Keys Writings, Part 3

This entry is part 5 of 34 in the series 2011C

Change of Mind
July 16, 2011

From Sen. Obama’s Floor Speech, March 20, 2006: “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

At the time, Senator Obama was urging Congress not to tolerate an increase that would bring the debt ceiling to $9 trillion. Under President Obama, the debt ceiling has been raised to $14.3 trillion. Even without counting most unfunded liabilities, the national debt is now calculated to be nearing $14.1 trillion. It increases about $4.22 billion per day (each citizen’s share stands at roughly $45K). Thus, Democrats will soon demand that the debt ceiling be raised, lest the sky fall. When they do, they will be asking for a significant boost in a ceiling that is already 60 percent higher than the one Barack Obama said was “a sign of leadership failure” five years ago.\ 2006-vote-against-raising-debt-limit-andrew-c-mcca

Re: A Curiosity
July 25, 2011

JJ You are correct here, Blayne. By all estimates Elenin is 1-2 miles in diameter and thousands of times smaller than a brown dwarf.

As far as a news blackout goes I think the problem is there is just nothing newsworthy. A long shot guess by one amateur astronomer that it could provide a spectacular display is not likely to make any news unless backed up by other astronomers as was the discovery of the Hale-Bop comet with its trajectory toward Jupiter.

There is less than a chance in a million that Elenin will create any problem for us so I’m not losing any sleep on it unless I receive some sort of revelation.

Much bigger news than anything recent about Elenin is the arrival of the half billion dollar space probe, Dawn, to the asteroid Vesta. This is a pretty big deal and I haven’t heard a word of it in the mainstream media. You can check this out here:\ orbital-im.html

Re: A Curiosity
July 26, 2011

I just cannot get excited about Elenin and have no sense that anything that it may cause will have ay negative effect on my life or anything I am supposed to do. I’m sure there will be some earthquakes between August and December of this year and if there are any significant ones then they will be attributed by some to Elenin, but the chances of it directly causing any harm to us is very low indeed.

I am about a thousand times more concerned about the economy.

By January of next year the memory of disaster warnings over Elenin will fade into the background as has the alarm over Y2K and Past Nibiru warnings. We will have other things to worry about.


Re: A Curiosity
July 26, 2011

JJ if the economy crashes will we have a world wide depression worse than anything else we have ever suffered from in the past depressions?

Ruth: If people have some money in their bank accounts or investments, will they lose the value of their money or lose the money?

JJ If we had a perfect storm we could lose everything. Without that things will just get worse until some positive changes are made.

Re: What Initiation is JJ?
July 31, 2011

DK says it is counterproductive for a teacher to reveal his status and I agree, but I will make this one statement. In order to pass my next initiation I must complete a successful molecule. Hopefully that can be done in this life. If not I will continue on into the next.

Re: A Real Brain Trust We Have in Congress...
Aug 1, 2011

What caused the inflation is the head of Zimbabwe’s Federal Reserve increased the money supply by 20 million times within a year’s time. The problem had nothing to do with interest free money but a reckless increase of the money supply. I doubt if the money was interest free since the central bank was printing it.

If we increased our money supply by 20 million times instead of 5% or so we would be immediately destroyed economically and it wouldn’t matter what kind of money it was if there was an increase like that.

You might want to read my treatise where I talk about various money systems. It starts here:

Re: Paul’s 2nd Food for Thought
Aug 2, 2011

Ruth: Joe Smith did not pass the 4th because he couldn’t give up his friends and family and was killed. But if he had gone West, he may have been able to still create a molecule, so what would he have to give up in reality?

JJ At the time he would have had to give up everything he held dear in his mind, his honor, his courage, his friends, his brother, his family, the respect of his followers. It was more than he could bear.

Yes, the reward would have been great if he had succeeded, but he did not realize that at the time.

Molecules can be composed of various numbers as I have taught before. The molecule of twelve is particularly powerful and has the attributes needed to build Zion. You not only need the number, but you need a Master to approve the molecule and overshadow it.

Re: Paul’s 2nd Food for Thought
Aug 2, 2011

The initiating molecule has to be linked up through a master. The additional ones must be linked up to the initiating one.

You do not have to worry about getting accepted by a master unless you are forming the first molecule. All molecules must be harmonious enough to allow for the flow of soul energy or they will not function or be linked to the first.

Re: Paul’s 2nd Food for Thought
Aug 2, 2011

Can we ever truly do more than just live the best life we know how and in doing so important rites-of-passage like Initiations happen in due course?


That’s about what we all have to do Rob. The drawback of studying the initiations is that many are impatient and want to see themselves on their last life when they have a long way to go.

Answer to a Reader
Aug 3, 2011
A reader named Benny made some comments at:

Here is my response to him. Note that his words are in CAPS and when he quotes me he uses lower case with quotation marks.

Benny: I HAVE READ A FLAWED MONEY SYSTEM, A TIME FOR ALL THINGS, THE IDEAL MONEY, THE NEW GREENBACK, And did Agree on much of it, until I came to These Quotes:

“Yes, it helps a little to get the best possible people in office and to make laws that attempt to restrain insanity but such steps are very insufficient to cure the disease. Outside help must be called in.” QUITE PESSIMISTIC!

JJ It’s not the outcome we all want but this is the outcome we’ve always had and if we follow the same procedure we will get the same results as in the past. If we want to change our destiny we need to do something different. The people themselves must take charge and create positive change.

Benny: “And where do we find such people? They are all over. They are called voters and most of these people do have the needed common sense.” NO THEY DO NOT! IF THEY HAD, WE WOULD NOT RESIDE IN SUCH A MESS.

JJ The common people have not been in charge and had little to do with getting us in this mess. The problems we have were created by people representing us while we have been too passive.

Benny: “The average voter knows better than to borrow more money than he can pay back.” NOT! WHO TOOK THE SUBPRIME LOANS? WHO BOUGHT TOO EXPENCIVE HOUSES, CARS AND STUFF?

JJ You’re not talking about the average voter here and those who took subprime loans were a small percentage of the population. Most of those who took such loans were way below average in income and many in this category do not even vote. The average person tries to balance his budget so he can make his payments.

Benny: “The average voter knows better than to spend more money than he has available.” NOT! ESPECIALLY IF HE DOESN’T HAVE ANY.

JJ You are thinking of people who are below average in handling their budget. Average people and above attempt to keep their financial houses in order.

Benny: “The average voter knows that his family wants many things he cannot afford so he has to set priorities in spending – unlike Congress that thinks it has to borrow whatever it takes to give us all the things we want.”


JJ We are over $14 trillion in debt and borrowing just to pay our bills. This is not sustainable.

Average people and above do not borrow to pay their bills, especially when there is another way.

I know that if I cannot pay my bills I will either make cuts or find a way to increase my income and most people I know think this way.

Benny: “The average voter is not a member of an elite club like Congress where he is under pressure to spend lots of money to be one of the group.”


JJ Again I think you are talking about a minority. None of my friends are like this. And even considering what you say, these type of people are much different than Congress who have spending pressures many times stronger than mere advertising.

What is more potent, an ad that says “Drink Coca Cola” or a political group that says, “Do what we say or lose your funding and your job?”

The answer is obvious.

Benny: “The average voter does not have to raise large sums of money to be elected and is not beholden to pressure groups.” THAT’S ONLY TRUE IF HE’S NOT TRYING TO BE ELECTED.

JJ Very few voters are trying to get elected to anything.

Benny: “Best of all, the average voter balances his budget and lives within his means.”


JJ To balance your budget and live within your means does not mean you do not borrow money. It means you are managing your budget so all debts get paid.

Congress only pays the interest on our debt and borrows money to pay that.

The average householder pays principle and interest and will have his loans paid off in the future. He doesn’t borrow to pay his debt.

Benny: “We cannot trust those who created the problem to solve the problem.”


JJ Yes, we are responsible for electing our representatives and it is not working so we have to try something else within the framework of the Constitution.


JJ Some people do this, but not the majority.


JJ Yes, this happened and some in Congress are still pushing for this to continue. This problem has diminished significantly, but it needs to stop completely. This problem is easily corrected through legislation.


JJ Most of the banks money is created from loaning money based on deposits on hand. If they have $100 they can loan out $1000 or so. Money is presently created through debt. This we must change.


JJ This may be true, but average people are not under the same pressures to conform that faces our representatives. Average people are not worried about getting reelected, being invited to Washington parties, being praised by the press, raising funds to keep your job etc. Because of this the majority of people support common sense decisions much more than our representatives.

For more on why I have faith in the majority go to:

Evil in the Eyes of Government Message List Aug 3, 2011

With all the dangers that assault us who does the government go after with guns and the full force of law?

Harmless people who sell raw milk. Take a look.

Re: Paul’s 2nd Food for Thought
Aug 3, 2011

I have been told to create a molecule. When it is correctly organized then it will be accepted. If there is not enough Harmony and soul contact in the group then it will not.

If I die before it is accomplished then others can try to create an accepted group. The important point to realize is that just getting the correct number of individuals is not enough. There must be group soul contact and acceptance from a Master who is a member of a higher molecule.

Re: Evil in the Eye of the Government
Aug 4, 2011

Back in the Seventies about a dozen of us got the bug Giardia in the small town of New Plymouth. Health officials became alarmed and investigated. They visited me and asked me if I drank raw milk. I answered yes. Then they asked me where I bought it. I told them but also told them that I was sure I didn’t get the bug from there. I told them that right after I drank some raw apple cider from a local plant that I was effected and thought that was the cause for the plant added water to the cider and the water may be contaminated.

They ignored this and went after the farmer and shut him down. They didn’t go after the apple cider plant for two reasons. First, they had an obvious bias against raw milk and second the owner of the cider plant was a powerful politician and they didn’t want to touch him.

I was further annoyed by the officials when I did my own survey and everyone I talked to that got the bug drank the apple cider but only a couple drank the raw milk.

Re: Paul’s 2nd
Aug 4, 2011

DK said back in the Twenties that there were only about 300 disciples, or third degree initiates, on the planet. So, using that as a starting point by interpolation there are probably a thousand or so today – though even this number seems high.

Bumper Sticker:
Aug 8, 2011

Clinton felt your pain. Obama causes your pain.

A reader made some comments about my post about Greenbacks at: Aug 11, 2011

He says:

Instead of garbage by Ellen Brown and Bill Still, read for once in your life the story of the Greenback. If you did, you would not regurgitate this fantasy about Lincoln and his Dick coming in a shining armour to save the village idiots from the big bad bankers.

Lincoln had as much to do with the invention of Treasury Notes as Saunders with the invention of fried chicken. Lincoln and his crew were all whigs; Chase learned what he knew about banking at the Bank of the United States, where he worked as attorney. The true fathers of the Greenback were Hooper, Corning, Spaulding. Hooper first practiced at the State level

(1) inflationary bonds – are you out of your mind ? bonds cannot be inflationary; if you bothered to pay attention, you would know that by 1865 $1,100million bonds were issued. The inflation was caused by the $300million additional Greenbacks, instead of the originally intended $150million Reply

Here was my response:

You act as if I said that Lincoln came up with the idea of the Greenback. I did not. You say that Corning, Spaulding and Hooper originated it. You overlook the fact that I did mention Spaulding’s role who was the main driving force behind it in Congress.

Just like any legislation today must involve both the President and Congress even so was it in those days. Who is the father of the current healthcare plan? Was it Pelosi and Reid, the lawyers who wrote the words or Obama? The fact is that the President had to support it to get it passed and in recognition of this it is called Obamacare. Does this make him the father of it? It’s a matter of interpretation.

The fact that people outside of Congress influenced Lincoln’s support of the Greenback is a separate story from its evolution in Congress. It was important that Lincoln be convinced, especially since he had the power of veto. Exactly how much interplay there was behind the scenes between Congress and the President concerning the Greenback we do not know but we know the is always a substantial amount on important legislation.

You rule out Lincoln’s reported conversation with Dick Taylor. Lots of things reported from history could be inaccurate or fabricated, but there is no proof this conversation did not take place so I relate it and let the reader decide. I also note that his economic adviser Henry Carey was said to have a similar influence on Lincoln toward the Greenback.

So instead of just having a narrow focus and stating that the Spaulding gang was the father of the Greenback I mention other possible influences. And you think that is wrong because…?

Bonds can be inflationary. Anything that can be used to purchase something can influence price increases. For example, if bonds were used to purchase 90% of the wheat then of course the price of a loaf of bread would increase.

Copyright 2011 by J J Dewey

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Creating Wealth

This entry is part 31 of 31 in the series 2011B

They say rocket science is complicated but I don’t think it holds a candle to understanding the economy, currency, the markets and what makes them work. If you study rocket science you basically learn A, B and C and find it equals D. There is very little if any disagreement among rocket scientists as to what makes a rocket work.

By contrast economic students can study A, B and C and cannot come to any unified conclusion. Some think the answer is D; others E or F and still others think no definite answer can be found. Average people listen to economic debate and their head starts to spin. Most just go with some authority that is in harmony with their mindset and accept what they say.

In this treatise I have only covered a small amount of economic thought, but it is an important part that is obscure to the people and widely misunderstood. I believe that the majority who read this can see the truth in what I present.

At present the majority do not know enough about the principles of money to know what is the best money system to support. Most people do not think about it that much. They believe our money system is in danger but not sure of the cause. They vaguely think that overspending and bad management has a lot to do with it but not sure of the details so they defer to their political leaders.

There are a number of economic points that the majority understand and these must be the starting point for positive change which is to come.

(1) It is precarious for the State, business or individual to borrow more money than he has income to pay back.

(2) Much of our money we borrow and spend is wasted.

(3) It’s not a good idea to place our finances in the hands of a third party as we do with the Federal Reserve for instance. Unfortunately many think the Fed is a government entity.

(4) If we really could create our own money interest free then yes, the majority would support this over borrowing from private sources at interest. The public merely needs convincing that this could be done.

(5) Most understand that too much money in circulation causes inflation.

(6) The majority feel there are a number of things wrong with our economy and money system but not sure of all the causes or the best solution.

That said let us sum up a plan for a money system that is likely to have majority support once the information in this treatise is understood.

As stated earlier there are two types of fiat money. The first is that which we have today. It is created not by the government but by a private banking system and then loaned to our government, business and individuals. All new money under the current system is linked to debt and interest.

The other fiat money is what is proposed here instead. We shall call this the New Greenback. This is money which creates no debt and adds no interest due by the government.

To create this money our government must do today what it did in the days of Lincoln and merely assume its constitutional authority to create its own debt free money. The new money could be more potent than the old Greenback, which had limited use. This new money could be used for all debts and payments foreign and domestic.

Under the current system the people are reluctant to support borrowing money to stimulate the economy or build new infrastructure. The downside is we have to go into debt and pay interest to do this.

This downside does not exist with the New Greenback. Let us say that we want to build a new bridge using the New Greenbacks. All the government has to do is issue the money to accomplish the job. The money, even though created by government, is far from worthless because after it is spent the bridge remains and will continue to add value to the economy for 50-100 years. Before the issuance of the New Greenbacks we had nothing. Afterwards we have a valuable bridge and new money added to circulation. The new money added to the system is not inflationary because its value is sustained by the value added by the bridge.

This is a much different situation than much of the money added to circulation in the past as much new money has been spent on things that add no value to society. During wartime we built many armaments that are destroyed in battle. These dollars were inflationary because they added no lasting value to our country.

In the past, much of the money that has been added to the system has been borrowed at interest to create armaments that add little wealth to the economy. They may be necessary for our security but their end is to be destroyed. Thus the dollars to create them are added to circulation but no added value to sustain the value of those dollars. A battleship built and then destroyed is as if it was never built (value wise) but the effect of the money added to circulation to build it remains.

If we create dollars to produce roads, bridges, and new infrastructure then we are adding value to our economy. When value is added in the form of usable products and services then dollars can also be added to the economy without producing inflation. If we issue New Greenbacks to sustain the creation of wealth building products and services then we can solve the unemployment problem. All we have to do is create wealth-building jobs with the New Greenback that can put people back to work. There are usually plenty of these to offer jobs to all who wish to work if we just had the money. The good news is that under the New Greenback system the money available for goods and services that add value would be unlimited.

One important use of the New Greenback would be in managing the national debt.

The first benefit is we would not be adding to the debt through borrowing from the Federal Reserve. Instead of borrowing at interest the government would merely create New Greenbacks debt and interest free with the stroke of a few computer keys. The only debt that would be added would be money borrowed from other nations such as China, Japan and the UK. At present foreign nations hold about 32% of our debt.

We would probably still borrow money from the nations with whom we have a trade deficit because these trading nations want to loan us money so we can use it to purchase more products from them. The New Greenback system would help with interest and repayment. Presently, we pay only interest on loans and we have to borrow to do this. Under the New Greenback system this would no longer be the case. Instead of borrowing, we could issue New Greenbacks to pay the interest (and principle when needed). This would have the benefit of creating no new debt.

Under the New Greenback system the trade deficit would shrink because of the stimulation it would provide for American production and the economy as a whole.

Unfortunately, much of the money borrowed by the government today not only places us in debt and accrues interest, but is spent on things that add no wealth. In addition to war materials a tremendous amount is spent on the various bureaucracies. Some government agencies, such as NASA, add some wealth to our system but many government workers just move wealth around without creating anything of sustained value. This is one important reason that a small government is good for the economy. The fewer the bureaucrats that need to be paid the better the sustained value of the dollar will be.

The Obama administration was mystified that their economic programs did so little for the economy. One thing that did not help, according to the U.S. Office of Personnel Management, between Sept 2008 to Sept 2010 (latest figure available) the number of federal jobs increased in number by over 174,000. These were not replacement jobs, but new ones.

Overall, according to a report by Obama’s own economists, the jobs added by his stimulus program cost $278,000 per job. If Milton Freidman were still alive he would be telling us we could have done better by just using helicopters and dumping the money at random for the people to spend.

It is now obvious that most of the stimulus did not go to wealth creating “shovel ready jobs,” and even Obama admitted this. Maybe the money didn’t go to shovel ready endeavors that create wealth but we do know it went somewhere. Obviously it went to low wealth producing high paying low value jobs that add little to the wealth of the nation. This is evidenced by the fact that the stimulus did not even create the expected short-term improvement except for a few fat cats benefiting. Instead, the unemployment just went up, the debt owed by our grandkids went up and the interest we have to pay in the present went up.

The Obama stimulus was $775 Billion. If we add in the interest yet to be paid it will add up to over a $1 trillion.

Let us say we could reverse time and instead of stimulating the economy with borrowed money at interest that was mostly spent on things that did not produce wealth we take a different approach, which is this.

The Republic takes back its power to create money and issues $1 trillion in New Greenbacks. This is plenty of money to tackle quite a few things. But let us say we just put $500 billion, or half of it, toward repairing and improving our infrastructure as well as building new schools. That would have reduced the unemployment rate right there and we could have had a half trillion dollars left over for something grand.

Forget about spending millions to help Chinese prostitutes to drink responsibly on the job or to restore old Indian trails. Here are a number of wealth producing projects we could have tackled.

(1) Going back to the moon with a dual purpose.

First, to add new life into the space program, which also has proven to add many wealth producing innovations as well as helping national security.

Secondly we would mine Helium 3 which is a non polluting environmentally safe nuclear fuel. This potent source of energy could supply all our energy needs for thousands of years and eliminate our dependence of foreign fuel. This project would pay of big time for centuries.

(2) As an alternative we could perfect breeder nuclear reactors that use nuclear waste as fuel and create non-poluting, carbon free nuclear energy while eliminating nuclear waste.

(3) Make zero interest loans to small businesses if they commit to hire one person for each $50,000 they receive. This would create jobs at less than 18% the cost of Obama’s program and we would get most of the money back to spend another time.

(4) If we just used the remainder and sent each man woman and child in the country a check for $1,600 each the economy would be more stimulated by this than anything done by the official stimulus.

And the best part would be that nothing would be added to the national debt, there would be no interest to pay and little or no inflation would result.

When one considers the possibilities it is amazing how simple the solution is to economic instability. Only four things need to be accomplished.

(1) Our government needs to take back its power to create interest and debt free money and issue New Greenbacks.

(2) The New Greenbacks must be issued, as much as possible, to support endeavors that create wealth.

(3) A reasonable balance must be attained so there is not a lack of money or too much money in circulation.

(4) Make legal the creation and distribution of alternative currencies such as gold & silver coin, local currencies, virtual currencies etc., though taxes and public services must be paid with the New Greenbacks. This leaves the door open for the best ideas in currency to demonstrate their value.

Even though items two and three are simple in theory they are difficult in execution because selfish interests want to overspend. Not only do powerful players seek to overspend but they care not where the money is spent as long as their pressure groups are happy. Thus we have the danger of the money being spent on projects that are frivolous and do not create wealth.

Fortunately, there is a solution to this problem and that rests with the final arbiter of power in this country as well as the world – the people.

The people are willing to do this if they have some organization or vehicle to provide a platform for their power. Two such organizations are outlined in this book. The first is Molecular Politics, a concept that allows the voters to be co-legislators with their representatives. Since this may take some time to create and perfect, a preparatory group called The Majority Speaks is proposed.

These organizations previously detailed in this book which is dedicated to the end that the people are well served and their goodwill becomes manifest as abundance for all.

Read This entire series. Here are the links.

Copyright 2011 by J J Dewey

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The New Greenback

This entry is part 28 of 31 in the series 2011B

There are a lot of different economic theories and ideas for an improved currency but one thing most thinkers have in common is this. The current system has a lot of flaws, is unstable and needs an overhaul.

So, what is wrong with the current system? Let us list a few items.

(1) Money creation is delegated to private banks instead of “We the people” through our elected representatives.

(2) The government borrows money adding to the public debt when it could create its own with no debt.

(3) The government borrows money at interest from private enterprise and other nations when it could create it’s own money with no interest.

(4) The interest rate on borrowed money, public and private, is determined by private interests.

(5) There are no effective restraints to prevent the Powers-That-Be from adding too much currency to the system causing inflation. They also have power to withdraw money from the system to create deflation which could lead to a depression.

The only current restraint is a debt ceiling that is supposed to limit government borrowing, but it may as well not be there. Congress routinely overrides it whenever it decides to borrow extra money placing citizens in greater debt.

A gold or silver standard is also ineffective for government has always found ways around their restraints and when a big crises comes along the whole metallic standard is trashed and becomes as if it never was.

So, are we doomed to a flawed money system no matter what we do?

I do not think so and here is why. We as a human race are always moving forward, making progress and perfecting that which was once flawed.

I remember when I bought my first Mac, a Mac Plus. I also bought with it the most sophisticated word processing program at the time – it was Microsoft Word, version 1.0. My new fangled computer with Word was a lot better than the typewriter I had before but it was far from perfect.

Then later they came out with version two, three, four etc. Each had improvements until we now have a program that does everything but polish your shoes. I still may not call the latest version perfect but I have to admit it does a lot more than version 1.0, and if I read the manual or Google information I can figure out how to get it to do any task within its parameters.

We have to look at the evolution of currency with the same perspective as a computer program. It may have had kind of a rough start and some versions are not as good as others, but overall we are progressing toward something that is stable and will serve us well.

Ancient Greece and Babylon had money version 1.0. Rome had version 2.0. After the fall of Rome we had version 2.5. The Tally stick was version 3.0. Creating fractional banking based on gold was Version 4.0. We experimented with several fiat systems and paper money in version 5.0 and then moved back to a gold standard in version 6.0. Finally with the creation of the Federal Reserve under gold we have version 7.0. Then when Nixon dropped the gold standard completely we moved to version 8.0 – and that is where we remain to this day.

Now some people may look at this progression and say that they think that some of these steps were not progress but this is also the case with various versions of computer programs. My favorite version of Microsoft Word is version 5 from 1992. Even so, I keep updating to newer versions to keep up and do find some things in them which are useful while others are annoying and distracting.

Unfortunately, we have not yet arrived at the equivalent of Word 5 as far as money goes, but improvements have been made that the public likes and I am sure will be retained and refined. Most of these are centered around the idea of convenience.

The impetus for the beginning of money itself was for convenience sake. Instead of trading cows for wheat it became much more convenient to trade coins. Later, paper became accepted because it was much more convenient to exchange a piece of paper than 20 pounds of silver.

The next stage in convenience is electronic money. It is much easier to buy something from a shop 1000 miles away with some type of electronic transfer than to send cash, check or money order.

Now some are experimenting with various forms of virtual money. Time will tell if this adds to convenience.

The point is this. If an innovation adds to convenience, whether it is an improvement in a car, a washing machine, a computer or money, then that improvement is here to stay.

Yes it is true there are always exceptions. Maybe the Amish would rather have a horse than a car and a pencil rather than a computer, but as a whole civilization will embrace that which adds convenience and will refuse to go backwards.

There are those who want to go back to coined money and gold backed currency but the inconvenience of doing this will make the crucial support for going backwards well nigh impossible. We might as well try and talk people into going back to the horse and buggy to save gas.

People will resist inconvenience like the plague and though this quality in the human race is an irritant to some it is overall a benevolent force that impels progress.

The results of new conveniences are rarely 100% positive. Perhaps the greatest convenience of our age is the automobile but this comes with the drawback of causing over 40,000 deaths per year in the United States alone. Does this make us want to return to the horse and buggy? Never.

How about air travel? The time savings is very convenient. But do stories of hijacks, terrorism and plane crashes discourage us? No. Convenience still prevails. Convenience always prevails.

Civilization has been shown that the transfer of money can be much more convenient than the exchanging of hard money of the old days and will demand that convenience continue or be expanded in any new version of the money system.

Has any new version of Microsoft Word dropped the spell checker? No. That will never go and neither will the ease of transferring money at the click of a button as long as there are buttons to click.

Now we arrive at the prime criteria for any new and successful money system on the horizon. It must not drop, but continue (and improve if possible) the convenience achieved with current money. One can argue the benefits of revisions of other aspects of the system but history tells us that the people do not want to drop any convenience even if there is significant risk. Any developer of a new money system needs to accept the conveniences established and work with them, not against them – include them, not exclude.

To create a new and improved money system we need to keep the conveniences attained and add two improvements.

Improvement One
Instead of giving the Federal Reserve power to create money and loan it to us at interest the government needs to take back the power to create its own debt free money given to it by the Constitution.

This money would have several advantages over the Greenback money created by Abraham Lincoln. The Greenbacks did not have universal legal acceptance. The banks were exempted from receiving them as payment for their huge government loans. They also could not be used for customs duties and imports. All these had to be paid in gold.

An advantage we have now over Honest Abe is the dollar is the reserve currency of the world and we now have the opportunity to create a universal Greenback that could have worldwide acceptance giving it power to revitalize not only the economy of the United States but be a benefit to the world.

The second advantage is our nation is not involved in a life and death struggle like the Civil War when the Greenback was created. During any such great crises the stability of currency always suffers and is sometimes destroyed. For the first time we have an opportunity to create a modern Greenback when we are not in a war of survival. Because of worldwide economic chaos the times are far from optimal but the situation just pushes the need for a solution to the forefront more than ever.

Improvement Two
The solution to a stable Greenback money system is a simple one. The State must not add more money to the system than will be supported by the value or increase in value of the goods and services in circulation. The simple rule is this. If there is too much money of any kind (including gold and silver) is added to circulation then we will have inflation. If there is too little money then we will have deflation, which is a much greater problem.

For instance, the housing crisis, which started in 2006 deflated the value of homes creating a domino effect leading to all kinds of economic woes. Imagine how bad things would have been if deflation was more universal.

So, to create stable Greenback money all we have to do each year is calculate the amount of money that needs to be released and added to the system. The next year we assess a new amount and repeat the process.

That’s a pretty simple process isn’t it? It is so simple a formula for proceeding could be programmed into the cheapest computer. The problem with making a new Greenback work then deals not with the problem of how much money to issue, but as always with the people who have the power to create it in the first place.

The solution to stable money is ever so simple a child can understand it. The State should not create or borrow too much money. The hard part is keeping these guys in line. Once a person gets a taste of spending money that seems to have an unlimited source, an addiction seems to take hold and nothing, even impending doom, seems to hold some of them back. These guys would continue to run up a tab on the Titanic even as it begins its descent into the great deep.

Are we doomed forever to have money systems that are held hostage to such human weakness?

I do not think so. For every problem there is a solution. Let us look at some.

Read This entire series. Here are the links.

Copyright 2011 by J J Dewey

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Fiat Money of the Past, Part 5

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.

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:
Video at:

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


To Fiat or Not Fiat

This entry is part 13 of 31 in the series 2011B

Okay, says the critic, gold and silver money (or commodity based money) is not perfect but it is a lot better than fiat money. Your fanciful parable sounds good but in actual reality fiat money has always led to disaster. Just look at the current debacle with our economy, which is based on fiat money. Do we want to create just another version of what we have now? I don’t think so.

The problem with this point of view is one has to accept a number of misconceptions to embrace it. Among them are:

(1) There were halcyon days in the past we can point to when there was no fiat money where the economy was stable.

The Reality Is: In all the history of the United States where any semblance of civilization has existed there has been fiat money or thin air money. This also applies to most of the history of the civilized world.

What is a good example of a period where there was no fiat money?

The darkest of the dark ages – not too good of an example.

(2) All fiat money is the same and equally bad, or nearly so.

The Reality Is: There is a huge difference in different types of fiat money and they all produce different effects.

There are two main divisions of fiat money which are:

(A) 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.

(B) Interest free money created by the government.

When one considers that we are paying over $450 billion just on interest per year then the advantage of the second type become blatantly obvious.

The last time we have created the second type of fiat money was in the creation of the Greenbacks by Lincoln during the Civil War. Since then all fiat money fits in the first category.

In the past century the banks have had a monopoly on fiat money, but there have been numerous examples in history where interest free fiat money has been used quite successfully. We’ll be elaborating on these.

In addition to the four main categories there are two subcategories of fiat money.

The first category is pure fiat money decreed to be legal tender by law but neither tied to or backed up by any commodity.

Since Nixon took us off any semblance of the gold standard in 1972 this is the type of money the United States and most of the world has had

The second type is money that has its value set by gold or some other commodity, but is not redeemable by anyone. The commodity such as gold merely determines the value of various bills. Ancient China used this method.

The third is where the value of the money is set by a commodity and can be redeemed by other banks institutions and nations, but not by individuals. This was the type of money the United States used from 1933-1972.

The fourth is usually called fractional banking rather than fiat money creation. This is where more than the value of the commodity, usually gold, is placed in circulation. The money can be redeemed in gold by all including private individuals. The amount of money created from a dollar’s worth of gold may range from $4.00 – $10.00, but many unscrupulous banks used a higher ratio – sometimes going up to 1000 to 1.

If a bank creates ten dollars for each dollar’s worth of gold then $9.00 of that is only backed by thin air and it can be argued that this money is as fiat as money can be. If all the banks’ customers come to redeem their money for gold then only the first ten percent would receive anything. 90% would get nothing.

During the entire history of the United States from colonial times until the present there has always been some type of fiat (or thin air) money in circulation. Those who advocate that we return to the past where we had a pure gold or silver standard just do not know their history. We have never had such a standard. For the purest possible gold standard we would have to go way back to the dark ages.

There are a number of views on the ideal money but what the idealist rarely admits, when defending his view, is there is a common flaw that has adversely affected money of every type throughout history. That flaw should be obvious to all and needs to be encapsulated.

Money is power and power corrupts. Unless checks and balances are put into place a large percentage of those who are in charge of the money will abuse their power for selfish gain – even at the expense and suffering of their customers and their nation.

This problem, an offshoot of human weakness, threatens all money whether it be fiat or gold backed, whether it be private or public, whether the basic system is sound or unsound.

Are we doomed then to be forever, manipulated by unscrupulous money managers? Should we just throw our hands up and give up?

Of course not.

What shall we do then?

The first thing is to create the soundest most beneficial money system. This is essential, for without a sound system the economy will stagnate even with honest people in charge.

The second is to not place blind trust in any central, regional or local authority who has power over the money supply or storage. The power to create or borrow money that places taxpayers at risk must be held in check by the people or some other means.

If these two points are realized then a sound money can be had by all and there is no reason that an optimum system will not last as long as the nation does. In fact a good money system will strengthen the nation and extend its life.

Read This entire series. Here are the links.

Copyright 2011 by J J Dewey

Copyright by J J Dewey

Index for Older Archives in the Process of Updating

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