Creature From Jekyll Island by G. Edward полностью

This Currency, as we manage it, is a wonderful machine. It performs its Office when we issue it; it pays and clothes Troops and provides Victuals and Ammunition; and when we are obliged to issue a Quantity excessive, it pays itself off by Depreciation.

When speaking of deficit spending, it is common to hear the complaint that we are saddling future generations with the bill for what we enjoy today. Why not let those in the future help pay for what will benefit them also? Don't be deceived. That is a misconception encouraged by politicians to calm the public. When money is fiat, as the colonists discovered, every government building, public work, and cannon of war is paid out of current labor and current wealth. These things must be built today with today's labor, and the man who performs that labor must also be paid today. It is true that interest payments fall partly to future generations, but the initial cost is paid by those in the present. It is paid by loss of value in the monetary unit and loss of purchasing power for one's wages.

INFLATION IS A HIDDEN TAX

Fiat money is the means by which governments obtain instant purchasing power without taxation. But where does that purchasing power come from? Since fiat money has nothing of tangible value to offset it, government's fiat purchasing power can be obtained only by subtracting it from somewhere else. It is, in fact,

"collected" from us all through a decline in our purchasing power.

It is, therefore, exactly the same as a tax, but one that is hidden from view, silent in operation, and little understood by the taxpayer.

In 1786, Thomas Jefferson provided a clear explanation of this process when he wrote:

Every one, through whose hands a bill passed, lost on that bill what it lost in value during the time it was in his hands. This was a real tax on him; and in this way the people of the United States actually contributed those... millions of dollars during the war, and by a mode of taxation the most oppressive of all because the most unequal of all-1. Letter to Samuel Cooper, April 22,1779, quoted by Albert Henry Smyth, ed., The Writings of Benjamin Franklin, (New York: Macmillan, 1906), Vol. VII, p. 294.

2. Thomas Jefferson, Observations on the Article Etats-Unis Prepared for the Encyclopedia, June 22, 1786, from Writings (New York: G.P. Putnam's Sons, 1894), Vol. IV, p. 165.

FOOL'S GOLD

163

ENTER PRICE CONTROLS AND LEGAL TENDER LAWS

As prices skyrocketed, the colonies enacted wage and price controls, which was like plugging up the whistle on a tea kettle in hopes of keeping the steam from escaping. When that failed, there followed a series of harsh legal tender laws. One law even invoked the specter of treason. It said: "If any person shall hereafter be so lost to all virtue and regard for his Country as to refuse to receive said bills in payment-he shall be deemed, published, and treated as an enemy in this Country and precluded from all trade or intercourse with the inhabitants of these colonies."1

Rhode Island not only levied a heavy fine for non-acceptance of its notes but, upon a second offense, an individual was stripped of citizenship. When a court declared the act unconstitutional, the legislature called the judges before it and summarily dismissed the offenders from office.

ENTER ECONOMIC CHAOS AND INSURRECTION

If the ravages of war were a harsh burden for the colonies to bear, the havoc of fiat money was equally so. After the war, inflation was followed by deflation as reality returned to the market place. Prices fell drastically, which was wonderful for those who were buying. But, for the merchants who were selling or the farmers who had borrowed heavily to acquire property at inflated wartime prices, it was a disaster. The new, lower prices were not adequate to sustain their fixed, inflated mortgages, and many hard-working families were ruined by foreclosure. Furthermore, most people still did not understand the inflation process, and there were many who continued to advocate the "paper money cure." Several of the states were receptive to the pressure, and their printing presses continued to roll.

Historian Andrew McLaughlin recalls a typical scene in Rhode Island at that time as witnessed by a visiting Frenchman: A French traveler who passed through Newport about this time gives a dismal picture of the place: idle men standing with folded arms at the corners of the streets; houses falling to ruins; miserable shops offering for sale nothing but a few coarse stuffs;...grass growing in the streets; windows stuffed with rags; everywhere announcing misery, V . D a v i d Ramsay, History of the American Revolution (London: Johnson and Stockdale, 1791), Vol. II, pp. 134-36. *