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2 SPEAKING
FREELY Dollar needs mint
freshener By Antal E. Fekete
Speaking Freely is an Asia Times
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contributing.
The superpowers of
China, Russia, and the United States may without
knowing it be racing towards reopening their
mints to the monetary metals. The governments of
these countries are like the heroes of Greek
tragedies: they are drawn to their fate by
destiny. There is no way for them to avoid Kismet,
regardless of what they do. This leads to the
question of what is meant by opening the mint to
the unlimited coinage of gold and silver free of seigniorage
charges.
The mint is
a monetary institution far more important than the
central bank. It is an ancient and venerable
institution. The central bank is a relatively new
invention, hardly venerable. It was conceived to
make ordinary people absorb the unpaid and
unpayable debt of kings.
The importance of
the mint is not to be found in its altogether
negligible role of coining small change, the
so-called subsidiary coinage which people use to
make small purchases. The mint is all-important
because it is designed to produce real money. The
origin of the mint is intertwined with religion.
From the point of view of political economy, the
mint is a reminder of the fact that, ultimately,
real money is created (and extinguished) by the
people and not by the government, or banks
approved by the government. For example, the
US Constitution reserves the power to create money
directly to the people themselves who convert gold
and silver at the mint into the coin of the realm
(and extinguish money by melting it down). This is
a power like habeas corpus that cannot be
delegated, still less usurped. If the government
grabs it, then, in the admirable phrase of Malcolm
Muggeridge, it becomes the power of habeas
cadaver. The mint is the symbol of Constitutional
Money, the only kind not subject to manipulation.
So much so, in fact, that the mint had to
be closed to gold forcibly in order to deny people
access to constitutional money, and in the hope
that the government could usurp their power to
create money. History had to be falsified to
conceal the fact of power-grab. According to the
official version, the mint was never closed down
as it continued to produce subsidiary coins. There
were some housekeeping changes, yes. But nothing
major.
This lie was exposed by William
Jennings Bryan, the Democratic presidential
candidate in 1896 when he denounced the power-grab
in describing it as "the Crime of 1873". He was
referring to the closing of the US mint to silver
in 1873, the first major violation of the
Constitution’s monetary provisions.
People
fell for the obfuscation. They were not interested
in checking out the charges of Bryan. What crime?
What closing? What mint? Lots of silver coins are
in circulation, can’t you see? People didn’t
understand the difference between the full-bodied
silver coin, the constitutional standard dollar,
and subsidiary silver coins that were not
full-bodied.
The nominal value of the
full-bodied coin, produced on account of anybody
tendering the right quantity and quality of metal,
coincides with the market value of its metal
content. By contrast, subsidiary coins are
produced on account of the Treasury and their
nominal value is always higher than the market
value of their metal content.
The
difference between the two is called seigniorage,
the profit going to the Treasury. There is no
seigniorage on coining the standard dollar, the
coinage of which is unlimited, in contrast with
that of subsidiary coins with limited coinage,
which explains why people accept them in
circulation for the higher nominal value. (The
cost of producing the standard coin, like that of
constructing and maintaining public roads, is
covered by taxes.)
Unexplained
revolution The banks are supposed to be a
handmaiden to the mint. After the closing of the
mint to gold and silver the banks became the boss
and the mint was reduced to the status of a
handmaiden. This was a violent revolution, the
full meaning of which has never been explained by
our institutes of higher learning.
Slavery
works best if people don’t think of themselves as
slaves. The mint is the symbol of freedom. It is
the very antithesis of slavery. Yet imposing
slavery on the people is as simple as closing the
mint to gold and silver. People are no longer
free. They have lost their God-given right to
create and extinguish money. They have become
slaves since the government has extorted the right
of first refusal on their produce and savings.
As Keynesians famously boast: "Taxes for
revenue are obsolete". Once closed to gold and
silver, the mint makes taxation for revenue
superfluous. It is freed up for devious purposes.
Now, for the first time, taxation can be used to
manipulate the economy and to manipulate the
people. The government can stamp an entire
industry out of existence by taxing it to death.
Less conspicuously, it can boost the income of one
branch of industry, or one group of citizens, at
the expense of another.
The mint, if
people can keep it open to gold and silver in
defiance of the machinations of the government and
banks, is both the symbol and instrument of
freedom. Once it is forcibly closed, freedom is
lost and the way to the pauperization of people is
thrown wide open.
I often come across the
objection that the government does make gold and
silver coins available to the people who care to
have them. There are officially produced eagle
coins in the United States, maple leaf coins in
Canada, panda coins in China, and koala coins in
Australia. This does not look like the mint being
closed to gold and silver, does it?
People
who use this argument only betray their ignorance
and prove how easy it is for the government to
fool public opinion. Gold and silver coins that
governments currently produce are meant to confuse
the issue. They are an eyewash. These are souvenir
coins struck on Treasury account, sold at a
premium prices including seigniorage charges.
People may feel good about having them, especially
when gold and silver prices are buoyant. But their
right to constitutional money has not been
restored. The mint is still closed to gold and
silver. The people’s right to unlimited free
coinage is still being usurped by the banks.
Rather than celebrating, people ought to be upset
that their government stoops so low as attempting
to lead them by the nose.
As I said, the
mint is one of the most ancient political
institutions brought about by our civilization. In
the early history of Rome over twenty-five hundred
years ago the mint where gold and silver pieces
were struck was a sacred and inviolable place. In
fact, the mint was housed in the Temple of Juno
(wife of the chief god Jupiter). Our linguistic
heritage shows this most clearly: the English word
"money" is derived from the Latin word
moneta, the surname of Juno.
Vigilance and freedom Juno
Moneta, literally Juno the Vigilant, refers to the
legend that Juno’s sacred geese on Capitolium
saved the city from being sacked. With their loud
cackling they alerted the sleeping town that enemy
soldiers had scaled the walls under the cover of
night and are ready to slaughter the inhabitants.
Thus the English word money has a connotation of
vigilance. Vigilance, that is, to preserve freedom
which is inseparable from constitutional money
facing, as it is, constant threat from adventurers
such as John Law, Keynes, Friedman, to name only a
few.
Sad to say, this connotation has worn
off completely by now. People no longer have any
idea that their freedom is being destroyed
little-by-little, as their money has been
corrupted.
Compare the mint of Juno to the
central bank of the United States, the Fed, which
is less than 100 years old. During its brief
existence it has done more monetary mischief than
all the monetary mischief perpetrated by
governments during the twenty-five hundred year
history of the mint, including the endless
debasement of coinage through the dilution of
metal content.
The most recent follies of
the Fed raise the question whether it will live to
celebrate its centenary, or whether pig-headed and
ham-handed central bankers will destroy the dollar
that was entrusted to their care in 1913. Already,
the dollar has lost 99% of its purchasing power,
and is manifestly in danger of losing the
remainder during the next five years or so. Quite
obviously this could have never happened if the US
mint had been kept open to gold and silver, which
is the reason why the Constitution demands it.
The oldest central bank in Europe is the
Riksbank of Sweden. It opened more than 30 years
before the Bank of England. The early central
banks in Europe were all established in order to
fund the unpaid and unpayable royal debt. The
newly chartered banks were in turn given
privileges such as the monopoly of issuing bank
notes, as well as immunity from being sued in case
of non-performance on contracts.
Milton
Friedman and his monetarist cohorts completely
misrepresent the relationship between the mint and
central bank. They allege, falsely, that a
price-fixing scheme is involved. In their
topsy-turvy world the gold standard, and the mint,
are institutions negating the free market. In
fact, however, the truth is that bank notes are
not money; they are merely promissory notes
whereby the central bank promises to pay bearer
money on demand. Only the full-bodied coins into
which the mint converts gold and silver on account
of anybody tendering the right quantity and
quality of metal constitute money.
You
cannot find price-fixing in this process with a
magnifying glass. The charge of price fixing was
planted maliciously by Milton Friedman in order to
denigrate and discredit the gold standard. His
suggestion that the central bank is the creator of
money, and the mint is merely an embellishment,
wholly unnecessary to boot, is a shameless lie.
Friedman is celebrated as the "liberator" of the
dollar by monetarists who consider it a triumph to
have set the dollar free from its golden shackles.
In fact, however, Friedman is the assassin of the
dollar and will be remembered as such.
The
fact of the matter is that the central bank is
anxious to keep
Head
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