WEBVTT

NOTE Why the U.S. Monetary System is Dishonest and Blowing Up

1
00:00:00.000 --> 00:00:07.360
Our next speaker is the author of What Does Mr. Greenspan Really Think?

2
00:00:07.360 --> 00:00:13.080
His articles have appeared in The Economist, Labor Studies Journal, The New York Sun, where

3
00:00:13.080 --> 00:00:19.520
he's a contributing editor, and he's also the host of The Larry Parks Show.

4
00:00:19.520 --> 00:00:24.040
And as I mentioned earlier, he's the reason that we are able to hold this event in this

5
00:00:24.040 --> 00:00:25.640
fine facility.

6
00:00:25.640 --> 00:00:35.240
Please help me welcome Mr. Larry Parks.

7
00:00:35.240 --> 00:00:37.640
What a thrill to be in front of such a big audience.

8
00:00:37.640 --> 00:00:42.440
It's so gratifying to see that the Austrian theories are gaining acceptance.

9
00:00:42.440 --> 00:00:46.320
When this started, as someone mentioned, you couldn't really get 30 people in a room.

10
00:00:46.320 --> 00:00:48.880
I think we have 325 folks here.

11
00:00:48.880 --> 00:00:54.520
This is roughly a 15-minute subset of a talk I've been giving roughly two or three times

12
00:00:54.520 --> 00:01:24.520
The main focus of this talk that I give folks is that the system is dishonest, and no amount of regulation is going to cure that defect.

13
00:01:24.520 --> 00:01:34.520
And by the way, anyone who would like to see this talk, there's no charge. I'm giving it again next Wednesday. If you give me your business card, I'll see that you get on the invite list.

14
00:01:34.520 --> 00:01:42.520
And the third talking point, which I'll cover right now, is that the system is going to blow up, perhaps while I'm speaking right now.

15
00:01:42.520 --> 00:01:53.520
And the reason you can be absolutely 100% certain that it will blow up is because there is no longer any self-correcting mechanism for increasing financial leverage,

16
00:01:53.520 --> 00:01:56.520
Increasing Debt and Increasing the Money Supply

17
00:01:56.520 --> 00:02:01.020
And any system that doesn't have a self-correcting mechanism blows up.

18
00:02:01.020 --> 00:02:05.020
Now what I'm going to do for the roughly 15 minutes that's been allotted to me,

19
00:02:05.020 --> 00:02:08.020
I'm going to demonstrate to you some of the dishonesty,

20
00:02:08.020 --> 00:02:13.020
particularly I'm going to show you that the monetary authorities have misrepresented

21
00:02:13.020 --> 00:02:18.520
the very strong views of the founders, particularly the early presidents.

22
00:02:18.520 --> 00:02:21.520
And then I'm going to tell you a brief story about Thomas Jefferson

23
00:02:21.520 --> 00:02:26.360
I doubt many of you have heard before, which will give you an idea of the visceral hatred

24
00:02:26.360 --> 00:02:32.000
that the founders had for paper money. And then I'm going to show you a misrepresentation.

25
00:02:32.000 --> 00:02:38.040
Again, a misrepresentation is fraud that is so egregious, you have to ask your head, ask

26
00:02:38.040 --> 00:02:42.680
yourself rather, how they got away with this. So firstly, the issue that we address is how

27
00:02:42.680 --> 00:02:49.040
do you get people to accept legal tender, irredeemable paper ticket, electronic money

28
00:02:49.040 --> 00:02:51.200
in exchange for their goods and services.

29
00:02:51.200 --> 00:02:52.960
Well, one of the things that they do

30
00:02:52.960 --> 00:02:56.240
is they give the bogus money the patina of legitimacy

31
00:02:56.240 --> 00:02:58.920
by implying that it had the imprimatur and endorsement

32
00:02:58.920 --> 00:03:00.760
of the founders and presidents

33
00:03:00.760 --> 00:03:02.960
when, in fact, they condemn paper money.

34
00:03:02.960 --> 00:03:05.240
So, for example, here's Thomas Jefferson

35
00:03:05.240 --> 00:03:07.040
complaining about paper money.

36
00:03:07.040 --> 00:03:08.640
His paper is poverty.

37
00:03:08.640 --> 00:03:11.520
It's only the ghost of money and not money itself.

38
00:03:11.520 --> 00:03:14.600
He said, but its abuses are inevitable

39
00:03:14.600 --> 00:03:16.480
and by breaking up the measure of value

40
00:03:16.480 --> 00:03:18.680
makes a lottery of all private property

41
00:03:18.680 --> 00:03:23.560
cannot be denied, a very strong statement against paper money, and here they have the

42
00:03:23.560 --> 00:03:29.400
effrontery to put Thomas Jefferson's portrait on paper money as if he might have endorsed

43
00:03:29.400 --> 00:03:36.080
it when in fact that is a misrepresentation. Again, a misrepresentation is fraud. And here's

44
00:03:36.080 --> 00:03:40.880
the father of our country, Washington writes to Jefferson, other states have fallen into

45
00:03:40.880 --> 00:03:46.320
very foolish and wicked plans of admitting paper money. Wicked, evil. I mean the founders

46
00:03:46.320 --> 00:03:53.320
The founders were not concerned with economics. They wanted a moral system. And they saw the paper money as evil.

47
00:03:53.320 --> 00:04:06.320
And here's another line from Washington. It says, paper money has had the effect in your state that it will ever have to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.

48
00:04:06.320 --> 00:04:09.320
And here's Washington on the paper money.

49
00:04:09.320 --> 00:04:17.080
Again, misrepresenting the very clear sentiments of the founders, implying that they would have endorsed this when, in fact, they rejected it.

50
00:04:17.080 --> 00:04:22.320
Now, notice also this is not a dollar. I don't know if you can read the little writing underneath.

51
00:04:22.320 --> 00:04:26.080
It's a promise to pay a dollar in silver.

52
00:04:26.080 --> 00:04:38.080
And here, James Madison, the father of the Constitution, says paper money is unjust to creditors if a legal tender, to debtors if not legal tender, by increasing the difficulty of getting specie.

53
00:04:38.080 --> 00:04:47.780
It is unconstitutional. Now, Madison is the principal author of the Constitution. If anybody knows what the Constitution means with regard to money, it's got to be Madison.

54
00:04:47.780 --> 00:04:55.780
He says, for it affects the rights of property as much as taking away equal value and land. And here's James Madison on the paper money.

55
00:04:55.780 --> 00:05:04.680
Again, misrepresenting the very strong views of James Madison. And here's Alexander Hamilton, the financial genius of the time.

56
00:05:04.680 --> 00:05:11.080
And here he's not complaining against paper money per se, he's complaining against what he calls unfunded paper money.

57
00:05:11.080 --> 00:05:17.180
He says, to emit an unfunded paper as a sign of value ought not to continue a formal part of the Constitution,

58
00:05:17.180 --> 00:05:22.680
nor ever after be employed, being in its nature, pregnant with abuses, and here are the key words,

59
00:05:22.680 --> 00:05:28.680
and liable to be made the engine of imposition and fraud, holding our temptations equally pernicious

60
00:05:28.680 --> 00:05:31.380
to the integrity of government and the morals of the people.

61
00:05:31.380 --> 00:05:42.380
Here you see Alexander Hamilton on the paper money. So again, in every instance, they've helped promote the paper money with the idea that it's been endorsed by these founders when in fact they condemned it.

62
00:05:42.380 --> 00:05:52.380
Now I want to tell you this story about Thomas Jefferson. My source is this wonderful book. The subtitle of the book should have been the title. It's called Thomas Jefferson and the Problems of Debt.

63
00:05:52.380 --> 00:06:01.380
The author, Herbert Sloan, is the head of the history department at Barnard College in Columbia, a very prominent and eminent historian.

64
00:06:01.380 --> 00:06:10.380
So it seems that Jefferson was married to a woman whose father, John Wells, was one of the richest men in the colonies, and he died in 1773.

65
00:06:10.380 --> 00:06:14.380
He left a huge estate consisting of plantations and slaves.

66
00:06:14.380 --> 00:06:19.380
He made Jefferson and Jefferson's two brothers-in-law the co-executors of his will.

67
00:06:19.380 --> 00:06:31.380
In those days, and today as well, if an executive distributes the assets of an estate without settling out the liabilities, the executive becomes personally liable for the liabilities.

68
00:06:31.380 --> 00:06:46.380
However, in this case, the assets, which were roughly 20-30,000 pounds, and the liabilities were around 11,000 pounds, the assets were so much greater than the liabilities, and press's two brothers-in-law wanted their share, Jefferson felt comfortable in doing that.

69
00:06:46.380 --> 00:06:53.380
and so he sold the plantations and the slaves, however in Virginia in those days they didn't have enough cash to make this kind of purchase

70
00:06:53.380 --> 00:06:59.380
and what they did in today's terminology, you'd have a seller's mortgage or vendor financing

71
00:06:59.380 --> 00:07:08.380
and those days the terminology was that the buyer would issue a bond to the seller and over time the buyer would pay off the bond and that's what happened.

72
00:07:08.380 --> 00:07:15.380
However in 1776 the revolution started, Virginia issued paper money, they made the paper money legal tender

73
00:07:15.380 --> 00:07:23.380
The value of that paper money went to zero, and the people who owed Jefferson the money on the bonds paid him off with the worthless money.

74
00:07:23.380 --> 00:07:31.380
But Jefferson still owed the 11,000 pounds to the financiers in Britain, and in his whole life he was never able to work his way out of that debt.

75
00:07:31.380 --> 00:07:36.380
He died a bankrupt. They auctioned off his possessions at Monticello, didn't bring in enough money.

76
00:07:36.380 --> 00:07:43.380
Along the way, the Congress tried to help him out. He had a lot of books. They bought his books for $15,000. That became the Library of Congress.

77
00:07:43.380 --> 00:08:13.380
and so when Jefferson said that the paper money was a cheat, he wasn't talking in terms of economics, he had been cheated and big time and so had all of the other gentry in Virginia including James Madison who was a large plantation owner, Madison had leased his plantations, the people to whom he leased it paid him off with the irredeemable paper ticket money and the same thing with George Washington and so when they went to the Constitutional Convention supposed to amend the Articles of Confederation, they wrote the

78
00:08:13.380 --> 00:08:24.380
When they got to the business about money, they only authorized the government to coin money, not to print money. All of this paper money is unauthorized.

79
00:08:24.380 --> 00:08:34.380
Now I want to tell you now, which I think is just about one of the biggest misrepresentations, and again you have to ask yourself, how did they get away with this?

80
00:08:34.380 --> 00:08:40.380
The line that I like, it's a paraphrase from Groucho Marx, as you'll see in a moment, why?

81
00:08:40.380 --> 00:08:45.380
Who are you going to believe, me or your lying eyes? Watch for your lying eyes, folks.

82
00:08:45.380 --> 00:08:51.380
So very few people in any of the economic school address the issue, what is a dollar?

83
00:08:51.380 --> 00:08:57.380
And pretty much everybody has the notion that the Congress can make the dollar anything that the Congress wants to make it.

84
00:08:57.380 --> 00:09:03.380
Well, it turns out that the dollar is mentioned twice in the Constitution, but it is not defined in the Constitution.

85
00:09:03.380 --> 00:09:16.380
The Constitution is mentioned in connection with the slave tax, which is no more, but much more importantly, it's mentioned in connection with the Seventh Amendment, which guarantees you a right to a trial by jury for any dispute, $20 or more.

86
00:09:16.380 --> 00:09:26.380
Now, if it were true that the Congress could redefine the meaning of a dollar, that would mean that the Congress could rewrite the Seventh Amendment, which is ridiculous.

87
00:09:26.380 --> 00:09:30.620
And in fact, for the 7th Amendment to have objective meaning, the word dollar has to

88
00:09:30.620 --> 00:09:31.620
have objective meaning.

89
00:09:31.620 --> 00:09:36.580
Now mind you, the Constitution is the overriding law of our land.

90
00:09:36.580 --> 00:09:40.660
So what is the Constitution talking about when they talk about a dollar?

91
00:09:40.660 --> 00:09:43.700
And the answer is, they're talking about the Spanish mill dollar.

92
00:09:43.700 --> 00:09:50.940
The Spanish had built mints all over the colonies from the 16th century on, and this coin was

93
00:09:50.940 --> 00:09:51.940
ubiquitous.

94
00:09:51.940 --> 00:09:56.000
And further evidence of this, when it came to the revolution, which was financed by creating

95
00:09:56.000 --> 00:10:26.000
Pay for Money. This is an example of the Continental and notice it says it's a $30 bill. I don't know if you can read the writing in the back. It says this bill entitles the bearer to receive $30 Spanish mill dollars. So it's the Spanish mill dollar that's talked about in the Constitution and when Hamilton wrote the Coinage Act of 1792, the Americans wanted their own dollars. They didn't have to use the Spanish mint and here he defines the dollar as the value of a Spanish mill

96
00:10:26.000 --> 00:10:33.000
What's the value of a dollar? What's the value of a coin? It's specie content. It's silver content or it's gold coin. It's gold content.

97
00:10:33.000 --> 00:10:43.000
So here the content of a dollar is 371.25 grains of silver. That is the definition of a dollar. It has never been changed. It cannot be changed.

98
00:10:43.000 --> 00:10:53.000
My last point I want to make to you today is this really this incredible misrepresenting that payment promises have not been defaulted.

99
00:10:53.000 --> 00:10:57.000
So here is a United States note. It's a promise to pay a dollar.

100
00:10:57.000 --> 00:11:00.000
I don't know if those of you in the back can see, but it says,

101
00:11:00.000 --> 00:11:03.000
we'll pay to the bearer on demand one dollar.

102
00:11:03.000 --> 00:11:06.000
It's not a dollar, it's a promise to pay a dollar.

103
00:11:06.000 --> 00:11:09.000
What's a dollar? That's a dollar.

104
00:11:09.000 --> 00:11:11.000
Now here's the punch line.

105
00:11:11.000 --> 00:11:14.000
Then they break the promise to pay the dollar,

106
00:11:14.000 --> 00:11:18.000
and the broken promise to pay a dollar becomes a dollar.

107
00:11:18.000 --> 00:11:21.000
How stupid can stupid be?

108
00:11:21.000 --> 00:11:26.000
The dishonest promissory note is misrepresented as being a dollar.

109
00:11:26.000 --> 00:11:34.000
So all this stuff that people have in bonds and stocks, what not, are all denominated in dishonest promissory notes.

110
00:11:34.000 --> 00:11:41.000
So my line is, if you take a sign that's like a cat and you hang it on the dog, does the dog become a cat?

111
00:11:41.000 --> 00:11:46.000
If you take a piece of paper and put the word dollar on it, does it become a dollar?

112
00:11:46.000 --> 00:12:05.520
The metaphor that I like, you go to a restaurant, you check your coat, you get a coat check.

113
00:12:05.520 --> 00:12:09.100
They steal your coat, and then when you show up at the coat check, they tell you the coat

114
00:12:09.100 --> 00:12:14.560
check is a coat, and you say, no, it's not a coat.

115
00:12:14.560 --> 00:12:16.560
So, what's legal tender for a coat?

116
00:12:16.560 --> 00:12:21.560
So, what's the difference between our money and the money from the parking game?

117
00:12:21.560 --> 00:12:26.560
And as Murray Rothbard used to say, the only difference is that it's all gussied up with seals and signatures.

118
00:12:26.560 --> 00:12:30.560
Well, I think I'm right on time. I think I'm even early in this 15 minutes.

119
00:12:30.560 --> 00:12:33.560
Again, I want to thank you all for your presence here today.

120
00:12:33.560 --> 00:12:37.560
Again, if you'd like to see this whole talk, it's a 70-minute talk. There's no charge.

121
00:12:37.560 --> 00:12:40.560
Give me a business card and I'll be delighted to have you attend.

122
00:12:40.560 --> 00:12:42.560
Thanks so much. Have a nice day.

123
00:12:44.560 --> 00:12:46.560
Thank you very much.