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Abusing Old Hickory

Mises Daily: Tuesday, October 28, 2003 by

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If you've gone to your bank lately, you may have noticed that the Federal Reserve System and the Department of Treasury have an all-out advertising blitz in progress touting the new $20 bill. On a small, slick piece of propaganda entitled "The New Color of Money" the nation's counterfeiting partners in crime — the Treasury and the Fed — point out the many reasons that the new twenties are supposedly "Safer. Smarter. More Secure."

Poor Andrew Jackson. No other ex-president would be as disturbed as "Old Hickory" at the monetary nonsense the Federal Government is perpetrating on the public. And it's not that Jackson would be especially perturbed at what the moneymakers are putting his portrait through. As a New York Times critic wrote about Jackson's new portrait, "The overgrown, right eyebrow has morphed into a giant albino caterpillar crawling to the edge of Jackson's face. He seems to have acquired a double chin. And his tight-lipped glower has been replaced by a near smile. The glance is ambiguous…He has become a bobble-headed toy, a big head on a small lopsided base. He looks deformed and mournful up there on the pedestal."

What has the 7th president spinning violently in his grave is the fact that, according to the Times, "The Bureau of Engraving and Printing will spend $33 million on advertising, marketing and education programs to promote the new bill, and it has hired a public relations firm and, in a first, a product placement firm and one of Hollywood's top talent agencies to put the $20 bill on the publicity circuit." All this to convince the public that the new bill is "Safer. Smarter. More Secure."

Jackson would no doubt disagree with each of these allegations. He was a hard-money man. He "referred to paper," wrote Jackson scholar Robert V. Remini in Andrew Jackson and the Bank War, "whether offered by individuals or issued by banks, as the instrument of the swindler and the cheat.

"For Andrew Jackson, hard money — specie — was the only legitimate money; anything else was a fraud to steal from honest men."

The new twenties are a long way from gold and silver, but they do keep many of the high-tech security design features introduced to the government's money in the 1990s. Hold these new bills to the light and you can see a security thread embedded in the paper and running vertically up one side of the note. The new bills also feature color-shifting ink. The number "20" in the bill's lower right hand corner will change color from copper to green when you tilt the note up and down. And, just to make triply sure that you and I can't print up a bunch of bills on our state-of-the-art color copiers, a watermark, or faint image of Jackson, is visible from both sides if the bill is held up to the light.

That's what's going on here: The government wants to counterfeit, but without any competition from others. When gold and silver are used as money, government monetary theft is limited to clipping the edges of coins. That's the cumbersome process ancient rulers had to resort to in order to debase their countries' money and pay for their governmental largesse.

Economist Murray Rothbard pointed out in What Has Government Done to Our Money? that "Governmental control of money could only become absolute, and its counterfeiting unchallenged, as money-substitutes came into prominence in recent centuries. The advent of paper money and bank deposits, an economic boon when backed fully by gold or silver, provided the open sesame for government's road to power over money, and thereby over the entire economic system."

One of the ads that the government is running in popular magazines states that, "But one thing will never change: The old bills will always be worth just as much as the new. All bills are good. For good." That's exactly right, but the problem is that the new bills, and the old, are falling in value every day. Because of the government's abuse of the printing press, the new $20 bill has but a tiny fraction of the buying power of the one-ounce twenty dollar gold piece of Jackson's day.

It's not new colors and security features that make money, "Safer. Smarter. More Secure." Money will never be safe and secure as long as the Federal Reserve and the Treasury can create money unchecked.

Let's return to smart money — gold and silver.