Month: June 2011

A Time for All Things

Joseph Dewey
This entry is part 27 of 31 in the series 2011B

Objection 3
You want to create a fiat money system under government control with central planning. Money should be created by private enterprise for the private sector is always better and more efficient than government bungling.

Answer:
Not many fiat systems have been managed strictly by government. The Federal Reserve is a private system loosely overseen by Congress. The Reichsbank that was responsible for the hyperinflation in Germany was privately managed similar to our Federal Reserve. During the last year where hyperinflation went to Biblical proportions money was completely privatized and private issuers were competing to see who could print the most money.

Private goldsmiths ripped people off and deceived them for centuries by creating fiat money backed by gold that didn’t exist.

As far as being stewards over our money, private enterprise has not proven itself to be reliable whereas the best examples of good currency in history has been that which is managed by the State.

I share the view of our Founding Fathers that as a whole the fewer powers the government has, the better, and the power of the individual should be honored when possible.

But even though these men were rebels against Big Brother they did acquiesce and give the government power over two important categories. These are (1) defense and (2) the creation of money.

So why did they select these two departments to be under government control?

Defense should be obvious. Suppose we left defense to private hands and then had to fight World War II. There’s no way we could have mobilized a few ragtime private militias into a unified Army, Navy and Air Force to defeat Hitler without government involvement. Even though government is much less efficient than private enterprise it has the advantage of being able to create a unified force when needed.

The same goes for creating the nuclear bomb or going to the moon. These could never been accomplished in such a short time frame by leaving it up to private enterprise. A government has the power of mobilization and unification of purpose that the diverse private sector cannot achieve.

As far as money goes, again its unifying power is needed to create a usable currency. The central government in the United States has always regulated the value of money as specified in the Constitution but there have been times that private banks have issued notes and when many such banks have done this numerous problems resulted. In 1860 there were over 1600 private banks issuing 7000 different types of notes. If you were in a different area or state than where the note was issued you had to exchange it at a discount. The discount was at least 10% and sometimes as high as 40% if the reputation of the issuer was not solid.

Many economic fundamentalists want us to have a completely private money system but few have stopped to think of what would happen if such a thing were in place. Perhaps it would be useful to paint a picture.

Apple decides to issue its own money backed by its products. The value is determined by the iPad, which equals 100 units or Apple dollars. Even though Apple has a great reputation less than half the retailers accept Apple dollars. Apple retail stores accept them at face value but others do not. Walmart, which also has its own currency, accepts them at a 10% discount and Apple in return discounts Walmart currency 10%

A number of retailers and manufacturers follow Apple’s lead and create their own private money. All of them only have a full redemption on their own products and are discounted everywhere else – some up to 40%.

Hundreds of private banks create their own money of many different variations. Some create 100% fiat currency and others have a currency backed by a 10% supply of gold or silver and others are 100% backed by gold or silver. Others still are backed by Apple dollars or a combination of dollars. A couple banks have their money backed by an average value of 20 different types of dollars in circulation. Still others have their money backed by oil, wheat, pork bellies or other commodities.

At first, a lot of customers gravitated to the 100% gold backed dollars. This seemed to be the best bet until one day China dumped 3000 metric tons of gold on the market to pay for oil leases. Within three days the price of gold dropped 35%. This caused a selling frenzy and many traded their gold dollars for Apple and Walmart dollars. This added to the panic and the value of gold dollars dropped to 50% of their previous value.

China then saw an opportunity and bought up 4000 metric tons of gold at a 50% discount and within another three days the price of gold tripled. This had several negative effects. No one felt safe putting their money anywhere and China decided to place their gold profits in building up their military.

In addition to large companies and banks creating money smaller companies and even private individuals started doing it.

There was one guy in particular that seemed very successful and was trusted but within a couple years his whole system fell apart. He was compared to Bernie Madoff because he sold all the gold that backed his money and when it was discovered that customers could not redeem their money for gold all his currency value fell to nothing.

This scam rocked all private money systems and the value of many of them fell 10% overnight.

After existing ten years on an all private money system there were literally thousands of entities attempting to circulate thousands of different bills all having different values.

Machines looking like ATM’s started springing up all over the country. If you punched in your PIN number you could exchange one currency for another but the exchange rate was high because the fraud rate was high. The exchange rate was between 10-20%. A lot of people who were paid in one form of dollar really grumbled when they had to lose 10% in an exchange.

Small businesses were linked to these devices. If you went to a flower shop to buy a dozen roses they may list three currencies they would accept. All others would have to be converted through the ATM machine.

On the internet, PayPal did not issue their own money but had a system where all other currencies were converted into PayPal dollars. Apple and Walmart dollars were the most stable so ten of their dollars were converted into nine from Paypal. Many were surprised that gold-backed dollars did not have the highest exchange rate, but since the price of gold was not set by the government it could go up or down in value 20% within a year and the Chinese made it fluctuate 100% in a couple days. To protect themselves from fluctuations PayPal only gave eight PayPal dollars for ten gold ones. Out of the thousands of different currencies PayPal only accepted the best twenty. All other currencies had to be converted to one of these twenty if they wanted to use PayPal dollars at all.

A research company did a study on the average loss that a worker suffered from having to deal with the exchanges necessary to spend his paycheck on the necessities of life. It turned out that the average family lost about 14% of their income through their various exchanges.

Now when one thinks of this situation in the light of reason this does sound like it would be a fairly probable outcome of an all-private system.

I am a big supporter of private enterprise and believe that in the vast majority of circumstances the private sector can trump the public bureaucracy any time. But major problems occur when a person becomes black and white in his view and needs to consider the wisdom of Solomon who said:

“To every thing there is a season, and a time to every purpose under the heaven.” Eccl3:1

While it is true that private enterprise is very innovative and can be very efficient, there is a time to use the central authority of the government and the Founding Fathers wisely saw that defense and money were two categories that the power of government could be used beneficially.

Isn’t it so much more convenient to have one universal currency that we can all use instead of the cacophony that was described in the above example?

Does this mean we have the best possible money system now?

No. It does not. We can create a much better one as we shall see.

Read This entire series. Here are the links.

Copyright 2011 by J J Dewey

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A Flawed Money System

Joseph Dewey
This entry is part 25 of 31 in the series 2011B

Objection 2
Just look at the fiat money system we have now. It just doesn’t work. Every year the dollar is worth less than it was the year before and there are recessions and boom and bust cycles.

Answer: The money system that we now have is far from perfect and is not the one I advocate. There are three major problems with it.

First, all money placed into circulation is through loans at interest. If one borrows $100 and pays back $100 plus $10 in interest then $110 is taken out of circulation. To maintain the status quo the banks have to then loan out not $100 but $110. This system of creating money through interest bearing loans and then destroying it when the loans are paid forces the banking system to always be seeking new ways to create more money making for an unstable system that is difficult to control and predict.

Secondly, there are no controls placed on the amount of money that will be placed into circulation. If the money supply contracts, as it did with the Great Depression, then there is deflation. Money is not available for expansion and the people suffer greatly. If there is too much money added to the system there is inflation and the savings of the people lose value. Then there is always the possibility of hyperinflation that could destroy the value of money completely.

Thirdly, the money supply is controlled by the privately owned Federal Reserve, which loans money to our government at interest. Currently, interest from all sources amounts to around a half trillion dollars. It would make a lot more sense to merely create our own money with no interest. Then, if desired, we could use that half trillion to send every man, woman and child a rebate check of over $1500 a year. I say this as something that could be done not something I would recommend.

The current money system does bear a lot of responsibility for the inflation we have had but it is far from being the only factor in our various financial problems. Even with the best possible money system the economy can be challenged by speculators and outright crooks. There is a lot more to creating a stable economy than having a good money base.

Let me give just one example.
In September 1869 Jay Gould and Jim Fisk had a plan to make a killing on the gold market. Here’s how it went. They figured out that the amount of actual gold that was available in the whole country for investors to purchase was only about $5 million even though much more than that was traded on paper and also stored at Fort Knox. If they could buy a good portion of that circulating gold and hold on to it, creating a demand for more gold than would be available, they could drive its price up to $1000 or more an ounce. They moved ahead with their plan by buying large amounts of gold and holding on to it. Within weeks they drove the price of gold from $120 an ounce to $165.50.

There was just one potential problem and that was President Grant. As the price rose he could dip into the $100 billion worth of gold at Fort Knox and put it in circulation. They had people on the inside influencing Grant to not do this so they thought they had their bases covered. Grant, however, caught on to their scheme and decided to put $4 million worth of gold into immediate circulation. This move by Grant created what is called “Black Friday” (Sept 24th, 1869) when the price of gold dropped from $165.50 to $135 in one day. Since many people were buying on a margin they lost everything they had and many brokers went out of business.

Ironically, one guy who came out on top was Jay Gould who caught wind of Grant’s move and sold at around $165. This wasn’t the $1000 per ounce or more he had hoped for if Grant cooperated but he was happy to come out ahead in the end. His partner Fisk, and most gold investors, were not so lucky and lost everything.

If gold, the most stable of all metals, can be so easily manipulated by just two guys – with a great disaster only being prevented through the creation of a lesser disaster – then where is the hope of a stable economy with any currency?

Our current economic system is far from perfect. Almost everyone is not happy with it and has criticized it. Gold standard advocates are its harshest critics but they are far from being alone.

Where few have looked objectively is in comparing the current system to the systems of the past. Let’s take a brief look with an attempt to be objective.

The largest change in the money system occurred in 1913 with the creation of the Federal Reserve. For many this is seen as the year of infamy where the economic devil became incarnate.

Now the Federal Reserve System is not something I would create or endorse but neither am I that excited about returning to any system we had before 1913.
As I write this it has been 98 years after the creation of the Fed. 98 years before the Fed takes us back to 1815.

It is true that we made a lot of progress and innovation between 1815-1913 – more than at any time in the history of the world.

On the other hand, the progress since 1913 has been much more dynamic still, again more than anytime in the history of the world. Just compare life in 1869 with 98 years later to 1967 or 1913 to 2011. They are two different worlds indeed and the latter, despite the imperfections, would be picked by the vast majority as most desirable.

True we’ve had inflation, but there have been adjustments to inflation. There’s also been deflation as well as inflation.

In 1913 a dollar was worth $22.82 of 2011 dollars. This value stayed fairly stable until World War I. Then it went down in value to $11.30 by 1920. In other words, the dollar lost half of its value. This effect on currency is pretty normal during war.

After 1920 instead of inflation we had deflation and the dollar increased in value. It was 1947, or 27 years later, before inflation could sink the value of the dollar below the 1920 value. That’s a stretch of time rarely equaled by the gold standard of history. Since then we have had a fairly steady rate of inflation until the dollar is now worth about 4.4% of what it was in 1913, or 8.8% of the 1920 dollar.

The average wage in 1914 was $627.00. That equals $14,167 in 2011. But the 2011 the median household income is around $50,000, which means we have achieved over three and a half times the income we had in 1914 through this imperfect Federal Reserve fiat system. If we go back to 1861 the contrast is even more pronounced. The income at that time was only $140 per year. That would buy about seven ounces of gold. In 2011 where gold is at an all time high of over $1500 per ounce seven ounces only equals $10,500. In 2001 you could buy seven ounces of gold for a mere $1897.

It is interesting to note other quality of life improvements. The average lifespan in 1913 was only 52.5 years. Now it is 77 years. Maybe they worked themselves to death – the average workweek was over 55 hours for much less money than is made today.

Over 60 times the number of babies died at birth and the hospitals were so bad that people were afraid to go there.

The three leading causes of death were: pneumonia and influenza, tuberculosis and diarrhea. These are now way down the list and have been replaced by heart disease, cancer and strokes.

Yes, our journey of progress has not been perfect but few would want to go back to the good old days.

If we have made such progress as improved standard of living, sending men to the moon, developing sophisticated computers, the internet and many time saving advances with a very flawed financial system just imagine what we could have done with a really good one.

Perhaps the major flaw blamed on the current money system is inflation, but most of our inflation has not been caused by the fiat system, but by government borrowing. If our Congress had the common sense of the average family they would stay within a budget and there would be little or no inflation.

“But,” says the fundamentalist, “if we were on the gold standard Congress would not be able to borrow like they do with fiat money.”

Bad argument. As soon as there was any major problem when on the gold standard they threw it out the window and borrowed bundles of money. This happened during the Civil war and World War I. The are also so many ways to create simulated money today that no possible gold standard could keep us out of debt. The only way to control our debt is to control Congress. If we have a perfect money system mixed with a drunken spending Congress there will be deficits.

Conclusion: Yes, the Federal Reserve fiat banking system is far from perfect, but neither has it been as bad as believed by many. It has served us as well as money systems in the past which also were far from perfect.

Read This entire series. Here are the links.

Copyright 2011 by J J Dewey

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Examining Fiat Money

Joseph Dewey
This entry is part 24 of 31 in the series 2011B

Some may wonder why I have spent so much time dealing with the gold standard and fiat money. The reason is quite simple.

There are two kinds of people in the world as far as economic theory goes. Those who think about how it works and what is the best approach and those who do not, but just blindly accept the crumbs that fall from the table wherever they land.

Unfortunately, the majority of Americans are in the second category. Any economic influence on their voting is very superficial. A meaningless sound bite can influence them if it tugs at their emotional nature. If they lose their job, suffer a pay cut, lose a benefit, hear of a fat cat getting exorbitant pay, see a homeless person or are merely told a certain politician is out to take what belongs to them they will vote accordingly without doing any research into the cause of their grievance.

The first category (the thinkers) is concerned about the economy and at least do a little reading and thinking about how it works and how it could be improved.

A large portion of the students and thinkers of economic theory and how money works are believers in the gold standard and are strongly against most fiat money. Many of these are adherents to the Austrian School of economics which ironically has its strongest supporters here in the United States. They cannot stand even the mentioning of Keynes name and love the words of Mises, Hayek, Rothbard, Ron Paul and others.

Most of these are good people of above average intelligence that have not considered the idea that there are several types of fiat money and it is possible to create a fiat system that brings as much stability as gold and even more prosperity.

Any workable money system has diminished chances of implementation when many thinking people are in opposition to it and it gains added power when a high percentage support it.

I have thus spent considerable time explaining the disadvantages of gold as well as presenting fiat systems of the past which have worked which tells us that we can put together one for the future that can serve us well. Actually this is an understatement. I believe we can put together a system that will bring prosperity that the world has never seen before.

In contemplating this I reflect back to a statement that Bobby Kennedy used when running for President.

“Many people see things as they are and ask why. I dream of things that never were and ask, why not?”

Our world has never had a perfect or near perfect money system, but that does not mean that we have to repeat the mistakes of the past, or even repeat the best of the past. We have the intelligence and the will to create anew a system that is better than anything that has existed before. There is no area of life where a breakthrough advantage is needed more than in our currency system. It hasn’t improved much in over 3000 years so it is about time for progress to be made.

Creating a better way was the attitude of the Founding Fathers when they founded this Republic and its Constitution. They didn’t just take the best of the past and recreate it. Instead they took the best working elements of past government and added new elements to create a government that was “a dream of things that never were.”

I don’t expect a lot of gold standard people to accept my writings right away but a few will at first and more will follow. If these ideas circulate among them they will be forced to discuss them logically without first just dismissing them as Keynesian or doomsday economics. In addition I hoped to reach many who do not have set opinions who can see the reasoning in that which I present.

First let us examine some of the problems many have with considering the use of fiat money.

Objection 1: Fiat money is not backed up by anything. It is created out of thin air. Real money is composed of metallic coins or is paper backed up by a commodity, preferably gold or silver.

Answer: This conclusion is not exactly true. If one only looks on the surface it may seem that fiat money is created out of thin air with no backing but such is not the case. If the dollar were really backed by nothing then it would be worth exactly nothing. This is obviously not the case because we purchase groceries, clothing, pay mortgages, buy cars and many other things with fiat money.

Our money obviously has value. Where does this value come from?

The most common answer is faith – pure faith. If one thinks about this answer he can soon conclude that this is far from the correct answer. Let me illustrate. If we find a person with no faith in the dollar and send him to the store to buy some bread does his zero faith take away value from the money so he cannot buy the bread? No. Even though he has no faith in the money the value is not diminished. His money will purchase just as much as the guy with lots of faith in the dollar.

If faith does not create the value then what does? Aristotle brings us closer to the answer. He stated:
“…Money exists not by nature but by law….There must then be a unit, and that fixed by agreement.”
Aristotle (Ethics, 1133)

This gets us closer to the truth. Money is created by law through a fixed agreement. This seems more reasonable than faith alone but it doesn’t give the full story. It doesn’t explain why fiat or any other kind of money has value.

If we could just create money by passing laws and making agreements then let us all agree that everyone will receive a million dollars in money each year and there will be no inflation.

We all know that would not work, don’t we?

Faith, law and agreements are all ingredients that help create the power of money, but what is the core principle? What gives a fiat dollar its purchasing power?

The answer lies in this question? What gives a gold backed dollar its purchasing power?

It’s gold you say? But what produced the gold?

It was human labor.

Money has also been backed by many other commodities such as houses, wheat, tobacco and Indian Wampum. What produced these products?

Adam Smith explains:
“Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared. It is their real price; money is their nominal price only.

Labour … is the only universal, as well as the only accurate, measure of value, or the only standard by which we can compare the values of different commodities, at all times, and at all places … By the quantities of labour, we can, with the greatest accuracy, estimate it, both from century to century, and from year to year.”

Labour was the first price, the original purchase – money that was paid for all things. It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased.
Adam Smith The Wealth of Nations, Book I, Chapter5

Benjamin Franklin agrees with this: “The riches of a country are to be valued by the quantity of labor its inhabitants are able to purchase, and not by the quantity of gold and silver they possess.

“All wealth is the product of labor.”
John Locke

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”
Abraham Lincoln

Thou, O God, dost sell us all good things at the price of labor.
Leonardo da Vinci

The bottom line is that money has value not because of any commodity, faith or law alone but because it is backed by labor and that which labor produces.

If I give my neighbor my word that I will mow his lawn tomorrow then that is as good as giving him the $20 (or more) he would have to pay a mowing service. It is also as good as $20 in gold, silver or wheat. I created this value seemingly out of thin air by the fiat of my word alone; but was the value created from nothing?

Not exactly. My word in this matter only has value because my labor has value. Labor does not come out of thin air but is energy guided by constructive intelligence.

Conclusion: Fiat money and commodity money both trace back their value to one source: human labor.

Copyright 2011 by J J Dewey

Read This entire series. Here are the links.

Copyright 2011 by J J Dewey

Copyright by J J Dewey

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Romney & Hot Air

Joseph Dewey
This entry is part 23 of 31 in the series 2011B

LWK links to this Romney quote asking if he is full of hot air.

“I don’t speak for the scientific community, of course,’’ Romney said. “But I believe the world’s getting warmer. I can’t prove that, but I believe based on what I read that the world is getting warmer. And number two, I believe that humans contribute to that . . . so I think it’s important for us to reduce our emissions of pollutants and greenhouse gases that may well be significant contributors to the climate change and the global warming that you’re seeing.’’ Boston Globe, Jun 4, 2011
http://free2beinamerica.wordpress.com/2011/06/14/is-romney-full-of-hot-air/

Before I comment let me remind readers that I have attacked the greens, the U.N. IPCC and numerous politicians for their distortion of facts and their desire to tax global warming out of existence as well as using it as a device to destroy capitalism.

I do not see any of that coming from Romney. Let’s take a look at what he actually said.
“I believe the world’s getting warmer.”

So do I if you look at the overall picture of the past 100 years. It has leveled off since 1998 so we cannot say where it will go next for sure.

How I differ from the global warming alarmists is that I do not see enough evidence that we have any major problem coming that we can do anything about. We may get hit by a comet in five years but should we throw all of our resources into preventing this?

No. Because the risk is not high enough to warrant this. Neither is the proven risk of global warming.

Romney continues: “I believe that humans contribute to that (global warming).”

Again I agree with him. CO2, methane and other gasses released by humans do have some warming effect. Some scientists believe half of the warming comes from human produced greenhouse gasses and others think it to be less but all acknowledge that greenhouse gasses do have some warming effect. We just cannot prove how much that is.

Romney: “I think it’s important for us to reduce our emissions of pollutants and greenhouse gases that may well be significant contributors to the climate change.”

JJ
Again I agree with him. In addition to some warming effect the addition of excessive CO2 could have other unforeseen negative effects. For instance, studies show that the amount of oxygen in the atmosphere is decreasing and in some large population areas have gone down an alarming rate. Oxygen levels in the seas are also decreasing. When CO2 is formed oxygen is taken from the air. Some say that this and other human effects are producing oxygen sinks that take this vital element from the atmosphere. This should be of more concern than global warming.

I agree with Romney that we just can’t sit around and do nothing. My main point of disagreement with the environmentalists is their economy destroying approach that would do much more harm than good.

If we read on in this same Boston Globe article we see that Romney qualifies his approach with some common sense. It says:
“Romney has made clear that he opposes cap-and-trade, a system that would combat climate change by limiting total emissions and forcing polluters to pay for the greenhouse gases they produce.”

This is a huge item for me and is my main reason to take alarm at the standard environmentalist approach. Some say that the core of the environmental movement is not about the environment but about destroying capitalism and nothing gives evidence to this more than the insane cap and trade movement.

The fact that Romney is not deceived by this, as was candidates John McCain, Jon Huntsman,  Pawlenty, Gingrich and Gary Johnson, score points in my book.

Someone can read about global warming and absorb some wrong information and this does me no harm. But if he wants to destroy our way of life (and eventually the environment) by destroying our economy then I am ready for battle.

Again Romney is quoted:
“Americans should do more to conserve.”

When Obama says something like this I get nervous but when someone with business sense says it I can be supportive for I also support common sense conservation. I am a big believer in the Law of Economy.

The article continues:
Instead, he said yesterday, he wants to wean the country from its dependence on foreign oil by seeking alternative sources of energy… If elected, he said he would pursue more oil drilling, as well as natural gas and nuclear energy.

Well, this is a man with some sense. I would do the same if I were president.

He wants to:
(1) Wean the country from its dependence on foreign oil

I am all for that. It is crazy to depend on those who hate us for oil.

(2) Seek alternative sources of energy.

Again to do this with a common sense approach may yield high results.

(3) “He would pursue more oil drilling, as well as natural gas and nuclear energy.”

My type of guy. That is 180 degrees the opposite of the Obama approach.

Romney adds a final caveat:
“We can’t just say it’s going to be all solar and wind,’’ he said. “I love solar and wind, but they don’t drive cars. And we’re not going to all drive Chevy Volts.’’

Amen.

 

Copyright 2011 by J J Dewey

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Fiat Money of the Past, Part 6

Joseph Dewey
This entry is part 22 of 31 in the series 2011B

German Money

Of all the incidents of failed money in history the poster child of bad money is that of the Weimar Republic of Germany in 1923. Unfortunately, this is often used as an example of why fiat money must be avoided like the plague.

Those who put the blame on fiat money make the mistake of lumping all fiat money into one category but as was pointed out earlier there are two categories of fiat money.  Here they are again:

(1) Money created by private banks or institutions and loaned out at interest. Most of our national debt is created this way. The Federal Reserve creates the money by fiat and loans it to the government at interest. There are many variations of this  category, some fairly workable and others doomed to failure.

(2) Interest and debt free money created or approved by the government.

The Greenbacks that we just covered was in the second category.  This has been proven historically to be much more stable than the private fiats that create debt and interest.

The fiat attackers make the mistake of lumping all forms of fiat money together as being equally bad and dangerous. Nowhere is this more apparent than their portraying the Weimar republic’s money as being no different than the Greenback.

Most writers talk about the German inflation problem as beginning in 1919 or 1921 but the problem really began at the beginning of World War I in 1914. By the time 1921 rolled around those who were on fixed incomes and depended on savings or government bonds for retirement or security were largely wiped out by the high inflation leading up to that date. From the beginning of the war in 1914 to its end in 1918 prices of consumer goods increased over 200%. By February 1920 shortly after the Treaty of Versailles internal prices jumped over 500% and prices of imported products skyrocketed to 1898% over the 1914 level.

Unfortunately, Germany could not pay off their draconian war reparations with inflated Marks but had to pay them with foreign currency values. This meant that when the Mark lost half of its value it took 200 of them to pay for what only took 100 earlier.

This situation accompanied by unlimited printing from private banks created an inflation slide of historical proportions.

By July 1922 it took 300 Marks to equal one U.S. dollar. By November it took 9000 and by January of 1923 it was a whopping 49,000.  That was just the beginning of the sinkhole.  By July 1923 the figure was 1,100,000 and by Mid November it reached the legendary 2.5 trillion marks to equal one U.S. dollar. Billion mark notes were traded as almost worthless paper.

It is a blatantly false and disingenuous comparison to compare the Weimar money as being equivalent to the Greenbacks.  Let us examine the differences so the reader can judge correctly.

(1) The Greenback was issued by the government
The Weimar money was issued by private banks – led by the Reichsbank.  This was similar to the Federal Reserve, which, contrary to the sound of its name, was privately owned and publicly controlled.  May 26 1922 private business was given complete control over the Reichsbank and the issuing of currency.

Most hyperinflation commentators blame the government as having sole responsibility for issuing so much money but it was done through the privately owned Reichsbank and other private issuers of the Mark. The Greenback was not issued by a private or semi private bank but by the U.S. government.

(2) The Weimar Mark was created by loans at interest whereas the Greenback was created without interest involved.

(3) The Weimar Mark had no limitations on its issue.  The Greenback’s issue was limited to $450 million.

A heroic German, named Hjalmar Schacht, who became the Commissioner of Currency, finally brought the inflation under control. He prohibited the private banks from creating Marks and established a new Mark – the Rentenmark. The new Mark had a value equal to an astounding $4.2 trillion of the old Marks. He then established guidelines for limited issue and created regulations that dramatically slowed the currency speculation that had been adding to inflation.

Within a year the currency reached an amazing degree of stabilization despite the fact they still had reparations to deal with.

After 1929 a great depression was forced upon most of the world. By 1932 Germany had suffered economic effects similar to that of the United States including a 30% unemployment rate and a 41% dip in industrial production. One could say they were lucky it was not worse considering they had war reparations to pay off.

This was the situation when Adolf Hitler came to power.

Now before I write more about Hitler let me make something crystal clear because many others who have written about Hitler’s economic recovery have been maliciously accused of being a Hitler lover or sympathizer.  This is not the case with me nor is it the vast majority of writers on this subject.

BUT… there is one thing that is agreed on by those who despise Hitler’s philosophy and that is – he was an evil genius.

It’s fine with people if you talk about the evil part but as soon as you talk about the genius part there is danger of being lumped with Neo Nazis or worse.

This is unfortunate as we need examine Hitler without blinders on if we wish to neutralize such tyrants in the future.

When Hitler took over Germany on January 30, 1933 Germany was in the middle of a great depression and the little gold they had was storming out of the country. By 1934 they only had 83 million Marks worth of gold, a loss of about 97% of their supplies since 1929.

Basing an economic recovery on gold would have been pure fantasy.

Instead of descending the country further into economic chaos, as many expected, Hitler surprised the world by creating a teeming economic system in a few short years.  Between 1933-1938 the Nazi economy grew by 9.5% per year. They built many public works projects such as dams and about 1900 miles of the current autobahn. Housing construction doubled. By 1936 unemployment was over 80% gone and by 1938 it was virtually non-existent for they had more jobs available than there were laborers to fill them.

By contrast FDR and his New Deal was not working so well. In 1938 the United States was in a depression within the depression with unemployment at 19% and many were committing suicide rather than endure a continued struggle.

Some say that Hitler achieved full employment because he borrowed money and put people to work on government projects.  That explanation does not cut it because FDR did the same thing yet his economy was in shambles.

What was the difference then?

There were several.  Even though Hitler only had a elementary understanding of economics he recognized talent when he saw it. Hjalmar Schacht, who once restored Germany’s economy but quit in frustration in 1930, was appointed by Hitler to be the Reichsbank President in 1933. He enthusiastically supported Hitler until the war and later supported Stauffenberg and the resistance to Hitler. He assisted Hitler in creating Bills of Exchange, similar to what the early American colonists did when they had no gold.

This was powerful fiat money, but still had a disadvantage over the Greenback in that they paid around 4% interest and added to the national debt whereas the greenback was interest free.

Even with this disadvantage they were able to put enough money into circulation to revive the economy whereas money was nowhere to be found or borrowed by the common people in the United States at that time.

By contrast it was said that the German “certificates (were) paid out to employers who undertook projects of replacement or maintenance projects. Anyone who equipped a factory with new machines or who had his house repainted could finance his operations with these work drafts…”
Konrad Heiden, The Fuerher, (Boston: Houghton Mifllin, 1944, page 662.

Hitler’s economy not only did a much better job in making consumers happy and employed but in addition to doing this he built up a military from virtually nothing that challenged everything the banking systems of the whole world could throw at him.  This is even more amazing when you consider that France, England and the United States put very little investment in defense until the War because they had just fought the war to end all wars – World War I.

Hitler often bragged about his economic accomplishments in his speeches.  Here’s just one example:

When I took over the government, I had only one hope on which to build, namely, the efficiency and ability of the German nation and the German workingman; the intelligence of our inventors, engineers, technicians, chemists, and so forth. I built on the strength which animates our economic system. One simple question faced me: Are we to perish because we have no gold; am I to believe in a phantom which spells our destruction? I championed the opposite opinion: Even though we have no gold, we have capacity for work.

The German capacity for work is our gold and our capital, and with this gold I can compete successfully with any power in the world.
DECEMBER 10, 1940 in Berlin

He not only bragged about besting his enemies when he had no gold but he also drew comparisons between Germany and the Allies. Germany only had 85 million people, and a land with limited resources occupying only 232,000 square miles. He compared that to the British Empire that controlled 16 million square miles of land. In addition, there was the Continental United States possessing over 3 million square miles containing vast resources.

We are extremely fortunate that two things were in our favor.

First, we can thank our lucky stars that Hitler did not wait an additional five years to start the war.  Five more years of economic growth and perfecting her military would have made Germany unbeatable.

Secondly, we are lucky that the bankers supported the Allies during the war and that we did have superior resources for we did not have a superior economic system or currency.

It is interesting to note that two of the most significant men in history – Abraham Lincoln (one of the best), and  Adolf Hitler (one of the worst) – both used creative forms of fiat money to advance their cause.  This merely illustrates that money, like electricity is a neutral power. Those bent on destruction can use it to do harm whereas those with good intent can use it constructively or for good.

Today, most of the common people use what power they have for good. They feed their families, heat their homes, travel to see friends and family etc.  The misuse of power usually comes from those who amass great quantities of it for the sake of control over others.  It thus behooves us to do all in our power to make all useful power or energy available to the masses who, on the whole, use it well. This principle certainly applies to money.  If there is abundance of it available to all then the chances are that it will be used constructively for the good of all.

Let it so be.

Sources:
Web of Debt by Ellen H. Brown, 2008

The Lost Science of Money By Stephen Zarlenga, 2002

Konrad Heiden, The Fuerher, (Boston: Houghton Mifllin, 1944

John Weitz, Hitler’s Banker (Great
Britain: Warner Books, 1999).

Henry C. K. Liu, “Nazism and the
German Economic Miracle,” Asia
Times (May 24, 2005).

HITLER’S MONEY
The Bills of Exchange of Schacht and Rearmament in the Third Reich
Guido Giacomo Preparata University of Washington, Tacoma

Hjalmar Schacht, Stabilization of the Mark, (London: George Allen & Unwin, 1927)

Hjalmar Schacht, The Magic of Money, (London: Oldboume, Trans. P. Erskine, 1967)

Norbert Muhlen, Schacht – Hitler’s Magician, (New York: Alliance, Longmans Green, trans. Dickes

C. C. Veith, Citadels of Chaos (Meador, 1949

Read This entire series. Here are the links.

Copyright 2011 by J J Dewey

Copyright by J J Dewey

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My Writing Instruments

Joseph Dewey
This entry is part 21 of 31 in the series 2011B

I first acquired an interest in writing when I was a boy of thirteen in 1958 and my first instrument of choice for placing my thoughts to paper was the ball point pen. Since my handwriting was fairly difficult to read I decided it would be nice if I could use a typewriter instead. I was delighted to discover that my Mom had this old Underwood that no one had used for years. I believe it was manufactured in the 1920s. Here is what it looked like.

I used a hunt and peck method and managed to type out a few things with it. Then in December of that year I was in an explosion that rendered my left hand useless for typing.  I continued anyway using one hand and still managed to get some stories typed out.

 

This was a frustrating instrument to use, however.  Th ribbon was consistently  getting stuck and I kept having to fiddle with it to get it to work.  The keys would also jam sometimes. As soon as I could afford it I decided I would get a more decent machine.

 

Finally at the age of sixteen I used some money I made from picking fruit to upgrade. I found a nice little Olympia in a pawn shop going for $80.  it sold new for around $120 and since it looked in  good shape I thought I was getting a deal. Here’s the image:

It is interesting to note that $80 in 1961 is equivalent to over $600 today.

 

Fortunately, I wasn’t disappointed.  It was a well made machine and worth every penny of my hard earned money. I used this for all my typing needs for about 23 years.  Finally in 1984 I bought  fancy electric typewriter.  I’m not sure of the model but it looked something like this:

This cost me around $1000 at the time and was state of the art and produced typeset quality type.  I was happy with this until the Mac Plus came out in 1986.  When I saw that it could typeset like a $25,000 machine I was sold and had to have it. It cost $2595 at the time and the Image Writer for printing was $595.00.  since I would use it for business as well as writing I figured the investment would pay off.

 

Here is the Mac Plus

And here is the Image Writer:

 

The image writer only had a resolution of 72 DPI, but when I needed higher quality I went to a service bureau and for $1.00 a page I could have laser prints at 300 DPI which was impressive at that time.

This served me well for a few years. Finally around 1990 I had to upgarde and got a MacSE with dual floppy drives and an external 80 MB hard drive.  I was in heaven indeed with this one:

Then a couple years later I was sold on upgrading to the performa 600.  This had a lot faster clock speed and I thought it wold be a much faster machine.  Here it is:

This was a huge disappointment.  Not only was it much slower than any previous Mac but it took ages to boot up. It was around this time that Apple was having many problems and many thought it may go under.  I thought I might have to face the possibility of switching to the PC.  The thought of this made me cringe.

 

Finally around 1998 I got a G3 machine that worked great.  In fact I still have it today and use it to run my sign making equipment.  It looks a lot like the Performa but much better under the hood.

At this time my wife also worked with me and we got an iMac like this one for her:

Then in 2001 I got my first notebook the G3 ibook:

 

In 2006 I had to upgrade to the G4 ibook.  I still use this now and then.

Finally around 2009 I bought a Mac mini which i still use as my main machine. My wife uses a mini also.  Again my computer is somewhat dated and there are lots of choices available for an upgrade, but I am in no hurry as the current one is serving me well.

We are now way past the idea of computers merely assisting us with writing and typesetting.  They are now put to thousands of uses and more are forthcoming. I certainly appreciate the technology we have and have no desire to return to the not so good old days.

Copyright 2011 by J J Dewey

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Fiat Money of the Past, Part 5

Joseph Dewey
This entry is part 20 of 31 in the series 2011B

The Greenbacks



Lincoln felt the weight of the world upon his shoulders after he was elected President. Before he assumed office he saw himself facing the greatest crisis since the Revolutionary War. He even called the situation his own Garden of Gethsemane and prayed that the burden of dealing with it could be lifted.

Little did he know at the time that the physical enemies that loomed before him were less than half the problem. The greater half of the war he faced was discovered shortly after he became president and the problem was clearly seen near his death in 1865 when he said this in a statement to Congress:

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe.”
Nov. 21, 1864 (letter to Col. William F. Elkins) The Lincoln Encyclopedia, Archer H. Shaw (Macmillan, 1950, NY

Lincoln first received a taste of this first enemy at the beginning of the war when he realized that they would have to amass an enormous sum of money if they were to defeat the South. The problem for both sides is that neither had the supplies of gold and silver coin necessary to wage much of a challenge. It seemed that whoever could borrow the most money would prevail.

As Lincoln and his cabinet checked out the possibility of borrowing from banks within the country they soon found that they were of little use. Over 1600 private banks existed and each of their 7000 notes had different values and confidence of the people. But the real problem became obvious when Lincoln discovered that they wanted over 20% interest on any loans they made to a government that may not be there tomorrow if the South were to prevail.

The eastern banks were particularly outrageous as they offered Lincoln a $150 million loan package at rates between 24-36%.

Lincoln felt there must be a better way to finance the war than making the winners slaves to the banks. This was irony indeed considering the war was said to end slavery.

There had to be a better way to finance the war so the President listened to all possible suggestions from his cabinet, Congress and consultants.

There was only about $100 million in gold and silver in the whole country and about 25 times that amount would be needed by the North alone to consummate the war. Secretary Chase supported the idea of issuing government war bonds. There were about $2 billion worth of these issued during the war usually at 6% interest.

As the war continued it became obvious that the bonds would not fulfill all the financial needs and the Greenback made its appearance to supply additional financing. Some say that Congress acted on its own initiative to pass legislation to create the Greenbacks and others call Lincoln’s friend, Dick Taylor the “Father of the Greenback” for selling he idea to the President.

The story relates that Lincoln called on Taylor for advice on financing the war and when meeting they he said:

“Why, Lincoln,” Taylor is said to have replied, “that is easy; just get Congress to pass a bill authorizing the printing of full legal tender treasury notes or greenbacks, and pay your soldiers with them and go ahead and win your war with them also.”

“Do you suppose the people will take them?” Lincoln is said to have asked.

And to this Taylor replied, “The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution and the stamp of full legal tender by the Government is the thing that makes money good anytime, and this will always be as good as any other money inside the borders of our country.”

Lincoln also had an economic adviser named Henry Carey who was a big supporter of the Greenback idea and it is thought that he also had a strong influence on Lincoln.

Some claim Lincoln then worked with Congress to pass the Greenback legislation and other historians believe Congress passed it independent of the President. Congressman E. G. Spaulding from New York was a big promoter of Greenback legislation. It seemed that the Greenback was an idea whose time had come. Legislation was passed on Feb 25, 1862 and Lincoln signed it into law. At first $150 million was authorized with a total of $450 million being put into circulation as the war continued.

The Lincoln administration partially bypassed the bankers with the war bonds, but the Greenbacks left them completely out of the loop. This was pure fiat money from the government that created no debt whatsoever and there was no interest to be paid to bankers or anyone else.

As word of the Greenbacks reached the big bankers in England and Europe great alarm was felt. In 1865 The London times wrote:

“If that mischievous financial policy, which had its origin in the North American Republic, should become indurate down to a fixture, then that government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.”

The Greenbacks had several advantages over the fiat Continental currency in that they were very difficult to counterfeit. They used a proprietary green chromium tint invented by Canadian Dr. Sterry Hunt to combat photo duplication. This made the Greenbacks very difficult to counterfeit. The bills got their name from this “green” ink on the “back” of the bill. The name did not come from the Lincoln administration but from the common people who started calling them “Greenbacks.”

It is interesting that the two men with the greatest authority (Lincoln and Chase) had strong reservations about the Greenback. Chase was particularly negative and may have influenced Lincoln at first. After Lincoln’s death Chase supported the retirement of the Greenback.

Fortunately Lincoln saw that the greenback was necessary and supported legislation to create them. As time passed he seemed to have embraced them as he said: “… (We) gave the people of this Republic the greatest blessing they have ever had – their own paper money to pay their own debts…”
Quote from Who Rules America by C. K. Howe

Near the end of his life Lincoln expressed interest in printing more Greenbacks. Some believe that his association with the Greenbacks, as seen through the eyes of the bankers, was part of the reason he was killed. Many students believe that his lack of cooperation with powerful bankers created a conspiracy against him. Whatever the case, it is obvious that many bankers were happy to have him out of the way thanks to John Wilkes Booth.

Those who do not like fiat money and/or the Greenback attack it as being inflationary and not holding its value. Most of the Greenback attacks I have read point out that it reached a low of 36 cents against what started as a dollar’s worth of gold. They rattle this off and then dismiss the Greenback out of hand as being “toilet paper money,” or worthless.

This is an extremely deceptive and mean spirited affront on truth and logic and leaves out the whole picture. Let us therefore fill in the blanks so the reader can make an informed judgment.

What readers are generally not told was that this low represented a spike that lasted less than a month. It was caused in part by a fear that the country would have a repeat of the inflation of the Continental currency. As soon as Congress let it be known that the total issue would not exceed $450 million the value of the Greenback sharply rose against gold. Here are the facts.

Congress authorized the circulation of Greenbacks on Feb 25, 1862. Their stated value was equal to one dollar in gold. They dropped down to 58 cents by the end of the year, but rose back up to 82 cents about six months later and then back down to the low of 36 cents on July 16, 1864. This low followed the largest release of Greenbacks during the war – $200 million and some were frightened that an unlimited inflationary amount was forthcoming.

Congress stated the total release would be limited to $450 million and put and end to this fear and it rose to 68 cents by December 1865. It rose steady after that until it became equal with gold in December 1878.

If the total issue of new money was limited to Greenbacks during the war the value of the Greenbacks would have held much higher, but often overlooked is the fact that almost $2 billion in war bonds, which was over four times the number of Greenbacks, was the major cause of the inflation of fiat money during the war.

It is interesting to note that this still does not tell the whole story. A small detail left out by the anti Greenback crowd is that the purchasing power of gold itself fluctuated significantly during the Greenback era.

Now some diehards will claim the value of gold never fluctuates giving their reasoning that an ounce of gold is always worth an ounce of gold. This thinking makes no sense and is like saying a Greenback is always worth a Greenback or a pound of wheat is always worth a pound of wheat. The hard fact is that every currency and commodity fluctuates in value and this includes gold as we illustrated a few pages back.

During the war conversion of notes into gold was suspended so this turned gold into a commodity with fluctuations like wheat or corn. The price of gold in relation to its value compared to commodities at the beginning of the greenback era fluctuated over 200% during the war. Cotton fluctuated much more though because of interrupted flow from the South. Its range of value was 1300%. In other words, it took a lot more gold to buy a pound of cotton near the end of the war than the beginning.

Wages also rose but not as much as the average commodity price or gold. When one takes all these fluctuations into account he must conclude that any indexed value of the Greenback would move like a roller coaster during such turbulent times no matter what happened to gold.

Stephen Zarlenga gives this interesting quote from Civil War historian J. G. Randall:

“The threat of inflation was more effectively curbed during the Civil War than during the First World War. Indeed as John K. Galbraith has observed, ‘it is remarkable that without rationing, price controls, or central banking, Chase could have managed the federal economy so well during the Civil War.”

He then adds this:
The fact that the Greenbacks were not accepted for import duties may also have been an important negative factor against the currency:

“Hence it has been argued that the Greenback circulation issued in 1862 might have kept at par with gold if it, too, had been made receivable for all payments to the Government,” wrote financial historian (Davis Rich) Dewey.

When one considers the mountain of obstacles the Greenback had to surmount to hold on to any value it is amazing that it did not go the way of the Continental which was worth virtually zero at the war’s end.

Here is a partial list of what the Greenback had to overcome.

(1) Almost $2 billion worth of inflationary bonds thrown into circulation.

(2) A Secretary of Treasury that was against their existence.

(3) The fact that almost all the spending of the Greenbacks during the war was for the war itself which added no wealth to the economy. This would be similar to spending money on digging holes and then filling them up again. Nothing is added to wealth.

(4) The fluctuations of wholesale, commodity and labor prices during a fight for survival.

(5) Attacks by big bankers to undermine its value.

(6) Attacks by the Press attempting to bias the people against it.

(7) Counterfeiting attempts

(8) Being associated in the public mind with the Continental currency, which failed for reasons previously noted.

(9) A little known but potent problem the Greenbacks faced were religious fanatics of the time. Many Bible believers thought that gold was a God-sanctioned money and any move to create money not backed by it came straight from Satan. These people created quite a stir and turned many politicians against the Greenback after the war.

These preachers must not have read their Bible very carefully for it doesn’t really support their case. Yes, they used gold and silver as money or barter in Bible times but God didn’t seem to be thrilled with the idea. Take a look at these scriptures:

“Their idols are silver and gold, the work of men’s hands. They have mouths, but they speak not: eyes have they, but they see not: (Sounds like gold and silver coins)

“They have ears, but they hear not: noses have they, but they smell not:

…They that make them are like unto them; so is every one that trusteth in them.” Psalms 115:4-8

“Receive my instruction, and not silver; and knowledge rather than choice gold. For wisdom is better than rubies; and all the things that may be desired are not to be compared to it.” Proverbs 8:10-11

“He that loveth silver shall not be satisfied with silver.” Eccl 5:10

“They shall cast their silver in the streets, and their gold shall be removed: their silver and their gold shall not be able to deliver them in the day of the wrath of the LORD: they shall not satisfy their souls, neither fill their bowels: because it is the stumblingblock of their iniquity.” Ezek 7:19

“Neither their silver nor their gold shall be able to deliver them in the day of the LORD’S wrath.” Zeph 1:18

It is amazing that the Greenback survived these problems and became a major factor in not only winning the war but inspiring people for a generation afterwards including the creation of a Greenback political party. Now finally, after its seeming demise, interest in the principle behind it is surfacing again.

The confederate currency didn’t fare so well as the Greenback.

In 1861 a confederate dollar was worth 90 cents in gold. By 1862 it had gone down to 83 cents and then took a big drop the next year to 29 cents. By 1864 it was worth only 5 cents and by early 1865 was on its way to oblivion at less than 2 cents in value.

The student of history may wonder why the Greenback held on to its value so much better. After all, they were the same type of money in similar circumstances, weren’t they?

Not quite.

There were several key differences. The first all important difference is that the Greenbacks were declared by fiat to be money, not a loan or promissory note, but national “legal tender for all debts public and private.”

The Confederate notes had no such fiat. Instead, they were promissory notes to be redeemed for something else of value in the future.

The second difference, which is also huge, is there was no limitation set on the number of Confederate notes that could be added to circulation. Whereas the Greenbacks were limited to $450 million the Confederates with no limitation wound up printing $1.55 billion in bills – over three times the amount of the Greenbacks in the North.

On top of this Lincoln took a queue from the British and counterfeited the Confederate dollar and circulated as many as possible in the South. Private counterfeiters also did their share. Their inflation became so bad that the South used Northern Greenbacks themselves to purchase essential goods and services. No one knows how many Confederate dollars were in circulation but judging from their inflation rate, it was several billion dollars worth.

Many students of monetary history believe the Greenback was the best money ever created.  Its creation did not depend on bankers or loans and there was no interest to pay to anyone.

During the Greenback/Civil War era Ellen Brown says “the country managed to become the greatest industrial giant the world had ever seen. The steel industry was launched, a continental railroad system was created, the Department of Agriculture was established, a new era of farm machinery and cheap tools was promoted, a system of free higher education was established through the Land Grant College System, land development was encouraged by passage of a Homestead Act granting ownership privileges to settlers, major government support was provided to all branches of science, the Bureau of Mines was organized, governments in the Western territories were established, the judicial system was reorganized, labor productivity increased by 50 to 75 percent, and standardization and mass production was promoted worldwide.

“How was all this accomplished, with a Treasury that was completely broke and a Congress that hadn’t been paid themselves? As Benjamin Franklin might have said, “That is simple.” Lincoln tapped into the same cornerstone that had gotten the impoverished colonists through the American Revolution.”
Web of Debt by Ellen H. Brown, 2008, , Page 82

If we had created Greenbacks in our age rather than borrowing many trillions we would not be paying over $450 billion a year in interest. Instead, we could put that money to good use in keeping the nation solvent.

Maybe we will eventually learn our lesson.

Sources:
Web of Debt by Ellen H. Brown, 2008

The Lost Science of Money By Stephen Zarlenga

Patrick Carmack, Bill Still, The Money Masters: How International Bankers Gained Control of America (video, 1998), text at:
http://www.no-debts.com/anti-federalist/files/moneymasters.txt
Video at:
http://video.google.com/videoplay?docid=-515319560256183936#

The Lincoln Encyclopedia, Archer H. Shaw (Macmillan, 1950, NY

The Case for Gold by Ron Paul and Lewis Lehrman,

J. G. Randall, The Civil War and Reconstruction, edit. D. David, (Boston: Heath & Co, 1937, 2nd edition 1961)

Charles J. Bullock, Monetary History of the U.S., (New York: Macmillan, 1900)

Wesley Mitchell, Gold Prices and Wages Under the Greenback System, (Berkeley: Univ. Press, 1908)

Irwin Unger, The Greenback Era
(Princeton University Press, 1964)

A History of Money by Glyn Davies, 1994

 

Molecular Preparation

Joseph Dewey
This entry is part 18 of 31 in the series 2011B

Larry W Asks:
So getting back to the 24 (molecule of 12 couples), will this be folks who developed the skill aspect of spiritual maturity to the point where they can place their consciousness at any level they chose at will?

JJ
A successful molecule will be created from people who have learned understand soul contact and then to keep their attention “steady in the light.”

Many there are who have achieved some soul contract, some contact with the formless worlds, some focus on the light, but they are not steady. As soon as they feel insulted or offended – to hell with the light – it is time to lash out and give someone a piece of their mind.

The useful disciple must see himself as an observer as he moves forward in cooperation and not be distracted by the outside astral noise.

Merely learning to place your attention on a certain body or being proficient at meditation is not enough. The disciple must have the self-control to force his attention on the task at hand and keep it on the light of the path and let no person or circumstance change that focus.

All of the group of 24 must be able to keep their minds centered in the light and center themselves on the point of peace so the soul can be accessed and love for all in the group felt undisturbed.

Here are some things that can destroy the focus of one and thus disrupt the whole molecule.

(1) Offense is a huge factor. One disciple is offended over something someone else said or did.

(2) Grievance. This often follows an offense. One harbors negative feelings toward someone else in or out of the group.

(3) Anger. Anger has its place but not toward a group member seeking to serve.

(4) Feeling like a victim also takes the attention away from the light.

(5) Glamour. A problem occurs when the disciple sees himself as more important than he really is or shows a false humility by falsely downplaying his roll.

(6) Illusion He or she has illogical conclusions planted in his belief system that he has not worked out.

(7) Lack of tolerance. He thinks others are not doing things correctly, or not doing their share or not evolved enough etc. He then concentrates on their flaws which takes his attention away from his own light.

(8) Sacrifice. Even tough the keynote for the coming age is not sacrifice he must be willing to make essential sacrifices for the work and dominate lower desire.

(9) Wrong use of sexual energy. This is especially disruptive if it involves betrayal and can disrupt the whole molecule.

(10) Not following the highest he knows. The disciple must follow the truth when he sees it.

(11) Feeling love. The disciple must actually be able to feel love at any given or required time toward all members of the group.

(12) The disciple must be able to drop all the cares of the world and seek the soul as an individual or with the group at the drop of a hat no matter what the circumstance may be.

There are more but this gives the general idea.

Larry
Also I get the impression that once a soul achieves access to a higher part of him/herself, perhaps they no longer need to access the lower parts because the higher part they now operate from can access and use the capabilities/senses of the lower any time.

JJ
The disciple does not lose the ability to access or use the lower when he learns to use the higher. He uses the highest that is available and is able to use the lower more efficiently.

Larry
Speaking of groups, where will JJ find the 24 people for the very first latter-day molecule?

JJ
They’ll be found a number of different ways – some may even surprise me.

Larry
If it (the molecule) takes someone who lives from the Intuitional level then only Hercules need apply.

JJ
Keeping the mind centered in the light is more important than which body your focus is in. If you get some good intuition now and then but are offended at small things then your focus will be taken off the light, off the soul and away from love.

Ruth wants to know if the disciples of old will return to be in molecules.

Some will and some will not. Some will be people who are not known to history.

As far as the unfulfilled prophetic utterances go… Some were inspired and some were not. The important thing is always that which your own soul reveals to you.

Blayne rsponds:
Thanks for pointing out all my flaws so succinctly to remind me of what I need to work on… 😉

JJ
I hope I didn’t give the impression that perfection is required for none of us are there yet and when human molecules appear they will be made of flawed human beings just as existed in the time of Jesus. If I had to boil the needed qualities for the molecules down to one thing it would be this.

The applicant must have the self control necessary to shift his attention back to the light when human weaknesses have distracted him.

 

Copyright 2011 by J J Dewey

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