Medium of Exchange

But our project to free ourselves seems stumped when we come to the “medium of exchange” function. Why? Because by political manipulation silver and gold have been demonetized. I can’t take my 100 ounce silver bar or gold coin down to the grocery store and buy bread with it directly. First, I have to find somebody willing to exchange it for paper dollars, then take the dollars to the grocery store to buy bread. The inconvenience alone keeps me from using silver and gold as money, and it was intended that way.

But what if it isn’t inconvenient? What if people in a local economy began to accept silver and gold among themselves, every day, as they buy and sell to each other?

Here is the key to your shackles: you free yourself, and deny the Tapeworm use of your wealth, when you use gold and silver coin to store value and exchange directly.

This is the great secret of the American system, not only concerning our rights to sound money but most of the rest of our “stolen” rights as well. They aren’t really stolen: we are fooled into renouncing them voluntarily.

Beyond all question (I say on the authority of years of study) you have a common law, constitutional, and statutory right to gold and silver money. In fact, the notes of the federal reserve bank, or any other bank, are not “money” under current law, they are “notes.” A “note” is not money but an obligation to pay money. They may be “legal tender”, but they are not money.

But wait! If they’re legal tender, that means that legally we are forced to accept them, huh? Not at all. That’s the catch. You can stay out of the legal tender system by specifying in advance what form of payment you will accept. Legal tender only operates by default, when no specification to the contrary is made. However, you are free to contract for specific payment in any form you desire: silver, gold, goats, fava beans, you name it. You merely need to make that known by contract or public announcement.

What stands in the way of your monetary freedom? Two things: ignorance, and laziness. Ignorance, because you don’t know how to use silver and gold as money, and laziness because it’s easier to use paper money or credit cards. Now I may be able to help you with the ignorance, but the laziness you’re going to have to take care of yourself.

Practicalities

Okay, so I’ve convinced you, but now how do you start using silver and gold every day? First, it’s nothing but a simple exchange rate problem. In the US we have a huge internal market, so few of us have ever dealt with foreign currencies. But there are people all over the world who live near national borders – probably a lot of them in Washington state near Canada – who deal in diverse currencies everyday.

If they can do it, you can do it.

For most daily transactions, you’ll be using silver. Today an ounce of silver brings about $12.00. Ten silver dimes, which contain nearly three-quarters of an ounce, cost about $8.75. The smallest generally available gold coin, a 1/10 ounce, costs about $68.

How can you learn what those exchange rates are? That’s what the Internet is for. You can go to the sites of the futures exchanges and look up prices, or you can go to my website , scroll down the home page to the yellow banner that says, “Download Free Portfolio Calculator,” double click on that, and fill out the pop-up form. That will automatically add you to the list to receive my free daily e-mail commentary, which includes the prices of dozens of items and spot gold and silver.

To make life easier for you, Catherine Austin Fitts and I have put together a website. All you need to do there is enter the spot gold and spot silver price and the amount you want to pay in dollars, hit the update button, and it will immediately tell you how much silver, or silver and gold, you need to pay that dollar amount.

Before too long, you won’t even need that website calculator. You’ll be making those calculations in your head, and then you’ll stop thinking in dollars altogether and begin thinking in silver and gold.

Then you and your neighbours can keep your wealth at home, circulating in your own local economy, blessing and enriching one another.

Think about it. All you have to lose is – your chains.

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Franklin Sanders [send him mail] has been brokering physical silver and gold since 1980 and trading metals even longer. He publishes a monthly financial newsletter, "The Moneychanger." In 1993 he wrote Silver Bonanza for Jim Blanchard, and in 2004 published Why Silver Will Outperform Gold 400%. For more information visit his website , where you can sign up for his free daily gold & silver market commentaries. He lives on a farm near Dogwood Mudhole, Tennessee amidst a mob of children and grandchildren.

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Footnotes

i.Consider the bank of England, founded in 1694. By 1749 the government owed the bank £9 million (2,118,600 ounces of gold). The total value of all gold minted in England from 1216 to 1760, about 550 years, was only £41,071,727. In about 50 years the Bank of England held a claim on nearly a fourth of that. See,, Federal Reserve Bank of St. Louis Review, April 1984, Vol. 66, No. 4, p. 15, “A Private Central Bank; Some Olde English Lessons” by G. J. Santoni. For British mintage figures, see Silver Bonanza by James Blanchard and Franklin Sanders, page 41. Jefferson, Louisiana: Jefferson Financial, Inc., 1993.

ii. CRS Publication 96-672-#, pages 11 & 12. Here’s more in the same vein: “The lack of backing, however, has no bearing on the suitability of Federal Reserves notes as currency. Money exists to facilitate exchange, functioning as a “medium” or middle part of a transaction. In a modern economy, every time someone purchases something, he engages in half of an exchange: one thing of inherent value has changed hands, with the buyer getting what he wants, but the seller [is] still looking to get something of value in return. Money is a token given the seller signifying that he is still owed something of value. A transferable IOU is ideal for this purpose.

The government creates money out of nothing in order to purchase goods and services of value [The banks create money out of nothing in order to purchase assets of value, and the banks create most of the money. In fact, the government creates none at all, and didn’t when Mr. Woodward wrote this, as he would have known if he hadn’t been an economist.] The note that it pays with is basically an IOU...

“Debt makes good money because the debt of one person or institution is an asset to whomever it is owned. Consequently the debt can be used for exchange by the creditor (the individual who holds the debt), and then in turn by the person who receives it, and so on [the game of hot potato I described above] When the chain of transaction comes round to the original issuer (the debtor), the debt can be cancelled against whatever obligation one has toward the issuer , and the series of exchanges becomes complete."

Consequently, Federal Reserve notes and other paper money are indeed “unbaked” IOUs. The fact that they are IOUs is the very thing that makes them suitable to be money.

iii. “Modern Money Mechanics: A workbook on Bank Reserves and Deposit Expansion. Federal Reserve Bank of Chicago. Originally written by Dorothy M. Nichols in May, 1961, revised June 1992 by Anne Marie L. Gonczy. Page 3.

vi. Letter to the Secretary of the Treasury Albert Gallatin (1802); later published in The Debate Over The Recharter Of The Bank Bill (1809). Wikiquotes

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