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Chapter I: The Dollar
For billions of years in the history of the universe and for thousands of years in the history of the human species, there was no United States and there were no US dollars.
Native Americans first arrived on this continent about 15,000 years ago, but still there was no United States and no US dollars.
By the year 1770, mostly European immigrants had established 13 colonies, and in 1776, delegates from these colonies met in a Continental Congress to create the United States of America.
The nation they created is not a physical entity; it is a legal entity, created from thin air.
Yes, the USA has those spacious skies, amber waves of grain, purple mountain majesties, and fruited plains, but that is not what was created in 1776. Being only a legal entity, and not a physical entity, the “USA” created in 1776, cannot be seen, tasted, smelled, touched or heard.
The sovereign United States of America, like all nations, was created from thin air — by an arbitrary collection of laws — written by men.
Like all nations, the newly created US needed some form of money, so the founders decided to create their own sovereign currency rather than using some other nation’s money (unlike the cities, counties, states and euro nations, which do not use their own sovereign currency). The founders decided to pass laws that made the USA Monetarily Sovereign.
Why $241,552,780? It was just the total of eleven different printings. The Congress had the power to create, from thin air, more Continental dollars or fewer, as it chose, merely by interpreting existing laws and by passing new laws. The Congress was sovereign over its currency.
Because there is no limit to what laws can dictate, there was no limit to the number of Continental dollars the Congress could create.
Congress appointed Robert Morris to be Superintendent of Finance of the United States in 1782. Morris advocated the creation of the first financial institution chartered by the United States, The Bank of North America.
Like the United States itself, the Bank of North America was created from thin air, by the passage of arbitrary laws. It was a legal, not a physical, creation.
On August 8, 1785, the Continental Congress of the United States authorized the issuance of a new currency, the US dollar. The Coinage Act of 1792 established the dollar as the basic unit of account for the United States.
Thus, the US dollar exists, not in any physical form, but only as an accounting term.
The US itself, the Bank of North America, and the US dollar, are not physical entities. They are legal entities, created from thin air by arbitrary laws. While the amount and form of a physical entity are limited by many physical factors — production, supplies, shipping, etc. — a legal entity is limited only by laws.
Like the US, the US dollar cannot be seen, tasted, smelled, touched or heard.
The dollar bill in your wallet is not a dollar. That piece of paper is just the title — evidence of ownership — to a dollar. Just as a car title is not a car and a house title is not a house, a dollar bill is only evidence you own a dollar.
Tear that paper in half, and you do not own two half dollars. Change the appearance — the size, color or words — of that piece of paper and it may continue to represent the same dollar, so long as the laws say so. A dollar bill, a check for one dollar, a wire transfer of a dollar, a savings account passbook showing a balance of one dollar, all are legal representations of that same US dollar.
Not only did arbitrary laws create the dollar, but arbitrary laws created the value of the dollar.
Not understood by the public is the fact that every form of money is a form of debt. And the value of any debt is based on its collateral, so every form of debt/money is backed by collateral.
The collateral for today’s dollar is the full faith and credit of the US government.
“Full faith and credit” may sound nebulous to some, but it actually involves certain, specific and valuable guarantees, among which are:
A. –The government will accept only U.S. currency in payment of debts to the government
B. –It unfailingly will pay all it’s dollar debts with U.S. dollars and will not default
C. –It will force all your domestic creditors to accept U.S. dollars, if you offer them, to satisfy your debt.
D. –It will not require domestic creditors to accept any other money
E. –It will take action to protect the value of the dollar.
F. –It will maintain a market for U.S. currency
G. –It will continue to use U.S. currency and will not change to another currency.
H. –All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill.
The full faith and credit of the fledgling US was insufficient to give the early dollar enough value, so additionally the dollar was collateralized by gold and silver:
In the early 19th century, gold rose in relation to silver, resulting in the removal from commerce of nearly all gold coins, and their subsequent melting. Therefore, in the Coinage Act of 1834, the 15:1 ratio of silver to gold was changed to a 16:1 ratio by reducing the weight of the nation’s gold coinage.
This created a new U.S. dollar that was backed by 1.50 g (23.22 grains) of gold. However, the previous dollar had been represented by 1.60 g (24.75 grains) of gold. The result of this revaluation, which was the first devaluation of the U.S. dollar, was that the value in gold of the dollar was reduced by 6%.
More recently, (in the Bretton Woods Agreement negotiated after World War II) the dollar was arbitrarily collateralized by 0.888671 grams of gold (plus the full faith and credit of the US government).
Then, on August 15, 1971, the laws were changed yet again, and the value of the debt known as “the US dollar,” no longer was partly collateralized by gold, but only by the US government’s faith and credit.
In summary: We repeatedly have used the phrase, “from thin air,” to emphasize the non-physical status of the US dollar. Being non-physical, and existing only because of non-physical laws, the US dollar is under the total control of the US government.
The existence of the US, and the existence of the dollar, and the total of outstanding dollars, and the value of each individual US dollar was and is controlled by our laws, which the federal government arbitrarily can change at any time, without limit.
So long as the federal government does not run short of laws, it cannot unintentionally run short of US dollars, nor have its dollar forced into an unintentional loss of value (aka “inflation”).
Next, Chapter II will discuss why America’s absolute sovereignty over the US dollar (Monetary Sovereignty) is important to you.
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Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually Click here
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
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10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.
THE RECESSION CLOCK
Recessions begin an average of 2 years after the blue line first dips below zero. There was a dip below zero in 2015. Recessions are cured by a rising red line.
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.
Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes..
•Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is the Gap between rich and the rest..
•Austerity is the government’s method for widening the Gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 