Video 2 to the OWS series –
A currency backed by gold and silver is what is called for in the constitution and that constitution was what the founders fought for. The founders rose up against the greatest military force in the world at the time, risked their lives and the lives of everyone who supported their crazy dream of having a government and land based in the principal of freedom. That alone should cause anyone who apposes the ideals of the founders to be branded un-American. Have you risked the same to challenge the founder’s declaration and constitution?
Let’s say we are going to start our own government right now with our own monetary system. First we elect the government then we take a look at what the population is and decide how much money to print up on our special paper that no one else has access to besides our new government. Our government will eventually hand out all the money to the population and the free market allows people to quickly start trading and determining what is fair value for everything. In this example we don’t trade with outside governments since the people produce all that is needed for our population.
In a very rare circumstance we would need to print up more money to keep up with the population growth or we might get deflation where the money doesn’t keep up with production and causes things to lose value. For all the products that people use to totally and completely be over-produced all at the same time would be very difficult for a decentralized free market to do. More realistically one or two products could be over-produced and lose value for a time and the producer of that product would have to diversify by producing something else or shut down that business because of market saturation. Similarly, the business who produced PVC to make vinyl records needed to find a way to adjust to the new CD market in the 1980s.
But for this example we are going to pretend all products ever produced all at once became over-produced and our government needs to print more money to keep up. The elected representatives with the special paper just start printing money. Wait a minute. How do we know how much money to print? Is it based on apples or some other tangible asset? Is it based on the current population? If we print too much money we will reverse the problem and have cheap money and expensive goods. You see the balancing act the government is getting into. Good thing the government answers to the people because if these idiots do the wrong thing we’ll just vote them out and get people in who understand how to manage the money supply.
Based on this hypothetical you can see that money might need to fluctuate from time to time and that is a big maybe. It isn’t that big of a problem unless an exaggerated amount of goods or money is pumped into the system to distort the value of things. You can also see that even if people in government make mistakes those mistakes will be corrected by us electing other people to office to help get bad monetary policy under control.
In our little example you can probably see that if some other entity other than our government had control over the printing of our money the people wouldn’t have control of their monetary system. They wouldn’t be able to hold the government accountable for the imbalances in goods and money. It doesn’t make any sense but let’s pretend the the government outsourced the printing of money to a printing company formed by a small group among the people and the way this printing company made it’s money would be to charge interest on every dollar printed for the government. As I stated above, this wouldn’t make any sense. Not only that but the printing company doesn’t have some special insight into the population without getting their information from the government. Who knows the population better than the government who were elected by the people? The government has the relationship with all the people in the land by way of elections. How can a printing company know how much money to supply the population better than the government?
The answer is obvious; no printing company can know what is best for the population because they don’t have that relationship. Further to that the people have no direct influence over the printing company because the printing company is a private company and by definition the public has no right to meddle with the business of a private company. The obvious point against outsourcing the printing of money is obvious:
What will stop the printing company if the money they print is directly proportional to the profit they earn?
Expand that out to the banking sector in general. If they make money from creating debt why wouldn’t they create as much debt as possible by making it as easy as possible to issue credit cards and loans?
Fast forward to today where it is now profitable to flood the market with opportunities to go into debt so the debt would become so great the occasional bankruptcy is negligible. The banks adopted the Costco and Walmart business model for dealing debt. You don’t make dollars from selling products, you make dollars from the pennies on the volume of product sold.
The US went from a nation of factories and mills in the early part of the 20th century to a nation that turned the process to buy things into the factory. So what really happened is instead of products being produced here, people with greater purchasing power started being produced in the US. The people are the products that the US government is selling to other countries so that those other countries can make products and goods in their factories and mills.
This is a crucial point: The US doesn’t produce anything and what is produced is traded at a huge deficit. Meaning, they sell us much more than we sell them. We the people are used to go into debt to keep other countries producing.