The High Priest of Monetization

By: Silver Analyst | Sun, Sep 11, 2005
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I mentioned previously the curious case of the fabulous and highly prized 1933 Double Eagle. This led to quite a number of replies from those taken by the appeal and history of this gold coin or should we say disk? For therein lies a conundrum, is the 1933 Double Eagle a coin or a disk?

What do I mean? Surely, in terms of composition, it is a coin no different from any other double eagle struck before it? Not so, according to some. Since the coin was never put into general circulation, it doesn't qualify to be anything except a disk of gold albeit with important historical value.

The rationale underlying this is that the coin was the property of the U.S. government and so for it to be in anyone else's hands constitutes robbery. Consequentially, it is not confiscation to take back that which was rightfully theirs. I take some issue with this for two reasons. Firstly, the U.S. government effectively owns every coin and note in circulation. They don't own the wealth, but they own the means whereby the wealth is circulated. So, when all gold coins were recalled in 1933, the government was obliged to take the medium of wealth but not the wealth itself. Therefore they had to compensate the owners with an equivalent amount of Federal Reserve notes.

Thus we can say that the government owned those double eagles in circulation as much as they did the 1933 double eagles sitting in the U.S. Mint. Thus, when the federal government recently confiscated the 10 double eagles under the simple claim of ownership, it didn't hold any water. What they do claim is that the 1933 coins were not monetized and hence were not available for public ownership. Which brings me to my second reason.

What does the U.S. Treasury Department mean by the term "monetization"? They are claiming that the 1933 double eagle had not been declared to be legal tender currency. This raised a further puzzle in my mind, when does a coin become "monetized"? When it is struck? When it leaves the Mint? When it arrives at a designated destination? On it's first monetary transaction? Implicit in all these puzzles is a certain mystical air about the Federal Reserve and its alleged creation of money. One second, our freshly minted coin is not legal tender, the next second it is. The coin itself has not changed in appearance, but suddenly, in the twinkling of an eye, it is not money and then it is.

It is almost like the Christian sacrament of communion. You also have a disk. It is made of bread and continues to taste and feel of bread, but after a brief ritual, it become the Body of Christ but still looks like a disk of bread. It is a matter of faith that one holds to the mystical change that has invisibly happened.

So it is an act of faith with our mystical Federal Reserve. One second it is a metallic disk, the next second it is money but still a metallic disk.

Can you imagine it? The priests of fiat money assemble at the Temple of Monetization. The great high priest Greenspan enters the solemn assembly to the low, repetitive chants of "Full faith and credit ... Full faith and credit..."

Before him on the altar is spread the offering of newly minted coins awaiting the metaphysical moment. He gazes at them in a contemplative manner as he mutters some verses from the holy Federal Reserve Act. As the chants begin to speed up, he raises his arms heavenwards, snaps back his neck and invokes the god of money, Mammon. Now in a state of fiscal ecstasy and assured that his god has heard him, he utters the words of monetization: "Fiatus Monetatus!"

The deed is done, the misty incense of boiling printing ink settles and the pieces of metal have undergone the supernatural transformation into money. We can now all head for the shopping malls.

Far-fetched of course, but not far from the truth in principle. The Federal Reserve claims to turn paper and metal into money. But, alas, there is a flaw in the inerrant and infallible Federal Reserve Act. For within it's not so sacred pages lies no definition of what monetization is or when it occurs. Indeed, the definition of what constitutes monetization is merely offered as a "position of the U.S. Mint" when they say that coins become monetized upon receipt by the Federal Reserve Banks or their agents (e.g. armoured carriers).

Woe unto us! Once again, the priests take it upon themselves to bypass the holy statutes and make it up as they go along. Indeed, in the case of the year 2000 Sacagawea dollars issued by Wal-Mart stores, the coins became legal tender when they were received in the ordinary post. Ah, the mystical properties of the USPS!

Now draw near and hear the unvarnished truth. Those 1933 double eagles did not lie in an unmonetized state. They were already money. Why? Because gold is money, period!

All that was required was a just weight and measure for the gold. For a double eagle, the weight was 0.9675 troy ounces and the measure was twenty dollars. The government does not decide what becomes money, they only confirm what is money and gold has had the approval of mankind and God Himself since time began. Alan Greenspan could chant the entire Federal Reserve Act over a double eagle, but it is already money and he can't make it anymore monetized than it already is.

Neither could he monetize a fiat dollar even if Mammon himself put in an appearance. It's just a piece of paper back by an equally flimsy promise and these guys are exposed as monetary heretics!

So, let us now hear the sum of the matter. Gold and silver are money. With the memory of vaporous continentals and assignants clear in their minds, the wise American people affirmed that which has been the hard learnt lesson of men for millennia: "No state shall make any thing but gold and silver coin a tender in payment of debts".

To which we say "Amen and Amen!"


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Author: Silver Analyst

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