How can We create a strong spacer economy?

A very good article about how to protect the value of money. If spacer
economy is to grow strong and to be profitable for all of us, then it
requires us to take step build capital without creating inflation. This
article deals with the causes of inflation in past and present in America.
If we can learn from our past sins and take steps implied in this article, we
can create a powerful market in space and leave a better legacy for our
children.

Carl E. Mullin
visionary artist and entrepreneur
homo asteralis
ravenart@...
www.ravenartstudio.com

====================
Robbing Peter
by George F. Smith
(http://www.strike-the-root.com/columns/Smith/smith21.html)

Imagine a thief so skilled he can take your money without it ever leaving
your hands. If this sounds impossible, you underestimate the power of
central planners.

How does it happen?

We know money as a medium of exchange. Over the centuries, just about
everything was used for money, including tobacco, sugar, cattle, beads, and
fishhooks. Two commodities--gold and silver--eventually supplanted all the
others. Not only did most people prize them for their ornamental
characteristics, they were easily divisible, durable, and transportable.

Two points we should always remember: (1) On a free market, money is first a
highly marketable commodity, a concrete good people want for its own sake and
not just as a medium of exchange; and (2) people buying and selling on a free
market chose gold and silver to serve as money because those commodities best
fulfilled their need for an exchange media. [1]

People often say we were once on the gold standard. What this means is the
dollar was just a name for 1/20 of an ounce of gold, just as a British pound
sterling was a name for 1/4 of an ounce of gold. Dollars, sterlings and
other currencies did not exist independently from their designation of a
certain weight and fineness of gold. Paper money was not money per se, but a
legal claim for a specific amount of precious metal, either gold or silver.
It was well-understood that these certificates carried with them the promise
of payment in their respective metals, from any bank or the U.S. Treasury
itself. [2]

The government has always influenced the money system, even under the de
facto gold standard of the 19th century. In addition to monopolizing the
mint, government intervened through legal tender laws, the creation of paper
money, and the development of inflationary banking. In spite of these
interventions, the business cycle inflations and recessions were relatively
short-lived because recovery was market-driven, not government-controlled.

For the most part, Americans enjoyed a robust economy that carried into the
20th century. Then in 1913, the government passed two major pieces of
economic legislation: the Federal Reserve Act and the income tax amendment.
The Federal Reserve Act created a central bank, the Federal Reserve, which
began issuing Federal Reserve Notes. When these notes appeared in 1914, they
carried the message that they were not directly redeemable in gold.
Furthermore, the income tax amendment stated that the revenue collected would
not be shared with the states.

This was a major shift toward central control of the economy. The income tax
legislation allowed government to aggrandize power while appeasing widespread
"soak the rich" sentiment. When explaining the Federal Reserve Act,
President Wilson said it was needed to promote higher employment, stabilize
the dollar, grow the country, and increase consumption. Yet, industrial
production increased 534% in the U.S. from 1878 to 1913. [3] Does this
characterize an economy crying out for help?

Through a policy of artificial credit, the government inflated the boom of
the 1920s that brought about the stock market crash of 1929. While
president-elect Roosevelt waited for inauguration in January, 1933, concerned
economists sent him a letter that was also printed in the press urging him to
take certain measures to restore the economy's health. Part of their letter
read: "The gold standard of present weight and fineness should be
unflinchingly maintained. We should also encourage and facilitate the prompt
restoration of the gold standard abroad . . . . With adequate movement of
goods across international borders [which the reciprocal lowering of tariffs,
another of their recommendations, would encourage], the gold of the United
States and of the world is more than adequate for all credit needs." [4]

The statement of the economists was consistent with the Democratic platform
of 1932. During his campaign, Roosevelt pledged 100% support of the gold
standard, as did the Republicans. But on March 9, 1933, Congress abdicated
its responsibility and gave Roosevelt full discretionary powers over money
and banking. He didn't waste time using them.

On March 11, 1933, he issued an order forbidding banks to make gold payments.
On April 5, Roosevelt ordered all citizens to surrender their gold--no
person could hold more than $100 in gold coins, except for collector's
coins. He also made it unlawful to export gold for payment abroad, unless
done through the Treasury. The penalty for defying Roosevelt was 10 years in
prison and a $250,000 fine. [5]

"It became clear to governments that they could not afford to allow people to
own and keep their gold," Murray Rothbard explains. "Government could never
cement its power over a nation's currency, if the people, when in need, could
repudiate the fiat paper and turn to gold for money." [6]

On June 5, 1933, Roosevelt signed a resolution he had introduced in Congress
nullifying the gold clause in all government and private contracts. It meant
what it said--that no one had the right to demand payment in gold for any
debt. [7] The Constitution says that no state shall "make any Thing but gold
and silver Coin a Tender in Payment of Debts"--a clear challenge to the
president's actions. [hightlighted by me-Carl] When Roosevelt asked Senator
Thomas P. Gore from Oklahoma what he thought of the resolution, the blind
statesman replied: "Why, that's just plain stealing, isn't it Mr. President?"
[8] Roosevelt succeeded in having the Senator unseated in the 1936 elections.

On January 30, 1934 Roosevelt signed the Gold Reserve Act into law, which
transferred title of the Federal Reserve Banks' deposits of gold to the U.S.
Treasury. In exchange, the banks received gold certificates. What did the
certificates mean? They meant only that something had been taken from them.
They were not a claim against the gold in the Treasury. [9] With this act,
Roosevelt completed confiscation of the citizens' gold.

As James Bovard observes, "Citizens had accepted a paper currency based on
the government's pledge to redeem it in gold at $20 per ounce; then, when
Roosevelt decided to default on that pledge, he also felt obliged to turn all
citizens holding gold into criminals." [10] Roosevelt also condemned them as
selfish traitors.

One day later Roosevelt reduced the gold content of the dollar by 41%,
raising the price of gold from $20.67 per ounce to $35.00 an ounce. The
devaluation resulted in a $2.8 billion "bonus" for the government.

Government's policy of debasing our money, which the U.S. Coinage Act of 1792
made punishable by death [11], hit full stride under Roosevelt. As the
world's reserve currency since 1945, the U.S. dollar has been playing the
part of gold in international trade. Almost no one seriously questions fiat
money anymore. Fed Chairman Alan Greenspan told a House Financial Services
Committee last February that "in years past, there's been considerable
evidence that fiat currencies have been mismanaged in general and that
inflation has been too often the result . . . [But we're] learning how to
manage a fiat currency . . . . Whether that continues is a forecast which I
can't really project on." [12]

Has a managed fiat currency enhanced our prosperity?

Here's one clue to the answer. Go to "How Much is That Worth Today?" [13]
and try a few computations. You'll find that a dollar in 2001 was roughly
equivalent to five cents in 1901. But a dollar in 1901 had the same value as
$1.50 in 1801!

In other words, under a mostly market-driven money system, the dollar
actually appreciated in value over the course of the 19th century--a period
during which average incomes rose and the population greatly expanded. Under
government-controlled fiat money, after nearly a century of war, waste,
wealth-theft, and welfare, with many families now needing two incomes to live
decently, the dollar today is almost worthless.

Next time you think government is completely inept, think again. To rob so
many of so much, while keeping complaints relegated to the lunatic fringe,
requires uncommon skill of deception.

References
1. What Has Government Done to Our Money?, Murray N. Rothbard,
http://www.mises.org/money.asp
2. The Last Great Bubble -- Counterfeiting the Dollar, M. A. Nystrom,
http://www.gold-eagle.com/editorials_02/nystrom022602.html
3. Central Banks, Gold, and the Decline of the Dollar, Robert Batemarco,
http://www.libertyhaven.com/regulationandpropertyrights/bankingmo
neyorfinance/goldstandard/ centralbank.html
4. Economics and the Public Welfare, Benjamin M. Anderson, D. Van Nostrand
Company, New York, 1949, p. 303.
5. The Great Gold Robbery, James Bovard,
http://www.libertyhaven.com/regulationandpropertyrights/bankingmoneyorfina
nce/goldstandard/ greatgold.shtml
6. Rothbard, p. 43.
7. Nystrom
8. Anderson, p. 319
9. Anderson, p. 349
10. Bovard
11. Nystrom
12. Paul and Gold -- Greenspan and Enron,
http://www.gold-eagle.com/editorials_02/paul030202.html
13. How Much is That Worth Today?, Economic History Resources,
http://eh.net/hmit/ppowerusd/
May 14, 2002

George F. Smith is a freelance writer with a special interest in liberty
issues and screenwriting. A certified Toastmaster, he welcomes the
opportunity to speak to your club or convention.