A Rebuttal To "Promises To Pay"
Jason Kirby
Mike Hoy's article needs a rebuttal. The assertion that a dollar is a promise to pay is incorrect. In this email I will explain why a dollar is not a promise to pay, and also refute a commonly held misconception that it is our money we are using.
"Promises To Pay" by Mike Hoy
http://www.gold-eagle.com/editorials_04/hoy111204.html
Alan Greenspan is quoted as having said that gold is the ultimate form of payment in the world. As of the passage of the money act of 1792, Silver dollars and gold dollars were the substance of payment. They were the legal tender and they didn't promise anything because when there was a promise to pay, they were that which was promised.
It would be useful at this point to note what may seem obvious: that the ownership of the coin was vested in the person spending it, until he passed it to his trading partner in exchange for goods. I make this point because certain types of people always try to get between parties doing business and make money as a go-between. And I intend to show how the central bankers have gotten in between every buyer and seller.
Silver and gold certificates were called dollars but were promises to the bearer from the issuer to hand over the coin on demand. They promised such on their face so they were actually promises. They circulated so that the metal could say locked up, but people were buying and selling by exchanging the title certificate to the gold or silver coin that was kept in storage. The certificates may have been legal tender (after 1862) but only because of the legal tender status of the coins that were on deposit for them, and even then only after the legal tender act and the cases that followed. It would have been considered silly to have the piece of paper be legal tender if there was no coin on deposit for it. And in 1862 many people hated a piece of paper being legal tender even when there was a coin on deposit for it (or supposed to be, how could they be sure?) and fought this new odditity in courts, and ultimately lost. This was a step in the progression of events that allowed central bankers get between every buyer and seller. http://college.hmco.com/history/readerscomp/rcah/html/ah_052400_legaltenderc.htm
But the wording on the money changed over the years (more steps), was shifted so that it went from being a warehouse receipt for specie on deposit, to taking the place of the specie itself. The common people may have noticed the change taking place but were not motivated or concerned enough to resist.
Now there is nothing specific on deposit for any one piece of paper and everybody knows it. Now the man no longer owns the thing (coin), or anything, when he possesses the dollar. All you have is a share of a ticket pool that lets you think you are doing all the things that used to be done with specie and certificates, paying taxes, buying, selling, saving, splurging. When real money circulated you had no intermediary, and now you do. The bankers are completely between the buyers and sellers of all goods and services. The ticket pool is composed of purely bank credit lent at interest to the people. Some folks call that usury. The system gives us inflation and bubbles, booms, and busts, no matter what, our ultimate creditors, the bankers, benefit from this arrangement.
Contradicting Mike Hoy's assertion that he made after he sat down to think about what a dollar really is, and was amazed to conclude simply that it is a promise to pay, it is not. Today the paper dollar promises nothing. It does not even pretend to be a promise to pay. There is no printed promise on its face. It is legal tender, or is declared to be on its face. It has taken the place of the gold and silver coins which were promised when gold and silver certificates circulated, but instead of a coin, you get a ticket.
You don't even own the ticket. The central bank owns that. You are only allowed the right to use the ticket, and by doing so, you accept the benefit (of using their property when the other option is to live poor as the result of having no access to cash) and find themselves in a commercial relationship with the bank, the system. Remember this the next time someone says, "It's your money!" It isn't, not like the specie was. Commercial law says that if the bus stops that is an offer, you board, that is acceptance, you are expected to pay and you do, that is consideration, the bus drops you off, that is conclusion. You are expected to pay if you accept benefits. If you use federal reserve notes, the property of others, to conduct commerce, you are expected to perform your part by contributing to the payment that goes to pay the stockholders, the owners of the member banks of the federal reserve system, to keep the system going and allow them to expand their scope of operations as a business. There is a set of complex contractual obligations between the people of this country and the banking elites because we use their services, I believe these obligations have grown like tentacles around all our necks and have more power over the people than they realize. It is to the point that it no longer matters what the Constitution has to say about anything.
Everyone should wonder how much it costs us to have this financial intermediary. The cost must be astronomical. It is likely far more costly than if people just used specie as per the money act of 1792. One way to reckon the cost might be to inventory all the physical or real luxuries and comforts of the central bank, the offices, the cars, the dinners, the lifestyle of the employees, job security, perks, jets flying around, cars, motorcades, travel, add them all up, the same for the IMF the World Bank, all the world's central banks, and there's the material cost of the intermediaries, doing for us what we could do for ourselves were we able to remain under the money act of 1792.
Then there are the moral costs and the sovereignty related costs. You can ponder these on your own.
Jason Kirby
kirbyjason@hotmail.com
November 15, 2004
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