(Not just me.) More confusion on money, but this time it’s official


This illustration is from a page of Vic Lockman’s little book,”A Biblical View of Money, Banking & Usury.” Click the link in my footnotes to read the whole thing at Scribed.com

We have been exploring the results of an elastic currency put into circulation by dishonest people among a dishonest and greedy folk (you and me? You be the judge). I am confused about dollars, money and prices. Am I the only one feeling mixed up? Is anybody important confounded? — DJT

By Paul Hein

Well, yes and no. Should you go into federal court to obtain an official determination of just what constitutes the “money of account” of the United States, likely you would encounter a judge, who in dismissing your petition as “frivolous,” seemed quite assured that he knew what our money was, and what a dollar was; but there would be a good chance that that very judge was on record of knowing no such thing. You see, when a judge is acting in an official capacity as an agent of the United States, he has a vested interest in staying on the good side of the boss. But when he acts as a private citizen, on behalf of himself, that’s another matter.

And just such a situation arose in 1976.

On Feb. 11 of that year, 44 federal judges — who were eventually joined by 96 more — went into the U.S. Court of Claims seeking a raise in pay. The 140 federal judges (and that’s a fair percentage of all federal judges) based their arguments on Article 3, Section 1 of the Constitution, which states that the compensation of federal judges should not be diminished during their continuance in office. Well, it was a matter of record that the pay of a federal circuit judge was $40,000 annually, and had been such for a number of years. How could the judges claim, therefore, that their salary had been diminished?

This is what they told the court of claims: “As a result of inflation, the compensation of federal judges has been substantially diminished each year since 1969, causing direct and continuing monetary harm to plaintiffs *** . Thus, as measured by the consumer price index, the real value of the compensation for each United States district judge was diminished from $40,000 to approximately $26,000 between March 15, 1969, and October 1, 1975.”

Yielding your labor for units of fiction

What a remarkable admission. If an income of $40,000 in 1975 was less income than $40,000 in 1969, then surely the “dollar” must be a fiction. For if the judges knew what a dollar was — whatever it might be — then they would also know that 40,000 of them were 40,000 of them whether in 1975, 1969, or whenever.

A rose is a rose is a rose is a rose, don’t you know? But when the dollar is not a standardized amount of anything, nor even defined in the law, then income in dollars cannot be measured in any reasonable, accurate way. That’s what I tried to tell you in my last post. The judges have made it official. You cannot measure intangible income!

But you can measure what you can get for it — as long as people are willing to yield their production in exchange for a fiction. And that is what the judges did. Recall their words: “Thus, as measured by the consumer price index, the real value of the compensation for each United States district judge was diminished from $40,000 to approximately $26,000 *** .” The judges were saying, in effect, “our income is intangible, but in terms of food, clothing, shelter, etc., we were only able in 1975 to get about 60% of what we got in 1969.”

The real (to use their own word) compensation of a federal judge is not to be discovered from looking at his paycheck, but from consulting the consumer price index. Your income is what you derive from your labors, and that can be measured in eggs, butter, shoes, electricity, fuel — you name it. The only thing in which income cannot be expressed accurately is “dollars,” because the “dollar” is not a thing.

Lire, yen, euros and dollars

Were you to inherit 500,000 lire from a relative in Italy, would the check be worth taking to the bank? Would you be better off to have inherited 500,000 yen? Since neither the lira nor the yen is a specific quantity of anything, comparisons are meaningless unless converted into what you could get for the foreign funny money. Monetary names, such a lira, yen, or dollar, have no definition and can hardly be used as a standard of measurement. The federal judges seemed to see this quite clearly, for they said that the “real value” of their compensation was not to be ascertained from their “dollar” income, but from the commodities they could obtain with the checks.

But in lucidly setting forth this undeniable truth, the judges placed themselves on the horns of a dilemma. For although as individuals they acknowledged the uselessness of the word “dollar” in assessing real income, in their official capacity as judges they could do not such thing. It is probably that at some time each of the 140 judges had sat in judgment on some individual charged with the crime of misrepresenting his income. Without a doubt, they are still doing so. Do you suppose that in an income tax trial, with everything hanging upon the actual “dollar” income of the defendant, the judges disqualify themselves by admitting that they cannot give the real value of their own incomes in terms of “dollars?”

‘True, correct, and complete’ — a 1040 problem

In donning the judicial robes do they also put on the wisdom of Solomon? Is the whole thing a put-on?

It gets worse.

The judges themselves file income tax returns, do they not? At the bottom of the return, the taxpayer must sign a statement whereby he swears that the income figures provided are “true, correct, and complete.” And those figures are all in dollars! The IRS doesn’t care how much less food you could buy for your paycheck this year compared with last — it only wants to know how many of those elusive “dollars” you earned. And the measurement you give had better be true, correct, and complete. Not only that, but you had better believe it to be so.

The Internal Revenue Code makes it a felony to put anything on a return which you do not believe to be true in every particular. Now what did the judges tell the court? They said that the real value of their compensation was not $40,000, but $26,000. Now if the real income is $26,000, isn’t that what you had better put on your 1040 form? Remember, it is a serious crime to put on that form something which you don’t believe true in every particular.

But if your bank deposits show that you earned $40,000, and you make a sworn statement that you earned $26,000, then expect the IRS to descend upon you like a pestilence. Because I have heard of no judges accused of filing “false” (meaning true!) income tax returns, I assume that the judges stated that their true, correct, and complete income was $40,000. But in that case, they lied in telling a U.S. Court of Claims that the real value of their compensation was not $40,000, but $26,000. No matter how you look at it, it seems that the truth took a beating at the hands of the one hundred and forty honorable judges.

I cite this case of the 140 judges not to emphasize the frailty of human nature, whether on the bench or not; but to remind you that my concern for the absurdity of making monetary measurements in terms of non-standardized units is shared by others who have given the situation thought.

And that, I think, is that.

Dr. Paul Hein, a retired ophthalmologist who lives in Ballwin, Mo., has always had the keenest eye for the misdoings of our betters on a fundamental point of economics. That is, their printing of unbacked paper notes that pretend to be lawful, valuable dollars and which promise nothing except the ruin of the federal republic. Dr. Hein is the author of a favorite book about economics, All Work and No Pay; Life Saving Lessons in Modern Money, and was president of the Monetary Realist Society.  He is married and father of four children.

Source: Vic Lockman, A Biblical View of Money, Banking & Usury, 1991, common law copyright. Great little illustrated book for us slow people — and the kids.

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