-16 votes

Benjamin Franklin Was No Fan of The Gold Standard

Federal Reserve Notes are the modern day, "colonial scrip."

Never thought I'd say that a year or two ago, but change is healthy.

Gold and silver can not supply the unlimited liquidity of a world market full of 6 billion customers. There's only so much precious metal to go around and quite frankly, if there wasn't enough to go around in 1751 there will never be enough to go around the globe today.


Franklin’s friends then asked him how the American Colonies managed to collect enough money to support their poor houses, and how they could overcome this plague of pauperism...

At that time, England was throwing into jail those who could not pay their debts. They therefore asked Franklin how he could explain the remarkable prosperity of the New England Colonies. Franklin replied:

“That is simple. In the Colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods and pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one.”

The information came to the knowledge of the English Bankers, and held their attention. They immediately took the necessary steps to have the British Parliament to pass a law that prohibited the Colonies from using their scrip money, and then ordered them to use only the gold and silver money that was provided in sufficient quantity by the English bankers.

(That's big...)

The first law was passed in 1751, and then completed by a more restrictive law in 1763. Franklin reported that one year after the implementation of this prohibition on Colonial money, the streets of the Colonies were filled with unemployment and beggars, just like in England, because there was not enough money to pay for the goods and work. The circulating medium of exchange (currency) had been reduced by half.

Franklin added that this was the original cause of the American Revolution – and not the tax on tea nor the Stamp Act, as it has been taught again and again in history books.

------------------- Full article linked above

The American Revolution was primarily fought over money, of course. The colonies wanted to print their own money, but England said hell no, you're going to use what we tell you to use.

Aren't all wars fought over money?

In 1913, America created the Federal Reserve. And then we got dragged into WWI shortly afterwards.

Was WWI started because America decided to print their own money again?

I hate to be the Dollar's advocate, but I think it is wise to question everything in an objective way.

Ever since the colonists of the United States decided to print their own money, America has been at war.

Is the printing of dollars itself the cause of all wars today, or is the attempted prevention of dollars being used around the globe the root cause?

If gold and silver were the only forms of money today, few people would own all of the wealth like kings and queens, and the rest of us would be begging for scraps and crumbs off their table.

Jesus turned over the tables of the money changers, and the benches of those selling peace doves for gold.

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"Upon the Whole it may be observed, That it is the highest Interest of a Trading Country in general to make Money plentiful; and that it can be a Disadvantage to none that have honest Designs."



The OP is unverified

As much as Id like to see Franklin's discussion on colonial scrip be true; I have never been able to verify it.

I have never read it in the copy of the autobiography I have.

It may be in a later copy made in the 1800s, but Ive never been able to see a copy to check.

About the only thing I could find that remotely came close was declarations of the stamp act congress, #9 specifically:
9. That the duties imposed by several late acts of parliament, from the peculiar circumstances of these colonies, will be extremely burdensome and grievous; and from the scarcity of specie, the payment of them absolutely impracticable

Which I assume is in reference to the currency act of 1764.

Ben Franklin was a big fan of porn

If authorship is any indication, anyway. The author of "Advice to a Young Man on the Choice of a Mistress" and "The Speech of Miss Polly Baker," is also reputed to have been one of the first American's to have acquired a copy of John Cleland's erotic classic "Fanny Hill." Of course, Franklin also flirted with fiat scrip for a while, so his judgment couldn't have been all that sound, after all.

dynamite anthrax supreme court white house tea party jihad
West of 89
a novel of another america

Loves of Dictators

Dictators love to claim that when they do something it is right, and when someone else does it, it is wrong.


Contempt before Investigation


“There is a principle which is a bar against all information, which is proof against all arguments, and which cannot fail to keep a man in everlasting ignorance that principle is contempt prior to investigation.”

The nature of counterfeit money?

In the words of Benjamin Franklin are concepts well elucidated concerning the nature of money.

"There is a certain proportionate Quantity of Money requisite to carry on the Trade of a Country freely and currently; More than which would be of no Advantage in Trade, and Less, if much less, exceedingly detrimental to it."

The nature of money is "to carry on the Trade of a Country freely and currently" which can be understood or which can be another example of contempt before investigation.

Whichever works for whoever carries on the trade they choose freely and currently wherever they may be in time and place and moving to another time and place.

A useful concept for me has been the concept of power.

Trade does not move without power.

Money can be understood, and even measured accurately, as the power to purchase.

Having no power to purchase is an accurate measure of something other than money.

Having more power to purchase than any other unit of purchasing power is an accurate measure of a highly competitive money unit.

Show as much contempt for the high powered money as you wish; as you please.


Once again saying nothing


About this time there was a cry among the people for more paper money, only fifteen thousand pounds being extant in the province, and that soon to be sunk. The wealthy inhabitants oppos’d any addition, being against all paper currency, from an apprehension that it would depreciate, as it had done in New England, to the prejudice of all creditors. We had discuss’d this point in our Junto, where I was on the side of an addition, being persuaded that the first small sum struck in 1723 had done much good by increasing the trade, employment, and number of inhabitants in the province, since I now saw all the old houses inhabited, and many new ones building; whereas I remembered well, that when I first walk’d about the streets of Philadelphia, eating my roll, I saw most of the houses in Walnut-street, between Second and Front streets, with bills on their doors, “To be let”; and many likewise in Chestnut-street and other streets, which made me then think the inhabitants of the city were deserting it one after another.

Our debates possess’d me so fully of the subject, that I wrote and printed an anonymous pamphlet on it, entitled “The Nature and Necessity of a Paper Currency.” It was well receiv’d by the common people in general; but the rich men dislik’d it, for it increas’d and strengthen’d the clamor for more money, and they happening to have no writers among them that were able to answer it, their opposition slacken’d, and the point was carried by a majority in the House. My friends there, who conceiv’d I had been of some service, thought fit to reward me by employing me in printing the money; a very profitable jobb and a great help to me. This was another advantage gain’d by my being able to write.

The utility of this currency became by time and experience so evident as never afterwards to be much disputed; so that it grew soon to fifty-five thousand pounds, and in 1739 to eighty thousand pounds, since which it arose during war to upwards of three hundred and fifty thousand pounds, trade, building, and inhabitants all the while increasing, till I now think there are limits beyond which the quantity may be hurtful.


what exactly

So, what exactly was the opinion, or observation, of Mr. Franklin as to what the nature of paper currency should be ?

Republicae's picture

Ben Franklin went 83 days out

Ben Franklin went 83 days out of 89 total days (93%) during the Constitutional Convention, the interesting thing is that during his time at the debates on the Constitution, he did not raise issue with the total and absolute rejection of bills of credit (paper scrip) as a medium of exchange in the United States Constitution, nor did he raise issue with the fact that only gold and silver were authorized as money.

*By the way, Benjamin Franklin was 23 years old when he wrote his pamphlet: “The Nature and Necessity of a Paper Currency.”


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

I have read the pamphlet


I have read the "the nature .... currency"
In it, Franklin manages to say absolutely nothing as what the nature of a paper currency should be (he doesn't even explain what the nature of the paper currency in use was)
I have a better quote, blamed on Franklin, in which paper currency is only substitute of money; and in those days real money meant silver coin to everybody.

"On the whole, no method has hitherto been framed to establish a medium of trade in lieu of money, equal in all its advantages to bills of credit, founded on sufficient taxes for discharging them, or land securities of double the value for repaying them at the end of the term, and in the mean time made a general legal tender. The experience of now near half a century in the middle colonies has convinced them of it among themselves, by the great increase of their settlements, numbers, buildings, improvements, agriculture, shipping, and commerce. And the same experience has satisfied the British merchants who trade thither, that it has been greatly useful to them, and not in a single instance prejudicial."

Not even Alexander Hamilton considered anything other than gold/silver/copper coin the money of the constitution; of course, he and his friends intended to circumvent the piece of paper, and establish their own printing-press bank(s)

At the same time, even Thomas Benton and William Gouge recognized the usefulness of Treasury drafts and bills of exchange

So, I think, (correct me if wrong) Mr. Franklin had in mind a sort of non-legal-tender Treasury note as paper currency; as was advocated by John Calhoun in the 1830s.


Republicae's picture

That is exactly right 789!

That is exactly right 789!


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun


Which means that "zooamerica" (and the whole LaRouche crew who lumps Franklin in with Hamilton, Clay, Lincoln) should read some real history first, then build up theory/thesis; similar fabricated quotes are used to make Jefferson out to be advocate of printing-press money

a few facts to show that all those conspiracists who sell books and other products on the mythological Lincoln and 'his' Greenbacks are liars

Republicae's picture

I agree, it is the Ellen

I agree, it is the Ellen Brown/Bill Still Syndrome!


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun


on page 225 of "Web of debt" the team that compiled the "book" directly quotes the LaRouche party-line:

"The American system of Franklin, Hamilton, Lincoln"

a) perhaps a hint as to the source of her sudden interest in the subject, and the source of her immense knowledge

b) it is a contradiction of what they said 200 pages earlier, when Hamilton was the big bad man who organized the 1st Bank.

Ben Franklins time with the Iroquois Indians.

did it really happen? or is that just another urban legend?


Interest of the people?

There is a reference to a pamphlet anonymously printed by Mr. Franklin titled The Nature and Necessity of a Paper Currency.

Using Google I found this:


"There is a certain proportionate Quantity of Money requisite to carry on the Trade of a Country freely and currently; More than which would be of no Advantage in Trade, and Less, if much less, exceedingly detrimental to it."

There is more offered by Ben Franklin in that work.

Confusion ensues whenever anyone believes in the claims that there is only one form of government and that one being the counterfeit one. From that confusion there is exponential compounding of interest in compounding the confusion infecting the confused by those who are not, and therefore those not confused benefit from those who are confused; with interest.


competing currencies

Again, I think the most obvious solution to this debate is to legalize competing currencies. The libertarian argument isn't a promotion of the gold standard, it is a promotion of the idea that the marketplace should decide the currency the people want. The people likely would want the gold standard, however to that point, I also disagree that "there isn't enough precious metal to go around". That seems like the zero sum game thinking that liberals use for their socialism. Who cares how much gold there is, the value of it changes in relation to it's need. A free system would still likely use bank notes instead of physical gold, and those notes would still likely increase or decrease in demand relative to how much gold there is and how securely the system fights against inflation. In theory, printing more notes without the gold would be illegal as it is fraud, however, people need the money and need the financing, so even if the gold supply increased slowly, the value of the bank notes would change based on demand, and if there wasn't enough to run the economy, then local transactions would simply use a different kind of currency. That is the beauty of legalizing competing currencies rather than making a gold standard the law. Gold would still be the preferred method, but for local transactions or person to person, people would find an additional medium.

Free market capitalism isn't right for America because it works better. It's right because it's free (and it works better).

behaviour of currency

good currency drives the not so good out of circulation

competing currencies have been tried:

people will always hold onto the note that has more credibility, that will more likely maintain its purchasing power

paper notes and silver coins are competing currencies; silver coins will be hoarded, paper notes passed on

It has been observed that in time of competing currencies the utterly worthless circulates the most, and the valuable will hardly move

Republicae's picture

It is important to understand

It is important to understand that during the Colonial period, Britain generally prohibited the colonies from establishing colonial mints and also restricted the export of British coins to the colonies, but these restrictions were not overwhelming as to affect the colonial economy, in fact, the prohibition was rather weak in that it prohibited the export of coin, but not specie, which had no prohibition on its export, additionally, foreign coins were totally exempt from the ban. British coins were routinely melted down and then were legal as export without any hindrance.

Throughout that period there was what essentially amounts to a competitive race for devaluation of all colonial units of account, thus by 1704, the Crown made proclamation that the maximum devaluation should not exceed 6 shillings to the dollar (Spanish Milled)which was in common use throughout the colonies.

The prohibitions were evaded throughout the colonies, the Crown sought to restrain several practices that were detrimental to trade and commerce through various proclamations, like the one in 1704, which was passed into actual law that year. The Crown send instructions to the Royal Governors and passed suspension clauses in an attempt to restrain the various monetary manipulations used in the colonies. None of which proved effective, thus in 1751 the Currency Act was passed, but even that was extremely limited in scope.

First, the Currency Act of 1751 only applied to the colonies of New England and was essentially confined to only one segment of colonial issued scrip and that was government expenses, placing restrictions on the quantity issued and the designated period of redemption. It also forbade making colonial scrip private legal tender. Thus, it had little or no effect on the use of scrip among the general public as is asserted in this thread. In 1764, another Currency Act was passed into law that pertained to the remaining colonies, it was essentially the same as the Act of 1751, in scope and effect.

To the common man, the increasing quantity of scrip depreciated the value of each unit. It hurt creditors, it hurt labor and it was, as it is today, an insidious means of covert taxation. Though forbidden by the Crown, legal tender laws only served to drive specie out of circulation. It increased the foreign exchange rate, caused an imbalance of trade and put uncertainty within the general economy.

The scarcity of coins in the colonies was not due to any prohibition, but to an unfavorable balance of trade brought on by a depreciating paper scrip, which also drove specie out of circulation. We must remember that this had been going on in New England since 1690, thus the effects were decades in the making.

Like all paper money regimes, if done in moderation, the effect is prosperity, but only if there is restraint on the issuing authority, that was not the case in the Colonies any more than it is today, anymore than it has been in most societies that have attempted money by fiat.


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

This Franklin Quotation Is a Fake

Where all this pro-paper money stuff is coming from on a Ron Paul website is beyond me. The argument that there isn't enough gold and silver to go around is ridiculous. David Ricardo answered that one 200 years ago. Prices simply go down, and the same amount of money can now facilitate a larger array of transactions. What's the problem?

Why someone who has taken so little time to understand the hard-money position---so little time that he repeats one of the silliest arguments against it as if it had never been answered before!---would take such a strong position against it is beyond me.

And on top of this, this Franklin quotation is a fake. Show me the primary source. Where did he say it? He never did. The colonies were not allowed to print their own money.

I also can't believe someone on a Ron Paul site repeats left-wing nonsense about how we'd all be starving under a gold standard except a few kings and queens.

Why don't you just watch Rachel Maddow and be done with it?

The greatest advances in the living standards of the poor took place under the gold standard. Or can you find a more rapid improvement in the living standards of the poor than in 19th-century England and the US?

What is the accurate label?

What is the accurate label for the practice of creating a false version of an actual competitor, and then claiming that the false version is the real version?


Anything other than Gold

Pick any form of money other than Gold, any viable competitor, and then create a false version of that viable competitor, and then claim that the false version of the viable competitor is not a viable competitor?

What is that practice called?


Republicae's picture

What was occurring in the

What was occurring in the Colonies was essentially the same as what is taking place today. The Colonies were doing little more than creating a "stimulus", creating scrip to stimulate economic commerce. But, just as we are witnessing today, there is an initial feeling of "good times are here again", but eventually it loses its luster. It creates what amounts to an illusionary economy and that is exactly what happened in the Colonies.

As I have stated numerous times on the DP under various articles on the subject of gold verses fiat currencies, one of my favorite historic economist, David Hume addressed the mechanics of inflation in several essays during the mid-1700s, the Founders were well versed in the works of David Hume. Hume stated that when a new influx of money enters the economy, that initially there is a gain, the appearance of growth and prosperity, but, at the beginning, the money does not impact all prices within the economy because it takes time for the "new money" to circulate, thus, in the beginning, prices rise by degrees, gradually, until all prices are increased throughout the economy in proportion to the amount of new money issued.

Usually however, the last increase is in wages, this does not pose a problem until there is an ever-increasing amount of new money issued into the economy and the rate of price increases out-strip wages to the point that it becomes increasingly difficult for the wage-earner to maintain a decent standard of living. Thus, inflation causes a rise in prices while at the same time reducing the real purchase value of each of the monetary units in the possession of the people. Now, this system works for a while, indeed, pressures increase on employers to the point that wages are increased, but no one is better off then they were before because the effects of the stimulus of fiat monetary inflation has equalized. There are essentially no lasting positive effects and, as time goes by, the official issue of more and more paper money takes on a very different scale of operation within the economy. There comes a time, as it did in the Colonies, when the issue of paper scrip was so drastic that mere inflation turned into hyper-inflation.

Indeed, the outrage of this growing threat of inflation caused many within the Colonies to address that issue with the Crown and thus the various attempts at reform in 1751 and 1763 were made. Contrary to the assertions within the above article, it was not that the Crown wished to deprive the Colonies of prosperity, it depended upon a prosperous Colonial system for its own welfare. The drastic degree of inflation that took place in the Colonies not only hurt the common people of the Colonies, but it damaged trade and commerce. The attempt by the Crown was to gradually reduce the level at which the Colonies issued scrip, the time-table for such reduction was to be several decades, not suddenly. Thus, the Crown did not simply issue an edict for the Colonies to immediately stop the issue of scrip, as is asserted, the currency reforms were to take place over a period of time.

The problem was that the Colonies, like our government today, was that the supply of scrip was increased so rapidly during the early portion of the 1700s, that the effects of inflation turned into hyper-inflation. Thus, the economy of the Colonies was beset by an increasingly vicious spiral of ever-increasing prices, followed by rising wages, again and again, the people were being subjected to the uncertainty of the pricing structure within the economy, business could not make future decisions because of the fact that there was such a great unknown in the pricing structure within the economy.

Like our economy today, commerce in certain sectors comes to depend in a new influx of fiat currency to effect the illusion of growth and indeed profit, but it is just illusionary and it eventually becomes obvious that it is unsustainable, the boom becomes a bust.

When looking at the economy of the Colonies during that period, it is easy to make comparisons to our own economy. With every issue of new currency, the same type of people got the real benefits from the issue, the bankers, investors and politicians reap the real rewards and are able to invest, make purchase with the new issue before inflationary depreciation takes place and the currency loses more of its purchasing power. Banks find themselves with more money to lend, the demand for investment rises, construction increases.

Misallocation of resources, mal-investment and down-right fraud becomes common-place. Eventually, everything becomes dependent upon the expansion of the money supply, it happened the same way in the Colonies as it is and has happened in our own modern economy under the auspices of the Federal Reserve. It doesn't matter who does it, whether it is the FED or the Congress, the effects are always the same when there is the ability to simply print currency without limitation or restriction. The entire economic substructure begins to crumble from either the reduction of stimulus or when the rate of monetary inflation reaches hyper-inflationary proportions, as was the case in the Colonies.


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Patently false

"It creates what amounts to an illusionary economy and that is exactly what happened in the Colonies."

I have to go so my comment offered at the moment will be limited.

The use of donations by tax payers were used to build such things as bridges and libraries.

"It creates what amounts to an illusionary economy and that is exactly what happened in the Colonies."

That sentence offered in quotes accurately measures up as "an illusionary" false claim "that is exactly" opposite of the use of tax payer funds to increase the productive capacity of the tax payers and, not limited to that economic advantage, even those so called "free riders" (those who can't afford donations) gain by that investment of that productive, economic, power.


Republicae's picture

After reading numerous

After reading numerous comments of yours I have come to the conclusion that your babbling is exactly no more than that...You cannot seem to offer a coherent rebuttal, you offer vagueness as though it held some meaningful insight, but your comments always fail to muster even the least degree of actual commentary on any subject. Your comment seemingly has no real bearing on the subject and, as they always, without any exception, you present your comments in an abrasive manner that is less than admirable. Stick to the subject at hand instead of offering us scattered commentary that, as obvious as it should be to you, few really respond to.

You just never seem able to make your case, your rebuttal was essentially a non-rebuttal, as are most of your comments...why is that?


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Still time to defend

I have to go soon.

"...your babbling..."

Why would someone resort to the fabrication of false names?

An opinion might be that a reader, any reader, considers any words written to be examples of "babble," but that is merely an opinion that can be offered as an opinion.

When the practice of DOMINATION by fraud, threat, or violence is deep down into the root of an infected person, that practice is often exemplified in the routine of claiming that an opinion is a fact.

An opinion is not a fact.

An opinion is merely an opinion, in fact.

"You cannot seem to offer a coherent rebuttal..."

A bridge built somewhere in New England may be a good study as to the actual facts of the matter of how investments are made by voluntary tax payers so as to collect up enough funds to build that bridge, and once that bridge is built the tax payers and the so called "free riders" increase their productive economic power significantly.

"...you offer vagueness..."

You exemplify that which you offer?

"...your comments always fail to muster even the least degree of actual commentary on any subject..."

The point of fact, the bridge, in New England, built by tax payer donation, in one form or another, did exist, may still exist, and proves the point without any need to focus attention upon me personally.

"Your comment seemingly has no real bearing on the subject..."

You could just as easily claim that I am no longer among the living, and such a false claim would remain to be as false.

"...your comments in an abrasive manner that is less than admirable..."

Rather than vague references to some nebulous wrongdoing done by me, in point of fact, an accurate account of what actually happened exists.

"...your babbling..."

That can hardly be considered accurate, or polite.

"...offering us scattered commentary..."

Dictators dictate orders to be obeyed without question because?

I am asking.

I have my guesses.

"...few really respond..."

Calling forth a nebulous majority rule?

I'm asking.


Republicae's picture

Again, you offer nothing

Again, you offer nothing coherent, only scattered phrases that are essentially meaningless. Focus Josf, focus...stop chasing rabbits!

During colonial periods, taxation within the colonies themselves was extremely low, most roads, bridges and even libraries were built, not by the colonial governments, but by people or companies such as the London Virginia Company and others, not taxpayers. The first lending Library formed by Benjamin Franklin was built by selling shares and the books were bought by Franklin and people of like-mind who polled their finances to purchase the books, they had toll roads and bridges, thus the infrastructure was built, not by taxes, but by independent sources. Thus, I am not sure what you are commenting on in your post, but it has little to do with what I wrote, but that seems to be the case in most of your comments, the hold little bearing to the subjects at hand.


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

No rabbits

Focus on TOPIC on a Bridge is offered, and no amount of dodging, character assassination, falsification, by you, can erase the actual, accurate, record.

So you claim that I am chasing rabbits, then you actually address the focus of attention on the offer I made of focusing attention on the Bridge?

"During colonial periods, taxation within the colonies themselves was extremely low, most roads, bridges and even libraries were built, not by the colonial governments, but by people or companies."


Government can be self government, family government, corporate government, and now I have to go.

Upon my return I will look for a copy of Franklin's autobiography on-line, since I loaned mine out.


Republicae's picture

Once again, you offer nothing

Once again, you offer nothing in the way of a coherent response, you avoid definitive rebuttals on all of your comments and rather make vague assertions that have little, if any real bearing on the commentaries you are claiming to rebut. You have, not merely on this thread, but on every single thread you comment upon, do so in a blatantly abrasive manner, you call people liars, their words patently false, among other things without ever offering a detailed rebuttal to their comments.

"Focus on TOPIC on a Bridge is offered, and no amount of dodging, character assassination, falsification, by you, can erase the actual, accurate, record." That statement is incoherent, it is babble, it contains no possible way of determining what you are thinking, in fact there is little in your responses that give the reading any real concept of your line of thought. Please, once again, try to focus on your thoughts and communicate those thoughts in a manner which is normally thought of as rational.


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Republicae, I am waiting for

Republicae, I am waiting for a response to my post where I completely obliterated all the so-called facts you had about gold keeping its value.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Republicae's picture

Dr. NO....thus far I have not

Dr. NO....thus far I have not seen where you have completely obliterated any facts.

Why do you value a slip of paper that has $100 printed on it more than another slip of paper that has $1 printed on it? The value is not really there is it, but the perception of value is present based upon what the slip of paper with the $100 printed on it will buy verses what the slip of paper with $1 printed on it will buy. Value is an attribute of perceived function, thereby imparting value. However, the nominal value of the that slip of paper with $100 printed on it, due to inflationary deprecation, only retains approximately $2.32 in purchasing value (functional value) verses what the $100 slip of paper bought in 1913. Eventually the function value and perceived value will merge and people will cease to place value on the fiat currency.

How many fiat dollars does it take to buy an ounce of gold, or for that matter an ounce of silver? When we view gold in terms of fiat money and that is the measuring stick that we currently must use, then we see some interesting facts about both metals. Since the dollar currently only buys maybe 2% of what it purchased in the year 1913, when compared to gold, which now buys about 150% of what it bought in 1913, as we view the purchasing power of an ounce of gold it was approximately $20 in 1913 then it is possible to see that gold has a substantially higher purchasing power than the dollar has maintained.

Since the value of gold and silver are not connected either directly or indirectly to a promise of government payment and they never were because unlike fiat paper money, gold and silver are not promises to pay, they are direct payment in recognized value and, in terms of debt, they are assets on both sides of the ledger rather than being, unlike fiat currency, which is a double liability on both sides of the ledger.

We must look at demand, and the type of demand that gold holds, it is not a direct use demand primarily, but a demand to hold gold, there is a very good reason for that fact, gold is recognized as a means of protection against the inflationary depreciation of fiat currencies world wide. Logically therefore, the demand to hold gold stems from something and that something is a recognition of value as opposed to the lack of or depreciating value of fiat currencies. A large number of people buy gold and silver, not to use in their everyday lives, but to store because of the value they perceive it holds. The perception of value therefore denotes a store of value and thus, since the perception of so many people is evident, that value is therefore real value.

Menger stated: "Value is… nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs... and in consequence carry over to economic goods as the… causes of the satisfaction of our needs." (Principles of Economics)

Thus, the recognition of value is therefore, value. When viewing gold verses the dollar, we must view it in relationship to purchasing power, thus since the purchase value of the fiat dollar is now approximately 2% of its former purchase value in 1913 and gold, when measured in dollars is at $1308.47 at this moment, the measure of gold purchase value verses the fiat dollar purchase value has not only retained value, but has outstripped the purchase value of the fiat dollar due to the constant inflationary depreciation of the fiat dollar.

Now, words are important, I grant you that, therefore when people say that gold is a store of value, that is really a misnomer, for attributes cannot be stored and thus since value is a perception it can only be recognized, but that recognition is of the ultimate importance when it comes to what we (people) think. So, you can buy a bar of gold, store it in a vault and hope that in the future when you decide to sell it that those to whom you sell it will attribute the same value or more value on that bar of gold as you did when you bought it.

It is, like money, nothing more than a measure of value, as such, one form of money, such as the fiat money substitutes are measured in comparison to another form of money, i.e. gold/silver. Again, that is however, a matter of the attitude that people take towards gold/silver, but it is even more than that, it is the attitude that people take toward gold/silver in relationship to the purchase value of the fiat dollar, which is not an attribute, but an actual physical function of a medium of exchange. Thus, it is the adequacy of the medium of exchange that is valued by humans as they act within the economy. This human action determines if the recognized value of a currency verses its functional value are equal, if not then the medium of exchange eventually will be abandoned as it ceases to function effectively as a means of economic exchange. As the function of the fiat dollar as a means of economic exchange continues to diminish due to inflationary depreciation, the perception of gold/silver as a recognized value strengthens.

It is therefore, impossible for you to obliterate the value that gold has held and does hold since such value is an attribute based solely upon the recognition of value by multiple millions of people. You can show functional valuations through the years, but that does not negate the value that is and always has been perceived of gold and silver. You cannot negate the perception of value which is, after all, real value.


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Great Post, Republicae !

Here is something from 1752, concerning state scrip, by Roger Sherman, a Congressman from Connecticut, who was a big part of the transition from colonies into a "Sovereign" nation.