Most people suppose that the concept of “money” is easy-peasy. What more do you need to know besides how to count it?
Well, there’s a lot more to money than mere counting. If all you know about money is how to count it, you don’t really have a clue.
The relevant information is deep, obscure, profound and confusing. The confusion isn’t accidental. The Powers That Be don’t want you to understand the nature of money because, if you did, you’d know that your government is mostly a racket.
What follows is an analysis of the first of three letters written to the Treasury Department from people who wanted to understand our monetary system.
In the 1990s, I had photocopies of these three letters allegedly written by officials of the U.S. Department of The Treasury discussing the nature of Federal Reserve notes (FRN’s). Those copies disappeared in a house fire. I can’t prove the photocopies were legitimate, but I have no doubt that they were. They were (and are) important because they helped fuel my interest in learning about the nature of money.
The dates on the first two letters were A.D. 1977 and A.D. 1982; the third letter’s date was unclear. Assuming these letters were legitimate and the statements they contain accurate, they offered some surprising insights into the realities of our current money system.
• These letters about our fiat currency (FRN’s) should be read against the background of Article I, Section 10, Clause 1 of The Constitution of the United States which declares, in part, that:
“No State shall . . . make any Thing but gold and silver Coin a Tender in Payment of Debts; . . . .”
That section of the Constitution has never been amended or repealed. And yet, curiously, we haven’t had gold coins circulating in our domestic economy since A.D. 1934, and officially-redeemable silver coins were last seen as lawful money circa A.D. 1968.
Today, in an apparent violation of Article 1.10.1 of the Constitution, we’re using green pieces of paper called “Federal Reserve notes” as our “money” (or, more precisely and accurately, “as our currency”).
The apparent contradiction between the modern use of paper currency and the constitutional mandate that we use only gold and silver Coin as our “tender” and money has caused some people to ask,
“Whut th’ helk is goin’ on here? Why don’t we have gold and silver coin as is still mandated by the Constitution?”
Or, in the alternative—“If we’re going to use fiat dollars (Federal Reserve notes; FRNs) as our “money,” why haven’t we amended Article 1.10.1 of the Constitution to legalize our use of paper ‘Federal Reserve notes’?”
The contradiction between the Constitution’s continuing mandate that we use only gold and silver coin and our current predilection to use only paper Federal Reserve notes has caused confusion. That confusion caused questions. The following letters illustrate attempts by others to get answers to some of those questions.
• The first letter was dated “1977” and marked “Exhibit 0-8”. It was apparently used as an exhibit in someone’s trial, but the name of the recipient has been whited out and is unknown to me. It’s simply another one of those millions of document’s that float like autumn leaves through the internet.
The first letter’s author was Russell L. Munk, Assistant General Counsel (a lawyer) for the Department of Treasury.
At first reading, Mr. Munk’s letter seems polite, concise and professional. A citizen posed a question and Mr. Munk provided a competent answer.
But if you read Mr. Munk’s letter two or three times, you may find your eyes starting to squint as you see or sense some oddities, confusions or even contradictions:
Although the entire letter is less that 200 words, the number of ambiguities it raises is substantial:
“Department of The Treasury
“Office Of The General Counsel
“Washington, D.C. 20220
“Feb 18, 1977
“Dear Mr. XXX1
“This is to respond to your letter of November 23, 19762 in which you request a definition3 of the dollar as distinguished from a Federal Reserve note.”
1 The original sender’s name and address were deleted from my copy and replaced with “XXX”.
2 Curiously, the original letter was written to Mr. Munk on “November 23, 1976”—but wasn’t answered by Mr. Munk until “Feb. 18, 1977”—almost three months later.
Did it take three months for Munk to reply because he was very busy? Was the original letter lost for a couple of months and then rediscovered? Or did it take three months for Monk or his staff to craft a letter that was intended to respond, but not illuminate?
3 The author of the original letter asked Mr. Munk to provide “a definition of the dollar as distinguished from a Federal Reserve note” (FRN). I see no such definition in Munk’s reply. Yes, there are descriptions and anecdotes concerning “dollars” and FRNs—but I see no legal definitions of either term.
That omission seems strange. You’d think that, if there were any words in all of American law that would be well and precisely defined, they’d include “money,” “dollars” and/or “Federal Reserve notes”.
Who wants to argue in court about whether FRNs are or aren’t “money”? It would be like arguing over how many economists can theorize on the head of a pin. Therefore, we generally suppose that government has a clear and unambiguous definition for FRNs that would explain and justify the FRN’s capacity to supplant gold and silver coins. But I don’t see that clear and unambiguous definition in Mr. Munk’s reply.
Was that omission accidental? Or, again, was Mr. Munk’s reply intended to obscure rather than illuminate?
“Federal Reserve notes are not dollars.”
“Federal Reserve notes are not dollars”?!
If I told most people that FRNs aren’t “dollars” (and I’ve told that to a lot of ‘em from time to time) they’d look at me as if were speaking in tongues (and they have, from time to time). They’d reply, “Of course they’re “dollars”—everyone knows that, silly.”
But, if Mr. Russell L. Munk, Assistant General Counsel for the Department of the Treasury, expressly declared that, “Federal Reserve notes are not dollars,” then lots of people might be shocked by his declaration, but lots of people should nevertheless accept that statement as true.
Why is that statement that “Federal Reserve notes are not dollars” so surprising (at least to some)?
It’s because, if I asked you how much cash you had in your wallet, you might count your FRNs and say “42 dollars,” “108 dollars,” or even “3,024 dollars”. We’re all “programmed” to count our paper and digital currency as “dollars”—even though, according to Mr. Munk, our FRNs are not “dollars”.
That has to seem strange (even inexplicable) to some. If the FRNs that we count as “dollars” aren’t actually “dollars,” what are they?
Mr. Munk didn’t say, but he did try to rationalize the confusion of “dollars” and “FRNs”:
“Those notes are denominated in dollars, which are the unit of account of the United States money.”
Oooh, now I get it. The FRNs that are definitely not “dollars” are nevertheless “denominated” in “dollars”. Seeee?
Makes perfect sense.
Or does it?
In fact, calling FRNs “dollars”—even though they’re definitely not dollars is a little like going to the grocery store to purchase 50 raspberries and finding that, on the receipt, the cash-register prints “50 watermelons”. When you ask the clerk why, he explains that it’s just a grocery store tradition to call raspberries by the name of “watermelons”.
Now, I like traditions as much as the next guy, but isn’t it at least a little confusing to use the term “watermelons” to signify raspberries?
Isn’t it likewise confusing to use the term “dollars” to signify or denominate FRNs which, according to Mr. Munk, are definitely not “dollars”?
Is this confusion of names and denominations accidental or intentional?
If intentional, is this confusion deceptive?
If intentionally deceptive, is this confusion evidence of fraud?
We can presume that the people running the Federal Reserve are uncommonly intelligent and highly educated. We can presume that Mr. Munk must’ve been an intelligent man. Couldn’t he have expressed his definitions of “dollars” and FRNs more clearly?
• Mr. Munk continued:
“[D]ollars . . . are the unit of account of the United States money.”
OK—based on that assertion, I assume Monk meant that the term “dollars” is a unit of measure like inches, feet, yards, ounces, pound or tons. That’s not so hard to understand.
But it’s still like measuring the distance from Dallas to Chicago in “gallons” rather than “miles”. Yes, we can redefine the word “gallons” to signify distance rather than volume. But why introduce that confusion into the English language? Likewise, why “denominate” FRNs as “dollars” when the Treasury Department has expressly declared that FRNs are not dollars?
• It’s hard to excuse the confusion of “dollars” with “FRNs” as accidental or innocent. I view that confusion as intentional, deceptive and, arguably, evidence of fraud perpetrated by government against the American people.
Mr. Munk ignores the confusion he’s helping to cause and continues to explain why FRNs (which aren’t dollars) are nevertheless denominated as “dollars”:
“The Coinage Act of 1792 established the dollar as the basic unit of the United States currency, by providing that ‘The money of account of the United States shall be expressed in dollars or units, dimes or tenths, cents or hundredths . . . .’ 31 U.S.C. Sect. 371.”
Mr. Munk implies that it makes no difference whatever substance or concept we actually use as “money of account of the United States” (let’s just say “money”). Whatever we use for “money,” we’re mandated by law (31 U.S.C § 371) to denominate/”express” that substance/concept as “dollars”.
For example, if we choose to use buckskins as money, we’d have to call ‘em “dollars”. If we wanted to use jugs of corn whiskey, wampum, intrinsically-worthless pieces of green paper or even digital 1’ and 0’s on a hard drive as “money of account of the United States,” it would have to be denominated, called and measured as “dollars”.
Mr. Munk implies that it doesn’t matter what substance we use as “money”—it only matters that our “money” be denominated/called/named as “dollars”.
Apparently, we could use almost anything we choose as “money,” provided that we called it “dollars”.
• But there’s a problem. Article I Section 10 Clause 1 of the Constitution of the United States still mandates and declares, in part, that “No State shall . . . make any Thing but gold and silver Coin a Tender in Payment of Debts.”
Doesn’t that constitutional mandate necessarily mean that, within the fifty States of the Union, the only substances that State governments can declare to be “money” (and therefore “dollars”) is gold and silver?
And then, there’s the Coinage Act of A.D. 1792 which Mr. Munk implied was the legal foundation for denominating “FRNs” as “dollars”. Unfortunately, that Act also declared that a “dollar” must consist of 371.25 grains of pure silver or 416 grains of “standard” (alloyed) silver.
Doesn’t that Act tell us that a real “dollar” must contain at least 371.25 grains of silver? If so, how many grains of silver are included in each of today’s paper “dollars” (FRNs)? How many grains of silver are included in each of today’s digital “dollars”?
Has that A.D. 1792 Act been amended, repealed or supplanted?
But Mr. Munk (an attorney) referenced that law as legal grounds to denominate FRNs as “dollars”. If Mr. Munk could rely on that A.D. 1792 Act to show why FRNs can be “dollars,” why can’t I rely on the same Act to show that FRNs can’t be “dollars”?
i.e., if there’s no silver in our paper or digital “FRNs,” are they really “dollars”?
If (as Munk declared in his letter), FRNs aren’t real “dollars,” what th’ heck are they?
And, if FRNs are prohibited for use within the States of the Union by Article I Section 10 Clause 1 of the Constitution and don’t conform to the requirements for “dollars” in the Coinage Act of A.D. 1792, are FRNs even legal within the States of the Union?
“The fact that Federal Reserve notes may not be converted into gold or silver does not render them worthless.”
FRN’s aren’t worthless any more than corn cobs are worthless. Even corn cobs have some value.
But, even though FRN’s might not be totally “worthless,” they are declared by law to be unredeemable in gold or silver from the entity that issued them. If they can’t be redeemed by the issuer in gold or silver, FRN’s may not be “worthless,” but they’re also not truly “money”.
• We’re most of the way through Mr. Munk’s 200-word letter, and we still don’t have a concise definition of “dollars” and “FRNs”. If anything, our understanding has become more confused rather than clarified.
Mr. Munk closes his letter with anecdotes that may be interesting, but offer no legal definitions for the terms “dollars” and “Federal Reserve notes”:
“Bernard of the Federal Reserve Board is quite correct in stating that the value of the dollar is its purchasing power. Professor Samuelson, in his text Economics, notes that the dollar, as our medium of exchange, is wanted not for its own sake, but for the things it will buy.”
Who, pray tell, were Bernard and Samuelson? Were they gods? Supreme Court justices? Former Presidents of the United States? Do the facts that one sat on the Federal Reserve Board and the other wrote a book prove that their opinions carried any legal authority?
In the final analysis, Mr. Bernard and Mr. Samuelson may have been uncommonly knowledgeable about the terms “dollars” and “FRNs,” but their opinions carried no more legal weight than yours or mine.
Therefore, how is it that Mr. Munk (who, as Assistant General Counsel for the Department of Treasury, must be a highly-skilled attorney) ultimately relied on the mere opinions of a couple of private persons to provide some semblance of a definitions for “dollars” and “FRNs”? Why didn’t the highly-skilled attorney (Mr. Munk) provide us with a definition in law that distinguished between the terms “dollars” and “FRNs”?
Could it be that there is no such legal definition?
Could it be that such definition exists, but the Department of Treasury and Federal Reserve would prefer that it remain unknown to the general public?
Whatever the answer, it’s apparent that somethin’ funny’s goin’ on with our monetary system. More, this strangeness isn’t new, but can be seen to exist at least as far back as Mr. Munk’s A.D. 1977 letter.
“I trust this information responds to your inquiry.
“Russell L. Munk
“Assistant General Counsel”
Obviously, Mr. Munk did “respond” to the original letter of inquiry. But his response provided no real answer to the question. A seemingly simple question was posed: How does the Department of Treasury define the difference between “dollars” and “Federal Reserve notes”?
Mr. Munk ducked that question. He didn’t answer. We’re left to wonder why.
I suspect that Munk failed to provide a definitive answer because the Department of Treasury, Federal Reserve, and the general government don’t want Americans to understand the nature of money, dollars and FRNs.
What’s the big secret about “money”?
In the coming article “Letters from the Past II,” we’ll take a look at a shorter and sometimes funny letter from the Department of Treasury on the subject of “dollars”.
Perhaps we’ll learn a few more facts about “dollars” and “FRNs”—or maybe we’ll just learn a few more questions.
Either way, it may be interesting.