What If !
I confess: I enjoy daydreaming. Actually, it's at night that I do my daydreaming, in that wonderfully relaxed period between putting my head on the pillow and falling asleep. I let my mind wander from practical concerns and worries into the wonderful world of What If! And, given the upcoming elections, my current daydream is What If: I were president! Well, as a practical matter, I'd be impeached or assassinated within months, but my daydreams are seldom that brutal—or maybe I just fall asleep before the hit man earns his pay.
Given my interest in the nature of money, and the powers of the presidency, it is tempting to think of those things the president could do to right the wrongs of fiat.
The powers of the presidency are limited; it just isn't a terribly important job. (Of course, I speak from the point of view of the Constitution, not present-day political reality). The president is chief executive officer of the United States corporation. An administrator, according to my dictionary, is one who "manages, supervises the conduct, or execution" of something. He also appoints ambassadors, and enters into treaties, but not without, in both cases, the consent of the Senate. He can appoint people to vacated Senate offices. He is Commander in Chief of the armed forces, and the various state militias, when acting on behalf of the U.S. He commissions officers of the United States, and takes care that the laws be faithfully executed.
Up until that last, it didn't sound like much of a job. Under a Constitutional government, one can imagine that many people might not know who their president was, or care. But the part about "taking care that the laws be faithfully executed" has a ring to it! The Supreme Law of the United States, after all, is the Constitution. And the President takes an oath to "preserve, protect, and defend" that agreement. If he has any power at all, it lies in that oath, which is unique to the presidency, and his duty to see that the laws (which, if not in agreement with the Constitution, are not laws at all) are faithfully executed.
In terms of the monetary situation, which laws would that be? Well, for starters, how about this one: Congress shall have the power to coin Money, regulate the Value thereof, and of foreign Coin." As one who supervises the conduct of the government (i.e., as an administrator) and is assigned the duty of seeing to it that the laws are faithfully executed---especially the Constitution---I could, as president, virtually eliminate inflation by simply requiring that this constitutional mandate be upheld.
My political enemies—who would be legion---might insist that this power was being exercised already via the printing of Federal Reserve Notes. That idea is so preposterous that the fervor with which it is defended is itself proof of the degeneracy of our system. One does not "coin money" by printing press; did you have your business cards "coined?" Besides, notes aren't money; they wouldn't be notes if they were. Moreover, FRN's are not legitimate notes, not being payable to anyone, by anyone, at any time, in any thing. And paper itself is not money, no matter how elegantly engraved and endowed with electronic gimmickry, unless there's ten times as much paper in a TEN as a ONE. There isn't, of course.
Congress has authorized the stamping of token coins, but the debt-settling ability of such base-metal tokens is limited to twenty-five cents. The dollar coin is only fifty percent heavier than the quarter, and they're made of the same thing. Obviously, they aren't money, either.
Well, I shall use my presidential clout to resume the coinage of money; gold and silver coin. After all, the states are prohibited from using anything else in settling their debts, and they are not allowed to coin money. Therefore, the states could, assuming any were interested, which seems doubtful, discharge their constitutional obligation honorably. What would happen to this precious metal coin? Some would find its way into circulation. Federal and state employees could cash their paychecks for specie. Some, doubtlessly, would. When that happened, it would signal the beginning of the end of fiat currency.
I would, of course, mindful of my oath, petition Congress to remove its "legal tender" status from the fiat. But even if it declined to do so, the use of silver and gold coins in addition to the FRNs would require the establishment of a dual pricing system. Those liable for income taxes would not long overlook the fact that an income of seven thousand dollars (of gold) is taxed at a much lower rate than its equivalent of, say, fifty thousand "dollars" of fiat.
Of course, the supply of precious metals is not infinite, as is the supply of credit. Savings in the form of specie would retain their value; conceivably, they could even appreciate. Fiat cannot compete; the supply of fiat must, necessarily, increase, to enable the payment of interest on money previously borrowed to pay interest, etc. Anyone bringing gold or silver to the mind could have it stamped into "money" free of charge, and the new money would enter circulation without a burden of interest. Gresham's law would take care of the fiat, without any help from Congress, just as it did for the Continental dollar.
It would also be my job to supervise Congress in its duty to regulate the value of foreign coin. How can there be fair exchange rates unless the value of foreign coin (its weight times its silver or gold content) is known and compared with the dollar? Of course, if foreign "coin" is simply fiat, there can be no rational exchange rate. Why would any U.S. producer take foreign bank "notes" when he can sell here for gold or silver? If the Russians and Chinese, for example, want U.S. goods, let them pay for it with gold. There's lots of gold in Russia, and when it was used in coins, Russia was the breadbasket of Europe. Now it's a basket case. If the present Russian rulers want to keep their jobs—and maybe even their heads---they'll provide the people with money, not scrip. Eliminate arbitrary and capricious exchange rates, and you'll level the playing field, making free trade equitable and profitable.
Congress is also charged with fixing standards for weights and measures. We have asked various federal officials what the standards are for the dollar, and been told that "weights and measures" do not apply to money. Well, sorry: they do. In my administration, the ultimate measure—the dollar—would conform to a standard. As administrator, in charge of keeping the laws faithfully executed, I'd see to it. The "dollar" should be as well-defined, and changeless, as the "gram" or the "inch." Why not? That would adequately "regulate the value" of the dollar.
Well, you get the idea. Inflation is an unmitigated evil which afflicts every working person on this planet; although those working for banks or governments could not maintain their standard of living without it—or so they think. And, unfortunately, banking interests, as pointed out by Franklin D. Roosevelt, "own" the U.S. government. Thus, my daydream is fated to remain only a daydream, and the people will suffer economically to the extent that they are involved with modern money. That's not a daydream; it's a nightmare, and we're living it now.
Dr. Paul Hein
24 September 2000