I'm thinking about a big-picture aspect of credit. The Constitution says that only gold and silver coin can be currency, and that only the United States can coin money. But from colonial times, promissory notes have been exchanged pretty much as currency. Since 1968 when the U.S. dropped all pretense of having any monetary basis to its currency, what we've been exchanging are called "federal reserve notes". These are merely promissory notes, backed by the "full faith and credit" of the United States (emphasis on the word, "credit"). A promissory note is a promise to pay money, but there hasn't actually been any "money" since 1968. The notes used to be called gold certificates, which could be exchanged for gold coins at the federal reserve banks, then similarly, silver certificates, and now "federal reserve notes". When I use them to pay for stuff, I joke with the cashiers about how we "pretend they're money".
Well, recently, there's been a shift in the currency administration and distribution system. It started with the economic policies of the Kennedy administration, in trying to figure out ways to pay for the war in Viet Nam without having to actually get Congress to authorize expenditures. That's why we had terrible inflation through the late 'sixties and into the 'seventies. It's still getting ironed out, but basically the deal is that the federal reserve notes represent your share of the national debt, not money. And the way to shift the costs of managing the economy to the people is to encourage the use of credit cards. That way, banks issue them under the supervision of the Federal Reserve Board, the FDIC, and other thrift supervision agencies, and collect fees for their use. That way there aren't even any promissory notes. And that's good for the U.S., because it keeps costs down, adjusts with the needs of the economy without micromanagement by the Treasury Dept., and allows the secret police to track every expenditure, so that when we decide to categorize some class of people as "bad guys", we'll be able to round them up quickly and produce evidence of their evil motives. That's how they got the Oklahoma City federal building bombers, so it's clearly a useful technique. (What I worry about is the day that "they" decide that Jews, Catholics, or persons of Asian descent are "bad guys". It's happened over and over and it can happen here.)
At any rate, the credit card and consumer credit generally, represents the last phase in the shift from a monetary economy to a credit based economy. What we're trading around isn't money, anymore, it's debt. Even what we call "money" is a certificate of indebtedness. But there isn't any money. It's like when the Soviet Union was around, and someone asked a "man on the street" how the Soviet Economy works, his response was, "we pretend to work, and they pretend to pay us."
Thanks dear.
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