MONOPOLY – IT’S ALL PLAY MONEY

[Texas Governor Scary] Perry, a late entry to the race to challenge Barack Obama for the White House, told a gathering in Iowa that it would be disastrous for the Federal Reserve to print more electronic money to fuel another round of asset purchases.

"Printing more money to play politics at this particular time in American history is almost treacherous, or treasonous, in my opinion," said Perry, on his first full day of campaigning for the Republican nomination.

UK Guardian

Which is why neither Rick Perry or Ron Paul will be the next president. Does he think American citizens (whom he fails to have a conversation with even as governor) elect presidents?

Does Michele Bachmann think the Fed can print money at will? If she wants to get close to the oval office, she'd better at least pretend she's okay with that.

Really, though, Rick Perry as president? The guy who wanted the State of Texas to secede? Huh-uh. He and Sarah Palin are essentially just attention hounds who may or may not actually believe they could be president. But they can't.

The Creature from Jekyll Island:
A Second Look at the Federal Reserve
(2002 – G. Edward Griffin)

Regular type indicates text directly quoted from the book. Where the words are my own, type will be italicized.

Installment 6
Chapter 7 - Gresham’s Law

Expanding the Money Supply by Coin Clipping

It didn’t take long for state rulers of old to start shaving off a bit of each supposedly standardized metal coin and melting down the bits to keep for themselves. Perhaps this is where the term skimming or shaving off the top in bookkeeping comes from.

As governments became more brazen in their debasement of the currency, even to the extent of diluting the gold or silver content, the population adapted quite well by simply “discounting” the new coins. Real prices, in terms of labor or other goods … remained unchanged.

Governments do not like to be thwarted in their plans to exploit their subjects. So a way had to be found to force people to accept these slugs as real money. This led to the first legal-tender laws. By royal decree, the “coin of the realm,” was declared legal for the settlement of all debts.

Refusal to recognize the coin of the realm resulted in imprisonment or other negative outcome for those who refused.

The result was that the good coins disappeared from circulation and went into private hoards. … That is what happened in America in the ‘60s when the mint began to issue cheap tokens to replace the silver dimes, quarters, and half-dollars. Within a few months, the silver coins were in dresser drawers and safe-deposit boxes. … In economics, that is called Gresham’s Law: “Bad money drives out good.”

As I mentioned in my last Monopoly post, I myself have collected a few silver quarters, but I never see them any more. I assumed that the government pulled them out of circulation as they replaced them by the diluted coins, but of course there are bound to be people who were privy to the scheme and those who were quicker on the draw than me, and indeed have decent sized collections of them.

The final move in this game of legal plunder was for the government to fix prices.…Now the people were caught. They had no escape except to become criminals.

Perhaps the greatest example of a nation with sound money … was the Byzantine Empire.

It is an amazing fact of history that the Byzantine Empire flourished as the center of world commerce for eight-hundred years without falling into bankruptcy nor, for that matter, even into debt. Not once during this period did it devalue its money. … Its quality was so dependable that it was freely accepted … from China to Brittany, from the Baltic Sea to Ethiopia.

Byzantine laws regarding money were strict. Before being admitted to the profession of banking, the candidate had to have sponsors who would attest to his character. [Filing or chipping coins] called for cutting off a hand.Okay, I’m going to say that the citizens of Byzantium were essentially honest people. Otherwise, one would be able to pay sponsors to attest to their good character. Certainly the Iranian terrorist organization MEK has managed this simple feat in the US.

Switching empires - we’ve all grown up with stories of the fall of the Roman Empire due mostly to loose morals. We can now challenge that assertion if we are to believe the next passages from this book.

Especially in the later [Roman] Empire, debasement of the coinage became a deliberate state policy. Every imaginable means for plundering the people was devised. In addition to taxation, coins were clipped, reduced, diluted, and plated. Favored groups were given franchise for state-endorsed monopolies, the origin of our present-day corporation. And, amidst constantly rising prices in terms of constantly expanding money, speculation and dishonesty became rampant.

By the year 301 A.D., … the treasury was empty, agriculture depressed, and trade almost at a standstill. It was then that Diocletian issued his famous price-fixing proclamation as the last measure of a desperate emperor… The result? Conditions became even worse, and the royal decree was rescinded five years later.

The Roman Empire never recovered from the crisis. By the fourth century, all coins were weighted, and the economy was slipping back into barter again. By the seventh century, the weights themselves had been so frequently changed that it was no longer possible to effect an exchange in money at all. For all practical purposes, money became extinct, and the Roman Empire was no more.

And then there were banks.

After the Fall of Rome, banks saw their beginnings in goldsmith activities. Goldsmiths, who created vaults to guard their money, were increasingly entrusted with other people’s gold. The goldsmith gave you a written receipt for your gold, which presumably was more easily guarded than your huge piles of coins, and to redeem your gold from the vault, another written receipt was issued. Eventually, a system of third-party endorsements led to checking accounts.

Now what could go wrong?

....but hey, do what you want....you will anyway.