Frequently Not Asked Questions: Six

Standard

How much money do you make?

 

None.

 

It’s illegal to make money unless you are the federal government, so I’m surprised you would ask me that.

 

New_five_dollar_bill

Please note that Lincoln looks reserved.

 

Like me I’m sure you have bookmarked Article 1, Section 8, Clause 5 of the U.S. Constitution, which grants the federal government the right to “coin” money. That meant gold and silver. Our Founding Fathers distrusted and eschewed* paper money, so they expressly prohibited states from “emitting” it.

 

 

You probably also know that Abraham Lincoln signed the first U.S. federal emission law allowing the government to print bills. In 1862, government IOUs in the form of “greenbacks” began circulating their way throughout the land until they landed in the pockets of the rich. It’s been that way ever since. The government called these bills Tender Notes, which I find rather endearing. Now, of course, the government no longer sends out Tender Notes; instead, they send out Reserve Notes. On our new colorful missives, the government promises that the Federal Reserve Banks have purchased enough U.S. Treasury securities (i.e., government debt) to cover “all debts, public and private.”

 

 

If that doesn’t make you feel secure, I don’t know what would. As a nation, we have debt coming out of the “wazoo” (French for “Congress”), and as of today, it stood (momentarily) at $16,804,904,109.526, give or take 25 cents. An endless supply of debt means an endless supply of securities, which means an endless supply of Reserve Notes promising to cover any and all other debts.

 

 

Please note: The writer of this blog reserves the right to interpret history and facts in a manner that tickles her fancy. If your fancy starts to itch when reading this post, please stop immediately and read your nearest economics book.

 

 

*Use of the word “eschew” entitles any writer or reader of this post the right to liberate one piece of chocolate per writing and/or reading.

 

 

 

 

32 thoughts on “Frequently Not Asked Questions: Six

  1. Great work in Constitutional law here! I love the mental photo of our Founding Fathers eschewing paper money! Chomp! Chomp! How did it work for Washington with his wooden teeth do you think?
    Maybe I’d better rethink my disdain for those folks who invest in gold.

  2. Thanks for setting me straight. I have stopped the presses and will not make any more money. (Oh wait, I’m retired so I really don’t make money!) I need some chocolate so eschew it!

  3. I so enjoy reading your interpretations of history. I prefer no other… And I would never have asked you how much money you make. It’s enough for me, those things that I know you make… like sense. And of course, best of all, that smile that follows you, and usually flies to my chin, and spreads my lips just after you’ve gone on to do something else… it’s always such a pleasure to listen to you…

  4. You could have also asked “How Much Money Do You Earn” and the answer would have remained the same. And as for that history lesson, I can only say that finally someone has explained the national debt in a way that makes sense. Well, except the part about the dog chasing his tail. I’m so relieved to know that another piece of chocolate has been set free. They have been a captive audience for far too long.

  5. I feel that I must add to your historical information in today’s post. The U.S. government ceased sending out tender notes on July 9, 1953. That is when the current version of the Internal Revenue Service was established. And no one has received a tender note from them, EVER!
    EEEsscheww! Oops I’m sorry, I just sneezed. I think I need some chocolate, it will cure almost everything. At least that is what I’ve heard.

  6. It is very interesting how you make sense out of nonsense, though you claim it is the other way around!
    Here in Canada, we aren’t so tied to paper money. Our dollar is a coin called a ‘Loonie’ and our two dollar coin is a ‘Toonie’. We don’t make pennies anymore. The Canadian public accepted the Loonie and Toonie quite readily, mostly because the Bank of Canada simply withdrew the paper equivalents from circulation!

  7. My gosh, Mr. ShimonZ said exactly what I wanted to say but with far more elegance. I always save your post for my quiet moments when the house is still and all eyes are closed. (except mine of course) It is always worth the wait. Wit and charm just what I needed.

  8. For some reason I have an almost overwhelming urge to read your fourth sentence again *chomp chomp* and again *snarf*

    Thank you…I will consider it an Anzac Day gift (even though I am reading your post almost a month later…whoopsy!)

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