Magical Money


       At age nine I became a magician.  A chum and I called ourselves "The Mystic Brothers" and boldly set out on the local performance  circuit,  quickly exhausting the limited venues. My friend soon tired of rehearsals and I became a solo act.

       By the time I got to high school  I found part-time employment with Mike McManus, who ran a novelty shop which specialized in magic and photos-while-you wait, 3 for 25.  My job was to shoot and develop pictures and also demonstrate magic.
 
        One of my favorite tricks involved a blank slip of paper the size of a dollar bill.  Right under the customer's nose I would carefully fold the paper into a small bundle, remarking that this was a good trick to know when one comes up short of cash.  Then, without removing the folded paper from the customer's sight, I slowly began to unfold it.  To the astonishment of the beholder it was - - a crisp $1.00 silver certificate! 
        Effects  involving the creation of money out of thin air go over very well.  The U.S. Congress has been pulling a trick similar to this since the end of World War 2.  The public eats it up.  We fall for the trick hook, line, and sinker.
 
        Consider those $1.00 silver certificates of long ago.  Prior to the mid 1960s anyone could take a silver certificate into a bank and swap it for the real thing - a U.S. silver dollar.  In fact, banks were usually busy around Christmas time exchanging paper certificates for silver dollar coins. .  Tellers would even hand them over in exchange for Federal Reserve notes, which were clearly imprinted with a promise they would be redeemed "in lawful money." The promise was dropped from the notes in late 1963 when we were all occupied with the assassination of President Kennedy.
 
        In the 1960s the Treasury Department quit redeeming silver certificates.  It didn't matter how many you had - you were out of luck if you  showed up in Washington after July, 1968, demanding silver.  By that time they had been handing out little vials of silver pellets valued at $1.00 to people who came to the Treasury Department to redeem their silver certificates.  Suddenly silver certificates stopped being certificates.  They were treated just like Federal Reserve notes - - not redeemable in anything but copper and nickel coins - if you chose to go to the trouble of handling such bulk.   Most people didn't.

        A friend called a few years later to say that he needed to redeem his mother's suitcase-full of silver certificates.  She was ill and he needed to raise cash from her hoard.  She had run a restaurant many years before and had carefully saved those certificates over the years.  He thought I might know how to go about "cashing them in.

        Twenty years or more had passed since the government honored its solemn pledge.  If some of the silver certificates were in crisp condition  collectors might offer a small premium above face value, but the government had long ago quit the old "lawful money" system and was doing business only in debt-based fiat currency.  Automatically, the certificates weren't any more valuable than the paper notes...which were only IOUs.
 
         Quite a trick, when you examine it closely.  The central government of the United States  converted the entire monetary system from the sound formulation established by the Constitution to the spectacle of a society  trading government IOUs with each other.  The transactions don't even involve paper currency to the extent they used to.  Digital numbers flash across the Internet and we regard our financial condition by the numbers  that appear on our computer screen.  And those numbers represent debt - - a record of dollar obligations owed by the federal government to the Federal Reserve.  We carry on under the illusion that promises to pay are the same as payment! We were led into believing that non-payable IOUs are money!  The main culprit is the United States Congress.  And members of Congress will say they are only "doing the bidding of the people."  If that be true we must all go look in the nearest mirror to see whom to blame.
 
           Where is this fiscal hocus pocus leading?  I noticed the other day that the U.S. dollar of the year I was born is now worth less than a nickel.  I'm beginning to think I might live long enough to see it reach 2. . . or even zero! Imagine!  All in one lifetime Congress has been able to make the once mighty dollar all but disappear!

            People are still scratching their heads wondering how the trick was done. 

 
   March 3, 2012

...from the Curmudgeon's Archives.


Posterity's Debt To Me
The Battle for Honest Money
Coping with Deflation
From Riches to Rags
Fiddler's Broken Wrist
Jack-lantern Wealth
Chances of Gold Confiscatio
1932
Poobahs of Positivism
IOU-nothing
Blood In the Streets

America Descending
Just Plain Stealing?
A thing to fear
Heavenly Sex
What Fools, We Mortals
Unvarnished Truth
Hucksterism Gone Wild
Religious Violence