Idaho's Weekly Journal of Local & National Commentary Week 2815


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by Free Market Duck

The Fuzzy Math of U.S. Coinage

   “Hey, Pops, what’s this big coin on the kitchen table?” asked grandson Rodney.

   “It’s called a cupro-nickel dollar, Rodney.  Or an Eisenhower dollar because it has a picture of our former President Eisenhower on it.”

   “What does cupro-nickel mean, Pops?”

   “Well, Rodney, it means the coin is made out of copper and nickel, mostly copper.”

   “It’s made out of copper?”

   “Yes, Rodney.”

   “Isn’t a penny made out of copper, too, Pops?”

   “Yes, Rodney.  Before 1982, a penny was made out of 95% copper and 5% zinc.  After 1982, our pennies are made out of 97.6% zinc and 2.4% copper.”

   “OK, Pops, so how many pennies equal a cupro-nickel dollar?”

   “A hundred pennies, Rodney.  Go get your piggy bank and stack up a hundred pennies next to this $1 coin on the kitchen table.”

   So Rodney runs into his bedroom, grabs his piggy bank full of coins, dumps them out on the table, and neatly stacks ten groups of ten pennies each next to the cupro-nickel dollar.

   “Hey, Pops,” said Rodney as he stared at the 100 pennies stacked next to the $1 coin.  “Something’s wrong.  Looks like the copper in five copper pennies equals the size of one copper-nickel dollar.”

   Cupro-nickel dollar, Rodney.  Yeah, you’re right.  Looks like the weight of about five pennies equal the $1 coin.”

   “But, Pops, you said a $1 coin equals a hundred pennies, not five pennies.”

   “Hmm, Rodney.  You ask a lot of questions.  How can the U.S. cupro-nickel dollar equal five pennies and a hundred pennies at the same time?”

   Rodney’s correct.  There is a discrepancy.  But that’s not all.  The current U.S. Dollar coins – the Susan B. Anthony and Sacagewea $1 coins – are about the size of the U.S. Quarter and contain about 88% copper.  Are they worth two pennies (copper content) or 100 pennies (face value)?  Go figure.  Where did the U.S. Treasury go wrong?  Or is it the private Federal Reserve?  Or is it the fault of the U.S. Congress?  How did this fuzzy math logic creep into our coinage system?  Does a U.S. dollar equal two pennies, five pennies or 100 pennies?

   Today, the concept of nominal value (face value) of U.S. coins has been stripped away from the relative weight of each fractional coin as if it no longer mattered.  Once the government strips away the concept of relative weights and measures for hard currency and convinces the public that it doesn’t matter, the government can then manipulate the people’s money, and therefore the people, in any way it chooses.  He who controls the money supply, controls the nation.

   The next obvious step would be to redefine the relationship between gold money and the paper receipt for the gold money.  The Federal Reserve changed the wording on our gold and silver certificates from “this certifies there is X amount of silver or gold on deposit in the U.S. Treasury, payable to the bearer on demand” to something like “Hi.  I’m an inflatable Federal Reserve Note not backed by anything.  You can redeem me for another inflated Federal Reserve Note.  Good luck.”

   Now that the Federal Reserve has played fuzzy math with the face value and relative weights of our fractional coins, and disconnected the relationship between a paper receipt (an IOU) for gold and silver, the government can do anything it wants with the people’s money – such as redefine the terms “inflation” and “deflation” and make up brand new terms to confuse the public like “trade surplus,” “trade deficit,” and “gross domestic product” which have no meaning except within paper-only (no gold) monetary systems.  In fact, the Fed now claims in a big contradiction that (1) there is no collateral for the Federal Reserve Notes it creates, and (2) collateral for the Federal Reserve Note is the nation’s gross domestic product.  Unfortunately for the Fed, it does not own America’s GDP – you do – and, therefore, the Fed cannot issue either promissory or non-promissory notes against collateral that it doesn’t own.  (I can’t issue paper money against your house or your car or your six-pack of Bud Lite sitting in your fridge.  Only you can.  But you can’t issue 1,000,000 Notes against the same car.  That would be counterfeiting.  However, the Fed does.  Every day.  How tricky.  The Federal Reserve is either legally counterfeiting its own Federal Reserve Notes by issuing more units for the same fake collateral – which it euphemistically calls a fractional reserve system -- or it’s simply creating National Wallpaper out of thin air.  Take your pick.)

   The crème de la crème of Federal Reserve Fairy Tales, however, is redefining inflation as an increase in prices (the result) rather than as an increase in the money supply not backed by gold (the true cause of general price increases).  In this clever manner, the people can be led to blame everybody and everything except the real cause of inflation, which is the private Federal Reserve bankers who make their fortunes by continually expanding (and contracting) the U.S. money supply at their mere whims (which happen to coincide with their latest economic deals) -- especially after having stripped paper money from gold.

   Why did they strip Federal Reserve Notes from gold?  Because you can’t inflate gold coins.  And if you can’t inflate gold coins, you can’t exercise control over free people who are on a gold standard.  How do you remove the concept of gold from money?  How about a national education system for the masses in which the people are taught new Federal Economic Fairy Tales – from kindergarten to Ph.D.s in Econometric Silliness?

   Why would anybody such as private bankers do this?  Ultimately, money is power.  And power is the name of the game.  That’s why a U.S. cupro-nickel dollar equals two pennies, five pennies and also equals 100 pennies.  Fuzzy math and economic fairy tales keep the private Federal Reserve bankers in power.  As long as the American public doesn’t understand the difference between real money (such as gold) and fake money (such as the Federal Reserve Note), when the Fed Reserve says, “Jump!” your only logical fuzzy answer is, “How high?”

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