old property and a few undesirable people, but they will be replaced with new, higher valued infrastructure. This replacement will generate enormous wealth—using AMI’s logic. All that the army has done is to remove the slums as in urban renewal. Why is one inflationary and the other is not?

Let’s apply AMI’s reasoning to projects of the Department of Defense (DOD). DOD projects do not seem to be infrastructure as they are involved with warfare, either present or future. Therefore, a road open to the public built on a military base is not infrastructure. Yet a road closed to the public built in a national park is considered infrastructure. Thus, using printing press money to build the military road is inflationary whereas using it to build the park road is not. At least this seems to be AMI’s claim. Presumably, all money spent on the DOD has to be tax money to prevent inflation, but AMI is not clear on this point.

Money is fungible. If part of the appropriated money is printing press money and part of it is tax money, as far as the economy is concerned, which type of money goes where is unimportant. From an inflationary perspective, where the money comes from (taxes or printing press) is the important thing, and not where it goes (defense or domestic infrastructure). The economy sees no difference between spending a billion dollars of tax money on tanks and a billion dollars of printing press money on dams and spending a billion dollars of printing press money on tanks and a billion dollars of tax money on dams. In both situations the same amount of money from the same sources is spent on the same things.

AMI is correct that expenditures for warfare can be inflationary. If printing press money pays for it, it is inflationary. If taxation pays for it, it is not inflationary.

AMI seems to have a unique definition of inflation. Its definition appears to be that any amount of money created by the government is noninflationary. The exception is money spent on defense (warfare); that money is inflationary. That is, the government can create and spend all the money that it wants to, and none of that money will be inflationary if it is spent on infrastructure. AMI’s definition of infrastructure is broad enough to cover everything except defense. However, any amount of money created by private bankers, counterfeiters, and other private parties, including the people, is highly inflationary even if spent on infrastructure because the people, and not the government, created the money.

AMI claims that governments do a better job of "issuing and controlling money than the private issuers" (p. 2). I presume that by private issuers AMI means privately owned banks, especially privately owned central banks and not the people in general. However, considering AMI’s animosity toward and mistrust of the people, I may be making an incorrect presumption. It may intend to include the people in general. If so, it is opposing the Constitution. As noted above, under the Constitution, the people acting in their individual capacities create money and spend it into circulation. As for private banks causing inflation, they cause it in collaboration with the government. With the consent and often at the command of the government, they create money to buy government securities. To protect its banker benefactors who have issued too much money, the government suspends redemption. (In the United States, the U.S. government has suspended redemption domestically since 1933 and internationally since 1971.) Thus, the government allows banks to violate their contract to redeem their paper money. Without government collaboration, inflation of privately issued money is shallow and short-lived.

As for central banks, they are creatures of the government creating them. They live at the pleasure of their creator government. (AMI is aware of this because it abolishes the Federal Reserve, the central bank, by incorporating it into the U.S. Treasury [p. 2].) Whenever the central bank ceases to do what its creator government wants it to do, it ceases to exist.

AMI’s monetary reform has three parts and all three must be enacted for its system to work (p 3). They are:

First, incorporate the Federal Reserve System into the U.S. Treasury where all new money could be created by government as money, not interest-bearing debt, and spent into circulation to promote the general welfare (p. 2).[7]

Second, halt the bank’s privilege to create money by ending the fractional reserve system in a gentle and elegant way. All the past monetized private credit would be converted into U.S. government money. Banks would then act as intermediaries accepting savings deposits and loaning them out to borrowers (p. 2).

Third, spend new money into circulation on infrastructure, including the crucial "human infrastructure" of education and healthcare needed for a growing society. . . . This would create good jobs across our nation, re-invigorating local economies and re-funding government at all levels (p. 3).

Let’s look at this three proposals. Incorporating the Federal Reserve System into the U.S. Treasury does not really solve anything. The British government nationalized the Bank of England in 1946.[8] Thus, the Bank of England was incorporated into the British government. Not much changed after that except a governmental bureau controlled the creation and issuance of money instead of a privately owned central bank. The problem is not the organizational structure or ownership of the entity in charge of the creation and issuing the money. The problem is the centralization of monetary creation and issuance and the money itself.

AMI is correct in that the money that it proposes will not be interest-bearing debt. It conceals that its money will be noninterest bearing debt forced on all the people—rich and poor alike. It is borrowing from the people just as surely as it would have if it had sold them bonds and took the money. When the government issues paper money or its electronic equivalent, it takes capital from all classes without regards to their ability to forgo the use of their capital.[9]

Ending fractional reserve banking, i.e., lending demand deposits or using demand deposits as reserves for loans, is desirable and needed.

As noted above, the U.S. government has no constitutional authority to spend money on "crucial ‘human infrastructure’ of education and healthcare." AMI’s proposal is little more than the Keynesian notion that a country can spend itself into prosperity.

One of greatest tax revolts that the world has ever witnessed occurred because Congress was taxing one region, the South, to pay for infrastructure in another region, the North. When Lincoln was elected President on a platform of transferring more wealth from the South to the North by significantly increasing tariffs, the Southern States seceded. They saw their choices as seceding or sending evermore wealth to the North in the form of paying higher prices on northern goods or paying higher tariffs, which were used to build northern infrastructure.[10] At least AMI solves the problem of taxing one part of the country for the benefit of another. It taxes the whole country with its forced loans of United State money and its accompanying inflation for the benefit of the politically powerful.

AMI does use a per capita basis for grants to States (p. 11 [§503]) and to a lesser extent for interest-free loans to States and local governments to minimize "playing politics over expenditures" (p. 11). Such per capita formulation may reduce politics or at least the appearance of politics. However, the per capita consideration does not apply to Congress’ direct funding of infrastructure projects. No such restriction can be forced on Congress statutorily; when it enacts a law that conflicted with the statute, the new law overrides the earlier statute. Congress’ direct funding is where the corruption will be the fiercest and most vicious. The Act has no check against this corruption and cannot have any check. Congress can and will play favorites and benefit one region or group at the expense of another. (Those who receive United States money first receive it at full value. Those who receive it later receive it at its reduced inflationary value.)

AMI claims that if the U.S. government creates and issues money for levees that money will be spent to build levees (p. 4). Granted, such money will be spent to build levees. However, AMI goes on to imply that money would not be lent for speculation (p. 4). As AMI allows private banks to lend savings (p. 2), people could borrow money for speculations. Only if the government dictates to banks the things for which they can lend can speculative loans be avoided. Such micromanagement of banking is fascism.

Like the Hamiltonians and other statists who have controlled the U.S. government for at least a century, AMI gives the clause "to promote the general welfare"[11] an extremely broad interpretation (p. 4). In the name of promoting the general welfare, the U.S. government can do just about anything that it wants to do. This interpretation makes the specific delegation in Article 1, Section 8, and the Tenth Amendment irrelevant. Why did the writers of the Constitution bother with specifically delegating anything to Congress if the general welfare provision gave it such broad powers?

The general welfare provision should be understood as a limiting provision instead of an empowering provision. Whenever Congress appropriated money, it was to be spent for the benefit of the country as a whole instead of for the benefit of one section of the country. The appropriation was to be for the benefit of all the people in the country instead of a select group of people. For example, appropriating money to establish and operate a mint to coin gold and silver benefits the country and the people as a whole. Appropriating money to build levees along the Mississippi benefits people who live and work along the Mississippi, but it does not benefit the people in Alaska. Thus, the proper use of the general welfare clause prohibits appropriating money for these levees. (Furthermore, appropriating money to build levees is unconstitutional anyway. The Constitution does not delegate Congress the power to build levees.)

AMI’s Monetary Act begins with a false premise. Section 2, Paragraph 1, reads, "The Federal Reserve Act of 1913 effectively ceded the sovereign power to create Money delegated to Congress by the Constitution to the private financial industry" (p. 4). The Constitution delegates Congress the power to "coin" money. It does not delegate Congress the power the power to "create" money. As noted above, the people "created" money when they brought their gold or silver to the mint to have it "coined."

Section 2, Paragraph 4, reads, "The power of Government to create Money and spend or loan it into circulation as needed is similar but different in nature from the power to create and market instruments of indebtedness; it eliminates the need to pay interest charges on the nation’s money supply, to financial institutions and removes their undue influence over public policy" (p. 4). How does the government know how much money is needed? Just as the Federal Reserve has no way of knowing how much the economy needs, the U.S. government likewise has no way of knowing.

AMI promotes its system as away to eliminate interest payments from the U.S. government’s budget (pp. 4, 7). It does do that. Contrary to what AMI may assert, it does so by substituting noninterest-bearing debt, AMI’s United States money, for interest-bearing debt.

Elimination of paying interest on debt from the U.S. government’s budget can be effectively achieved under the current system. All Congress has to do is to require the Federal Reserve to buy all U.S. government securities. As the current law requires the Federal Reserve to rebate to the U.S. Treasury all interest that it earns above its operating costs, these securities become interest-free loans.[12] If Congress believes that the Federal Reserve is keeping too much money, it can cap the amount that the Federal Reserve retains to cover its operational costs.

AMI claims that its reforms will greatly reduce the influence of private lenders over public policy decisions (p. 7). It probably will. However, it will increase the influence of the construction, educational, healthcare, and many other industries that will be competing for free money. As Congress can give all these groups all the money that they want under AMI’s proposal without borrowing or raising taxes, Congress will seldom say "no." (Congress probably will not make what it is doing blatantly obvious by appropriating money directly to the favored firm. It will conceal it as contracts, subsidies, and the like.)

AMI calls its money United States money. Its "nominal unit" is "the U.S. dollar" (p. 6 [§101]). AMI comments, "It does not prescribe a value for the dollar in terms of commodities, or labor or any other thing. The value of the currency unit is already known in the market in terms of its relation to assets and goods and services and existing obligations" (p. 6). So, the value of a dollar is what a dollar will buy. Whatever AMI’s dollar is, it is not the dollar of the Constitution. The dollar of the Constitution is the weight of silver in the Spanish milled dollar.[13]

AMI admits that, unlike Scriptural and constitutional money, its money has no substance. Its money is an undefined and undefinable abstraction. It does not differ from the current federal reserve note.

According to the Bible, money has three components: quantity, measurement, and substance. Genesis 23:16 illustrates this idea. Abraham bought a burial plot. He paid 400 (quantity) shekels (measurement of weight) of silver (substance). In pre-1933 money, if a person bought something with a $20 gold coin, he paid with money that had quantity (20), measurement (dollar, a unit of weight equal to 23.22 grains), and substance (gold). If he paid with a $20 gold certificate, his currency promised to deliver money containing these three components on demand.

AMI’s money like the current federal reserve note lacks two of these three components. For example its $20 of United States money has quantity (20). The dollar appears to be its measurement. However, it is not. AMI claims that money is that abstraction. Therefore, its dollar is an abstraction. It measures nothing. A unit of measurement has to be something concrete and definable like the foot, ounce, minute, or horsepower so that things can be compared to it. It has to be something that instruments can determine.

With pre-1933 gold money, $20 in gold weighed twice as much as $10 in gold. Even if the disks had no inscription on it, a disk containing 464.4 grains of gold had twice the purchasing power of a disk containing 232.2 grains of gold. It was twice as large and weighed twice as much.

AMI’s money cannot be measured. If the inscriptions are removed from AMI’s money, its $20 would look like its $10. They would both have the same value: nothing.

According to AMI, "This value [of its money] is not fixed but adjusts to continuous changes in supplies and desirability of goods and services and is also influenced by the existing supply of money" (p. 6). This is true. Like the federal reserve dollar, the value (purchasing power) of AMI’s money will trend downward. Most likely its value will decline even more rapidly as creating and spending money will be easier for the U.S. government under AMI’s system than under the present system. When given the choice between raising taxes and printing money, most politicians will choose to print money because it is much less painful—they receive much less opposition.

AMI’s proposal seems to lack any effective way to remove any excess money. The only way that excess money can be removed under its system is for the U.S. government to have a budgetary surplus. It would have to collect more taxes than it spends. As AMI’s system is designed for deficit spending, having a surplus is highly unlikely.

Of coarse, AMI may argue that if money is being created to pay for infrastructure, no excess money can be created. However, its definition of infrastructure is so broad that it could be construed to cover nearly everything. Contrary to AMI’s assertion, its monetary system is highly inflationary, i.e., it creates large quantities of excess money.

Like all fiat money, AMI’s money is forced on the people with legal tender laws (p. 6 [§102]). By resorting to legal tender laws, AMI is admitting that its money is overvalued and inferior and as such cannot stand competition—especially from real money. Money that satisfies the needs of the people best needs no protection from competing types of money. As AMI wants to give its money a legal monopoly, it is admitting that its money fails to satisfy the needs of the people best.

AMI has to force its money on the people because it would have no value otherwise. If its money had real value, people would accept it without legal tender laws. AMI knows, perhaps subconsciously, that its money is overvalued and, therefore, people must be forced to accept it. Like the current monetary system, its monetary system can only function through coercion and cannot survive open completion with real money. Legal tender laws are unnecessary for true and honest money. Superior money will circulate without legal tender laws.[14]

Sennholz summaries the evils of legal tender laws as follows:

To declare paper money legal tender may be one of the greatest evils government may inflict upon its subjects. It confers terrible financial power on government—far greater, indeed, than the power to tax. It affects economic production and distribution, influences the formation of prices, and makes all private property easily accessible to government. Legal tender laws permit government to take income and wealth without the people's consent. usually even without their knowledge. In the end, it is bound to destroy the private-property economy.[15]

Supreme Court Justice Stephen Field warned against the evil of making paper money legal tender. He wrote:

The arguments in favor of the constitutionality of legal tender paper currency tend directly to break down the barriers which separate a government of limited powers from a government resting in the unrestrained will of Congress. Those limitations must be preserved, or our government will inevitably drift from the system established by our Fathers into a vast, centralized, and consolidated government.[16]

History has shown that Field was correct. Irredeemable legal tender paper money has led to "a vast, centralized, and consolidated government." AMI not only aims to maintain the "vast, centralized, and consolidated government," but it wants to expand it.

About legal tender laws, Parks asks, "If the money is good, and would be preferred by the people, then why are legal tender laws necessary? If the money is not good, then why in a democracy should people be forced to accept it?"[17]

Section 103 authorizes the Secretary of the Treasury to finance budgetary deficits by creating and spending money (p. 6). Thus, printing press money or its electronic equivalent will finance deficits. No real restraints are placed on exploding the expenditures of the U.S. government and funding them with printing press money.

Section 105 sets forth provisions that will presumably control the money supply. The Secretary of the Treasury "shall pursue the policy that the supply of money in circulation should not become inflationary nor deflationary in and of itself" (p. 6 [§105, ¶1]). A Monetary Authority, a board of nine people, establishes targets (p. 7, [§105, ¶2]) for the Secretary to use (p. 7, [§105, ¶3]). If the targets are not met, the Secretary reports this discrepancy to Congress (p. 7 [§105, ¶4]).

What are these monetary targets? Are they solely the quantity of new money created and spent without observation of effects? This does not seem to be AMI’s intent. Are these targets related to price levels, wage rates, or interest rates? AMI emphatically states more than once that money created by the government and spent on infrastructure is not inflationary and presumably cannot be deflationary. So, why have targets anyway?

Do these nine elite "experts," whose knowledge on monetary needs must exceed that of the entire country, have the authority to decide what these targets should be? It seems so. Once they decide what the targets should be, how are they going to decide what the appropriate level or range should be? Are they going to use aeromancy, anthropomancy, astrology, cartomancy, hydromancy, oneiromancy, or pyromancy? Whatever they use, it is not going to be scientific unless someone develops a scientific methodology to foretell the future. To be sure, they will certainly dress it in scientific and economic garb.

Regardless what these targets are, the whole exercise of setting them is superfluous and meaningless. (Is their purpose to deceive the people into believing that the U.S. government is properly tending to and regulating the money?) If the money supply or whatever exceeds the targets or causes the targets to be exceeded, the targets can be ignored. Congress does not require itself to raise taxes or cut spending to bring the money supply or its effect in line with the targets. Congress does not direct the President or the Secretary of the Treasury to cut spending or raise taxes to bring its money supply or its effect back to the targets. (Possibly, taxes would have to be cut or spending increased to meet the targets. However, unless the Monetary Authority sets highly inflationary targets, the money creation under AMI’s system is going to be excessive instead of deficient.) Congress can simply ignore the targets and keep pleasing its constituents by appropriating them more money without corresponding tax increases—if the inflation tax is ignored.

Section 301 sets out the procedures for converting federal reserve notes into AMI’s new United States money. AMI comments, "We won’t call them notes because that indicates debt, and they are not debt (p. 8). Yes they are debt! AMI’s new United States money may be noninterest bearing debt, but it is still debt. It may be nonpayable debt, but it is still debt. Paper money is representation of something beyond itself.[18] Therefore, it is a promise or obligation—hence, debt. AMI is merely trying to deceive the people by substituting "money" for "note."

Section 302 sets forth provisions to eliminate fractional reserve banking (p. 8). Elimination of fractional reserve banking is one of the few good proposals offered by AMI. No longer would banks be able to create money "out of thin air." (AMI does not object to creating money "out of thin air." Its objection is who gets to create it. Its proposal allows the U.S. government to create money "out of thin air." Under the gold and silver standard, no money is ever created "out of thin air.")

AMI proposes to allow banks to borrow money at interest from the U.S. government (p. 8 [§302, ¶4]). This provision is among the many unconstitutional provisions of this Act. No where does the Constitution authorize the U.S. government to lend money to banks.

Section 303 limits interest rates (p. 9). Presumably, if inflation drives the market rate above the 8-percent maximum rate inclusive of fees, legal lending ceases. (Of coarse, AMI argues that the creation of its money, which has no relationship to the markets’ demand for money, would not and cannot be inflationary. Therefore, inflation need not be considered.) When legal lending ceases, the U.S. government has yet another excuse to extend its power and control over the people. (AMI seems to believe that if the dictator is elected, the power that he possesses is irrelevant.)

Title V of the Act sets out the requirement to create money to fund infrastructure (pp. 9-12), which AMI defines broadly to cover nearly everything not related to warfare.

Section 502 provides for interest-free loans to States and local governmental entities for infrastructure improvements (p. 11). No where does the Constitution authorize such loans.

Section 503 requires giving the States grants for them to use "in broadly designated areas of public infrastructure, education, health care and rehabilitation, and paying for unfunded Federal mandates" (p. 11). Again, no where does the Constitution authorizes such grants.

Many problems, especially those related to the centralization and consolidation of political power, have grown out of the U.S. government giving States grants. These grants have stripped States of their independence and make them subservient to the U.S. government bureaucrats. State legislators and governors no longer serve the will of their people. They serve the will of the U.S. government. In their lust for "free" money, the States have enslaved themselves. The creators have become the vassals of their creation. AMI wants to continue their bondage.

Under Section 504, AMI set out its farming parity program (p. 11). It proposes to continue the enslavement of farmers. In the name of protecting the family farm, parity programs have nearly made the family farmer extinct. AMI gives no valid reason that its program will succeed where all others have failed—at least failed in their ostensible objective. They have been highly successful at concentrating agriculture under the control of a few giant agribusinesses.

Under Section 505, AMI sets forth a funding requirements for education. Congress is to fund a program for "our educational system that will at least put the United States on par with other highly developed nations, and create a learning environment so that every child has an opportunity to reach their [sic] full educational potential" (p. 12). This has been the professed objective of nearly every educational program that Congress has funded. As government, especially the U.S. government, spends more money on education, the country moves farther away from this objective. Its real objective has been to dumb down Americans to make them obedient slaves of the people who really control the U.S. government. Its objective is to dumb them down so that they will believe this idiotic proposal of AMI—that they will believe that a people and a country can really make themselves rich by having the government print words on paper, call it money, spend it, and force the recipient to accept it at the point of a gun (legal tender laws).

AMI wants evermore federal control over education. It wants to expand pre-kindergarten programs (p. 12). It wants to capture and indoctrinate children as young as possible. Enthralling children earlier to the government makes them easier for their rulers to control.

At least AMI is right about one thing. "We shouldn’t rely on local property taxes to solve a problem that has for so long been a national short-coming" (p. 12). AMI wants to substitute printing press money for local property taxes to fund education. No tax money should be used to fund education.

History has shown that the more money that the U.S. government has spent on education, the less educated the people have become. If AMI really wanted to improve education, it would forbid Congress to appropriate or lend any money for education. Moreover, it should demand complete privatization of education.

Section 506 is a provision to give each citizen a tax-free grant. This would be a one time payment (p. 12). This is nothing more than using printing press money to bribe the people into accepting AMI’s imbecilic plan. It wants to create money to pay the people to accept their own enslavement. Sadly, most probably would accept the bribe.

AMI’s purpose for giving these grants is to prevent deflation until Congress get its money machine going to fund infrastructure (p. 12).

AMI seems to be arguing that if Congress fails to create and spend enough money on infrastructures or dump enough money into the economy, deflation will occur. Deflation is possible. On the other hand, Congress cannot create and spend enough money to cause inflation by definition. If AMI is correct and if deflation occurs, the U.S. government could never overcome the deflation by creating and spending enough new money on infrastructure. The country would have to go to war because only military action is inflationary. Alternatively, the government would have to force private banks and counterfeiters to create money and spend it. Money created and issued by private banks and counterfeiters cause inflation. At least this is the conclusion that one derives from AMI’s presentation.

Section 507 sets out the requirement for universal healthcare (p. 12). This is more proof that AMI aims to establish fascism. If the objective of socialized medicine is to provide everyone, especially people who are really sick, with high quality, inexpensive medical care quickly, it has been a complete failure. Most do not even provided two of these three (quality, inexpensiveness, and quickness). Most are usually slow and expensive with variable quality.

The problem with healthcare in the United States comes not from a lack of governmental funding or oversight. It comes from too much governmental interference and a lack of competition. The government has sided with allopathic medicine and expends resources to suppress all its competition.

AMI asserts that its universal healthcare will not be inflationary (p. 12). How paying for universal healthcare with printing press money is not inflationary, it fails to explain satisfactorily. The best explanation that it has is its unsupported claim that all the money created by the government for healthcare and other infrastructure is not and cannot be inflationary by definition.

AMI offers two examples of successfully governmentally issued money of to support its position. These two examples are the Continental and greenback (p. 13).

AMI claims that the Continental’s loss of value came from British counterfeiting and not from the Continental Congress over issuance. Later AMI notes that money that is created and spent on warfare is inflationary (p. 13). Most Continentals were issued to pay for warfare. Which caused the inflation? Was it spending printing press money on warfare? Or, was it British counterfeiting?

AMI cites the greenback as a successfully governmentally created and issued paper money. True, it was much more successful than most fiat currencies. However, its success is contributed to features lacking in AMI’s money. First, the government limited the quantity of greenbacks and slowly reduced their quantity. AMI’s money expands indefinitely and without limits. Second, and most important, the people expected them to be redeemed at par (one greenback dollar for one gold dollar), and they were in 1879. Third, from 1879 to 1933, the government backed the outstanding greenbacks with gold. It held between about a third and a half of the outstanding value of greenbacks in gold. Because the people using the greenback knew that they could redeem them in gold anytime on demand, they did not rush to do so. AMI’s money is irredeemable.

When Roosevelt ended the gold standard in 1933 and greenbacks could no longer be redeemed in gold, their value declined. It declined as much as the value of federal reserve notes declined. If AMI’s theory were correct, greenbacks should have retained their value. A greenback dollar should have become worth more than the federal reserve dollar. Yet it did not. It maintained parity with the federal reserve dollar. This is strong evidence that AMI’s theory is wrong.

AMI’s system rests upon the integrity, honesty, and wisdom of a group of men not known to have these qualities. It relies on the incorruptibility of perhaps the easiest group of people in the world to corrupt. It entrusts vast amounts of power to Congressmen, Presidents, and cabinet officers. As a group, these politicians are notorious for their lack of probity. Most of them arrive at these high offices because the power brokers find them easy to control.

Fiat money reformers are rightly concerned about concentrating the power to control the supply of money and credit in the small group of people who run the central bank (Federal Reserve). They can see that the people who run the central bank will be tempted and will give into the temptation to use their power for selfish ends to the detriment of the country. Yet they seem not to recognize that political leaders and government bureaucrats suffer from the same temptations. History shows that political leaders are morally and ethically among the weakest of mortals. More often than not, their lust for power and fame injures the country. The problem of corruption exists even if some independent agency of "experts" is empowered to issue the currency. Whenever power becomes concentrated, the temptations of selfishness, self-interest, and corruption are usually too great to resist.

AMI places an enormous amount of trust in politicians, a group not known for its trustworthiness. It distrusts the people with the control of the monetary system. If it trusted the people, it would follow the example of the founding fathers and let the people create their money directly.

The founding fathers wisely did not trust giving political leaders, including themselves, the vast amount of power that AMI wants to give them. They left the creation of money directly in the hands of the people. With their control of the money, the people could better protect themselves from the government and the demagogues and despots, who always seek to control it.

Most of the founding fathers and supporters of the true gold and silver standard advocate using money based on the principles that God revealed. They advocate using the material, gold and silver, that He provided for money.

AMI like other adherents of fiat money advocates money based on the principles proclaimed by pagans, such as Aristotle. It advocates using manmade money. It wants money created and imposed by force instead of choice. It wants money that is independent of the people and is totally dependent on the whim of a ruling elite.

Walter E. Spahr remarks:

It should not be surprising that apparently all who would socialize our economy are opposed to the restoration of a redeemable currency in the United States. Either because they understand the relationship between an irredeemable currency and the processes of socialization or because they simply note that Socialist, Communist, and Fascist governments employ irredeemable currencies as a means of controlling and managing the people, advocates of government dictatorship seem invariably to defend irredeemable currencies with the utmost vigor. The evidence seems overwhelming that a defender of irredeemable currency is, wittingly or unwittingly, an advocate of socialism or of government dictatorship in some form.

So long as a government has the power over a people that is provided by an irredeemable currency, all efforts to stop a government disposed to lead a people into socialism tend to be, and probably will be futile. The people of the United States have observed all sorts of efforts, organized and individual, to bring pressure upon Congress to end its spending orgy and processes of socialization. It should be amply clear by this time that none of these efforts has succeeded. Moreover, there is no reason for supposing that any of them, except the restoration of redeemability, can succeed in arresting our march into socialism.[19]

Spahr describes the result of AMI’s proposal. Whether AMI’s real goal is socialism, it does not state in this article. Whatever its professed objective is, it gives the U.S. government absolute power over the people. Its proposal is pure statism.

In summary, AMI’s proposed monetary system has many flaws. A few follow.

1. It is unconstitutional. The Constitution does not authorize the U.S. government to issue any kind of paper money—at least its writers were convinced that it did not.[20]

2. The dollar is left undefined. It is a vague abstraction. It has no substance or measure. Value can only be measured against tangible things that have value in and of themselves. An abstract value does not exist economically. (Although AMI would deny it, AMI’s dollar derives its value from the federal reserve dollar. The federal reserve dollar derives its value from its connection to gold in 1933 and 1971.) As far as AMI is concerned, the "dollar" is dependent on the whims of Congress and is whatever Congress arbitrarily proclaims it to be.

3. Contrary to its assertions, AMI’s monetary system will be highly inflationary.

4. AMI’s system relies heavily on men of good will who place the interest and welfare of the country above their own. It depends solely on the probity of politicians. It depends on the type of person who is seldom elected to Congress and the type of person who has not been elected President for more than a century.

5. Not only does AMI’s system depend on politicians of integrity, it also depends on competent politicians. Rare is a government that is wise, competent, and honest.

6. It will breed corruption. The whole system is designed of feed corruption.

7. AMI’s money is inelastic. It does not change to meet the economic demand for money. Political needs instead of economic needs determine the quantity of money. The quantity of its money cannot vary to meet the ever-changing demand of the people or business for money. AMI’s system is designed so that the quantity of money always grows even when the economic demand for money declines. Furthermore, AMI’s system like all fiat monetary systems has no way of really knowing the economic demand for money. The money mangers can only guess at that demand. Besides, real economic demand for money is always subordinated to the political and fiscal needs of the government under all fiat monetary systems including AMI’s.

8. Like other fiat money adherents, AMI mistakenly believes that the government is competent to manage the money supply. Never has history shown a well-managed fiat currency. Inconvertible paper monetary systems have always failed. Even the best ones fail in less than three generations. Many fail in less than a decade. There is no reason to believe that AMI’s system would last more than a decade.

9. Central planning has proven itself to be a failure. Yet AMI wants more central planning.

10. AMI seems to believe that if the government prints enough money, which is a liability of the government, it becomes an asset. It does believe that the government can create real wealth by creating and spending money for its broadly defined infrastructure.

Other articles posted at AMI’s website may answer some of the questions and resolves some of the issues raised in this paper. The purpose of this paper is not to evaluate all AMI’s material. It is limited to analyzing its August 18, 2008, version of "The American Monetary Act."

[Editor’s note: The original contains an appendix that described the real bills doctrine. To reduce the length of this article, the appendix has been omitted. A detailed description of the real bills doctrine is found in the author’s book Reconstruction of America’s and Banking System: A Return to Constitutional Money.]

ENDNOTES

1. Thomas Coley Allen, Reconstruction of America’s Monetary System and Banking System: A Return to Constitutional Money (Franklinton: TC Allen Co., 2009), pp. 72-81.

2. Edwin Vieira, Jr., "The Constitutional Imperative in Reform of the Monetary and Banking System of the United States,"1993, http://www.fame.org/HTM/ Vieira_Edwin_ The_ Constituion_ Imperative_in_the_ Reform_of_the_ Monetary_ EV-003.HTM, May 19, 2008.

3. Ibid.

4. Allen, pp. 72-81.

5. Henry Hazlitt, The ABC of Inflation (Lansing: Constitutional Alliance, Inc., 1964), p. 6.

6. This definition or one similar to it is used by most economists. Rothbard and his followers define inflation as any amount of money issued beyond the monetary metal. As AMI’s monetary system has no monetary metal, every piece of money issued would be inflationary.

7. Also see §2, ¶6 (p. 4) and §401 (pp. 9-10).

8. "Bank of England," Funk & Wagnalls New Encyclopedia (1983), IV, 257. William Bridgwater and Seymour Kurtz, ed., The Columbia Encyclopedia, 3rd ed. (New York, 1963), p. 162.

9. Joseph French Johnson, Money and Currency in Relation to Industry, Prices, and the Rate of Interest, revised ed. (Boston: Ginn and Company, 1905), p. 325.

10. Charles Adams, For Good and Evil: The Impact of Taxes on the Course of Civilization (New York: Madison Books, 1993), pp. 323-337.

11. The phrase "to promote the general welfare" is not in the Constitution. The Constitution reads, "The Congress shall have Power to lay and collect Taxes . . . to pay for the Debts and provide for the common Defense and general Welfare of the United States. . . ."

12. Frederick A. Bradford, Money and Banking, 4th ed. (New York: Longmans, Green and Co., 1938), p. 342. Lloyd B. Thomas, Money, Banking, and Economic Activity, 2nd ed. (Englewood: Prentice-Hall, Inc., 1982), p. 150.

13. Allen, pp. 17, 72, 84, 247-248.

14. Allen, pp. 30-35.

15. Hans F. Sennholz, Money and Freedom (Spring Mills: Libertarian Press, 1985), p. 26.

16. Johnny Silver Bear, "The Nature of Money and our Monetary System," Aug. 20, 2004, wysiwyg.//156/http://www.financialsense.com/editorials/ 2004/0820.html, Aug. 25, 2004.

17. Larry Parks, "Interchange between Professor Robert Mandell and Larry Parks re: the Legal Tender Issue," http://www.fame.org/HTM/ Mandell%20and%20Parks.htm, May 19, 2008.

18. At the terminal stage of hyperinflation, paper money reaches its intrinsic commodity value of its Btu content, and in that sense it may cease to be debt.

19. Garet Garrett, The People’s Pottage (Caldwell: The Caxton Printers, Ltd., 1953), p. 46.

20. Allen, pp. 74-75. George Bancroft, A Plea of the Constitution of the United States, Reprint (Boring: CPA Book Services, Inc.), pp. 40-43.

Copyright © 2009 by Thomas Coley Allen.

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