Currency as Debt: A New Theory of Money
An Introduction
Part 8 of 9
 

The solution then is rather straightforward. The problem is not that more than one form of currency exists, or that a paper currency exists, but that:

1. There is among the various currencies no longer a relationship to the real world of physical wealth and,

2. No mechanism exists to prevent printing more paper currency than needed, and,

3. There is no means for consumers to determine the market exchange value of the various circulating currencies.

NESARA provides such solutions. NESARA reestablishes an arbitrary but statutory definition of the fundamental unit of currency, the dollar, as 371.25 grains of silver; thereby arguably satisfying Constitutional requirements. That arbitrary definition could have been defined in terms of gold, but silver was chosen to provide an historical connection with the original coinage act.

NESARA provides a new mechanism to prevent inflating of the paper currency. The major means today of inflating paper currency is by purchasing government debt through the Federal Reserve System. The Fed purchases that debt with currency created out of thin air, but more importantly, that new currency is backed by no wealth. NESARA establishes a Treasury Reserve Account, and the quantity of paper currency in circulation will be more easily regulated through that new mechanism.

NESARA restores both gold and silver coin to circulation. Additionally, NESARA provides a means to determine both the exchange value of the circulating currencies with respect to one another, and also provides a means to determine the exchange value of the paper currency with respect to goods and services. Both methods help maintain a stable purchasing power.

Unlike previous efforts of establishing a stable currency, NESARA does not compel a statutory exchange rate of any of the currencies in circulation. NESARA allows the market to determine the exchange rates of all currencies. A fundamental definition is provided, only establishing a known standard that all people can recognize, but NESARA lets the market go from there.

Because the exchange values of the various currencies are determined by the market and not by statute, should a means be discovered to inflate the paper currency the market will quickly discover that effort. The exchange value of that paper currency will fall. Yet, because other forms of currency are available, gold and silver coin, no person will be forced to accept the inflated currency; or people can adjust the price of goods and services to account for the lowered value of the paper currency.