A Condensed Version of: Ex America by Garet Garrett.
Compiled and Edited by Dr. Jimmy T. (Gunny) LaBaume
Ex America, Part V. 1951.
Lenin said that the best way to destroy the capitalist system was to debauch its currency. John Maynard Keynes added that, by inflation, governments can secretly confiscate the wealth of their citizens. While this process impoverishes many, it actually enriches some.
Any defender (be it intentional or unintentional) of irredeemable currency is advocating socialism or government dictatorship in one form or another. As long as a government has the power of an irredeemable currency, any effort to stop socialism is futile.
In order for the New Deal to implement revolutionary change in the government’s laws, it had to have the means of enforcement—e.g. it had to have the money. Therefore, its first act was to induce inflation for that premeditated political purpose.
First it got physical possession of the people’s gold under the pretense of an “emergency” measure. Then it confiscated it by edict—all the existing gold and any that might be mined later was declared to be government property. It then introduced a paper dollar that was not redeemable in anything but itself and declared it to be the only lawful money. It was illegal for private contracts to be made for payment in any other kind of money.
Next, the New Deal planners wrote a series of monetary laws.
One of these laws authorized the printing of three billion dollars in counterfeit money.
Another law authorized the government to take three billion dollars out of the Federal Reserve in exchange for its IOU’s. This is how converting government deficits into money began.
Another law allowed the President to “reduce the gold content of the dollar.” This was ingenious because the new irredeemable paper dollar did not have any gold content to begin with—but the lie served its purpose.
One way to depreciate the value of the dollar was to print large quantities of it. Another was to price it down in terms of gold. To do that, the Treasury bought gold on the world market, and each day, they offered more and more dollars per ounce. In this way the government deliberately beat down the international value of its own money.
When the hoax began, the price of gold was $20.67 an ounce. When it ended the Treasury was offering $35 an ounce. At that point, the President announced that the imaginary gold content of the dollar was reduced from 100 to 59 cents. The result was that the New Deal acquired for itself nearly three billion dollars out of thin air. How? Simple.
When the government nationalized the gold it was worth $20.67 an ounce. After the beat down of the dollar it was worth $35.00 an ounce. The total difference amounted to almost 3 billion dollars profit which was declared to belong to the government.
Then, the government learned how to turn its deficits into money simply by pledging its IOU’s (bonds) as security for more credit. The national debt began to rise drastically yet nothing disastrous happened. As a result, the people began to ask why this could not go on forever.
To be continued
The Essence of Liberty Volume I: Liberty and History chronicles the rise and fall of the noble experiment with constitutionally limited government. It features the ideas and opinions of some of the world’s foremost contemporary constitutional scholars. This is history that you were not taught at the mandatory government propaganda camps otherwise known as “public schools.” You will gain a clear understanding of how America’s decline and decay is really nothing new and how it began almost immediately with the constitution. Available in both paperback and Kindle versions.
You might be interested in the other two volumes of this three volume set: The Essence of Liberty Volume II: The Economics of Liberty and The Essence of Liberty Volume III: Liberty: A Universal Political Ethic.