Returning to the Gold Standard

Returning to the Gold Standard

Thomas Allen

    The following is written for the United States. With minor modifications, it could be applied to most countries.
    Several recommendations have been proposed for returning to a gold standard or a monetary system that incorporates gold. One is returning to the true gold standard. Nearly all of these recommendations require fixing or defining gold at a specific price, generally between $1000 and $10,000 per ounce.
    Because of falsely perceived problems with returning to the true gold standard, several pseudo gold standards have been proposed. One is backing the currency by some arbitrary amount of gold, usually between 5 and 25 percent. Another is to use the price of gold as an index. The central bank expands and contracts the money supply to keep the price of gold within a specific, but arbitrary, range. Related is making gold part of a commodity basket index. Then the central bank expands and contracts the money supply to keep this arbitrary index within an arbitrary range.
    Although the gold exchange standard fell quickly the two times that it was tried, it is still popular in some circles. Presumably, its proponents will make it work this time.
    The following recommendations can return the country to the true gold and silver standards without the problems of the aforementioned recommendations. They take the control of the money from the government and its central banks, the Federal Reserve, and return it to the people where the U.S. constitution originally placed it. These recommendations call for phasing in the gold and silver standards. Many pertain to reforming banking as poor banking practices cause many of today’s economic problems.
    1. All U.S. debt securities held by the Federal Reserve are voided and the Federal Reserve is abolished. The Federal Reserve returns the gold certificates that it holds to the U.S. government. Federal reserve notes are no longer printed unless the U.S. government needs to print more federal reserve notes to pay its existing debts made in terms of federal reserve dollars.
    2. As part of abolishing the Federal Reserve, the U.S. government buys all the stock of the Federal Reserve banks owned by member banks and pays for the stock with federal reserve notes. All member banks receive in federal reserve notes all their reserves held by the Federal Reserve.
    3. All gold held by the U.S. government or the Federal Reserve is distributed equitably among the people who lived in the United States in 1933 or their descendants if they have died. The distribution is in gold coins minted in denominations 5, 10, and 20 pennyweights.
    4. The Federal Deposit Insurance Corporation (FDIC) is phased out. Its coverage could be reduced by one-fifth per year for five years after which it ceases to exist. Any bank could opt out of the FDIC earlier and cease being subject to its regulations.
    5. The U.S. government immediately opens the mint to gratuitous free coinage of gold and silver. Private mints may also coin gold and silver provided the minter and the content of gold and silver of the coin are identified on the coin.
    6. Gold and silver coins replace the federal reserve dollar. The coins are denominated in troy pennyweights of gold or silver. The pennyweight value is stamped on the coin. Also stamped on the coin are the grains of gold or silver that the coin contains. (Also, stamping on the coin the number of grams of gold and silver in the coin is desirable.)
    7. No fixed exchange rate or legal ratio exists between gold and silver. No fixed exchange rate exists between federal reserve dollars and gold or silver.
    8. Legal tender laws are repealed; people are required to accept the type of money (gold, silver, or federal reserve dollars) for which they have contracted.
    9. Sound banking needs to be restored as quickly as possible. Banks issuing banknotes for real bills of exchange need to be physically separated from other types of banking.
    10. Banks issue only gold and silver banknotes and checkbook money to buy real bills. Banks do not issue banknotes or create checkable deposits for any purpose but to buy real bills.
    11. Other banks do not issue banknotes and do not create checkable deposits. They make loans by transferring money from savings and bank capital. Borrowing short and lending long is prohibited.
    12. Banks and others may issue gold and silver certificates provided such certificates are fully backed by gold and silver. The government should not issue certificates.
    13. All banknotes and certificates clearly identify the issuer and whether it is in gold or silver.
    14. The smallest denomination of banknotes and certificates is 50 pennyweights of gold and 100 pennyweights of silver.
    15. The States penalize the issuer of banknotes and certificates that refuses or fails to redeem its banknotes or certificates on demand.
    16. Within 12 months, no new checkable deposits are created in federal reserve dollars; they are in silver or gold. Within 12 months, no new loans are made in federal reserve dollars; they are in silver or gold.
    17. Federal reserve dollars are withdrawn from circulations as debts made with federal reserve dollars are paid off. Debts contracted in federal reserve dollars are paid with federal reserve dollars although the debtor may pay with gold or silver if he so chooses and the creditor willingly accepts.
    18. Banks maintain 100-percent reserves in gold and silver for primary gold and silver demand deposits. Banks that buy real bills maintain 100-percent reserves for derivative demand deposits in real bills and maintain adequate reserves of gold and silver to redeem in gold and silver checks drawn on derivative demand deposits. All other banks maintain 100-percent reserves for derivative demand deposits by transferring money from savings or bank capital to them.
    19. Banks are prohibited from buying government securities, using government securities as reserves, lending money to buy government securities, or accepting government securities as collateral for loans.
    20. Banks do not pay out banknotes or certificates of other banks.
    21. No bank keeps any of its reserves in another bank.
    22. The U.S. government and States keep their money in their own vaults and write checks against money in their vaults. They do not deposit money in banks. The U.S. government and States belong to clearing houses to clear quickly checks, banknotes, and certificates that they receive and checks written on their accounts.
    23. Within 12 months, the U.S. government and States begin paying their employees in physical silver coins and continue to pay them in physical silver coins for at least five years. After five years, they may pay their employees with silver checks or silver transfers to the employees’ checking accounts.
    24. The U.S. governments and the States start collecting taxes in gold and silver within six months. They should continue to collect enough taxes in federal reserve notes to pay their debt obligations made with federal reserve dollars.
    25. Within 30 days, the U.S. government and States cease contracting and issuing securities in terms of federal reserve dollars and start contracting and issuing securities in terms of gold or silver.
    26. All capital gains taxes, sales taxes, and other taxes on the exchange, sell, or purchase of gold and silver in any form that is at least 18 carats or on any other currency are eliminated.
    27. People may make contracts in gold and silver or any other commodity, good, or service, that they choose. Contracts are paid as specified in the contract. If the value of the contract when completed has risen in terms of federal reserve dollars, no taxes are paid on the increase. Tax laws in general are revised so as not to penalize using gold or silver as money.

Copyright © 2014 by Thomas Coley Allen.

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Analysis of “Can Christians Wield the Sword?”

Analysis of “Can Christians Wield the Sword?”

Thomas Allen

    The following is the impression that Mr. Shawn Lazar gives in his article  “Can Christians Wield the Sword?” in Grace in Focus, November and December 2014, pages 21-25.
    Mr. Lazar presents Jehovah as a god of war. He is the Hebrew equivalent of the Greek god Ares and the Roman god Mars. According to Mr. Lazar, war and violence are love: They are the highest form of love that Jehovah can express.
    Whether against their subjects or foreigners, rulers show their love through war and violence. War and violence are expressions of God’s will and love. Likewise, oppression expresses God’s will and love. The only time that war and violence are sinful is when oppressed people rebel against their oppressive rulers.
    Mr. Lazar argues that Christian pacifism is not only wrong; it is unscriptural. The primary purpose of his argument is to justify Israel's warring against and oppressing the Palestinians. However, when the Palestinians resist their overlord, the Israelis, they are committing a great evil and sin.
    Like most Zionist Christians, Mr. Lazar quotes Romans 13:1-4 and claims that Christians should do whatever their rulers tell them to do. Civil disobedience is their only option if they disagree with their rulers’ orders.
    He states that those who control governments are God’s ministers for good. If his understanding is correct, he must support Stalin’s and Mao’s slaughter of their people. These slaughters were good, for government can do no evil and always act according to God’s will. Everyone whom rulers kill or order killed is an evildoer.
    Moreover, if Mr. Lazar is correct, the United States were founded in iniquity. The founding fathers committed a great sin against God and their oppressive rulers when they led a rebellion against their British rulers. Likewise, several Old Testament Judges were guilty of the sin of rebellion as they revolted or led revolts against their overlords.
    According to Mr. Lazar's reasoning, whenever the ruling tribe in an African country hacks to pieces people of other tribes in their country, that is love — Divine love. However, if the victims resist being slaughtered, that is sin — a great sin.
    Israel was born out of the great sin and iniquity of rebellion. Using terrorism, the Jews rebelled against their ruler, the British, and eventually forced the British to leave Palestine. How Mr. Lazar can support such rebellious countries as Israel and the United States, he does not explain. He seems to go as far as to fawn over Israel.
    Contrary to Mr. Lazar’s implications, Jews stealing Palestinian land and slaughtering Palestinians when they resisted the thief is hardly comparable with the death penalty for murder or Abraham rescuing his nephew. Abraham’s use of violence to rescue his nephew is much more comparable to Hamas's using violence to restore stolen land to the Palestinians.
    The Jews’ drive to exterminate the Palestinians is similar to God’s commanding the Israelites to exterminate the Canaanites when they entered the promised land. (The Israelites of the Old Testament should not be confused with today’s Israelis, who according to Jewish sources have no claim to being descendants of Jacob.) However, then God spoke through the great prophets Moses and Joshua. Who is the prophet, great or small, who has heard the voice of God and told the Jews to invade Palestine and exterminate the Palestinians?
    According to Mr. Lazar, a Christian is obliged to defend his neighbor from violent acts. However, if the ruler is the perpetrator, he is obliged to take no action except perhaps civil disobedience. (Civil disobedience did not do the tens of millions that Stalin and Mao killed much good. At least they were obedient to death.)
    Apparently, the sixth commandment (Thou shalt not kill) does not apply to people in government when they act in the name of the government or the state. It only applies to those who try to defend themselves from the government.
    Perhaps Mr. Lazar has explained why God almost never answers prayers for peace. His warmongering God loves war so much that He ignores the promise that His son made in Matthews 7:7. Moreover, Jesus must have erred when teaching “blessed are the peacemakers.” He should have taught “blessed are the warmongers.” Contrary to what Jesus claims, warmongers, not peacemakers, are the sons of God. At least this is what Mr. Lazar implies.
    By following the policy that war and violence are the solutions to all problems, rulers are obeying God’s will. When done by rulers, war and violence solve all problems. When oppressed people resort to war and violence, they solve nothing for themselves other than to commit a great sin and act against the will of God. Such Mr. Lazar implies if not outright claims.
    Mr. Lazar is obviously an Israeli-firster, and like most Zionists, he seems ready to defend Israeli imperialism to the last American. Why should anyone who claims to be a Christian want to support the Antichrist? According to John’s definition of the Antichrist (1 John 2: 22), both Jews and Muslims are Antichrist as they deny Jesus is the Christ. If a Christian is to choose sides, should not he support the one whose holy book considers Jesus to be a great prophet and oppose the one whose holy book considers Jesus to be a sorcerer and a bastard? The Koran presents Jesus as a great prophet. The Talmud presents Jesus as a sorcerer and a bastard.

Copyright © 2014 by Thomas Coley Allen.

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Analysis of Thomas Porter’s The Green Magicians

Analysis of Thomas Porter’s The Green Magicians

Thomas Allen

    This article analyzes Thomas Porter’s The Green Magicians (Omni Publications, 1968). His words and my paraphrases or summaries of his words are in italicized. My commentary is in roman letters. I have provided references to pages in his book and have enclosed them in parentheses.
    Mr. Porter states, “A  bank’s basic function is to transfer credit (wealth) from one account to another. Banking is a bookkeeping business” (p. 3.). When a person deposits money in a checking or savings account, he is lending to the bank receiving the deposit. Banks use these deposits as reserves or as the basis for their loans.  Although most loans are in the form of entries in checking accounts, some are in the form of cash. Although most people deposit checks that they receive in banking accounts, some convert their checks to cash. This cash comes from deposits, which serve as the bank’s reserves. (Mr. Porter acknowledges using deposits as reserves [p. 2.].)
    Mr. Porter claims that “a bank does not loan money, but instead accepts the customer’s wealth in the form of property and agrees to transfer that wealth from the customer’s account to others as ordered by the customer’s checks” (p. 3.). Contrary to his assertion, a bank does not accept the customer’s wealth in the form of property. The customer’s property is used as collateral for the loan (Mr. Porter notes this purpose on page 2.) The customer retains ownership and use of the property during the term of the loan. However, the bank may place restrictions, such as, the customer may not sell the property during the term of the loan without the bank’s consent. What the bank does when lending is to convert the borrower’s credit, usually in the form of a promissory note, into the bank’s credit, usually in the form of a checking account entry. Bank notes (federal reserve notes) are another form of credit in which the borrower’s credit is converted.
    Moreover, not all loans are collateralized. Credit cards are a good example. When a buyer charges a purchase with a bank credit card, he has borrowed money from the bank to pay the seller He provides no collateral for the loan. (Mr. Porter expresses great concern about bank credit cards supplanting all currencies. [p. 28.].)
     Also, contrary to Mr. Porter’s claim (p. 2), banks do not claim the borrower’s property as an asset. They list loans as assets. Borrowers list loans as liabilities. (When a person deposits money in a savings account, he lists the deposit as an asset although it is a loan to the bank. The bank lists the deposit as a liability.)
    The primary reason that people convert their credit, their promissory notes, into bank credit, checkbook money and bank notes, is that buying goods and services with bank credit is easier than buying them with personal credit. (One can buy with personal credit without involving banks — even large purchases. I bought my land with a promissory note to the owners; I did not use a bank loan.)
    Mr. Porter states that banks do not normally lend cash money; they lend credit money (p. 2). What he fails to explain is that all money, including cash money, is credit money. Since 1933, all money in the United States has been credit money.
    Mr. Porter remarks, “Checks are the commonest form of money (p. 3).” When he wrote his book, he was correct about checks being the commonest form of money. Now electrons in computers, electronic money, is rivaling, if not surpassing, paper checks as the predominant form of money.
    He states “Bank credit must be ‘borrowed’ to create it and is destroyed when paid back” (p. 4). He is correct. To prevent inflating the money supply, credit money needs to be removed from the economy and destroyed once its work is done.
    Mr. Porter notes, “Currency is no longer a tangible thing, but is an order to pay, like a check” (p. 5.). This is true. It was true for all three types of paper money in circulation in 1969, viz., silver certificates, U.S. notes, and federal reserve notes. Like checks, all three are forms of credit money. (At the time that he wrote this book, silver certificates were being withdrawn from circulation. A few years later, U.S. notes would be phased out.)
    Mr. Porter writes, “United States Notes, Silver Certificates and coins are paid into circulation. They are not borrowed into circulation” (p. 6). This is true. However, he fails to inform that U.S. notes are forced loans that pay no interest and promises to pay nothing. He errs when he writes that “U.S. notes have never been redeemable in anything” (p. 4.) Between 1879 and 1933, U.S. notes were redeemable in gold coin on demand. One-third to one-half of them were backed by gold.
    He claims that the value of U.S. notes had “been stabilized by being exchangeable for silver certificates whose value has been stabilized by their value in silver” (p. 4.). This claim is false. Silver certificates ceased being convertible in silver in 1964. At the time of his writing the value of silver in a silver dollar exceeded the value of a one-dollar silver certificate. As silver certificates, U.S. notes, and federal reserve notes had the same purchasing power, what fixed the value of one to the other two? It was not silver as Mr. Porter implies.
    The U.S. government may have spent U.S. notes into circulation, it did not spend gold certificates into circulation as Mr. Porter claims (p. 4). The owners of gold deposited their gold with the U.S. Treasury Department for gold certificates. If no one deposited gold in exchange for gold certificates, there would be no gold certificates in circulation.
    Mr. Porter correctly notes that federal reserve notes are orders to pay like checks. Also, he notes that they are a private bank note (p. 5.) Unlike most fiat money reformers, he at least mentions that federal reserve notes are obligations of the U.S. government. However, he implies that this obligation only existed under the gold standard and that this was the cause of Roosevelt’s great gold thief of 1933 (p. 5). (He does not use “thief.”) As the U.S. government and the Federal Reserve Bank held nearly all the monetary gold, Roosevelt did not have to steal privately held gold. If the gold coins in circulation were approximately equally distributed, each person would have held $2 to $ 3 in gold — well below the $100 limit. (I discuss this in detail in “Review of Daniel Carr’s ‘FDR’s 1933 Gold Confiscation was a Bailout of the Federal Reserve Bank.’”)  As nearly every country besides France had left the gold standard by the time that the United States did, few foreign claims for gold payment remained. The U.S. government and the federal reserve bank had plenty of gold to pay the few, if any, that remained. The purpose of abandoning the gold standard was to relieve the government and banks of the burden of paying in gold and of keeping their promise to redeem their notes and checks.
    Mr. Porter remarks that the U.S. government pays the federal reserve bank interest on U.S. bonds (p. 5.). He fails to mention that most of this interest is returned to the U.S. government.
    Mr. Porter lists three things that give currency value:
    “1.   Need of the currency to pay taxes.
    2.   Legal requirements to accept it in payment of debt.
    3.   Direct or indirect exchangeability for something of value such as gold or silver” (p. 6.).
    Number 3 ceased to exist long ago and was not even in effect when Mr. Porter wrote his book. However, number 3 is what originally gave today’s currency its value. The nonmonetary uses of gold and silver gave gold and silver money its initial value After gold and silver began to be used as money, the combination of their nonmonetary uses and monetary use fixed their value. Numbers 1 and 2 are what now gives currency its value albeit at a decaying rate. Also, the service that currency provides as a medium of exchange gives it some value. (One of the great monetary mysteries is why fiat money, which is a promise to pay nothing, has any value at all.)
    Mr. Porter correctly notes “that cash is only a slightly different form of credit money” (p. 6.).
    He claims, “The only thing backing the money in the U.S.A. is the property of those who ‘borrowed’ it into circulation” (p. 11.). What really backs money in the United States is the taxing power of the U.S. government — its military might to take people’s property. All checkbook money is built on a foundation of federal reserve notes and bank deposits at the federal reserve banks. Federal reserve notes into which these bank deposits are convertible on demand are backed by the U.S. government. Likewise, U.S. government securities that the Federal Reserve uses to cover its liability of bank deposits are backed by the U.S. government. The U.S. government stands behind the country’s monetary system. This governmental control and guarantee of the U.S. monetary system seems to be what Mr. Proter advocates although in a different form.
    He claims, “The  total debt of the nation must increase by the  amount of interest removed from circulation or it will be made up by foreclosure on property” (p. 11.). He focuses negatively on interest paid to bankers on loans. He ignores interest charged to banks for loans, i.e., interest paid on savings and checking accounts. Interest is also paid on personal nonbank loans, government securities, and other nonbank loans. Rent for a house or an apartment, car, equipment, or anything else is interest (See Usury by Calvin Elliot and “Questions for Anti-Usurers” by Thomas Allen.) If most of the interest that bank charge “is not legitimate profit but gained under false pretenses” (p. 10) is true, then most of the interest charged by nonbank lenders, landlords, equipment leasers, etc. must be profit gained under false pretense.
    The U.S. government does not have to increase its debt to “borrow” money into existence or resort to using noninterest loans, like U.S. notes, to provide money to pay interest. People do not buy with money. They buy with production, labor. Products and labor buy products and labor — Say’s law. (As stated in Wikipedia , Say’s law is as follows: “As each of us can only purchase the productions of others with his own productions — as the value we can buy is equal to the value we can produce, the more men can produce, the more they will purchase.”) Money merely serves as an intermediary to facilitate the exchange. Ultimately, borrowers pay interest with their production.
    Mr. Porter claims that “all interest is charged unjustly” (p. 13). If true, banks should not pay interest on deposits or certificates of deposit. Governments should not pay interest on their bonds. Corporations should not pay interest on their bonds or dividends (a form of interest) on their stock. Landlords should cease offering their property for rent. Without interest, our society would revert to the agrarian society of the Middle Ages or of ancient times.
    In Chapter V, Mr. Porter gives his solutions. When a person borrows from a bank, he should pay a fee adequate to cover the cost of the loan with a reasonable profit and to protect the lender from possible loss (p. 30.). What the difference between this fee and interest other than how it is computed, he does not explain. As any good anti-usurer knows, fees related to loans is just another name for interest.
    Borrowers should not be allowed to convert checkbook money resulting from loans into currency, precious metals, or anything other than credit. However, people who deposit precious metals or currency should receive precious metal or currency when demanded (pp. 30-31). Precious metal is no longer an issue — and it was not when Mr. Porter wrote as silver coins where no longer used. By currency, I assume that he means U.S. notes and federal reserve notes, i.e., paper money. Whether federal reserve notes are considered credit or currency may not matter, as he favors eliminating the federal reserve banks and by that their notes. He probably means U.S. notes. If bank notes are considered currency, why the restriction? Bank notes are functionally the same as checkbook money. Prohibiting banks from converting checkbook money created by lending to paper money, i.e., U.S. notes, removes an important limitation on the amount of loans that a bank can make.
    Mr. Proter wants to make checks legal tender (p. 31.) He states, “Coin, United States Notes, Credit and silver at a definite value per ounce, should all be made legal tender for all debts, public and private by Federal law” (p. 32.) A major cause of monetary problems comes from legal-tender laws. These laws should be repealed instead of extended. Real money, such as gold and silver, do not need the protection of legal-tender laws. Fraudulent money like U.S. notes and federal reserve notes do. Without declaring them legal tender, they may have difficulty circulating and would circulate at a discount to specie. Mr. Proter states, “What is needed is a Federal law chartering institutions to issue credit backed by property, without maintaining any reserves and without being required to pay their debts in anything other than credit” (p. 31.).
    Mr. Proter favors repealing then entire Federal Reserve Banking Act (p. 32.) This is the best proposal that he makes.
    He seems to favor returning to some kind of bastardized silver standard. He remarks, “Making all debts payable in either silver, credit or currency at a definite ratio and as the person paying chooses, will maintain and stabilize the value of all money the same as making it redeemable in silver would. Yet the government will not need to invest in the silver and the silver will not be withheld from the market or the use of the consumer” (p. 32.). Obviously, he has little understanding of the true silver standard. Under the true silver standard, the government does not invest in silver. It merely coins all silver presented to the mint for coinage. The coins minted are the property of the person presenting the silver. They are not the property of the government until it obtains them via taxes, fees, or fines. The only way that U.S. notes and bank credit can maintain the same value as silver is for them to be converted to silver on demand. That requires the U.S. government to maintain silver reserves for U.S. notes, and banks, for bank credit.
    He supports the Friedman concept (although he does not credit it to him) of free floating exchange rates for currencies. Currencies change value relative to each other instead of being a fixed weight of gold or silver or fixed in terms of another currency. Thus, neither gold or silver would be used in international exchange or for balance of payments (p. 32.). Essentially, this system is the one that the United States and most countries use today. Some countries do fix their currencies in terms of the U.S. dollar. This part of his proposal has been mostly implemented.
    Floating exchange rates make foreign trade more speculative. Exporters and importers need to account for variable and unknowable future-value changes between the U.S. dollar and foreign currencies. Such changes were not a problem for countries on the gold standard because they did not occur. Countries defined their monetary unit as a specific weight of gold. Moreover, variable exchange rates leads to the U.S. government speculating in foreign exchange markets in an attempt to maintain stability — a task that it did not have to do under the gold standard.
    Mr. Protor claims that “the  Constitution empowers Congress to issue our money” (pp. 32-33.). He makes a mistake common to all fiat money reformers and federal judges and to most Congressmen. The Constitution does not empower Congress to issue money. It empowers Congress to coin money. That is, the U.S. government coins (not issues) all gold and silver presented to the mint for coinage. If no one presented any gold or silver for coinage, there would be no money other than perhaps some previously issued credit money, such as script. (As I have discussed this in detail in Reconstruction of America’s Monetary and Banking System: A Return to Constitutional Money and other articles, I will not do so here.)
        Mr. Protor states, “A dollar bill is a token of a definite amount of wealth. It represents a definite amount of work done. As long as it represents a definite amount of wealth or work done its value obviously will not change and inflation or deflation cannot occur (p. 33). The “dollar” as used in the Constitution has nothing to do with work. It is the weight of silver in the Spanish milled dollar. Congress found the average weight of silver in the Spanish milled dollar in circulation was 371.25 grains of silver when adjusted so that 15 grains of silver had the same value as 1 grain of gold. Mr. Proter does not define how much of what kind of work equals one dollar. He seems to follow the classical concept of wealth and value of Adam Smith and other classical economists. As Carl Menger proved, value is subjective and has nothing to do with work.
    If he is correct, we should have experienced no inflation over the past several decades. As we have had inflation, his definition of the dollar is flawed. Otherwise, wealth and work done in the U.S. has been declining over these decades.
    Mr. Proter goes on to remark that “inflation is caused by labor demanding more money without more production or work done” (p. 33.). Thus, according to him, whenever labor demands an increase in pay without an increase in production, the dollar loses value. He is not alone in this belief. However, the purchasing power of the money is independent of the income of workers. Its purchasing power depends on its quality. High quality money like gold and silver maintains purchasing power better than low quality money fiat paper money like U.S. notes.
    Mr. Protor claims that the economic problem in the United States is not over-production. The problem is under-consumption (p. 33-34). This is a commonly held belief by fiat money reformers.
    He notes, “Unemployment is caused by a shortage of money in circulation. Every time considerable money is put in circulation, unemployment drops sharply, until the money is in some manner removed from circulation as soon happens” (p. 34.). The decade of the 1970s proved him and others who held this belief wrong. During the 1970s, the money supply, unemployment, and prices soared. Unemployment usually does decline with a significant increase in money supply. It does so because when “considerable money is put in circulation,” the purchasing power of the monetary unit declines. Declining purchasing power lowers the cost of labor.
    His proposal of returning to a free enterprise economy (p. 34) is sound. However, his proposal to prohibit charging interest would devastate the economy (v.s.).
    Mr. Proter also supports the Liberty Amendment, which he quotes (pp. 35-36).  The Liberty Amendment is a great proposal, which would eliminate many problems that the country faces. It would eliminate all the so-call free trade agreements, which are actually managed trade agreements, like NAFTA. It would prohibit the U.S. government from engaging in any business or enterprise. Also, it prohibits subjecting the laws of the United States and the States to any foreign or domestic agreement.
    Like most fiat money reformers, Mr. Porter believes that only two approaches exist in providing the economy with the money it needs. One is having the government print and spend money into circulation — his preference. The other if for people to borrow money into circulation. That is, banks create checkbook money to lend to borrowers. This approach he adamantly opposes.
    He ignores the one monetary system that can provide the economy with all the money that it needs without governments or banks. That monetary system is the gold-coin standard accompanied by the real bills doctrine and ideally the silver-coin standard. It automatically inserts money into the economy when it is needed and where it is needed far more accurately and precisely than governments can. Moreover, it inserts the amount needed far more accurately and precisely than governments can. Furthermore, unlike governmentally issued fiat money, which remains in the economy indefinitely and leads to inflation, it removes money from the economy once it is no longer needed.

Copyright © 2013 by Thomas Coley Allen.

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Why Elijah Defeated the Baal Priests

Why Elijah Defeated the Baal Priests

Thomas Allen

[Editor's note: The following article has been significantly revised from the earlier version that appeared.  Revised January 13, 2018; revised May 5, 2018, by adding 35-37; revised March 18, 2019, by adding 38; revised September 28, 2024 by rewriting 14 and adding 39.]
    Why was Elijah able to defeat Baal’s priests in his duel with them (1 Kings, chapter 18)? The traditional explanation is that Jehovah or Yahweh or YHWH is the supreme God or that He is the only true God.[1] Naturally, Baal apologists object to Jehovah being the supreme god, much less being the true god.
    Jesus said in Matthew 7:7, “Ask and it shall be given you.” As many prayers go unanswered, prayer apologists have come up with excuses for unanswered prayers. Baal apologists can easily use these excuses to explain Elijah’s victory over Baal’s priests. Some of the favorite and most popular excuses of the prayer apologists for unanswered prayers follow.
    1. Doubt. God does not answer prayer because of doubt, i.e., the prayer has some doubt that God would answer the prayer. Thus, doubt is more powerful than God. How much doubt is necessary is not usually stated other than if the prayer has one iota of doubt, his prayer will not be answered. According to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they had some doubt that Baal would answer their prayers. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that out of the multitude of people praying for peace, is that all of them have doubt. Of the few who pray for war, apparently one of them has no doubt that God will deliver war. Therefore, we have war instead of peace. (In this article, peace means the absence of war; it does not mean the unmeasurable internal peace of God.)
    2. Lack of Faith. God does not answer prayer because of a lack of faith, i.e., the prayer does not have enough faith. Presumably, if the prayer is answered, the prayer has enough faith. If it is not answered, the prayer does not have enough faith. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not have enough faith that Baal would answer their prayers. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that out of the multitude of people praying for peace, is that none of them have enough faith. Of the few who pray for war, at least one of them has enough faith to ensure that God will deliver war.  Therefore, we have war instead of peace.
    3. Serious and Earnest. God only answers prayers when the prayer begs seriously and earnestly. Otherwise, He ignores the prayer. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not beg seriously and earnestly enough. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that out of the multitude who pray for peace, none begs seriously or earnestly enough. Of the few who pray for war, at least one begs seriously and earnestly enough. Therefore, we have war instead of peace.
    4. Not God’s Will. God does not answer the prayers of His people unless He so desires, i.e., it is His will to answer them, or the prayer is consistent with His will. Presumably, His refusal to answer serves some higher and usually hidden purpose and is not whimsical. Moreover, as God’s will always prevails, presumably, His will is going to be executed even if no one ever prays. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because Baal’s will was that they lose. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that of the multitude who pray for peace, is that none are praying for God’s will. Of the few who pray for war, they are praying for God’s will, which means that God’s will is war. Therefore, we have war instead of peace.
    5. God Answers Those Who Seek His Will. If what the prayer is seeking with his prayer is God’s will, God answers the prayer. If the prayer’s prayer is contrary to God’s will, God does not answer the prayer or answers it negatively.  Again, as God’s will always prevails, presumably, His will is going to be executed even if no one ever prays. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they were not seeking Baal’s will when they asked him to defeat Elijah. Therefore, Baal allowed Elijah to win. Moreover, the reason that we have war instead of peace is that people who pray for peace are not seeking God’s will. The few who pray for war apparently are seeking God’s will, which is war.
    6. Gives Things Asked for That He is Willing to Grant. The prayers must ask for things that they know that God is willing to grant. This excuse leads to much groping around in the dark, for who knows the mind of God. Thus, prayer is mostly a trial and error thing with the prayer searching for what God will grant. Even then, he does not know whether it is answered prayer or coincidence. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not ask for that which Baal was willing to grant when they asked him to defeat Elijah. Therefore, Baal allowed Elijah to win. Moreover, we have war instead of peace because those who pray for peace are not praying for that which God is willing to grant. The few who pray for war are praying for that which God is willing to grant, which is war.
    7. God Answers But the Answer Is “No.” God answers all prayers. Sometimes He grants the prayer what he asks for, and sometimes He does not. How this is to be distinguished from random events and coincidence is not adequately explained — especially when compared to nonprayed-for events. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because Baal answered his priests negatively. Therefore, Baal did answer their prayers, and his answer, contrary to their petition, was to allow Elijah to win. Moreover, the reason that we have war instead of peace is that God answers the prayers for peace negatively. However, He answers the prayers of the few who pray for war in the positive and gives them and those who pray for peace war.
    8. The Answer Is Not What Was Expected. God answers all prayers. However, the answer is frequently not what the prayer wanted or expected. Again, how this is to be distinguished from random events and coincidence is not adequately explained. Baal did answer the prayers of his priests. However, the answer was not what they expected. They expected Baal to give them victory over Elijah. Baal decided to answer their prayers by giving Elijah victory over them. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because Baal answered his priests in a way that was not expected. Moreover, the reason that we have war instead of peace is that God answers the prayers for peace with war, which is not what the prayers for peace wanted or expected.
    9. Has Something Better. God answers all prayers, but He often answers by giving the prayer something better than what he asks. Evidently, this is true even, and especially, when the prayer never perceives the thing received as better than what was requested. Apparently, the “something better” for Baal’s priests was defeat, humiliation, and death. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; Baal gave his priests something better than victory over Elijah: defeat, humiliation, and death. Moreover, the reason that we have war instead of peace is that God is giving the prayers for peace something better than peace and that is war.
    10. Gives What Is Needed, Not What Is Wanted. God answers prayers by giving the prayer what he needs instead of what he wants. A corollary of this excuse is that God does not answer prayers for wants; He only answers prayers for needs. What does God do when the request is for something that is both needed and wanted? Does He grant the request because it is needed? Does He withhold answering because it is wanted? Or does He only partially answer it? Obviously, Baal’s priests merely wanted victory over Elijah. What they really needed was defeat, humiliation, and death. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; Baal gave his priests what they needed (defeat, humiliation, and death) instead of what they wanted (victory). Moreover, the reason that we have war instead of peace is that prayers for peace merely want peace. What they really need is war. Presumably, those who pray for war merely want war, but what they really need is war, so God gives them war.
    11. Not Yet. God answers all prayers, but He often delays in answering, even when the prayer is time sensitive. Again, how this is to be distinguished from random events and coincidence is not adequately explained. Also, not explained is time running out without the prayer being answered. When was Baal going to answer the prayers of his priests? After Elijah defeated, humiliated, and killed them? According to the Baal apologists, Baal did answer the prayers of his priests. He just did not answer them in a timely manner. He delayed answering their prayers to some future date. Evidently, Baal plans to answer the prayers of his priests in the future when he has reincarnated or resurrected them and Elijah and has the duel between them reenacted. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because Baal decided to answer their prayers later. Moreover, the reason that we have war instead of peace is that God will grant peace sometimes in the future — perhaps when no one is left to fight.
    12. Unconfessed Sin. God does not answer prayer because the prayer has unconfused sin, i.e., the prayer has not confessed all his sin. Therefore, God will not answer the prayer. If this excuse is true, then God seldom answers many prayers as many prayers have unconfessed sin. Many people cannot even remember all their unconfessed sins, so their prayers are never answered. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they had some unconfessed sin. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that of the multitude who pray for peace, all have unconfessed sin. Of the few who pray for war, apparently at least one does not have any unconfessed sin, so God answers his prayer for war.
    13. Dire Need. God only answers the prayers of people in dire need. When does a need become a dire need? What is a dire need? Cemeteries are full of people who thought that they had a dire need. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not have a dire need to win. Apparently, they had a dire need for defeat, humiliation, and death. Moreover, prayers for peace do not have a dire need for peace; however, prayers for war do have a dire need for war. Therefore, we have war.
    14. Not Praying the Correct Way. According to this excuse, one needs to follow the correct formula in praying before God will answer the prayer. That is, in order for God to give the prayer his request, the prayer must follow the correct formula for prayer. (This excuse sounds like Gnosticism in that a hidden formula for prayer exists. One only needs to be enlightened enough to find it.) Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not pray the correct way. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that of the few who pray for war at least one follows the correct formula. Of the multitude who pray for peace, none uses the correct formula. To the extent any formula for prayer is given in Matthew 7:7, it is simply to ask; then God will grant the request.

     15. Failing to Deal with the Spirit Behind the Problem. The prayer has one or more spirits causing the problem for which he is praying, and he has not dealt with these spirits. He must first rebuke, confess, acknowledge, and command these spirits to depart before his prayers are answered. (To the extent that this excuse has validity, the rebuking, confessing, acknowledging, and commanding the departure of these spirits is implied in most prayers even if they are not explicitly stated. Often the prayer may not even be aware of such spirits.) Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not first rebuke, confess, acknowledge, and command the departure of the spirit behind Elijah’s challenge although their prayers did imply, if not explicitly command, etc., such departure. Moreover, the reason that we have war instead of peace is that of the few who pray for war at least one has rebuked, confessed, acknowledged, and commanded the departure of the spirit behind peace. Of the multitude who pray for peace, none has rebuked, confessed, acknowledged, and commanded the departure of the spirit behind war.
    16. Not Praying to the Right God. God will not answer one’s prayer if he prays to the wrong God. Presumably, the wrong God will not answer his prayers either, although the prayer prayed to him. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they prayed to the wrong god. Therefore, Baal refused to answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that out of the multitude of people praying for peace, none of them is praying to the right God. All are praying to the wrong God. Apparently of the few who pray for war, at least one is praying to the right God.
    17. Asking God to Perform Magic, Miracles. One should never pray for a miracle because that is asking God to perform magic. God does not do magic because that is interfering with the natural course of events, and God does not interfere with the natural course of events. Therefore, one should only pray for unmeasurable intangibles like courage and wisdom. One should never pray for measurable tangibles like curing someone of a disease or world peace. Apparently, people who use this excuse do not believe Jesus when he said, “Ask and it shall be given you” (Matt. 7:7). An unanswerable prayer for a measurable tangible shows that Jesus lied. A prayer for an unmeasurable intangible cannot be shown whether it is answered or not. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they prayed for a miracle, i.e., they asked Baal to perform magic. However, Jehovah interfered with the natural course of events and performed an act of magic by lighting Elijah’s water-soaked wood (1 Kings 18:32-38). Therefore, proponents of this excuse must reject Jehovah as the true God because He performed magic. Baal apologists would add that since the true God does not do magic since Baal did no magic, and since Jehovah did do magic, Baal must be the true God. Moreover, God refuses to answer prayers for peace because to do so requires magic, a miracle. War is the natural course of events.
    18. Lack of Fervor. According to this excuse, God only answers the prayers of those who pray fervently. How much fervor does it take before a prayer is fervently prayed? Apparently, the fervor displayed by Baal’s priests was not enough. For anyone to display more fervor as the Bible describes them doing (1 King 18:28-29) is hard to imagine. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not pray fervently enough. Therefore, Baal refused to answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that out of the multitude of people praying for peace, none of them prays fervently enough. However, out of the few who pray for war, at least one prays fervently enough.
    19. Praying for the Wrong Thing. God does not answer the prayers of people who do not pray for the right thing, i.e., they pray for the wrong thing. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not pray for the right thing. He did not answer the prayers of his priest because they prayed for victory over Elijah; they prayed for the wrong thing. Presumably, they should have prayed for Elijah to win; then Baal would have answered their prayers because they would have prayed for the right thing. Likewise, the multitude who pray for peace prays for the wrong thing: peace. However, the warmongers pray for the right thing: war. Therefore, God answers the prayers of the warmongers and ignores the prayers of the peace lovers.
    20. Asking for Things Not Good for the Prayer. If a person prays for something that is not good for him, God will not answer the prayer. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they prayed for something that was not good for them. He did not answer the prayers of his priest because they prayed for victory over Elijah, which was not good for them. Presumably, defeat was good for them. Likewise, God does not answer the prayers of those who pray for peace because peace is not good for them. Therefore, war must be good for them.
    21. Sinner. God does not answer the prayers of sinners. If true, then God would never answer any prayers as everyone is a sinner. Possibly, the only exception is a prayer for salvation and that is iffy. So why did Jesus bother promising that people would receive whatever they asked? Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they were sinners. Therefore, Baal refused to answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that every one of the multitudes who pray for peace is a sinner. At least one prayer for war is not a sinner. Therefore, God answers the prayers of the nonsinning warmonger.
    22. Not a Christian. God only answers the prayers of Christians. This excuse is a good test for someone to use to decide if he is really a Christian. If God answers all his prayers, he is a real Christian. If God fails to answer at least one of his prayers, he is not a real Christian; he is a pseudo-Christian. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they were not real Christians. Therefore, Baal refused to answer their prayers and allowed Elijah to win. Because Elijah was not a Christian either, Jehovah could not have answered his prayer. Moreover, of the multitude who pray for peace, not one of them is a Christian. Of the few who pray for war, at least one is a Christian. Therefore, God answers the prayers of the warmongering Christian.
    23. The Prayer Must Be Prepared to Receive What Is Being Asked For. God only answers the prayers of those who are prepared to receive that for which they pray. He does not answer the prayers of those who are not prepared. How one becomes prepared is anyone’s guess. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they were not prepared to receive victory. Therefore, Baal refused to answer their prayers and allowed Elijah to win. Thus, of the multitude who pray for peace, none are prepared to receive peace; none can handle peace. Of the few who pray for war, at least one is prepared to receive war; this one can handle war. Therefore, we have war instead of peace.
    24. Must Adhere Only to Christ.  Before God answers a person’s prayer, that person must adhere only to Christ. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not adhere only to Christ. Therefore, Baal refused to answer their prayers and allowed Elijah to win. Although evidence is given that Elijah adhered to Jehovah, no specifically stated evidence is given that Elijah adhered only to Christ. Thus, of the multitude who pray for peace, none adhere only to Christ. Presumably, of the few who pray for war, at least one adheres to only Christ. Therefore, we have war instead of peace.
    25. Prepared to Live God’s Will. Before God answers a person’s prayer, the prayer must be prepared to live God’s will. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they were not prepared to live Baal’s, will. Therefore, Baal refused to answer their prayers and allowed Elijah to win. Thus of the multitude who pray for peace, none are prepared to live God’s will. Of the few who pray for war, at least one is prepared to live God’s will. If correct, then living for war appears to be God’s will.
    26. Praying for God’s Will to Be Done. Only when a person prays that God’s will to be done, does God answer the prayer. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not pray that Baal’s will be done. Therefore, Baal did not answer their prayers and allowed Elijah to win. Thus, of the multitude who pray for peace, none is praying that God’s will to be done. Of the few who pray for war, they are praying that God’s will to be done. Therefore, as we have war instead of peace, then God’s will must be war. However, according to Matthew 7:7, God’s will seems to be simply to ask so that He can give whatever is asked for.
    27. Must Know God. God only answers the prayers of those who know Him. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah was mightier; they lost because they did not know Baal. Therefore, Baal did not answer their prayers and allowed Elijah to win. Thus, of the multitude who pray for peace, none knows God. Of the few who pray for war, at least one knows God Therefore, we have war instead of peace.
    28. Must Keep the Commandments of God. God only answers the prayers of those who keep His commandments. This excuse is the ultimate excuse because we are all sinners, and no sinner can keep the commandments of God. To break one commandment is to break all commandments. Based on this excuse, God never answers anyone’s prayer, which makes Jesus’ promise in Matthew 7:7 a hoax. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not keep Baal’s commandments. Thus, of the multitude who pray for peace, none keep God’s commandments. Of the few who pray for war, at least one keeps God’s commandments. Therefore, we have war instead of peace.
    29. Must Have Accepted Jesus as Savior. According to this excuse, God only answers the prayers of those who have accepted Jesus as their savior. This excuse is a good test for one’s salvation. If the prayer has one unanswered prayer, then he is not saved. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah was mightier; they lost because they had not accepted Jesus as their savior. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, no specific evidence is given that Elijah had accepted Jesus as his savior, so accepting Jesus as his savior had nothing to do with his victory. Thus, of the multitude who pray for peace, none has accepted Jesus as his savior. Of the few who pray for war, at least one has accepted Jesus as his savior.
    30. Must Pray in the Name of Christ Jesus. According to this excuse, a person must pray in the name of Christ Jesus before God will answer that prayer. However, Matthew 7:7 does not require asking in the name of Christ Jesus. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they had not prayed in the name of Christ Jesus. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, no evidence is given that Elijah prayed in the name of Christ Jesus, so his prayer had nothing to do with his victory. Thus, the reason that we have war instead of peace is that of the multitude who pray for peace, none pray in the name of Christ Jesus. Of the few who pray for war, at least one has prayed in the name of Christ Jesus.
    31. Asking with Incorrect Motive. God does not answer prayers when the prayer is praying with incorrect motives. Thus, according to Baal apologists, Baal’s priest did not lose because Jehovah is mightier; they lost because they prayed with an incorrect motive. Therefore, Baal did not answer their prayers and allowed Elijah to win. Thus, of the multitude who pray for peace, none ask with the correct motive. Of the few who pray for war, at least one asks with the correct motive. Therefore, as we have war instead of peace. Apparently, a desire for war is the correct motive, while a desire for peace is an incorrect motive.
    32. Asking from a Selfish Heart. God does not answer the prayers of a prayer who prays from a selfish heart. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they prayed from a selfish heart. Selfishly, they want to defeat Elijah. Therefore, Baal did not answer their prayers and allowed Elijah to win. Thus, of the multitude who pray for peace, all pray from a selfish heart. Of the few who pray for war, at least one does not pray from a selfish heart. Apparently, praying for peace is selfish, while praying for war is altruistic. Therefore, we have war instead of peace.
    33. Pray Continuously. One must pray continuously for God to answer a prayer. Although the record shows that Baal’s priests prayed continuously, apparently, they did not pray continuously enough — much more continuously than Elijah prayed. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah was mightier; they lost because they did not continuously pray. Therefore, Baal did not answer their prayers and allowed Elijah to win. Thus, of the multitude who pray for peace, all failed to pray continuously. Of the few who pray for war, at least one prays continuously. Therefore, we have war instead of peace.
    34. Seeking to Receive the Blessing More Ardently than Desiring to Commune with God. God does not answer the prayers of prayers who desire the object of the prayer more than they desire to commune with God. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah was mightier; they lost because they desire victory over Elijah more than they desired to commune with Baal. Therefore, Baal did not answer their prayers and allowed Elijah to win. Thus, of the multitude who pray for peace, all pray desire peace more than they desire to Commune with God. Of the few who pray for war, at least one desires to commune with God more than he desires war. Therefore, we have war instead of peace.
    35. Sowing and Reaping: One Reaps What He Sows. God answers prayers using the principle of what one sows is what one reaps. Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they had been sowing defeat, so he let them reap defeat by letting Elijah defeat them. Thus, all of the multitudes of those who pray for peace have been sowing war; therefore, God lets them reap war. Likewise, the few who pray for war have been sowing war; therefore, God lets them reap war.
    36. Lack of Humility. God does not answer the prayers of those who lack humility.  Thus, according to Baal apologists, Baal’s priests did not lose because Jehovah was mightier; they lost because they lacked humility. (Based on his actions, Elijah displayed much more arrogance than humility.) Therefore, Baal did not answer their prayers; consequently, he let Elijah win. Thus, of the multitude who pray for peace, none prayed with humility. Of the few who pray for war, at least one prays with humility. Therefore, we have war instead of peace.
    37. Lack of Trust. God does not answer the prayers of those who lack sufficient trust in him. Presumably, if the prayer is answered, the prayer trusts God, even if the prayer is an atheist who prays sarcastically. If it is not answered, the prayer does not trust God. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because they did not trust Baal. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that out of the multitude of people praying for peace, none of them trust that God will deliver peace. Of the few who pray for war, at least one of them has enough trust that God will deliver war.  Therefore, we have war instead of peace. (Promises kept build trust; promises broken destroy trust.)
    38. Pleasing in God’s Sight. The prayer must ask for things that God finds pleasing. Thus, according to the Baal apologists, Baal’s priests did not lose because Jehovah is mightier; they lost because prayed for something that was not pleasing to Baal: namely, victory over Elijah. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that the multitude of people praying for peace are praying for something that is not pleasing in God’s sight: peace. The few who pray for war are praying for something that is pleasing in God’s sight: war.  Therefore, we have war instead of peace.

39. Pray as Though the Prayer Has Already Been Answer.  According to this excuse, one should pray as though God has already answered the prayer. If the prayer thanks God in advance for answering the prayer, God will grant the prayer's request. That is, in order for God to give the prayer his request, the prayer must thank God for answering the prayer before he begins to pray. Thus, according to Baal apologists, Baal's priests did not lose because Jehovah is mightier; they lost because they did not thank Baal for answering their prayers before they began praying. Therefore, Baal did not answer their prayers and allowed Elijah to win. Moreover, the reason that we have war instead of peace is that of the few who pray for war at least one thanks God for giving them war before praying. Of the multitude who pray for peace, none thank God for giving them peace before praying. 
    As shown above, the traditional explanation of Elijah’s victory over Baal’s priests may not be correct if the prayer apologists are correct. Prayer apologists need to find a better excuse for unanswered prayer. They need to find an excuse that the Baal apologists cannot possibly use to explain Elijah’s victory.
    Now let us examine Jesus’ promise in Matthew 7:7. According to this verse, God’s will it to ask so that He can give. All one has to do is merely ask in order to receive that for which one asks. If this verse means what it says, conditions necessary have prayers answered, i.e., the excuses, given above are irrelevant. Taking as Jesus spoke it, this verse contradicts the above excuses offered by the prayer apologists.  If one or more of the above conditions, excuses, must be met before a prayer is answered, then Matthew 7:7 is deceptive. In essence, by providing excuses for unanswered prayer, prayer apologists do not believe what Jesus said in Matthew 7:7; they are calling him a liar.
     When the prayers for peace are considered, one must wonder why we have more war than peace. Is it because God gives more weight to the few who pray for war than He gives to the multitude who pray for peace? Is it because, as some critics claim, Jehovah is a god of war who relishes in war? Parts of the Old Testament seem to suggest such. Is it because one or more of the above excuses are correct and, therefore, God refuses to answer prayers for peace?
    As for war, a typical retort is that sin is the cause of war. True. Yet this argument also rests on making sin more powerful than prayer. Sin is more powerful than God Himself. It is so powerful that it prevents God from keeping the promise that His Son made in Matthew 7:7.
    To mask unanswered prayer, many pray for intangibles that cannot be measured, such as comfort or guidance. An exception is the prosperity preacher. His prayers or at least those of his followers can be measured. As many of these prayers are not answered, the prosperity preacher qualifies prayer and praying away as meaninglessness. The favorite excuses of the prosperity preacher for unanswered prayer are doubt and lack of faith. Thus, he does not really believe what Jesus said in Matthew 7:7. If his followers do not become wealthy, the followers doubted or lacked sufficient faith.
    In essence, by providing excuses for unanswered prayer, prayer apologists are claiming that the Bible is written as a good shyster lawyer writes contracts and laws. Grandiose promises are simply and concisely stated upfront. Then the promise is qualified as meaningless with the fine print.
    Apparently, Jesus’ promise in Matthew 7:7 does not really mean what is so plainly stated. So, what does it really mean? Is the Bible written as a shyster lawyer writes a contract or law? Are the atheists right? Is it all coincidence? Was the little boy right when he said that faith was believing in what one knew was not true? Is it all caprice?

Endnote
1. If He is the only god, then the first of the commandments (“You shall have not other gods before me:”) is meaningless.

Copyright © 2013, 2015, 2016, 2018, 2024 by Thomas Coley Allen. 

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An Analysis of Gods of Money – Part 2

An Analysis of Gods of Money – Part 2

Thomas Allen

    17. Engdahl claims that for more than a century N.M. Rothschild & Sons set the world’s daily price of gold [p. 96]. Absurd! Here Engdahl shows his ignorance of the gold standard. First, to change the “price” of gold daily would have required Parliament, Congress, and other governments of countries on the gold standard to change the change the definition of their monetary unit daily. Under the gold standard, the price of gold is not fixed. The monetary unit is defined as a specific weight of gold. For example, between 1837 and 1934, the U.S. dollar was defined as 23.22 grains of pure gold. (To say that the price of gold is fixed under the gold standard is to say that the meter fixes how far light travels in 1/299,792,458 of a second. The distance that light travels during that time fixes the meter, so the weight of gold fixes the monetary unit.)
    If N.M. Rothschild offered to pay more than a pound for 113 grains of gold, which was the value of the pound, people would have sold all their gold to N.M. Rothschild as it would be paying more than 113 grains of gold for 113 grains of gold. If it offered to pay less, no one would have sold it any gold.
    18. According to Engdahl’s description of the New York bankers and the London bankers between the world wars in Chapter 5, the Rothschilds were not as powerful as many believe.
    19. Engdahl claims that President Franklin Roosevelt made the holding or owning gold coins, gold bullion, or gold certificates illegal [p. 123]. That is not quite true. An individual could possess $100 in gold coins. If all the gold coins then in circulation were divided approximately equally among the population, each person would have had between $2 and $3 in gold coins. The U.S. government and the Federal Reserve held 93 percent of the monetary gold. Thus, the U.S. government had no need to collect coins held by the public.
    Like most writers, Engdahl refers to Roosevelt ordering the “confiscation” of the people’s gold [p. 123]. “Confiscation” is merely a euphemism for the more accurate term “stealing.”
    20. Most opponents of the Federal Reserve and the Money Trust believe that the Money Trust or at least a faction of the Money Trust planned and deliberately caused the Great Depression. Engdahl seems to believe that stupidity, greed, arrogance, lust for power, fear, hatred, etc. of the Money Trust and governments caused the Great Depression; it was not a planned event.
    21. Engdahl states that President Hoover took a laissez faire approach to the Great Depression [p. 126]. Earlier he noted that Hoover took an interventionist approach instead of a laissez faire [p. 107]. In America’s Great Depression, Murray Rothbard shows that Hoover’s approach to the Great Depression was highly interventionist. The New Deal was built on the interventionist foundation that Hoover laid.
    22. Engdahl claims that in 1933, Roosevelt began buying newly minted gold above market price. Actually, what he did was to change the definition of the dollar from 23.22 grains of gold to 1/35 of an ounce of gold through several incremental steps. He did not buy gold at an above market price; he devalued the dollar. This action was legalized by the Gold Reserve Act of 1934.
    Engdahl states that Roosevelt resumed the gold standard under the Gold Reserve Act in January 1934 [p. 129]. That is not true. As no one could redeem paper money for gold, which Engdahl acknowledges [p. 129], the gold standard could not exist. The Gold Reserve Act formerly ended the gold standard.
    23. Engdahl calls National Review as an arch-conservative magazine [p. 242]. A better and more accurate description is “neo-conservative.” As he notes, it was and continues to be a promoter of the American Empire. One of its prime objectives was to control the right and direct it away from Washington’s noninterventionist policy and Jefferson’s small highly limited governmental policy. The Old Right, the paleo-conservatives, who advocated small limited government could not be allowed to have a voice.
    Engdahl identifies James Burnham, an operative of the OSS, as a cofounder of National Review [p. 242]. He does not identify the other cofounder, William Buckley. Buckley was a member of the Council on Foreign Relations and Skull and Bones and was a CIA agent.
    Except neo-conservatives, who are as statist as socialists, most conservatives claim that they want limited government. However, most conservatives support a large all-powerful military, i.e., knowingly or unknowingly, they support the military-industrial complex. Thus, they support the warfare state, which is incompatible with limited government.
    24. Engdahl discusses President Kenney’s Executive Order 11110 [p. 250]. Unlike many opponents of the Federal Reserve who discuss this Executive Order, he seems to realize that it dealt with silver certificates. Most write as though it dealt with U.S. notes. Then he claims or at least implies that Kennedy issued $4.2 billion in U.S. notes pursuant to this Executive Order.
    This Executive Order had nothing to do with U.S. notes. U.S. notes and silver certificates are two different types of currencies. Although both were legal tender, U.S. notes were backed by nothing; silver certificates were backed by silver. U.S. notes were an inexpensive form of fiat money. Silver certificates were an expensive form.
    During the Kennedy administration $4.2 billion in U.S. notes were issued. However, they were issued pursuant to an 1878 law that required the U.S. Treasury to maintain a fix supply of $347 billion in U.S. notes.
    The Executive Order did not order the issue of silver certificates. With this Executive Order, Kennedy delegated his power to approve the issue of new silver certificates to the Secretary of the Treasury.
    Engdahl states that Kennedy was the first President since Lincoln to issue interest free money [p. 250]. That is not true. U.S. notes were issued under nearly every President from Lincoln to Nixon. Silver certificates were issued under nearly every President from Hayes to Lyndon Johnson.
    (Engdahl believes that this Executive Order may have led to Kennedy’s assassination [pp. 249-250]. The CIA, FBI, Department of Defense, military-industrial complex, mafia, Mossad, France, Vietnam, Cuba, anti-Castro Cubans,Russia, Lyndon Johnson, and the Texas oilmen among others have been accused of being behind his assassination. If the truth were known, probably several of these were behind it. The poor man did not have a chance.)
    Engdahl suggests that Kennedy’s assassination caused the demise of the silver certificate. It did not. Inflation, deprecation of the U.S. dollar, did. The bullion value of silver in a silver dollar began exceeding the monetary value of a silver dollar. Although no silver certificates were issued after Kennedy’s assassination, or even during his administration, they continued to circulate. They were never called in as were gold certificates.
    25. Engdahl claims that gold has little intrinsic value (p. 264). To the contrary, it has a great deal of intrinsic value — much more than his beloved U.S. note. The U.S. note like the Federal Reserve note has no intrinsic value beyond crude toilet paper and its Btu content.
    He claims that gold’s scarcity made gold serve as a store of value against which countries fixed their currencies [p. 264]. This is only partially true. It is scarce in the sense that it does not exist in large quantities when compared to base metals. However, this scarcity is not what makes it ideal money. A large quantity of gold exists above ground ready to be used as money compared to newly mined gold entering the market. That is, the flow of gold (newly mined gold) is small (about 2 percent) compared to the stock of gold (above ground supply). Thus, newly mined gold has little effect on the value of the existing supply.
    Unlike the U.S. note, people freely chose gold as money. No government had to force it on them. Federal Reserve notes and U.S. notes have to be forced on people to get them to function as money. Moreover, and perhaps more important, gold can actually extinguish debt; U.S. notes and Federal Reserve notes can only discharge debt by passing it to another. Ultimately, the U.S. government ends up owning all debt as U.S. notes and Federal Reserve notes are obligations of the U.S. government.
    26. Engdahl gives the impression that the U.S. government has undergone massive deregulation beginning with the Carter administration. When the EPA came into being in 1970, I worked with two or three volumes of Title 40 of the Code of Federal Regulations. I was working with more than 20 volumes 37 years later. Since 1977 when Carter became President to today, the Code of Federal Regulations has more than doubled. If the United States had undergone massive deregulation since 1977, the Code of Federal Regulations should be much small today than it was in 1977.
    27. Engdahl spends a large part of his book describing how the Rockefellers used governments to increase and protect their wealth and power. Then he claims that they want to turn to a true free market economy to increase and protect their wealth and power [p. 276]. He goes as far as to call such economy neo-feudalism [p. 277]. Feudalism, neo or classical, is hardly free market. It is more like communism. Under feudalism, the monarch owns most of the land. He leases the land to noble families for specific services. Along with the land come the workers, serfs, who are bound to the land and, with few exceptions, cannot legally leave it.
    Based on their actions from the late 1970s, when this abandonment of statism was supposed to have begun to today, the Rockefellers and their associates have not abandon their statism in favor of the free market. Moreover, they have not abandon their control of the U.S. government. If the United States had been on a free market trend since 1977, the U.S. government and its budget would be much smaller today than it was then. To the contrary, both the government and its budget have grown unabated. The U.S. government’s control of the economy has expanded. Apparently, Engdahl has no clue what a free market economy looks like. The Rockefellers do not want a free market economy or free trade, they want a managed economy and managed trade managed for their benefit. That requires the cooperation of government, which is why they expend so many resources to control it.
    Moreover, free trade does not require any international organization like the World Trade Organization to manage it. It requires no management. Managed trade is the bane of free trade. All that free trade requires is for governments to get out of the way and let their people trade. None of the trade deals that Engdahl describes throughout his book are free trade deals. Even when he claims that free trade was behind the deals, they were not free trade deals.
    28. Engdahl calls Milton Friedman’s teachings as “radical free market dogma” [p. 276]. I am not sure what Engdahl means by a “radical free market dogma,” but Friedman was an ardent opponent of free market banking and money. He supported centralized banking, the Federal Reserve System, and the banking cartel that it entailed. Also, he was a proponent of the government controlling the monetary system and opposed the gold standard.
    Engdahl gives the impression that the Federal Reserve abandoned Keynesianism for Friedmanism. It may have abandoned Keynesianism, but it never adopted Friedman’s doctrine. Friedman advocated the Federal Reserve creating the same quantity of money month after month, year after year, without regards to employment, interest rates, or anything else.
    29. Engdahl claims that when interest rates rose from 6 to 8 percent under Volcker, wealthy bondholders reaped staggering profits on their bonds [pp. 278-279]. When interest rates rise, the value of existing bonds falls. If the interest rate doubles, the value of existing bonds falls about half. People holding bonds when the Federal Reserve raised interest rates lost wealth. People who had advance knowledge that the Federal Reserve was going to raise interest rates could profit handsomely by shorting bonds. When they knew in advance that the Federal Reserve was going to start reducing rates, they could cover their shorts and begin to buy bonds. Thus, they can receive enormous profits.
    If the Rockefellers and their banker, industrial, and government comrades were really promoting the free market, they would have dismantled the Federal Reserve. They would not have used it to manipulate interest rates or to control banking.
    The crisis that Engdahl describes that governments of several foreign countries endured following Volcker’s raising interest rates [p. 286] would not have occurred if those governments had followed the example of President Jackson. If they had no debts, a change in interest rates would not have affected them.
    Engdahl does not discuss the massive destruction of capital that came with falling interest rates. A company that borrowed $10 million with bonds at 10 percent interest was at a competitive disadvantage with a company that later borrowed $10 million with bonds at 5 percent. It had to pay twice the interest. If it bought its bonds to avoid the higher interest, it would have to pay $20 million for them. (The value of bonds rises as interest rates drop. If the interest rate falls by half, the value of bonds approximately double.) Under the gold standard, interest rates vary little and are usually low. The interest rate gyrations that have occurred in recent decades would not have happened under the gold standard.
    30. Engdahl blames the inflation of the 1970s and early 1980s on a 140 percent increase in the price of oil and not on government deficits. Inflation is a monetary phenomenon. If the money supply were stagnant, a large increase in the price of oil could cause a good deal of havoc, but it would not cause a rise in general prices. As the increased oil prices caused oil-related products, assets, and services to rise, prices of other things would have to fall.
    31.Engdahl states that President Reagan filled his administration with laissez faire economists [p. 286]. If he did, they had little influence. The size of the U.S. government and its power over the economy grew during his administration.
    Moreover, he claims that “Reagan’s free market had all but destroyed an entire national economy: the USA’s” [p. 293]. He blames this destruction on the Federal Reserve raising interest rates to very high levels and spends pages describing its destructive effect. The Federal Reserve is not a creature of the free market; it is a governmentally created entity. A governmental monopoly, such as the Federal Reserve, with the power to manipulate interest rates and to control the banking cartel is not free market.
    In Chapter 16, Engdahl describes Greenspan’s management (mismanagement?) of the Federal Reserve. He claims that Greenspan was a proponent of the free market. He describes Greenspan’s creating booms and busts in various markets via manipulating interest rates while he protected banks and other financial institutions that he deemed too big to fail. In spite of his rhetoric, Greenspan was no proponent of the free market. If he were, he would not have used his office to manipulate interest rates or to bail out banks and other financial companies to keep them from bankruptcy. Moreover, he would have pushed for the abolishment of the Federal Reserve System and would have promoted a decentralized competitive banking system without any central bank. He would have advocated returning to the classical gold standard. Then interest rates would have been steady at a low level.
    In summary, in spite of its shortcomings, Engdahl’s book is worth reading. In spite of his lack of understanding the free market and the gold standard, his book does contain a good deal of useful information.

Copyright © 2014 by Thomas Coley Allen.

More articles on money.

An Analysis of Gods of Money – Part 1

An Analysis of Gods of Money – Part 1

Thomas Allen

    The following is an analysis of Gods of Money: Wall Street and the Death of the American Century by F. William Engdahl (edition.engdahl: Wiesbaden, Germany; 2009). Engdahl has written an interesting book. It is an excellent general history of the self-proclaimed ruling elite working behind the scene to control the U.S. government from Lincoln to 2009.
    He identifies many powerful and important people and organizations and their relationships. He discusses their schemes to concentrate wealth and power under their control. Although he does not seem to be a supporter of free enterprise, Engdahl shows that corruption instead of free enterprise had much more to do with the people like Morgan, Rockefeller, Harriman, and several others (about 60 families) massing their fortunes during the latter part of the nineteenth century and early twentieth century [p. 28].
    Engdahl describes the rise and fall of the House of Morgan. He describes Morgan’s involvement in the Panic of 1893 and the following depression, the establishment of the Federal Reserve System, and World War I. Next he describes the rise of the Rockefellers, which began in earnest after World War I, their replacement of Morgan as the chief money power in the United States during the 1930s, and their rise to the primary money power of the world following World War II. Whereas Morgan was involved mostly in manipulating financial markets in the United States to grow his wealth and power, the Rockefellers were mostly involved in geopolitics to grow their wealth and power. He describes the Bretton Wood agreement, which the Rockefellers were behind, and the rise of the American Century. He finishes with a description of Greenspan’s scheming and its aftermath.
    Much of what he describes is basically the Hamiltonian principle of government-business partnership advocated by Alexander Hamilton, Henry Clay, Daniel Webster, and Abraham Lincoln, and most Presidents after 1860. Under this system, government works with (or for) big business, the money interest (the Money Trust), and multinational corporations to protect them and to advance their causes. The Hamiltonian philosophy calls for the concentration of economic and political power. (During the 1930s, this type of political economy was call fascism.)
    Engdahl has a weird understanding of the free market. Most of what he calls free market is governmental intervention or intervention by the Federal Reserve, a U.S. government created monopoly, in the economy.
    Unfortunately, his book contains some omissions, errors, and incorrect conclusions. Some of them are discussed below. Many of his omissions result from the scope of his book and go beyond its objective. However, other omissions can explain how bankers were able to do what they did. Moreover, Engdahl believes the Lincoln myths, which is the source of many of his errors and incorrect conclusions.
    1. Except a brief quotation from one of Lord Palmerston’s speeches, Engdahl fails to mention the four most powerful men in the world between Lincoln’s election, about when his story begins with a flashback to the Jackson administration and World War I. They were Lord Palmerston (Henry John Temple, 3rd Viscount of Palmerston), sometime after 1848 to 1865, Mazzini, 1865-1872; Albert Pike, 1872-1891; Adriano Lemmi, 1893-1906. These men were the head of the important and powerful secret societies, such as Freemasonry, which Engdahl fails to mention, of the Western world. As such, they were the power behind the powers behind the governments of the Western world.
    2. Engdahl makes the same mistake that most opponents of the Federal Reserve make [p. 9-12]. He emphasizes its private ownership to the point of implying that if the U.S. government own it, most of the country’s financial and economic problems would vanish. If true, Great Britain and other countries whose governments own and control their central banks would be economic paradises compared with the United States. The problem is central banking — not the ownership structure of the central bank.[1]
    3. Engdahl claims that the Constitution gives the U.S. government control of money and credit [p. 14-15]. The founding fathers left the control of the monetary system directly in the hands of the people. The Constitution granted only two monetary powers to the U.S. government. One was to coin money, i.e., to stamp all the gold and silver presented to the mint into coins. These coins were the property of the people who held them and not the U.S. government. The other was to define the monetary unit as so many grains of silver and so many grains of gold. The dollar used in the Constitution was understood to mean the weight of silver in the Spanish milled dollar. The Constitution grants the U.S. government no power to create and issue currency.[2] The only power that it has related to credit is to borrow money. Engdahl seems to trust the U.S. government to issue the country’s money — the same government that the Money Trust, the term that he usually used for the money interest, has controlled since 1860.
    Contrary to what governmental issued fiat money adherents like Engdahl claim, Lincoln was not an admirer of governmentally issued fiat money. However, he was a supporter of centralized banking[3] and the National Banking Act. The National Banking Act gave the U.S. government control of the largest commercial banks. Under the law, if a bank wanted to issue banknotes, it had to buy U.S. government bonds to back its notes. At that time, the National Banking Act was about as far as the public would allow the U.S. government go in establishing a central bank.
    Engdahl does describe the National Banking Act and how it gave an advantage to the larger, more powerful banks, especially those in New York City [pp. 42ff]. He errs when he writes that national banks were required to maintain reserves in gold. Between 1863 and 1879, most banks used legal-tender U.S. notes as their reserves. Only after 1878 when U.S. notes became redeemable in gold did banks begin increasingly to hold gold as reserves. Moreover, the National Banking Act places many restrictions on banks, such as no branches and no dealing in bills of exchange for exports or imports (this restriction greatly benefitted the London bankers).
    Also, Engdahl believes that the Constitution gives Congress the power to print and issue fiat paper money. It does not. The first draft of the Constitution did contain a clause that gave Congress this power. However, the drafters of the Constitution removed that clause. When they removed that clause, they were convinced that they had denied Congress the power to issue fiat paper money.[4]
    4. Engdahl presents President Lincoln as an opponent of the Money Trust [pp. 13-15]. Lincoln’s rhetoric may make him appear to be an opponent of the Money Trust, but he was not. He was the father of America’s government-business partnership. Lincoln and most of the administrations that followed him promoted the warfare state, corporate welfare, ever expanding centralization of political and economic power — all goals of the big banks and Money Trust. (As President Nixon so aptly admonished his opponents, “Watch what I do and do not listen to what I say,” or word to that effect. He tickled the ears of his supporters by telling them what they wanted to hear. His opponents got the action as he implemented their policies.)
    When the government gains control of creating and issuing all currency and credit, either directly as Lincoln’s monetary admires want or indirectly through a privately owned center bank, which always exists at the pleasure of the government, the government gains complete control of the people. That is why the founding fathers granted the U.S. government no such power.
    Between 1840 and 1865, Lincoln was a front man for the equivalent of Wall Street at that time. He favored rechartering the National Bank;[5] thus, he wanted a central bank.
    5. Engdahl believes that the Rothschilds were behind secession and Lincoln’s assassination [pp. 15-18].  To the extent that the Rothschilds were involved in encouraging Southern States to secede, their objective was not to establish a confederation of Southern States. It was to destroy the States and consolidate an all-powerful government in Washington, which would be much easier for them to control. If they had really wanted to have a confederation of Southern States, Great Britain, France, and most other European countries would have sent troops to fight for the South. The Rothschilds had an enormous amount of influence over these governments.
    6. Contrary to Engdahl’s claim [p. 14], Lincoln understood nothing about the Constitution. If he did, he would have let the Southern States go in peace as they had the constitutional right to do. He could not let the Southern States go because they provided most of the revenue while Lincoln’s Wall Street friends received most of the expenditures.
    7. Engdahl claims that Lincoln’s policies were not continued after his death and that if his Reconstruction policies had continued, the London banks could not have raised the world price of grain [p. 16]. For the most part Lincoln’s policies were continued after the War and are still being implemented today. That Lincoln would have treated the South any better than it was treated during Reconstruction is speculation. Like most Presidents, Lincoln was notorious for saying one thing and doing the opposite. His lust for power would have caused him to try to out do the Radical Republicans so that he, instead of them, would control the Republican party. President Johnson was almost removed from office for standing up to them.
    As for the price of grain, it did trend upward after the War until the Panic of 1873. Then it trended downward for several decades. The South was not noted as a grain growing region. Tobacco and cotton were the major Southern crops. Grains came mostly from the Midwest and Prairie States. The price of cotton and most other agricultural products followed the same trend as grain. However, much influence the London banks had on them is difficult to prove. If they suppressed their production to profit from high prices for a few years after the War, why did they not continue to bribe and extort governments to implement policies to keep prices up during the late 1870s, 1880s, and 1890s?
    If Engdahl is correct about the Rothschilds and other London bankers using Reconstruction to suppress the South’s economy, then the Radical Republicans would have been doing the bidding of the London bankers. The Radical Republicans were the ones who adopted and implemented the Reconstruction laws.
    8. Engdahl seems to oppose the gold standard and believes that it is easily manipulated [pp. 16-17]. Fiat paper money, such as the greenback, is much easier to manipulate than is the true gold standard. Consequently, the Money Trust has fought to replace the gold standard with paper fiat money and its electronic equivalent. Under the true gold standard, the monetary system can operate without banks or government. Although he shows little understanding of the classical gold standard, he does realize that it comes as close as possible to separate money from the state and that it is an automatically correcting system [p. 99].
    9. Engdahl correctly notes that Eastern banks wanted greenbacks to be redeemed in gold [p. 17]. They were not the only ones who wanted gold redemption. Others included the Calvinist and Reform clergy, many Baptist and Methodist ministers, academic classical economists, Liberal Republicans and Mugwumps, merchants who favored free trade and an end to governmental extortion via protective tariffs, and merchants in the export-import business except the speculators. The mercantilists, industrialists, manufacturers, many businessmen, speculators in the export-import business, promoters, the Careyites, and the greenbackers (intellectuals and politicians with their working class and rural followers) typically opposed redemption. Even some bankers opposed redemption. Engdahl does mention many of these groups. Moreover, in 1869 Congress promised redemption.
    Engdahl seems to be an admirer of Henry Carey [p. 17], a leading opponent of the gold standard and proponent of fiat paper money like the greenback. He was essentially a nineteenth century Keynesian.
    10. In Chapter 2, Engdahl describes how J.P. Morgan and others profited from redeeming U.S. Treasury securities for gold and drawing the U.S. Treasury’s gold reserves used to back U.S. notes dangerously low [pp. 22-27]. What he does not show is that if the U.S. government had not undertaken issuing fiat money in the form of U.S. notes (greenbacks) and Treasury notes of 1890, Morgan’s scheme would not have worked. (To drive up the price of silver, Congress ordered the Secretary of the Treasury to buy silver at the market price with Treasury notes, called Treasury notes of 1890. This silver served as a reserve for the Treasury notes. However, the Secretary of the Treasury had the option of redeeming these notes in silver or gold.) The U.S. Treasury should not have had any paper money to redeem other than gold certificates, which are basically warehouse receipts for gold and fully backed by gold that can be redeemed for gold.
    He suggests that the Depression of 1893-1899 was the result of Morgan and his associates manipulating financial markets. No mention is made of the malinvestment caused by the inflationary Bland-Allison Act and the Sherman Act. No mention is made of the Tariff Act of 1890, commonly called the McKinley Tariff, which raised tariffs by almost 50 percent.
    11. In Chapter 3, Engdahl discusses the Panic of 1907 and Rockefeller’s and especially Morgan’s involvement in orchestrating it [pp.34-38]. What is omitted is that if banks had been practicing sound banking, they would have survived a bank run without the threat of bankruptcy. The major sin of banking is borrowing short and lending long — a formula for disaster once confidence is lost. Another sin is creating banknotes and demand deposits to buy assets other than gold and real bills of exchange.
    12. Engdahl claims that the U.S. government had the constitutional power to regulate credit and be the lender of last resort [p. 38]. It does not although Lincoln and other Hamiltonian wanted the U.S. government to have that role. They wanted to let their comrades in banking profit handsomely from high risk speculation while having the U.S. government bail them out if the speculation went wrong.
    Engdahl mentions the Secretary of the Treasury seeking authority to have a slush fund to manipulate bank lending and to change reserve requirements. He also wanted the power to contract national banknotes [pp. 38-39]. With a minor change in the law or procrastination on his part, the Secretary of the Treasury could have achieved much of his goal by manipulating the supply of U.S. notes. As recent history has shown, having a lender of last resort for banks makes the economy more volatile rather than smoothing it.
    Engdahl comments on the U.S. government hoard of gold in 1895 and notes it was larger than any central bank’s hoard [p. 39]. What is left unsaid is that this gold was held as backing for gold certificates and for partial backing of U.S. notes and to a lesser extent Treasury notes of 1890.
    Moreover, Engdahl seems to believe that when the government manages the gold standard, the money is stronger than when banks manage it [p. 39]. The gold standard is the same regardless who manages it. All the gold presented to the mint, which can be a private mint, is coined, and the coins are the property of the person presenting the gold. Furthermore, no restrictions are placed on the melting of coins and using the metal for nonmonetary purposes. No restrictions are placed on the importing or exporting of gold.
    13. Throughout his book, Engdahl describes the lackeys, cronies, toadies, and agents of Morgan, the Rockefellers, and other bankers capturing key posts in the U.S. government, chiefly the Secretary of the Treasury and often the President, where they faithfully serve the interest of the Money Trust. Does he really believe that these bankers would cease putting their people in these key positions if the Federal Reserve were abolished and the U.S. government issued paper fiat money directly? To the contrary, they would have even more incentive to control these positions. As the U.S. government acquires more of the power that Engdahl wants it to have, the more the bankers seek to control it, and the more corrupt it becomes.
    Engdahl notes that the big international banks seek to gain control of governments and their countries’ money primarily through governmental debt [p. 42]. If true, if the U.S. government had followed the example of President Jackson, the bankers would not have gained the power that they have in the United States. They would have no U.S. debt securities to buy.
    14. Engdahl remarks that the Federal Reserve Act gave private banks total control over note issue, over money [p. 53]. This statement may be true today, but it was not before 1933. Between the adoption of the Federal Reserve Act in 1913 until the end of the gold standard in 1933, banknotes, including Federal Reserve notes, were not legal tender. No one was required to accept them in payment of debt. The only legal tender moneys then were gold, U.S. notes, which was redeemable in gold, and silver certificates.
    Moreover, throughout the history of the United States only banks chartered by the States or the U.S. government could issue banknotes. In that sense, private banks have always had a monopolistic control over note issue. The Federal Reserve Act merely centralized control over note issue. As a result, banks expanded and contracted bank credit money in concert. Thus, inflating and speculating banks no longer had to worry about prudent bankers demanding gold for their notes; after the end of the gold standard in 1933, they could no longer demand gold.
    15. In Chapter 4, where Engdahl describes the events and corruption lending to the United States’ entry into World War I, he fails to mention the importance of the Zionist connection.[6] He also fails to mention that at this time the Federal Reserve Act prohibited the Federal Reserve buying and selling U.S. government securities. During the war, it bought U.S. government securities in violation of the law. As it was doing the U.S. government a service and a favor by buying its securities, those who were charged with enforcing the law refused to do so. Later, Congress legalized the Federal Reserve’s buying and selling U.S. government securities.
    16. When Engdahl discusses the gold standard following World War I, he often gives the impression that it was the gold standard that existed before World War I [pp. 84ff]. (He does note that the classical gold standard separated money from the state and was self-correcting [p. 99].) The impression that he gives is that the only important difference between the two was that the center of financing world trade was moving from London to New York. The two gold standards were entirely different. Before World War I, the United States, Great Britain, France, and most other important countries of the world were on the classical gold standard albeit an adulterated form. Following the war, the United States remained on the classical gold standard, but without the accompanying real bills doctrine. To control trade with Germany, the Allies abandoned the real bills doctrine. Under the real bills doctrine, manufacturers could finance their productions and pay employees and suppliers before their goods were sold without having to borrow. When the real bills doctrine was abandoned, they had to borrow from banks to finance their production. Without the real bills doctrine, gold could not withstand the strain of world trade under the highly bastardized, politically contrived gold-exchange standard instituted after World War I.
    Following World War I, the gold-exchange standard replaced the classical gold standard. Under the classical gold standard, gold was the world reserve currency. Under the gold-exchange standard, the British pound and U.S. dollar functioned as the world reserve currency. Banks and governments found manipulating money under the gold-exchange standard much easier than manipulating it under the classical gold standard. Even under the gold-exchange, gold prevented unrestrained money manipulation. That is why it was abandoned a few years after implementation for a pure fiat monetary system.
    Engdahl does discuss the gold-exchanged standard [pp. 88ff]. However, his failure to explain adequately the difference between the classical gold standard that existed before World War I and the gold-exchange standard that existed after World War I can confuse readers who do not understand the difference.
    Following World War II, the Allies again tried to institute another gold-exchange standard, which was even more bastardized than the one adopted after World War I. It was called the Bretton Woods agreement. The Bretton Woods gold-exchange standard differed in some important aspects from the gold-exchange standard adapted after World War I. Under the latter, the United States remained on the gold-coin standard that existed before the War while Great Britain replaced the gold-coin standard with the gold-bullion standard. Thus, in both countries, the domestic users of the currency could exchange their currency for gold. Also, under the latter, countries defined their monetary unit in gold. Under Bretton Woods, the U.S. dollar was backed by gold, but domestic users of the dollar could not exchange dollars for gold; only foreign central banks and governments could redeem dollars for gold. Countries defined their monetary unit in the U.S. dollar instead of gold [pp. 214, 217-218].
    Under the Bretton Woods gold-exchange standard, the U.S. dollar, which was the only currency redeemable in gold, became the world reserve currency. In reality, the Bretton Woods monetary system was more a dollar standard than a gold standard. It lasted longer than the gold-exchange standard adopted after World War I. It too was abandoned for a pure fiat monetary system.

Endnotes
 1.  Thomas Coley Allen, Reconstruction of America’s Monetary and Banking System: A Return to Constitutional Money (Franklinton, North Carolina: TC Allen Company, 2009), pp. 204-218.

2. Ibid., pp. 72-82.

3.  Thomas J. DiLorenzo, Lincoln Unmasked (New York: Three Rivers Press, 2006), p. 128.

4.  Allen, pp. 72-82.

5.  DiLorenzo, p. 128.

6.  Thomas Coley Allen, Zionism: A Brief History, 1800-1949 (Franklinton, North Carolina: TC Allen Company, 2007), pp. 38-40.

Copyright © 2014 by Thomas Coley Allen. 

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