Three Thoughts About Money

Three Thoughts About Money

Thomas Allen

Discussed below are Executive Order 11110, cryptocurrency as a form of fiat money, and payment of interest on the national debt.

Executive Order 11110

Some people believe that President Kennedy was assassinated because he was planning to abolish the Federal Reserve System. Their proof is Executive Order 11110. Using this executive order as proof, some claim that Kennedy was planning to replace federal reserve notes with US notes, a.k.a. greenbacks. One wonders if these people have ever read Executive Order 11110.

The portended part of Executive Order 11110 reads:

(j) The authority vested in the President by paragraph (b) of section 43 of the Act of May 12, 1933, as amended (31 U.S.C. 821 (b)), to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, to prescribe the denominations of such silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption,  (https://www.presidency.ucsb.edu/documents/executive-order-11110-amendment-executive-order-no-10289-amended-relating-the-performance)

Executive Order 11110 had nothing to do with the Federal Reserve. It delegated the President's authority to issue silver certificates to the Secretary of the Treasury. In 1878, Congress authorized the President to issue silver certificates — long before the Federal Reserve existed. 

Moreover, Executive Order 11110  had nothing to do with US notes. By law, the Department of the Treasury had to maintain $346,681,016 of US notes in circulation from 1878 to 1971. 

When this executive order was issued, three types of paper money were circulating in the United States: silver certificates, US notes, and Federal Reserve notes. Although all had equivalent purchasing power, all were issued under different laws. (One may still find silver certificates and US notes in circulation. I have received one of each since 2000.)

Furthermore, the President cannot abolish the Federal Reserve. Only Congress can abolish it. Congress created it; Congress can abolish it.

        Moreover, a common misconception that some people have about US notes is that they are debt-free money. They are not. A note is a debt instrument. Therefore, a US note is a debt. However, it is a noninterest-bearing and nonmaturing debt that is legal tender.

This strange notion that President Kennedy was assassinated because of Executive Order 11110 and that this executive order replaced Federal Reserve notes with US notes, which would have led to abolishing the Federal Reserve, has been floating around for at least 40 years.

Cryptocurrency

Cryptocurrency like Bitcoin is not real money. It is a type of fiat money. Real money has quantity, measurement, and substance. Fiat paper money has only quantity. Likewise, cryptocurrency has only quantity.

An early illustration of these three attributes in real money is recorded in Genesis 23:16. 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).

Cryptocurrency lacks two of these three characteristics. For example, a Bitcoin has a quantity of one. It can be converted to fiat money, such as dollars or euros, which has quantity but, like Bitcoin, lacks measurement and substance. (Bitcoin averaged about $60,000 in 2024 and ranged between about $39,507 and $99,637.) Unlike fiat paper money like the dollar, which appears to have a measurement, cryptocurrency does not even seem to give the illusion of a measurement until it is converted to a fiat currency. However, even if cryptocurrency has a measurement, its measurement, like fiat currency, is an abstraction. It measures nothing of substance. A unit of measurement has to be something concrete and definable, like the meter, ounce, minute, or horsepower, so that things can be compared with it. It has to be something that instruments can determine. Also, it lacks substance as its monetary value exceeds the value of the material of which it is made, and it does not promise to deliver anything concrete. (See “What Is the Difference Between Commodity and Fiat Money” and “Differences Between Real Money and Fiat Money” by Thomas Allen.)

Another distinction between real money and fiat money is how the quantity of money in circulation is determined. With real money, the markets decide how much money is in circulation. The money supply adjusts automatically to meet monetary needs. Under a fiat monetary system, the money supply is regulated artificially; instead of the markets deciding, some entity decides. For paper fiat money, the government or its central bank regulates the quantity in circulation. With cryptocurrency, the programmer regulates it with the program that he wrote that creates the cryptocurrency. Like other fiat currencies, the quantity of cryptocurrency is independent of the market or economic needs or demand for money. (See “Gold and Silver as Fiat Money” by Thomas Allen.)

One advantage that the existing paper fiat monetary system has over cryptocurrency is that it has a mechanism for withdrawing excess money. Cryptocurrency lacks such a mechanism. Once cryptocurrency is issued, it remains in circulation forever unless it is lost.

Interest on the National Debt

Many people express concern about paying the ever-growing interest on the ever-growing US national debt. However, two legal methods can be used to eliminate paying the interest on the US debt.

First, Congress can require the Federal Reserve Bank to buy all US government’s debt securities. Under current law, all earnings of the Federal Reserve above its operational cost go to the US Treasury. Thus, nearly all the interest that the federal government pays on its debts would return to the US Treasury. If Congress thought that the Federal Reserve’s operating expenses were too high, it could limit those expenses.

Second, the federal government could pay the interest with government notes, a.k.a. US notes, also called greenbacks. Also, it could pay off or even buy back the US government’s debt securities with government notes. Government notes are notes issued directly by the government instead of indirectly through the central bank, as are Federal Reserve notes. Moreover, instead of issuing bonds, treasury bills, etc., the federal government could just issue government notes. From the government’s perspective, government notes have a great advantage over other governmental debt. Government notes pay no interest and never mature. (See “Difference Between Bank Notes and Government Notes” by Thomas Allen.)

Of course, if either of these two methods is used, the US dollar will go the way of the Zimbabwean dollar much quicker than it will under the current system. (At its peak, the Zimbabwean inflation was estimated at 79.6 billion percent month-on-month, 89.7 sextillion percent year-on-year in mid-November 2008.)

Copyright © 2025 by Thomas Coley Allen.

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