Not surprisingly, the individual who made the comment we reported in yesterday’s blog posting on “Social Credit” had something to say about the fact that we had managed to critique his comment so rapidly. The response, however, did not actually address the critique we made. It simply make an assertion that the commentator seemed to believe said everything, when, in fact, it said nothing:
“Government issued currency is ultimately backed up by its power to levy taxes. Money is not property it is just a claim on property and the ability to pay any taxes due on any property that is owned, like land value.”
Well . . . yes. That is why the U.S. Constitution does not grant the Congress the power to “emit bills of credit,” i.e., “create money,” and prohibits the individual states from doing the same thing. The U.S. government has been acting unconstitutionally since 1862 by emitting bills of credit that are then either used directly as money, or monetized through so-called “open market operations.”
The money supply was never intended to be backed by government debt, i.e., the present value of future tax collections (the ability of the government to collect taxes), but by the present value of existing and future private sector marketable goods and services, monetized by offering mortgages for existing goods, and bills of exchange for the present value of future goods. Accepting private sector bills and mortgages and issuing promissory notes that are then used as money is the proper function of commercial and central banks, not financing government largesse.
Taxation is not the exercise of a property right by the State, but a grant from the citizens to enable the government to carry out its legitimate functions — of which redistribution of wealth is not one. By exercising property in what belongs to the citizens by issuing debt-backed currency, the government abolishes private property to that degree.
Naturally the commentator did not take these wild and crazy ideas lying down. Almost immediately we got another response:
“The constitution was intentionally flawed and a corrupt supreme court upholds it in a way that limits the sovereign power of the U S Congress and the individual states and allows only for the private issue of credit as debt by the banking industry now under monopoly control by the Federal Reserve.”
Well . . . not exactly. On the question of money, we find the arguments against permitting Congress to retain the power to emit bills of credit in the Constitutional debates.
The legitimacy of a central bank was acknowledged early on in Alexander Hamilton’s 1791 Opinion as to the Constitutionality of the Bank of the United States, and McCulloch v. Maryland in 1819. It had nothing to do with the Supreme Court’s seizure of power in the Dred Scott case in 1857 and its effective nullification of the 14th Amendment in its opinion in the Slaughterhouse Cases of 1873.
In any event, the issue as to whether the Constitution was intentionally flawed or created as a presumably perfect document is irrelevant. The original intent of the framers with respect to money and credit was to prevent both the state and federal governments from being able to create money, thereby presumably avoiding another Continental Currency debacle.
The Constitution gives the Congress only the power to set standards and regulate, not create money. Being able to create a claim on what belongs to others, whatever you may call it, abolishes private property to that extent. As John Locke pointed out,
“What property have I in that, which another may by right take, when he pleases, to himself?” (Second Treatise on Government, § 140.)
By issuing claims on what belongs to others, a government that implements a program of social credit abolishes private property.