Currency as Debt: A New Theory of Money
The White Grease Conspiracy
 

My Dear Friend,

In previous letters I explained that the concept of money—that is, currency, the thing used as money—is a public utility. I also suggested that currency can be viewed as colored grease and that color as a characteristic of the grease is irrelevant to the purpose of the grease—to lubricate the wheels of trade and commerce and to facilitate exchanges of wealth.

Yet, many people are upset with the current monetary system. If the substance of currency is unimportant, then why are these people upset? Furthermore, do these people truly understand why they are upset?

Many people argue that paper currency is not tied to the real world—that Congress debased the national currency by allowing removal of gold or silver “backing.” Some even claim that confiscation of gold and silver coin validates their theory of a conspiracy to rob people of their wealth.

Regardless of type, all currency deposits to financial institutions are recorded as a number after a “$” symbol. This was no problem before 1933, when the gold “backing” was eliminated, because paper currency always exchanged on demand for its equivalent face value in gold or silver coin. Prior to 1968 few people cared that gold no longer circulated because paper currency could still be exchanged for commodity silver, maintaining a real world connection. Once that connection was broken, many people felt they had been robbed. Merrill Jenkins, active in the coin machine business, was one of those people, vigorously protesting through his writings and lectures.

In my analogy using red, white and blue grease as currency, all blue grease (gold and silver coins) disappeared from circulation. Although gold and silver coins still exist, the coins lost their function as “currency.” Today, most currency is created by monetizing debt (red grease), but once in circulation in the community, the nature of its origin is indeterminable, that is, the color of the grease changes to white. Because all red grease enters circulation almost immediately, everybody now uses white grease. Therefore, many people exclaim, much as Murray Rothbard did in the title of his famous book, “What Has Government Done to Our Money?”

Yet, perhaps, if the public was “fleeced,” the robbery was “fair and square.” Perhaps they should have paid more attention to that dismal subject, economics.

The nation’s currency was certainly debased, but not necessarily because gold and silver coin ceased circulation. The challenge to that claim is that even when paper currency was “redeemable” in gold or silver coin, the currency, regardless of its form or substance, was additionally backed by goods and services. All currencies function this way.

As I previously noted, currency is a medium of exchange. All currencies, regardless of their type, represent debt, a negative value, in the form of unclaimed wealth. When used as currency, gold and silver coins serve the same function as paper currencies. Both merely represent debt, meaning society has an obligation to supply goods and services to the holders of currency at some future time. True, gold and silver coins contain a certain positive commodity value, but as long as the coins are used only as currency, the coins function exclusively as debt, as mere grease to facilitate commercial exchanges.

Yes, gold and silver coins disappeared from circulation. For many years people customarily deposited their coin with bankers. Returning later, they requested their “money,” discovering then that bankers kept no records of the type of currency deposited, just its “$” amount, and now only returned paper currency, all perfectly legal.

Of course, this irritated many people although the function of the nation’s currency never changed, just its substance. NESARA, The National Economic Stabilization and Recovery Act, a bill proposed for Congressional consideration, addresses this problem by requiring all financial records at institutions subject to United States jurisdiction to note the type of currency used in each transaction.

The function of the nation’s currency might not have changed, but its purchasing power certainly eroded once ties to the physical world were severed. Purchasing power continues to erode, one of the main reasons why many people are upset with the nation’s current monetary system. Had paper currency maintained its exchange value, few would have reason to complain.

The substance of currency is much less important than some people imagine. Many people erroneously believe that the decline in paper currency’s purchasing power was attributable to breaking its link to gold and silver. This is partially true, but a bigger cause was Congressional failure to provide proper control mechanisms to sustain the exchange value of paper currency and to insist on preserving that value.

In fact, government’s vested interest lay in the opposite direction. Working in conjunction with the central bank, another Congressional handiwork, Congress created and obtained first use of new paper currency, in effect imposing a heavy, although nearly invisible, tax upon the people.

You can’t fool all the people all the time. Some were bound to notice and sure to complain. Yet, you can fool most of the people some of the time, largely because most are ignorant of monetary policy and its significance in their lives. This is easily sufficient for insider purposes in a democratic society.

Once people become sufficiently knowledgeable of monetary issues, surely they will instruct their public servants, namely the Congress, to take corrective action. The NESARA plan certainly deserves full consideration and debate.

With all due regard and affection,

Your friend
 

Editor’s Note:

To better understand the concept that the currency represents unclaimed wealth, please read Back to Basics—The Nature of Money.

To understand how NESARA restores the national currency to being a true public utility, please read the following portions of the bill:

• Part I. Banking and Monetary Reform, Section 2 Findings
• Part I. Banking and Monetary Reform, Section 3 Congressional Control Of The United States Monetary System

To understand how NESARA establishes honest and moral characteristics for the national currency, please read Part I. Banking and Monetary Reform, Section 4 Provisions For United States Currency (Note: Section 4B, the characteristics necessary for Congress to lawfully define United States Treasury credit-notes).

To understand how NESARA maintains stable purchasing power and maintains a stable exchange value of all currencies in circulation, please read Part I. Banking and Monetary Reform, Section 9 Regulation Of The Exchange Value Of Treasury Credit-Notes.
 

Title of a poem by Ogden Nash