first majestic silver

Coin Clipping And Inflation

April 19, 2001

All readers of GOLD-EAGLE know, I hope, that inflation is caused by increasing the supply of "money," regardless of what form it may take. I must use "money" in quotes, because current "money" isn't money at all, as it has no value other than as legal tender, meaning we are forced to use it to trade. Money is supposed to be valuable. I preach over and over again that you must save in measurements denominated in things other than a shaky "dollar" or other currencies, as they are shrinking measuring devices. When a measuring device changes values, you MUST store assets in other forms of measurement, and when you need to use your savings, you switch to whatever currency is in use by selling your other denominated assets into that currency, and you have (excuse the expression) "made money." As the supply of currencies grows because of electricity, ink, and paper being fed into printing presses, they always become worth less, and eventually these two words are melded into one…"worthless." All currencies in the world today are pieces of paper with ink on them, and stand for, or are backed by…nothing.

It was not always so. In ancient Roman times, there were no printing presses to turn out the money, and in fact parchment was difficult to manufacture anyway, so actual silver and gold were used as money. It's amazing what some people will do in a pinch. These coins were money, (no quotes) because to turn them out required a lot of effort to mine, smelt, and stamp out the coins. But inflation did occur. How? Simple! Look closely at the photo of the almost 2,000 year old silver Roman Denarius, which hangs over my desk. The photo proves a couple of things. First of all that silver has been, and probably always will be…true money. But secondly, note the small piece of the coin that is missing. This was "inflation" of 2,000 years ago. The Emperor, governor, Caesar, or whoever controlled the money, would "clip" a bit off of each coin as it passed through his hands. The "clippings" would be melted down, and made into new coins, thereby increasing the supply of money without having to mine more silver. In those days, it also became common practice to gradually, microscopically, reduce the size of the coins, and declare they had the same value. As today, the dumb Romans probably never knew the difference. Inflation is not new!

 Isn't it impressive that the dollar bill looks almost exactly as it did a hundred years ago? What better way to keep 'em fooled. "Why I always save a certain part of my paycheck, and put it in a savings account for a rainy day," is a phrase that has been uttered billions of times by billions of people. In the last hundred years, the 'look almost the same dollars' have lost about 98% of their purchasing power. Gold and silver, during the last hundred years, even at their low price in dollars today, are up over 1000%, and soon will mushroom wildly; I believe. The Romans were defrauded when their coins were "clipped," but not nearly as much as are the world's population today, no matter what country they may live in, because all currencies are worthless, other than by government laws which say everyone must use them. Anyone today who, "puts aside a bit of each paycheck in a savings account," is not saving anything, but losing the part of each paycheck he puts aside. Spend it! Do NOT save it, as it is a sure loss.

Walter Levy, an internationally known oil consultant, was born in Germany, and wrote: "My father was a lawyer, and he had taken out an insurance policy in 1903. Every month he had made the payments faithfully. It was a twenty year policy, and when it came due, he cashed it out and bought a single loaf of bread." The currency the policy was written in, Deutschmarks, had lost all their value. Is gasoline more valuable at two dollars a gallon than it was at 25 cents? No, as it is the same gasoline. The gas hasn't "gone up." The money has "gone down."

I am certain that in Roman times, the populace was enthralled to hear the Caesar tell them how well off they were, and today we have CNBC tell us all is rosy. The presses are as busy as California electricity suppliers, and there can't be too many ones, fives, tens, fifties and hundreds. There can't be too many Fanny Mae and Freddie Mac and other government sponsored mortgages, student loans, and grants, because every time one is given, the money supply grows by that much. If the currency supply didn't grow, the whole thing would collapse almost immediately, like an oversold Ponzi scheme, as it has everywhere else at one time or other, and here three times already. Government inflation figures are so misleading, I can't believe anyone would believe them. Inflation, as figured by the DC drones, includes perhaps half of the things we use. The fed occasionally tells us not to buy expensive things, or that we should, "fight inflation." Gee Dad, I don't increase the money supply, do you? I mean I don't have my own press that turns out bucks by the bushel, do you? Wouldn't it be nice not to have to worry about the $400 million the Dept of Education can't account for? Wouldn't it be nice to have spent, misplaced, lost, or, screwed up in finance, and not have to pay the piper? Government employees don't worry about hundreds of billions squandered, lost, or stolen…except for press releases. "Hell Alan, we are out of money again, lets sell some more bonds, O.K.?" As Lisa Doolittle of MY FAIR LADY fame said, "Wouldn't it be lovely?"

"We the People," tried to tell the truth about the income tax, and succeeded three times by placing full page ads in USA Today, but have been cut off from further truth - telling by the paper's management. I wonder who got to them? Why should any government, anywhere, at any time, release a statistic which makes it look bad? Why should any person tell bad things about himself? Don't we always gloss over our weaknesses and brag on our assets? Of course, as it is human nature. The same holds true with any government, from Roman times to now, and before.

The Romans clipped their coins to create false wealth. America's Treasury and Federal Reserve gleefully print, and print, and print, as does every other nation in the entire world. To whose benefit? Not yours or mine. Protect yourself.

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