Why Honest Money?

By Jerry Titus

Why? Because precious metals provide security against inflation and financial catastrophe. Using gold or silver gives individuals a proven, tested age old alternative to the  monopoly of a money supply. And because quite simply, IT'S THE LAW.

Honest money, (or sound money), is the principle of either a gold or silver backed currency, or the use of the metals themselves as a currency instrument. It's an age old economic principle, one that served our country, either completely or in coexistence with ‘fiat' money and other forms of currency until a mere 80 years ago. Fiat currency is money backed by nothing more than the word of the issuer, notes of credit. Hence the notation on all of our money - ‘Federal Reserve Note'. As more fiat money is put into circulation, the less each previously issued note becomes worth. Just like stock in a company is diluted when more stock is issued. Our Government calls this ‘inflation', when in reality it's devaluation. It's worth to note at this point, that the Federal Reserve isn't Federal and there is no Reserve. It is a cabal, cartel, monopoly that consists of the bank themselves. A privately owned, never audited, corporation with very little oversight. We have no competing currency to the Federal Reserve Note, hence a monopoly.

For comparisons sake, let's use one ounce of gold as a standard. In 1920, an ounce of gold cost $20. Let's call today's price at $800 for simplicity sake (it's been as high as $1000 recently). 800 divided by 20 is 40. It takes 40 times as many 2008 dollars as 1920 dollars to buy the same amount of gold. Or, divide the 1920 dollar by 40, and one finds that the 1920 ‘dollar' is worth $.025 in 2008. That's TWO POINT FIVE CENTS. Hence, devaluation.

A practical illustration. In 1920, a ounce of gold - $20, was about a weeks wages at a decent job. If in 1920, one were to have put an ounce of gold and a $20 Federal Reserve Note in a drawer, each representing a weeks work; and then opened that same drawer today, the ounce of gold would be worth about a weeks wages at a decent paying job - $800; and the $20 Fed Note would be worth about an hours pay at the same job. 1/40^th of it's 1920 value. Hence devaluation of a fiat ‘dollar' by way of increased money supply, and the use of gold as a protection against devaluation.

Governments, banks, multinational corporations and the rich all use gold, silver and other precious metals as a ‘hedge' against inflation, as ultimate currency transfers and as proof positive security. There is no better collateral than precious metals. As evidence consider this:

Most importantly, and reason enough above all other, our Constitutions specifically instruct our governments to use gold and silver as legal tender.

United States Constitution, Article I, Section 10:

"No state shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; ... "

Indiana Constitution, Article XI - Corporations:

"Section 3. If the General Assembly shall enact a general banking law, such law shall provide for the registry and countersigning, by an officer of State, of all paper credit designed to be circulated as money; and ample collateral security, readily convertible into specie, for the redemption of the same in gold or silver, shall be required; which collateral security shall be under the control of the proper officer or officers of State."

"Section 7. All bills or notes issued as money shall be, at all times, redeemable in gold or silver; and no law shall be passed, sanctioning, directly or indirectly, the suspension, by any bank or banking company, of specie payments."