Legal Counterfeit Money
September 2, 2013
This is not the work of a huge nefarious counterfeiting ring. Nor is it a plot by some foreign government intent upon destabilizing the U.S. government (although that sort of thing did happen during World War II). No, The United States of America started counterfeiting its own money in 1913. It showed a little more restraint with its coins; it didn’t start counterfeiting them until 1965.
How did we come to this sorry state of affairs? Strangely enough, it all started with the Romans…
Like the politicians of today, the Roman Senators had huge egos. They wanted to build monuments to themselves, and they needed to keep the masses happy. So they constructed huge public works projects, they provided public entertainment (lions eating Christians), and they even had a welfare system.
The problem was that all this cost money – more money than they had. Like all good politicians, their first thought was to raise taxes, and raise taxes they did – right up to the point where if they raised them any further there would have been armed rebellion.
Then one politician (the Roman equivalent of a Liberal, I am sure) came up with a brilliant idea: “Let’s debase our money!”
Now, let’s stop right here and clear up a few things. First, the reason the Romans didn’t just print more money (like our Federal Reserve System does today) is that paper money hadn’t yet been invented. Money was “real” back then – primarily silver or gold coins, money that was not so easy to counterfeit as the paper IOU’s of today.
Secondly, we incorrectly use the word “debasement” today in relation to currency, or paper money. When we say that a government “debases” its currency, we mean that it has issued more dollars (or Euros or pounds) backed by nothing, making all the other currency in circulation worth less. But the word “debase” was originally used for coins, when a government added “base” (worthless) metals to the precious metals in its coins, thus “debasing” them.
Coins meant for circulation were seldom made of pure gold or silver. For instance, pure gold is so soft that if it were handled daily, as coins used for money would be, it would wear down, bend and be easily nicked. So an alloy, usually containing a small percentage of copper, was typically used for gold and silver coins intended for circulation.
Now, back to Rome. As I said, thousands of years ago their politicians had the same problems ours do today, but they had to be more creative with their counterfeiting. They decided to “clip” their coins. This meant that they shaved a small amount of silver from the edge of the coins as they circulated through the Roman Treasury. Then they used the shavings to make additional coins.
This worked for a while until the people realized that the coins no longer contained the same amount of precious metal. Then they stopped accepting them, or they required more of them to purchase the same item. For instance, if the price of a loaf of bread was two silver denari, the baker might charge two unclipped coins or three clipped coins.
Take a moment and look at your loose change for a clue as to how the Romans solved this problem. You will notice that your “base” metal coins – the copper pennies, and the five cent pieces made of nickel – have smooth edges. But your dimes, quarters, half dollars and dollar coins, which used to be made of silver (that’s right – I said “used to be”) have ridges on the edges, called “reeding.”
The Roman people starting cutting notches in the edges of their coins so that it would be obvious if they had been clipped. This practice was the inspiration for the eventual invention of the process of reeding that is used by most nations for their precious metal coins (and by many countries to fool people into thinking their coins are made of precious metals when they no longer are).
In the case of Rome, once the people realized their coins were being clipped, the government discontinued that particular scam. But they still need to inflate the money so they could spend more and more and more. So the government criminals figured out a new way to rip off the citizens they were supposed to serve: They started debasing the coinage in earnest.
In 54 A.D. the main coin of the Roman Empire, the silver denarius, was 940 fine, meaning that it was 94% silver. The other 6% was base metal used to create a harder alloy. Since the people had caught them in their clipping scam, the government started melting down the silver coins as they circulated through the treasury and increasing the percentage of base metals so that they could produce more and more counterfeit coins.
By 218 A.D. the denarius had been reduced from 94% to only 43% silver. By 268 A.D. it contained less than 1%. There are many theories relating to the reason for the fall of the Roman Empire. But one primary reason seems obvious. The Roman soldiers grew tired of fighting and getting paid with worthless money that the local market wouldn’t accept. They began to desert and go home to farm so that their children wouldn’t starve. It’s hard to defend a far-flung empire without soldiers.
I will not go into detail concerning all the governments that have risen and fallen over the last twenty centuries. It is sufficient to say that politicians of every culture and creed recognize a good scam when they see one. Almost every nation since Rome has counterfeited their own money, while piously arresting private players who attempt to horn in on the government’s game. Individuals who print a few thousand worthless dollars in their basements are called criminals. Individuals who print trillions of worthless dollars are called politicians.
Today, The Federal Reserve System of the United States and the Central Banks of most of the world’s developed nations have refined the Roman scam to the point where it’s like comparing a horse-drawn chariot to the space shuttle. Listen to a smirking Ben Bernanke, current Chairman of the U.S. Federal Reserve System, describe how the U.S. will pay off its horrendous National Debt:
"The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost." By saying this he was telling the American people that their money was worthless! In a speech in November, 2002, he also said that it was in the interest of the U.S. Government to create inflation, because it, in effect, reduced the National Debt.
I will not tell the story of the Federal Reserve here. I have done that in a previous article, “The Non-Federal Fed,” which is in the Archives of www.ConservativeTruth.org (see LINK below). For our purposes today, it is sufficient to say that 1913, the year the Federal Reserve System (the Central Bank of the United States) was established, was also the year that the U.S. started to counterfeit its own money.
The real money of the United States, as established by the Constitution, was gold and silver coins. By this time we had also printed paper currency that was “demand” money. For instance, a $20 Gold Certificates stated, “This certifies that there have been deposited in the Treasury of the United States of America $20 in Gold Coin Payable to the Bearer of Demand.” So the paper “demand” money was as “good as gold.”
For twenty years the real money and the fake Federal Reserve money circulated side by side. I believe that this was by design so that the unsuspecting public would get used to the idea of the Fed “funny money” and come to believe it was the same as real money. After all, it was designed to look very much like real money. But there was a crucial difference. It was backed by nothing.
Remember that the gold and silver certificates we once had were backed, dollar-for-dollar, by precious metals. Not one gold or silver certificate could be issued unless it was backed by gold or silver. And that is why the politicians hated them so much. They lusted for money that they could print at will, money with no accountability. Money like that could be printed to pay for as many “pork” projects as they wished to buy - and as many votes as they wanted so that they could get reelected forever – was every politician’s dream. And the Federal Reserve System was their dream come true.
Please don’t take my word for this. I have known for decades that Federal Reserve “notes” are not real money and are backed by nothing. But I didn’t really expect the government to admit that. So I was surprised to find these words in the Question and Answer section on the U.S. Treasury website (see the LINK below to verify it for yourself):
• QUESTION- “What are Federal Reserve notes and how are they different from United States notes?”
• ANSWER- “Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy.”
So instead of being able to redeem your $20 Gold Certificate for $20 a one ounce piece of solid Gold, you get to wave your $20 Fed “note” (basically an IOU) in the air and claim $20 worth of all the goods and services in the U.S. economy. Good luck with that.
I believe the timing of the creation of the Federal Reserve System twenty years before FDR’s treasonous and unconstitutional Executive Order 6102 in 1933 (which took the U.S. off the Gold Standard) was deliberate and planned. At the same time as he removed the connection between the dollar and gold, FDR made it a felony for U.S. citizens to own Gold coins or Gold Certificates. If they didn’t turn these in to the U.S. government they could be fined $10,000, go to prison for 10 years, or both. This was the first time in the history of the world that a ruler had made it a crime for citizens to own their own money. And he did it by Executive Order (sound familiar?) without the consent of Congress.
The next step in the debasement of our money was the attack on our coins. Starting in 1965 the silver content of our coins was cut in half. Four years later, there was NO silver in our formerly silver coins.
But the U.S. Mint wants to give the appearance of normalcy, and they do that in two ways. The coins are actually cheap copper, but they are clad with a nickel-zinc coating to make them look silver. And, just as most nations have adopted the Roman custom of reeding the edges of coins to show that they are made of precious metal, so did the U.S. Only now that they are made of junk metal the U.S. government still reeds them. I wonder why?
Today you won’t find any pre-1965 U.S. silver coins in circulation. If you want some of them as an inflation hedge, you will have to pay a premium for them at a local coin store. (See my linked article below titled “The 10-10-10 Financial Survival Plan” for a concise plan for using gold and silver to deal with inflation and potential hyper-inflation.)
Finally, let me suggest that you study the work of Congressman Ron Paul, perhaps the only person in Congress who truly understands money, the economy and the Federal Reserve. I have written a short article about him (see LINK below) which has links to his websites. I particularly recommend that you read his book, “End the Fed.”
To the people (mostly Liberals, but also a few misguided Conservatives) who say that we can’t get along without the Fed, I have two retorts on the matter. First, we got along just fine without it for 60% of our nation’s existence. Second, the dollar has lost 96% of its purchasing power since the Fed was established. While the Fed has been bad for the citizens of the United States, it has been very good for the private bankers and politicians who own and control it.
Most of all, I would like to respectfully suggest that Americans get their heads out of the sand and start learning what is going on in our country. Most Americans are content if they have a job and can pay the rent. They don’t realize that, due to the manipulation of our money, we are handing our children a massive debt that they will never be able to pay.
There is only one way this manipulation of our money can end – the way it ended for France in the 1790’s, for Germany in the 1920’s, for Argentina twenty years ago, and for Zimbabwe four years ago: with massive, crippling hyper-inflation.
France ended up sentencing its citizens to death for the “crime” of using gold instead of the worthless national paper money. Germany’s Deutschemark, which traded at 4 Marks to one U.S. dollar in 1919, was at 4.2 TRILLION Marks to one dollar in 1923. To put this into some kind of perspective, German consumer prices doubled every 28 hours during a 20 month period in 1922 and 1923.
The U.S. had to bail out Argentina from hyper inflation that reached 23,000% in one month in 1989. Argentine employers paid their employees not twice a month, but twice a DAY because the peso was losing value so rapidly. In exchange for the U.S. bailout of Argentina we forced them to implement austerity measures that included backing all paper money with gold, reducing taxes and down-sizing government. These measures worked. But today our government is doing exactly the opposite.
Zimbabwe, whose dollar was valued at almost the same as the U.S. dollar in 1990, has experienced inflation that is impossible to calculate – estimated in the hundreds of millions of percent. Just before their currency completely crashed, a single egg cost $35 BILLION dollars.
Many politicians say that could never happen here. “This is America. We are special.” How arrogant! Fully 10% of all modern nations have experienced hyper-inflation. And none of them had the level of debt of the United States. In fact, just 80 years ago when we were still on the Gold Standard, the U.S. had essentially no inflation and negligible debt. Today it has more debt than any nation that has ever existed, and a dollar that is worth 4 cents compared to the U.S. dollar of 1933.
The Bible tells us in Proverbs 13:22 that good people leave an inheritance for their children and grandchildren. Do you want to leave lands and gold? Or do you want to leave crushing debt and the bonds of slavery? It’s not too late, but we must act quickly.
NOTE: If you would like to attend free Webinars on either financial topics such as debt reduction, financial planning and investing from a Biblical viewpoint; or Webinars on how to use Gold as a hedge against inflation, write to Webinars@Bellsouth.netfor times and links.
Articles and Videos on Biblical Concepts of Finance and Investing
“The Non-Federal Fed”
From the U.S. Treasury Website
“The 10-10-10 Financial Survival Plan”
Who is Ron Paul?
Dr. Tom is a pastor, teacher, author, conference speaker and marketplace minister. He has been ordained for over 40 years, and has pastored in seven churches since then. Today he pastors pastors as he oversees ordained and licensed ministers in Southeast Florida for his ministerial fellowship. He speaks internationally concerning Biblical finance in churches, conferences, colleges and financial events. His passion is teaching, as you can see from this website, his business site (www.GoldenArtTreasures.com) and his patriotic site (www.ConservativeTruth.org).
Visit Dr. Tom Barrett's website at www.DrTom.TV
See more from Dr. Tom Barrett at www.ConservativeTruth.org