first majestic silver

Making Money the Old Fashioned Way--Printing It

November 23, 1998

Our currency, the beloved Federal Reserve Note, is printed by the Bureau of Engraving and Printing on 15th Street in Washington, D.C., and in Pyongyang. The Pyongyang printing is unauthorized, and small-time---only about 20 million yearly.

Economies are collapsing, some faster and earlier than others. One of them is that of North Korea, where government income falls far short of meeting expenses. Of course, that is true of nearly all governments, which solve the problem, in many instances, by printing money. The North Koreans are doing that also, but the money they're printing is ours, and why not! No one wants North Korean money. It's not that there's nothing behind it: there's nothing behind ours, either. Neither Treasury nor Federal Reserve will give you anything for it. But you can buy all manner of wonderful things with dollars, and not much with the North Korean stuff.

Besides, the North Koreans aren't insiders in the currency game. International financiers just don't take their money seriously. It would be futile, therefore, to print up large quantities of it for international use. The North Koreans have decided, therefore, to raise revenue by the sale of dope, and the printing of federal reserve notes.

It is a foregone conclusion that our own government regards this activity with distaste. In a real sense, however, it is a minor blessing. A major concern of our government is our economy, and means of stimulating it. If the North Koreans print up 20 million dollars and buy American goods with it, that's a nice little economic boost, and nobody had to borrow the 20 million to accomplish it. If the Koreans had borrowed twenty "legitimate" million, the final amount repaid might have been 25 or 30 million. In other words, the total amount of money, after repayment, would have been reduced by five or ten million: hardly a stimulus to our economy. By simply printing the 20 million, the economy was enriched by that amount, with no need for repayment of a single cent. A blessing!

It is the burden of debt which is crushing productivity in America, and the world in general. A moment's reflection will show that debt cannot be paid when all money comes into existence as a loan from a single source which demands back more than was loaned. Indeed, if only the principal were to be repaid, without interest, the money supply would shrink to nothing, since all the money had been borrowed. On the other hand, tangible money, such as precious metals, decried by the bankers as a "barbaric relic," does not enter circulation as a loan. It needn't be returned to the earth, much less with interest. Once in use as money, of course, it can be loaned at interest, but if the interest burden eventually becomes oppressive, it can be relieved by producing more of the money from its source, the earth. Natural gas is obtained from the earth, and I imagine that utilities lend one another natural gas when it becomes short in one location or another. They can repay when demand tapers and they have produced enough natural gas to meet their needs and permit the debt to be eradicated. Money is unique in being the only thing (sic!) which can be loaned, but never repaid. Actually, this is only possible because money is no thing.

Counterfeiting, however, permits repayment without further borrowing. It is as capable of producing high production and employment as borrowed scrip. While there are laws against it, those laws are obviously designed to favor the interests of the sanctioned counterfeiter, who obviously does not relish competition, especially from a source which is content to merely spend the money into existence, rather than lend it. The interest on the borrowed stuff approaches a billion dollars per working day, enough to make its creators protective of their franchise.

Moreover, it would be hard to sustain a charge of counterfeiting, since any definition of "counterfeit" that would apply to the Korean stuff would also apply to that produced in Washington. The conviction rate against counterfeiters (unauthorized) is, admittedly, almost 99%, but those convictions were handed down in courts owned and operated by the counterfeiters, and sustained by their activities. The jurors, moreover, had been told that they were to decide only the facts, and accept the "law" as presented to them by the judge. This is a perversion of the truth, but a people that accept funny money will accept funny law from funny judges.

Morally, of course, counterfeiting is unacceptable. It is a form of stealing by deception. The person who exchanges his homestead for a gilt-covered brick, thinking it solid gold, has obviously been cheated, as has the person who exchanges his homestead for a series of "notes" which are not, by any definition of the term, genuine. The fact that the government, which has a vested interest in the acceptance of those notes (they are "obligations" of the United States) declares it legal to tender them, is irrelevant from a moral standpoint. Wrong doesn't become right when the government announces that, for this particular wrongdoing, there will be no punishment.

The problem with counterfeiting therefore, is not legal, but moral, and economic as well. If everyone, or even every government, could ease economic problems by printing a "sound" currency, the explosion of prices resulting from this inflation would only accentuate the underlying economic problems. This is why governments limit counterfeiting to monopolies of like-minded individuals who become, de facto, if not de jure, the government, though unelected and unknown to the general populace. A moment's reflection, however, reveals that there would be no need for unauthorized counterfeiting, nor any bad consequences resulting from either doing it or not doing it, if the money was sound in the first place. In other words, the problems which stimulate the Koreans to counterfeit, as well as those resulting from excessive counterfeiting, "legal" or not, are inherent in the "money" itself. Like any narcotic, fiat money produces a delightful intoxication in the beginning, with no obvious ill-effects. Prolonged use destroys, however; and does so whether one continues, increasing the dosage daily, or stops cold turkey and succumbs to withdrawal effects. There is no middle ground, although survival is possible is cure is undertaken before the condition becomes critical.

In the meantime, the infusion of a paltry 20 million in counterfeit from North Korea is a sort of refreshing breeze, giving the addicts a little boost without the "hard" stuff. If, in addition, it gives rise to some thought about counterfeiting, its nature, and the circumstances which make it necessary, it is an unqualified boon.

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