How an Honest Money System Can Help America

Many who write about the precious metals field have put out their 2009 forecasts and predictions for the New Year. This writer is no exception, but it seemed to me that it might be nice to look at my mission statement and determine if I could compose a simple story that might engage the reader to think about the current dire state of affairs in the economy and how an honest “money” system might help on an individual basis.

My mission statement is, “To teach and empower people to understand the benefits of an Honest Monetary System.” Although the words gold and/or silver are not even mentioned in my mission statement, they are both very important components in an honest money system—they instill trust. And the lack of trust is the core issue of today’s economic problems. Our banking institutions and well established investment firms do not trust each other, and the system is grinding down. This has even affected the “Big Three” automakers, who are experiencing problems in this economy... but it wasn’t always that way.

Looking back in time I found some very interesting facts regarding Henry Ford and the typical North American autoworker. On January 5, 1914, Ford announced that Ford Motor Company employees would receive a minimum wage of $5 a day, more than double the average pay available at that time. This date is just within days of the Federal Reserve Act that Congress passed during the Christmas Holiday in 1913. Basically, Congress relinquished its constitutional power and duty to “coin Money and regulate the Value thereof” to a private banking cartel, the Federal Reserve System.

That action was a blatant overthrow of The Coinage Act of 1792, which had been signed into law by President Washington and defined the “dollar” as a coin containing 371.25 grains (troy) of fine silver. This Coinage Act of 1792 established the monetary system the Founders had outlined in the Constitution. (See: what is a dollar?)

So, getting back to the Ford example, what would happen these days if Ford Motor Company decided to pay their employees 5 “honest” dollars a day? Could this be accomplished? For purposes of this article let us round a real dollar to 0.75 troy ounces of silver. Additionally, I am going to use 245,000 as the Ford employee base reported in September 2008 (Wikipedia).

Therefore 245,000 employees at $5 (~3.75 troy ounces, based on the Coinage Act) per day would be equivalent to 918,750 troy ounces per day! This implies within a one-month time frame (~22 working days) a total of more than 20 million ounces.

Of course if we check the data in 2006 (latest data available) we find the average pay per employee to be almost $29 per hour. From last week’s article we can see that the average price of silver for the year 2006 was about $11.50 per ounce. So, quite easily we might state 2.5 ounces per hour, or 20 ounces per day. Looking at the 2006 Ford Motor Company stats, using dirt-cheap silver, we have 107,800,000 ounces of silver in ONE MONTH!

This article can be taken several ways and that is the point—I want the reader to think. One area that gets very little attention in the mainstream financial press is that even mainstream political people are waking up to the problems. Just one example is shown in an excerpt below, from the Idaho Republican Platform (click here for full platform):

We believe the Federal Reserve Bank should be abolished and the issuing power restored to the people through their representatives in the U.S. Congress with the stipulation that the U.S. dollar be backed by gold and silver. [Emphasis mine.]

So at a state level, people are beginning to realize that the system has failed them. And Idaho is not the only state; in fact Nevada and New Hampshire have tried in the past, and this week Senate Bill 453 was purportedly introduced by Greg Walker, a state senator from Indiana.

In conclusion, 2009 may turn out to be a year where one primary question is not so much who can we trust, but what can we trust?

Comments

[bobomite:]

There is nothing wrong with a fiat currency. The problem comes when money is created only as debt. For example, if the government created money debt free and collected the interest on loans made with it (instead of private banks) then income tax would not be required.

The problems with using metal objects as money include:

-Far too easy for banks or other interests to corner the market
-Money supply can not be adjusted without buying into that cornered market
-It does not address the real problem we face today, which is debt, not fiat currency

Gold, silver etc. will always retain value as a backup unit of trade in the event of total financial collapse. But they are not suitable as the backbone of modern economic systems.

It is comforting for people to conclude that a gold standard is the answer to the problems we face today, but that does not make it true.

Jan 18 11:20 AM

[EricH:]

To me what a "new" gold standard would look like:

1. Government excuse to immediately confiscate and outlaw all private holdings of gold (prior to revaluing it upwards)
2. They would claim our money is now backed by gold, but only redeamable in gold between governments, not citizens
3. At the end of the day the sheeple would still be on a fiat system, the claim of "backed by gold" would merely be a mirage for the masses.

Think about it.

Bottom line, if you appreciate the ability to buy/sell & hold gold then DON'T hope for a gold standard, it would be a wolf in sheeps clothing and only serve to finally get the gold out of private hands for once and for all. UNLESS, each dollar would become a "receipt for gold" and could be redeamable for gold at any bank... THAT WILL NEVER EVER HAPPEN, you and I know it.

If I had to guess what's going to happen next, the banksters will cal for some quasi-BS gold standard as I've outlined here and all the sheeples will no longer have anywhere to hide or store their wealth... It's a trick don't let it happen.

Jan 18 02:31 PM

[fireball:]

as far as cofiscation we have the 2nd ammendment. the fiat currencies always fail, always. it is simply a matter of time.
the treasury should be issueing debt free currency to nueter the private federal reserve.
any interested should google devvy kidd (a former california rep.) and read her booklet "why a bankrupt america."

Jan 19 09:15 AM

[ibejack:]

I bet you were one of the folks advocating that their is nothing wrong with an economy based on 70% consumption?


On Jan 18 11:20 AM bobomite wrote:

> There is nothing wrong with a fiat currency. The problem comes when
> money is created only as debt. For example, if the government created
> money debt free and collected the interest on loans made with it
> (instead of private banks) then income tax would not be required.
>
>
> The problems with using metal objects as money include:
>
> -Far too easy for banks or other interests to corner the market<br/>-Mone...
> supply can not be adjusted without buying into that cornered market
>
> -It does not address the real problem we face today, which is debt,
> not fiat currency
>
> Gold, silver etc. will always retain value as a backup unit of trade
> in the event of total financial collapse. But they are not suitable
> as the backbone of modern economic systems.
>
> It is comforting for people to conclude that a gold standard is the
> answer to the problems we face today, but that does not make it true.

Jan 19 01:09 PM

[notsosmart:]

the sheepes will always get fleeced.much better to know the sports scores than who has their hands in your pocket.

Jan 19 01:16 PM

[silver-bullet:]

Anyone ever thought of 'Digital Money' backed by gold and silver?

With technology, we can divide a gold or silver gram to micro millionth, making it suitable for everyday trade. As transaction volume increase, the cost decrease exponentially, effectively to zero. Technology will effectively make digital gold and silver money easy to convert to any fiat currency - US$, Yen, Yuan, Singapore $, Malaysia Ringit, Mexican Peso, Euros, Sterling Pound, Real..... you name it.

Would you rather pay a tiny transaction cost on using Real Money (gold/silver), or would you rather pay taxes and inflation for holding fiat money.

Imagine.... no fiat currency.....small government!

Jan 19 11:05 PM