For the last four years I have resisted the temptation to respond Ed Griffin’s criticism of my work that has resided on his website since 2006. However, the link to this website has been thrown at me so many times now that for me not to respond implies that I do not have a good response. Such is not the case. Unlike Ed, I welcome a full and open debate on this topic and welcome his further response. Griffin's comments are in non-bold text below. My comments are in bold.
GRIFFIN:
MEET BILL STILL, FIAT-MONEY ADVOCATE
An analysis of the documentaries Money Masters and Capital Crimes
© 2006 by G. Edward Griffin
The purpose of this analysis is to evaluate two video documentaries on monetary issues that were written and produced by Bill Still. One is The Money Masters and the other is Capital Crimes.
STILL: They are both the same production. We just changed the name after the first year of distribution.
GRIFFIN: They are excellent productions with a great deal of history and professionally created images. They tell the story of our debauched monetary system based on fractional-reserve banking. There is just one problem. They offer a false solution – which is to say they offer no solution at all. The alleged solution is that we abandon our present fiat money system and adopt another one similar to it. Yes, they actually advocate FIAT money!
STILL: It drives me nuts the way Ed misuses the term "fiat" money. "Fiat" is not synonymous with "Satan"! Here's the dictionary.com definition:
"an arbitrary decree or pronouncement, esp. by a person or group of persons having absolute authority to enforce it: The king ruled by fiat."
But Ed and the other goldbugs prefer to define "fiat" as meaning money not backed by gold. It always comes as a surprise to them that gold money is also fiat as soon as it is declared "good for the payment of taxes" by the government.
GRIFFIN: proposal is that we should take the power to create money-out-of-nothing away from big, bad bankers and turn it over to nice, trustworthy politicians. In my view, it is very naïve to think that politicians are more trustworthy than bankers.
STILL: This is perhaps the most telling of all of Ed's statements, and represents the most important and astonishing error in the goldbug's argument. Ed obviously does not believe in the utility of an elected government. This is actually very consistent historically with the goldbug's view of our democratic republic. The goldbugs of the late 1800s were the big bankers. Their consistent message was that government was incapable of governing, and therefore, money matters should be left to the experts --- the big bankers --- and not to the people through their elected representatives.
To me, government is all we have – the best tool – to, as Gouverneur Morris, one of the authors of the Constitution and the author of its Preamble put it in a letter to James Madison on July 2, 1787:
"The rich will strive to establish their dominion and enslave the rest. They always did. They always will.... They will have the same effect here as elsewhere, if we do not, by [the power of] government, keep them in their proper spheres."
GRIFFIN: problem with money created out of nothing is not who does it but that it is done at all.
These documentaries remind me of William Greider's book, Secrets of the Temple, which was offered to the public as a scathing exposé of the Federal Reserve System. Greider’s history was excellent, but his conclusion was fatally flawed.
STILL: So is yours, Ed.
GRIFFIN: That is exactly what Bill Still has done in his documentaries. The solution to fiat money is not MORE fiat money.
STILL: Keep in mind, gold is fiat money, too. What Ed is trying to do here, is to gloss over my real solution. It doesn't matter what backs the money, all that matters is who controls the quantity. That combined with the elimination of the ability of the federal government to BORROW – No More National Debt – is the solution to all our economic problems.
Historically, without exception, in every gold-only money system, the quantity of money is controlled -- not by the people, through their elected representatives -- but by the big bankers for their benefit alone. Ed tries to paint my solution as one where the government issues money without controlling the quantity. This would, of course, be insane!
GRIFFIN: It is REAL money based on tangible assets, and none has yet been discovered that serves as well as gold or silver.
STILL: Au contraire, Mr. Ed! Gold only works well as money for the very rich – the holders of fixed investments. It has never worked well as money for the middle class. It has never worked well to provide freedom from serfdom to the majority of any population! And, despite other assertions of yours, I do not believe in wealth redistribution. If all wealth were redistributed equally at midnight on Day 1, by dawn, the clever would have cheated the weak, the frugal would have saved and the spendthrift would have wasted his wealth, and the government who would have legislated the scheme would have skimmed of a substantial share.
GRIFFIN: The assertion in the videos that wooden sticks were successfully used in England as money is grossly misleading. Tally sticks were occasionally used like government-issued script that could be applied to the payment of taxes, but at no time in history were they ever used as a medium of exchange for substantial economic transactions.
STILL: Ed sadly bases this assertion on zero historical facts. This is exactly why I traveled to London during the filming of "The Secret of Oz" to film at the Bank of England museum holding actual examples of tally sticks kept there. According to the museum's curator, John Keyworth, tally sticks comprised well over 90% of English money for about 700 years. Although the tally sticks I filmed were the very large ones, because those are the ones Mr. Keyworth brought down from the vault with him, I included a segment in the film of Mr. Keyworth explaining that the average tally stick was the length between a man's thumb and forefinger. This small size made tally sticks convenient for every-day exchanges. Do you think that the average serf would have owned any gold coins, much less traded with them?
GRIFFIN: To propose that we now can live with fiat money based on that myth is a non-solution of the highest order.
STILL: Get your facts together, Ed.
GRIFFIN: Still points with admiration to some of the darkest days of the American Republic. He praises Lincoln for issuing debt-based money, called Greenbacks, during the Civil War even though this was a blatant violation of the Constitution. His argument is not that this was a desperate expediency required by the urgency of war, but that it was an act of brilliant monetary statesmanship.
STILL: At last, one correct statement from Mr. Griffin.
GRIFFIN: In a similar vein, he approvingly surveys the early colonial period in which colonial governments resorted to printing-press money without silver or gold backing. It led to disastrous inflation and was devastating to the common man; but he says this was caused, not by flooding the colonies with fiat money, but by England forcing the colonies to STOP the practice!
STILL: Ed is very confused here. He is mixing up two different periods in early American history. Unfortunately, he's doing this deliberately to support his theories. He knows very well what actually occurred. This period in history opens a gaping hole in his theory and he desperately tries to gloss over it. Here are the facts of this matter:
Early America had no gold. They were forced, in order to have a medium of exchange, to print their own homegrown paper money. This was money issued by the individual colonial governments, without debt. It worked very well, and the colonies began to prosper.
Unfortunately, as of 1694, England's tally stick system --- also a debt-free money system --- had been killed with the founding of the Bank of England. After 700 years of prosperity under the debt-free tally stick system, England was suddenly thrust into a situation where they had to borrow all of their money into existence, at interest, from bankers. Of course this new money, was backed by gold. So how did that work out?
By the mid-1700s, the interest on this new national debt was crippling the empire on which the sun never set. Fully 75% of British taxation went to paying just the interest on England’s titanic debt. As a result, England was forced to squeeze increasingly exorbitant taxation out of all her colonies; America was no exception. Of course, they demanded this payment in gold, but America had no gold. To the gold money system of the bankers, America’s debt free “colonial script” was worthless.
So, the British passed the Currency Act of 1764. This outlawed America’s “worthless” fiat paper money and ordered all Americans to pay their taxes in fiat gold or silver coin. The result was the same as would occur today if the average American was told that they could no longer make transactions in anything but gold or silver coin. Most of us would immediately be bankrupt. Look what befell the American colonies. As Franklin put it:
"In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed."
To Ben Franklin this return to a gold money system was the basic cause for the American Revolution.
"The Colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the Colonies [their] money, which created unemployment and dissatisfaction."
So, to Franklin, this banning of America's debt free currency was the primary and underlying cause of the American Revolution.
GRIFFIN: [Still] relies on the words of Benjamin Franklin to support his case, and, indeed, Franklin speaks forcefully. Still does not explain that, although Franklin was an advocate of fiat money in the early years, after the experience of rampant inflation had taught its painful lesson, such a view was in the extreme minority. Still makes it appear that Franklin was expressing the consensus of the Founding Fathers when, in fact, it was just the opposite.
STILL: Not true, Ed. But again you gloss over details in a lame attempt to hide evidence that is detrimental to your case. After America revolted from Britain's gold backed fiat money system, they begin printing their first national fiat money. It was called Continental currency. It was issued without debt and without backing by the fledgling and impoverished Continental Congress. It worked very well, and George Washington was able to pay American troops and pursue a revolution against the mightiest power on the face of the earth.
It was only during the last half of the Revolutionary war that the continental currency became wildly debauched. Why? It was not as a result of the duly-elected government, the Continental Congress, printing too much of their "worthless" fiat paper, it was because the British parked ships in Boston Harbor with complete printing presses on board where they massively counterfeited the new American currency and spent it into circulation, driving up demand and prices everywhere.
These were the circumstances that led George Washington to lament towards the end of the Revolutionary war:
"…a wagon load of money will scarcely purchase a wagon load of provisions."
GRIFFIN:Still claims that it would be a mistake to return to a gold-backed monetary system because most of the world’s gold now is held by the bankers. This is a deceptively appealing argument. First, it is not true. Central banks do hold more gold than any other single entity; but the total inventory of gold in the hands of private citizens, as bullion or coins or jewelry or known deposits in working mines, is much larger. If money were to be restored to a precious-metal base, this largely invisible reserve would be more than adequate to supply the demand.
STILL: Ed is absolutely correct -- on one point, anyway. The majority of gold is now in private hands. In all of human history only a grand total of 161,000 tons of gold have ever been mined, and world production today stands at about 2500 tons per year. A ton of gold at today's prices will cost you about $12 million. So even if all the gold that had ever been mined was in existence today it its value at current prices, would be less than $2 trillion, less then 1% of that which is needed in today’s world. In other words, gold’s price would have to go to $100,000 per ounce to serve the money needs of the world today. Can you imagine buying a house with a single gold coin?
Of course, Ed addresses this in his next paragraph.
GRIFFIN: We must remember that the limited supply of gold as a monetary base is an advantage, not a disadvantage. If it were not scarce, it would not have utility as money. The smaller the supply, the more valuable it is. Any amount of gold or silver will work just as well as any other amount. The only difference is how valuable each unit of measure will be. The argument that “we don’t have enough gold in the world” is without foundation, and those who say this do not understand the fundamental mechanics of money.
STILL: Okay. This would be a reasonable argument if Ed had not just ignored tons of monetary history to get to this point. The history is that gold has not worked --- it has never worked --- at least for the last 2000 years --- for the common man. Ed’s “fundamental mechanics of money” worked great for the world’s richest people --- the holders of the majority of gold. Gold money has never worked well to provide freedom from serfdom for the common man. Again, the pertinent question is not what backs the money; the essential question is, who controls its quantity?
GRIFFIN: Bill Still does not make this argument but he comes close when he says that most of the world’s gold is held by the bankers.
Ed, my contention is that never before has a higher percentage of world gold been in private hands.
GRIFFIN: Even if this were true (which it is not) we need to ask a question: If gold is so useless as a backing for money, why are the bankers trying to acquire it as fast as they can? And why are central bankers so strongly opposed to gold or silver-backed currencies?
STILL: Ed seems a little confused here again. Bankers are trying to acquire gold as fast as they can, and so are central bankers. China has just opened up a new gold repository underneath Hong Kong airport and are buying up all the gold they can get their hands on. India’s central bank is doing the same. As a result, recent news items have found that some of these purchases of gold bars, reputedly coming from Fort Knox’s reserves, have contained counterfeit tungsten cores. Huge international scandal which has devastated the notion that gold cannot be manipulated. If true, it shows that gold is not only being manipulated, it’s being outright counterfeited!
GRIFFIN: The answer is obvious. It is because precious metals still are, and will continue to be, a universally recognized storehouse of value,
STILL: Ed is correct again. Gold is a store of value, but what he usually goes on to say is that money needs to be a medium of exchange and a store of value. In reality, money only needs to be a medium of exchange, NOT a store of value.
GRIFFIN: and that value cannot be manipulated by bankers OR free-spending politicians. But fiat money CAN be – and always will be.
STILL: Absolutely wrong! Any open-minded review of the monetary history of the world shows that gold is absolutely manipulateable by bankers!
GRIFFIN: This brings us to the crux of the matter. Still claims that, because the bankers have operated a gigantic monetary scam for hundreds of years, it is time to break their grip over our lives and establish a fair and honest monetary system We could not agree more on that point. But then, in the tradition of Greider and Stinnett, he attempts to lead us to a non-solution. He claims that we should take this power from the bankers and give it to the politicians, because they are chosen by the people and, therefore, can be trusted.
STILL: Well, unfortunately, they cannot be trusted in today’s world because the banking monopoly has controlled the quantity of money for nearly 150 years now. However, history has shown that freely-elected governments have always been humanity’s only successful method of freeing itself from serfdom --- the serfdom of the big banker’s gold-only money system. Today, we have nearly lost our precious freely-elected Republic. We have in its place, for all practical purposes, a plutocracy --- rule by the rich. Ed’s gold money system with only serve to enhance the powers of plutocracy and diminish the capability of the average American to have an influence over their government.
GRIFFIN: In my view, this is the most naïve concept since Adolph Hitler won the elections in Austria as “the man you can trust.”
STILL: Ed's argument now devolves into desperately equating my views with those of Adolf Hitler.
GRIFFIN: We must not forget that politicians gave this monopoly to the bankers in the first place. Politicians continue to cooperate with the system in all of its corruption. Politicians derive huge benefits from this system and repeatedly place their careers above the public good. Politicians vote the bills that spend more than comes in from taxes and thereby create that hidden tax called inflation. Politicians write the laws that take away our liberty in the name of fighting terrorism or crime or drugs. It is the height of folly to design a plan of monetary reform based on the assumed wisdom and incorruptibility of politicians.
STILL: Well, Ed, my view is that government is all we've got! The average person has absolutely no other ability to influence the political state of affairs other than to band together and elect representatives and re-empower our Republic thereby.
GRIFFIN: Lincoln’s issuance of fiat money, called Greenbacks in violation of the Constitution, once again was presented as an act of statesmanship.
STILL: I wonder what part of the Constitution Mr. Griffin is referring to here? Article 1, section 8 clearly says that Congress alone should create the money and "regulate the Value thereof….” Wouldn't regulating the value thereof mean the Congress should be in control of the quantity?
GRIFFIN: There were numerous other flaws that seriously marred this otherwise excellent production, including the acceptance of the myth that JFK was assassinated because he opposed the international bankers.
STILL: Not true, Ed. I have consistently stated that JFK was NOT assassinated because he was preparing to issue US notes. Executive Order 11101 speaks only about the re-issuance of Silver certificates. I spent three days in the Library of Congress back in 1994 tracking this down. JFK was not at Columbia University on the day he supposedly made a widely quoted speech that is apocryphal. He was in the White House that day.
Like many in the monetary reform camp, I grew up on Ed Griffin. He used to do brilliant work, but he has now backed himself into this gold-backed money corner from which he has trouble extricating himself honorably. Ed, you have correctly identified the problem, but you made just one tiny error with the solution. That isn't the end of the world! As many times as you've been right over the years, there is no shame in admitting you got something wrong.
