| « (15.1) Previous Section | Table of Contents | Next Section (16.2) » |
Blood Money
By Daniel McGavin Hansen
What is more valuable... a brick of gold or a canteen of water? Well, it depends on supply and demand. A brick of gold could even have a negative value as a burdensome weight in the backpack of a weary and thirsty traveler in the middle of a scorching desert.
All value is relative to SUPPLY AND DEMAND. Article I section 8 of the Constitution specifies that Congress shall have the power... to coin Money, regulate the value thereof, and of foreign coin... How is value regulated? By controlling the supply. Regarding the power of Congress to create MONEY no restrictions are mentioned or specified such as using gold or silver or paper. Congress is: “To provide for the Punishment of counterfeiting the securities and coin of the United States.” Congress could not regulate the quantity and hence the value of money if it could not stop counterfeiting
The ultimate authority on the value of money is the market place. It is like a giant auction measuring and determining the value of the medium of exchange in relation to the goods available.
Congress has the responsibility to issue sufficient currency, to create a convenient and stable medium of exchange that will be uniform throughout the Union in order to facilitate the transfers of commerce, which promote the General Welfare.
If, for example, the market is 100 Apples and Congress wants to establish and maintain a value of one dollar per Apple, Congress must create and distribute $100.00 to the market. The market is always fluctuating, therefore, if we have a bumper crop and produce 200 Apples in a growing and healthy economy, Congress must issue one hundred more dollars into circulation in order to maintain the relative value of $1.00 per apple. If the money supply remained at $100.00 per 200 Apples each dollar would buy and hence be worth 2 apples. That would be deflation.
If in the following season the economy produced only 150 Apples, Congress would have to withdraw from circulation via taxation $50.00 in order to retain the Dollar per Apple ratio and hence fulfill the Constitutional mandate to regulate the value thereof. If Congress failed to withdraw $50 inflation would be the rule, as each apple would now cost $1.334.
| « (15.1) Previous Section | Table of Contents | Next Section (16.2) » |