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Why the United States Treasury Should Control Our Money Supply
publication date: Aug 2, 2011
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author/source: Brad Hamill
The headline for
this article most likely leaves many people gasping. After all, how in the
world could we trust our Federal government to responsibly issue our
money? Isn’t that like putting the fox in charge of the hen house?
I wrote a few
days ago about how the US Congress would be passing a debt ceiling increase.
There was never any doubt whatsoever. The fact was also alluded to that it
really didn’t matter what Congress did. That’s very hard to understand for
those thinking that spending cuts and a balanced budget would be the antidote to
what ails our nation.
How can I say
this? It makes absolute perfect sense if one steps back from
preconceived notions that were pounded into heads via the communication
mechanisms of the current worldview.
First off, people
think of “awful fiat paper” when we talk of “money”. They get angry about
an incorrect notion that “government is just printing more money and we will
soon have hyperinflation”.
Let’s get a
little more exact with our terms. “Money” is the general unit of buying
and selling that can have many different forms. It can exist as electronic blips
on computers, as printed words on a promissory note, or as physical units of
“currency”. Currency is a very small subset of money. It simply has a
convenience factor where a buyer and seller can transact with “cash” instead of
“credit”.
The important
thing to realize about money in our economy, and the economies of the developed
world, is that all “money” is simply a claim on the promise of future
labor.
Let me explain
this in clearer terms. We all create money, not just government or the Federal
Reserve. Those of us seeking to be responsible by paying off our credit card
every month are guilty of creating money. Every time we put something on credit
we are promising our future labor (or claims we have on someone else’s future
labor) to the seller. This will increase the nation’s money supply by the amount
of the transaction until payment is made at the end of the billing cycle.
The nation’s
overall money supply is the sum total of all promises of future labor. Those
holding claims on that labor own the money.
When someone gets
foreclosed on, or files for bankruptcy, or simply walks away from a previously
agreed upon loan then default takes place. There are promises of future labor
that will cease to exist. They will be gone and will never be fulfilled. This
causes a decrease in the overall money supply.
Do you see the
danger in all of this? The international banks have shut off a majority of debt
creation over the past three years – on purpose in my view, which is based upon
many historical examples. This means that new promises of future labor are hard
to come by, keeping our money supply shrinking from all of the debt
defaults.
This is where the
US government has stepped in with an attempt to replace the defaulting debt with
promises of new future labor. They do this through massive amounts of deficit
spending. They’re trying to keep this going until the international banks start
lending again, in an effort to keep the overall economy from collapsing into a
deflationary depression much worse than the Great Depression.
There are
problems with this idea. First, history shows that the banks usually shut off
lending for an average of ten years when they seek an economic reset. We’re only
three years into things, so we most likely have another seven to go. Second, US
government deficit spending is promising more and more of the future labor of
our current and future generations. They will have very hard times economically
if they are not well prepared.
Congress had two
options. Raising the debt ceiling kicks the can down the road for another
short while. Not raising the debt ceiling would bring about an instantly
recognizable depression. It seems like they had no real option towards fixing
anything – but they actually did.
The economic
problem we face is that our money supply is completely and solely based upon
debt. What if this wasn’t the case? What if we could go back to the point in
history where our money supply was based on completed labor? Let
me explain.
Let’s assume that
the US Treasury printed up one million dollars worth of money in the form of
currency. What would be the worth of that money in a completed labor
based economy? The answer is: zero. Why? It’s because it wouldn’t yet be
circulated into the economy. Now let’s assume that a company builds some widgets
for the government and charges $500,000. The US government would pay the money
upon completion of labor at various points in the project. Has any debt
been created? No. Is there any promise of future labor that exists? No. Is
there any future encumbrance upon anyone after the transaction has been
completed? No. Do the individuals holding the money have something of real
worth? Yes.
Can you see the
difference? Our current form of economy is built upon the US government printing
up new debt notes in the form of Treasury securities. These securities are
simply promises of the future labor of the citizenry. These are sold at auction
and paid for with more claims on the future labor of others. Every transaction
is based on debt. There are always future encumbrances upon every single
financial transaction. The owners of the money become slave owners. The
borrowers of the money are slaves. The international banks hold a great majority
of the securities.
Is there a way to
change our economy to one based on completed labor? Is there a way to regain
true liberty and freedom away from bondage as slaves?
Yes, I believe
there is – but the path is one that requires diligence, perseverance, and a
total reliance on the Word of God.
It’s easy to
operate in the current “Wimpy” economy, where we will gladly pay tomorrow for
the goods and services that we enjoy today. Instead, we must learn the blessing
of completed labor. If we desire a national money supply then it needs to be
issued by the US Treasury. Only then can we enjoy the economic pattern so
clearly laid out in God’s Word.
Please send
comments, or requests to be added/removed to brad@newfamilyeconomics.com.
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