Who, With Justice, Has The Right To Issue The Medium Of Exchange?
We know that one bona fide medium of exchange is a certificate of credit which gives evidence of a just claim for goods or services for which it will be redeemed. The other bona fide medium of exchange is a tax credit certificate which gives evidence that it will be redeemed when presented as payment for taxes to the governmental body that issued it.
So we ask, who, with justice, has the right to make out and sign a document which would be evidence of a claim for goods or services for which it will be redeemed? Of course the answer is that only the one who is in possession of those goods or services can write out and sign a document which states that he will give up his goods or services for that document or claim.
The goldsmith who possessed gold could, with justice, write out his promises to pay with gold because he was the possessor of the gold. The government had no right to issue claims against the goldsmiths gold. The neighbors of the goldsmith also did not have that right. Only the goldsmith himself had that right because he was the possessor of the gold.
When the United States government issued gold and silver certificates, it had a right, with justice, to issue those certificates because it was in possession of the gold and silver for which the certificates were evidence of a claim.
When the department store issued gift certificates or certificates of credit for merchandise in its store, its officials issued and signed the certificates because they were in possession of the goods for which the certificates were to be redeemed. [p. 73]
When the telephone company issued its tokens and certificates, it had the right, with justice, to do so because it was in possession of the necessary equipment with which to render the services for which the tokens and certificates were evidence of a claim.
Also each governmental body has the right, with justice, to issue tax credit certificates with which to pay for its own necessary goods and services because it will accept and redeem those certificates when they are presented as payment for the taxes that were levied at the time the certificates were issued.
Thus we see that the documents which are bona fide media of exchange are always issued by the possessor of the goods or services for which the documents are evidence of the claim for those goods or services. One company cannot issue certificates of credit, or gift certificates, for the merchandise of another company. One governmental body cannot, with justice, issue tax credit certificates to be redeemed by another governmental body.
The United States Constitution gives Congress the power to coin money. But it is understood that Congress is to do it with honesty and with justice. The United States Congress has the power to coin and issue money, with or without honesty and justice, but the Constitution does not give it the right to do it without regard to justice and honesty.
So let us see what money the United States government can coin or issue with justice and honesty. Since the government no longer issues gold or silver certificates, the documents that are now to be issued as money may only be tax credit certificates, issued as payment for the goods and services that the United States government buys. And then those tax credit certificates are to be accepted and redeemed when received as payment for federal taxes. The United States notes and the United States coins are to be issued as if they were United States tax credit certificates. They will then be and will serve as bona fide media of exchange for all purposes. Such a bona fide medium of exchange may be called money because it was issued by the federal government. [p. 74]
The United States government, then, has the right and the power; with justice, to issue as much money (tax credit certificates, notes, and coins) as is necessary for its just needs. It is not necessary and it is not proper for the government to borrow bank credit. However, the United States government does not have the right to issue tax credit certificates for any purposes other than for its own necessary expenses, and it must levy a tax equal in value to the amount of the certificates, notes, or coins it issues. In that way the government will have all the money it needs and inflation will never exist.
Any government, big or small, anywhere in the world can issue all the money (tax credit certificates) it justly needs for governmental expenses. It is never necessary for a government to borrow bank credit from within or without the country .It is never necessary for any government, anywhere, to borrow its medium of exchange. If the government has the taxing power that is necessary in order to borrow money, it can use the same taxing power to give value to the money it issues for itself.
(When a government borrows money, it levies a tax to pay off the loan, plus interest. When it issues tax credit certificates, it levies a tax only to redeem the certificates. There is no tax for interest because there is no interest to pay. The same security, the power to tax which a bank gets from a governmental body when it makes a loan to a governmental body, is the same security that is back of the tax credit certificates. If the security is good enough for the banks, it is good enough for everyone else. That is why tax credit certificates can be issued and accepted as a bona fide medium of exchange.)
It is very important to note that when credit certificates are issued and paid (for goods and services) into circulation, they are first earned by someone. Whoever earns them is, in justice, entitled to receive them. One reason inflation exists is because money is issued that has not been earned by someone before it is issued. [p. 75]
Some good people believe that the federal government should issue all the media of exchange necessary for the buying and selling of all the goods and services in the country. Let us remember that a bona fide medium of exchange is a document giving evidence of a just claim for goods or services for which it will be redeemed. Such a document can be issued and signed only by one who is in possession of the goods or services for which it can be redeemed. It follows, then, that before the government can issue a just claim for goods and services, it first must be in possession of the goods and services for which it issues the claim.
Therefore, in order for the federal government to have the right to issue, with justice, the media of exchange for all the goods being offered for sale, it would be necessary for all the producers of goods to turn over all their products into a large pool owned by the federal government.
35 While it could be done that way, such a monopoly would not leave much economic freedom to the producers within the nation. In the end the government would be setting the price of the goods for the producer, whereas the price should be set by negotiation between the producer and the consumer.
The banks now issue nearly all the media of exchange (bank credit) used by governmental bodies. The banks are not rendering any of these governmental services. Therefore, the banks cannot issue tax credit certificates which would be redeemed in the payment of taxes. But they issue and loan to governmental bodies bank credit which serves the same purpose. We cannot blame the banks. The government officials who authorize such loans should do their homework on the subject before they accept such loans. The governmental body can issue tax credit certificates which will serve just as well as the bank credit. And they will do it without any cost for interest payments.
However, no monopoly on the issuing of the media of exchange should exist, not even by the government. Some might say, Cant you trust your own government? If you cant trust your government, then who can you trust? We [p. 76] can trust our government; it is just some government officials we cannot always trust.
In the lifetime of the writer the government officials have not limited our money to a bona fide medium of exchange. Instead they have done the following:
- They, at times, made one-dollar silver coins with only thirty-five to forty-five cents worth of silver in each coin.
- The silver certificates were claims for silver dollars, so they too, at times, were issued as a claim for less than fifty cents worth of silver for each face value of one dollar. (That meant the government would buy one dollars worth of silver and make between two and three silver dollars, or between two and three dollars worth of silver certificates out of it.)
- The federal government officials authorized the bankers to form the Federal Reserve banking system, and gave that banking system the power to expand and contract the amount of money (bank credit) to be used as the medium of exchange by the government itself, as well as by the producers and distributors of goods and services. Thus, it gave them the power to control all business and to stimulate inflation and make deflation.
- The government officials have made no effective objection to the issuing of inflationary money.
- The officials are supposed to regulate the value of the money. They have not done that, and they cannot do it as long as they permit inflationary bank credit to be legal.
- The government officials who are elected to be good managers of our government have run the federal government into over a three hundred and sixty billion dollar ($360,000,000,000) debt which has cost the producers of goods and services, over $15, 000,000,000 in taxes just to pay the interest in 1969. And not one official has offered a sound way to reduce or pay off the debt. The debt could be reduced gradually until paid off as soon as the [p. 77] officials permit only bona fide media of exchange to be used.
- The officials passed the Coinage Act of 1965 which, among other things, made the Federal Reserve notes lawful money. Beginning in 1914 the Federal Reserve notes were not lawful money. On the notes, it was written Redeemable in Lawful Money. They are now legal tender; that is, lawful money. For the first time in the history of our country, we are borrowing privately issued lawful money. Remember, the making of these notes lawful money does not make them bona fide medium of exchange.
The above are a few reasons why some of us do not trust the knowledge and the ability of some government officials.
We, therefore, conclude that the media of exchange issued for the country will be bona fide and adequate, if the federal government issues tax credit certificates or United States notes and coins as tax credit certificates for only the goods and services it justly needs; the state and local governmental bodies issue tax credit certificates for their just needs; and if there is still a need for more of the media of exchange, then non-governmental corporations and private persons can issue as many certificates of credit as may be necessary in order to sell all the wanted goods and services that are produced.
In that manner all the media of exchange will be issued with justice. None of it will have to be borrowed and no one will have a monopoly in the issuing of it. It will always be issued by the possessor of the goods or services for which it will be redeemed or by the governmental body that will redeem it when it is presented for the payment of taxes. [p. 78]