Exclusive to STR

January 16, 2008

In the public schools, I was "taught" economics. The derisive sneer that accompanies those quotes is more understandable when I say that half the course was based on Adam Smith's work, and the other half based upon the work of John Maynard Keynes. The material on Keynes was presented last; it supposedly made Smith's classical economics obsolete. This was, after all, a government-run school.

Fortunately for me, I was able to learn some real economics after escaping the grip of my well-meaning educaptors. I strongly suggest that all people with even a passing interest in liberty do the same.

There is a difference between money and currency. Money is an intangible idea; currency is a physical object. Metaphorically speaking, currency is a jar and money is the jelly, boiled down from the fruits of human labor.

In this metaphor, the jelly is the important thing. People make the jelly. People eat the jelly. The jars are only there to keep hands from getting too sticky. They are supposed to be for your convenience.

Now, since money is an idea, and jelly is not, this metaphor shows some strange properties. Do not be fooled. Remember, when I say "jelly," I am really talking about money.

One of the strange properties is that when a person seals jelly up into opaque jars, each identical in size and shape and stamped with a trademark, they all contain exactly the same amount of jelly. If someone were to seal four ounces into one jar, and just two ounces in another, and then put both jars on a balance, they will each apparently contain three ounces. This property of quantum jelly-portation is extremely useful, because it is far easier to count jars than it is to count jelly, and more useful still when all the jars are equivalent.

But it is also dangerous. If someone publicly fills those two jars, and then, in secret, seals up a completely empty jar, the empty jar will also balance three ounces on the scales. That person could take three ounces of homemade jelly, and trade the empty jar, and everyone would leave happy. Later, when the jar-holder got peckish, and cracked open that jar, it would only have two ounces in it. The people left holding the other two jars would find that they each now balance one ounce less than they did before someone observed the quantity of money stored in a unit of currency.

This is the essence of counterfeiting. And counterfeiting is the essence of inflationary fiat currency in a fractional reserve banking system. If someone issues currency without having the money to back it up, the new currency, for a time, acts as though it had been filled with the correct amount of money. But then, when someone else finally gets hungry, and opens up a jelly jar--any jelly jar--the fraud is exposed. But by that time, the counterfeiter has already traded the bogus currency for real goods and scudded into the shadows.

Continuing with the metaphor, the Federal Reserve--the privately-owned central bank of the United States--does nothing but manufacture jelly jars and seal them up tightly, without adding a single drop of jam. They do not even add water or little IOU notes. The Fed just makes jars, and seals them up empty, allowing the apparent magic of quantum jelly-portation do all the work. They are counterfeiting on a truly massive scale. How, then, are the little jars not all nearly empty by now? Someone must be filling some dollar-jars with an awful lot of jelly. Who is it? Who could it possibly be?

Can you not guess?

It is you, or people like you. Whenever you create a contract valued by a certain trademarked brand of currency, you are making one big jar into which you can dump your unpackaged jelly. You drop great, heaping spoonfuls of jelly into the big contract jar, and get some standard, Fed-created jars in exchange. Whatever you drop into the big jar is sucked through the frugiferous aether into all the little jars.

That's awfully generous, don't you think? You do all the work of making the jelly, and the Federal Reserve takes your jelly and lends it out, even going so far as to demand that it be paid interest. And then the government that takes the loan pretends that the new jars are as full as the old ones once were, using that fiction to make advantageous trades.

What if you aren't in the mood to be generous? Well, what can you do?

It couldn't hurt to remember two of the points I previously mentioned. First, people need the jelly, not the jars. Second, you can make your own jars, and when it is necessary, you do make your own.

It is not my intention to tell you what you should do with the knowledge that I have attempted to impart. But you should not delay too much while you think on it. Wait too long, and you may have naught but dry toast.

Reprint Rights

back to Strike The Root