by John Hunt
“I’m preaching to the choir then,” responded Petur, nodding.
“Well, only if the choir doesn’t know the music. Look, Petur, I’m one of those people in America who knows something is very wrong. I am also one of those people who don’t understand central banking and money supply well. I have never put the time into it. And I don’t watch reality shows, so that can’t be my excuse. Only recently has central banking made the national stage as an issue, and then, still, it has been kept on the fringe. So, my ears are open. Teach.”
Petur sat down on a stonewall adjacent to the bench, next to but slightly behind Standall. He spoke gently, but not in a whisper, simply stating facts into the ear of the willing listener.
“Counterfeiting the currency of a nation has for all human history been considered a capital offense. Deserved of the death penalty. Why? Because counterfeiting so seriously destabilizes a nation. Debasing gold coins by mixing base metals into them like copper would get a man killed, rightfully, for fraud. Likewise, debasing silver with nickel and lead would trigger the same punishment. The Secret Service in the United States spent much of its effort protecting the US paper currency in the 1800s, because that paper currency had to all be backed by gold and silver in the US Treasury. Printing fake paper currency was a huge concern to the United States, and to the people of America. Printing out fake dollars was often easier and cheaper for criminals than debasing gold or silver. It is one reason why gold and silver coins have more value than paper notes backed by the coins, often substantially more.
“Do you know what the dollar is, Thomas?”
Standall replied, “I think what I assume it to be is not likely to be correct.”
“I expect you are right. The word ‘dollar’ was derived from a mint in what is now Bohemia, in the Czech Republic. In the Middle Ages, there was a silver mint there, in the Joachimthal Valley. This mint developed a reputation for making excellent and trustworthy silver coins of exactly one ounce. Everyone throughout Europe preferred these coins from the Joachimthaler mint because they were well-forged and hallmarked. They were truly one ounce silver coins. Over time, these coins became known as Thalers. Then the term ‘thaler’ became a generic word for one ounce of silver. In turn the term ‘thaler’ became ‘daler,’ and then ‘dollar.’ A dollar in the beginning of the United States was also the equivalent of one ounce of silver. A dollar is supposed to be, still, one ounce of silver.”
Standall smiled thinly and offered, “But it’s not. Now a dollar is but a thin piece of paper. No silver backing.”
“Correct. It is a piece of paper. A piece of paper that the government is allowed to print as fast as it wants to, but that no one else can print. If you were to print such paper, the government would track you down and imprison you for counterfeiting.”
“And yet the government counterfeits every day.”
“Every day.”
“But people trust the US dollar anyway.”
Petur asked, “Do they?” He let the question answer itself.
Indeed, Standall responded only with silence. Petur looked over his shoulder at the canal which he would fall into if he leaned too far backward. Standall shifted his position to see Petur’s face and put his feet up on the slats of the iron and wooden bench.
“And coins, Dr. Standall, what about coins? Until 1965, the United States quarter was 90% silver. It was debased to only 40% silver through 1969, and since that year it has no silver at all. It is just base metals. The quarter is now counterfeit. Entirely. So are the dime, and the half dollar coin. The government tried to hide it, by reeding the fake quarters, and making them look the same.”
“Reeding?” Standall interrupted.
“Reeding is the grooves on the edges of the coins. They used to only reed coins that are made out of precious metals — Dollars, half-dollars, quarters, and dimes. Nickels and pennies are made out of base, cheap metal, and don’t have reeding. The Romans started reeding coins so people could not shave the edges off precious metal coins and make new coins out of the silver. It was their effort to prevent counterfeiting. I’ll get back to that too. In any event, the US government has continued to put the reeding on the quarters and dimes, even though there has been no silver in them for more than 40 years. They were trying to fake people out. Make people think that these fake coins still had value.
“But people knew, of course. As the new fake coins were made, by that I mean counterfeited by the government in the USA, the people stopped spending the silver quarters, and hoarded them. In the mid-sixties, there was a severe shortage of quarters as a result. The government made a law that insisted that the new fake quarters be considered to be worth as much as the old silver quarters. But just because the government made the law that says so, doesn’t make it true. The new quarters had less silver, and then a few years later no silver at all. People knew. And they weren’t going to spend the good quarters for what they wanted to buy when they could pay with crappy new quarters. They hoarded the old coins. All those old silver quarters and dimes came out of circulation. You will never see one of them circulating now.”
“What is a silver quarter worth now?” asked Standall.
“It goes up and down with the demand for silver, but when silver is selling for thirty dollars an ounce, a quarter is worth about seven dollars.”
“So, a dollar, which used to mean one ounce of silver, is now worth about 1/30th of an ounce, and a quarter, which used to mean one quarter of an ounce, is now worth seven dollars.”
“That’s right. There’s nothing new about this process. The Roman government did the same thing despite their own honest reeding of their coins earlier in their history. During the early empire, in the first century AD, the Romans began a 200-year process of debasing their currency. The Roman government had to pay for wars, welfare, construction projects and the like, just like our country does. They taxed their people to get the money, but after a while, the people complained as taxes got too high. They started having a Roman version of the Boston Tea Party. So the Roman government started cheating. People caught on quickly if coins were clipped — shaved into smaller coins. So the Romans instead melted gold and silver coins and started adding cheap metal into the melt mixture, and then re-minting new coins, now debased. The government used the extra coins they were able to mint with the diluted precious metal to spend on their projects, wars, welfares and subsidies. In about 50 AD, a Roman denarius was a coin that was 94% silver. Within 200 years, the process of debasing had gone so far that a denarius only had 1% silver, and then none. During that time, the costs of goods soared over a million-fold in relation to the denarius. Inflation happened. It wasn’t really that the value of the goods were higher, but rather that the value of the denarius was lower, obviously.”
Standall nodded. “And at the end of those 200 years, with the currency completely debased, the Roman Empire collapsed.”
“Inevitably. It was a long and horrid decay. Such collapse is the certain end-result of counterfeiting of the currency. It always happens. Always, always, always. Such destabilization of the economy from counterfeiting is why governments have always been so harsh in punishing people who counterfeit.”
“Unless it is government itself doing the counterfeiting.”
“Right. Governments commonly excuse themselves from laws. The US government counterfeits the currency all the time, to pay for wars, projects, welfare checks, social security, medical expenses. They do it so they don’t incite a revolution against the higher taxes that would otherwise be needed to support the spending desires of the government. But the cost of this counterfeiting is the inevitable destruction of the economy, and in our case the destruction of America, Europe and most everywhere else.”
“And people don’t complain much about it,” inserted Standall.
“Nope. They don’t get it. The government and the Federal Reserve use confusing terminology like ‘quantitative easing,’ and ‘discount rates,’ and ‘fractional-reserve banking,’ and ‘required reserves’
to effectively hide the fact that they’re doing this.”
“Why don’t the bankers, who know about finance… well, stop this?”
Petur smiled, “Why would they? They are the principal beneficiaries of the counterfeiting! They created the central banks. They designed the Federal Reserve and the central banking system. They are often the first recipients of the inflated currency, and receive it while it still has full value. They profit from inflation.”
They talked for another hour. Standall’s eyes grew ever so slightly wider as the degree of the problem, the impossibility of contending with it, the inevitability of the loss of his entire fortune, and the nation itself in the very near future, was made increasingly clear. Petur’s knowledge of the issues was deep and certain, buttressed by years of study and complete comprehension of the bewildering issues. Through the whole conversation, the conviction in Petur’s eyes was firm, strong, unmistakable and convincing.
Standall asked, “Is there any country that is not doing this?”
Petur replied, “Every nation on the planet now relies on counterfeit currency. Some of them counterfeit slowly or not at all — and they are much more stable, but some rapidly expand their money supply — in other words, they inflate. The US government is massively inflating currently. But even those countries that aren’t inflating currently still have given themselves the power to do so: the ability to counterfeit is always there, because the currencies are all unbacked, unreal, without any real inherent value. All the currencies of the governments of the entire world can be created out of thin air as easily as pressing a button on a computer keyboard. The whole world’s system of currency, which is the central underpinning of every economy, is an utter and complete fraud. In the end, fraud collapses. This will assuredly devolve into tyranny, famine, and war as it has every time in the past. Even though these events have happened over and over, such knowledge does not prevent them from happening again. This time, though, it’s the whole world. And in the very near future. That is the future of our children, Dr. Standall.”
“And this utterly fraudulent cheat, central to society and the economy but dark and hidden in its own confusing veneer of financial sophistication, is why people sense something is wrong, but cannot put their finger on what it is?”
“Certainly.”
Almost in exhaustion, Standall said, “Is there nowhere on Earth that we can go to avoid this?”
Petur smiled. “Not yet. But there can be.”
Both men stood up and began slowly walking, in no particular direction. As they walked, Petur began detailing his vision of the future with the confidence of one who has thought through every predictable detail — which he had. The two men became so enthralled in their conversation that despite their hunger, they walked past several adequate restaurants, without paying them any heed. Petur suddenly realized that they were lost. In the dimming light, he looked around him, his eyes passing, but not noting, two men with dark complexions and black wavy hair, following a block behind.
Standall was asking, “And the investors? What of them? You can expect them to want money back for what they’ve provided.”
Petur slowed his pace, a little distracted. “Certainly, why not? Those who invest will be taking an enormous risk. These investors will have the foresight. They will have invested the time and energy to prepare. If successful, they will benefit. You will benefit. But that’s not the main reason why investors will choose to participate. The main reason is that they will see that there is no other choice. We will pay our investors back in the stock of human survival and human progress, and, someday, with real money.” He switched his heavy lap top case from one hand to the other.
“An interesting notion.” Standall said, calmly. “But you can’t just flood money into a system indefinitely, regardless of the form of the reward. The space shuttle program has cost multiple billions, yet only takes us two hundred miles above the planet — hardly out of our atmosphere. What is the core difference in your philosophy that will allow you to accomplish such great and grand goals as you propose?”
This was a standard question, and the biggest part of the financial gamble.
“Because there will be no initiation of force or fraud in our system. All money invested in any project will be freely invested. No coercion, no taxation. The risks will be borne entirely by, and benefits accrue to, those who invest in and work on a project.”
They were walking past a little restaurant that advertised itself as a pancake bakery. It was set down below street level, and the smells emanating from it distracted Petur even from the impassioned discourse. He caught Standall’s eye, and without a word, they headed down the five steps into the restaurant. Two men followed them inside several minutes later.
It was not as dark inside as it had appeared from the street, but it was a simple place. Wooden tables lined the walls on either side, leading back to the kitchen in the rear. Tucked in the back corner were a few shorter tables, surrounded by infants’ high chairs. The cement floor in that area was littered with toys, and, intriguingly, sand. Two toddlers were playing in the sand, while their harried parents enjoyed an evening snack.
Otherwise, the place was nearly empty. At one of the front tables facing the windows leading to the street above was an older gentleman with a gray mustache who greatly resembled an American television actor. In fact, thought Petur, he indeed was that television actor, although he could not come up with his name.
Petur and Isaac settled down at a table near the actor, and perused the menu. There were two pages filled with more than fifty methods of topping pancakes. There were meats, vegetables, candies, sugars, and chocolates, alongside the familiar fruits and syrup options. It was the perfect restaurant for Petur, and it seemed to please Standall too.
Standall repeated an earlier question, one that Petur had not yet completely answered. “How do you presume to accomplish such a task?
“I believe that it is primarily a matter of sheer drive, combined with foresight, and most importantly, focus. Focus is the key. We only recruit people who can recognize the urgency. And who have the skills and knowledge that may be useful for any given project. To obtain funding, the researchers will have to convince the investors of their worth, and of the worth of their proposal. The scientists won’t be funded by a committee that distributes money collected by taxation, but rather will need to use persuasion to convince thoughtful investors voluntarily risking their own money. The successful people who create value will be treated as heroes. It’s what they deserve, after all. They are certainly much more heroic than movie stars or professional athletes.” Petur had said that a bit too loudly, and the actor nearby turned his mouth slightly downward at the edges in silent protest.
Standall nodded fervently. “Too bad most people don’t see how much more the scientists can provide than the athletes in the form of wealth and happiness and health.”
“The people who will be working on the project shall be unhindered, unfettered by outside influences. It will be just a group of people dedicated to the intense challenges. Many will be radicals. Out-of-the-box thinkers. We will rely for the big leaps forward on people who are not in the mainstream, who don’t think like the average scientist, or even like the average top scientist. Special. We need special. At least that is my bias. However, it is the investors who will make those determinations, primarily.”
Standall asked, “Who will make the decisions for this group as a whole?”
“This is important: I don’t like to think of them as a group. They are individuals, and will be making their own decisions, individually. Each individual will choose what project they will commit themselves to, and that will be determined by how much they believe the project will be successful and profitable. To the extent that there are common resources — which, by the way, will be kept to a highly constrained and very bare minimum, relevant decisions will be made by consensus voting, but only as long as the group is small and focused. Democracy often ends in calamit
y, so there will be elected members who will serve the purpose of daily administration, and also make emergent decisions. There will be constant electronic information and debate available via a computer network, and it will be the responsibility of each member to participate in this communication, and then vote on proposals. To vote on an issue, each person will have to prove they are knowledgeable about it. It will be a small enough group that a representative structure will play a smaller role initially, but over time the powers of the democracy will be transferred to the representatives as the number or people involved increases.”
“How about secrecy? You will be sacrificing secrecy in this form of government. Your thoughts and successes will be available to the world.”
“We won’t be a true democracy, thank God, but you are right, information will be freely distributed among the people involved, for the most part. Isaac Bonhoff has been worried about the secrecy issue also. He thinks we need some secret agents, some spies, some counterespionage team to protect us. But I think differently. Details of our successes and advancements may well leak out to the general public, industries, governments. But remember, the projects have to succeed in the market process, small as it is, that will be present on the Island. If secrecy hinders profit, then the methods of maintaining secrecy will be developed spontaneously.”
Standall had learned quite a bit from the racquetball player who had told him about Petur, and revealed some more of that knowledge now. “Yes, an island. I had heard that you plan to do this all on an island. Why?”
“We need to be above and outside of any sovereign nation. No external influences, avoiding the whims of current political tides. In order for the maximum value to be created from this proposal, and no less than maximum is enough by the way, we need to not suffer from irrelevant regulations and bureaucratic hurdles that provide no value but suck energy and strength out of people and projects and funding. Most importantly, we need to not be controllable by the powers of the central banks. We need to be an island in geographical, political, economic and cultural contexts.”