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What is Money? part IV (my challenge to pundits)!

June 6, 2017

Image result for thomas jefferson

The originator of the American $1.00 was primarily Thomas Jefferson. He chose the ‘name’ dollar  in 1784/85 (after our break with Britain and their monetary system) and then he defined this ‘name’ so we Americans could exchange dollars in the marketplace. The mind of Thomas Jefferson needs to be understood if we desire to understand this mental abstraction called the American dollar ($1.00). Please read this missive with your scientific mindset as I will focus on the details of how our ‘dollar’ originated. Let’s start with the definition which T.J. developed for our dollar:


$1.00  =  371.25 grains of Ag (silver)


Notice the above mathematical formula which Thomas Jefferson developed after 1784 and which our first Congress adopted in 1792 via the Coinage Act. On the ‘left’ (of the = sign) is the symbol ($1.00) which represents a ‘mental abstraction’ and/or a ‘virtual unit’ (a mere number). This unit derived from the inner consciousness of Thomas (his mind) came to represent the ‘name’ dollar. To the ‘right’ of the = sign is the definition of our mental abstraction called the dollar ($1.00)…this item called silver. This needs to be understood!

This definition (above) represents what Thomas chose to serve as our beginning  ‘money’ system. Let’s think of the word ‘money’ as our proxy (substitute) for this inner concept called ‘value’. The purpose of any invention of money is to calculate and/or measure ‘value’ (this inner concept which we think about when we are purchasing or selling goods in the marketplace). We desire to calculate and/or measure ‘value’ to the best of our ability. Value is what initiates the need for a currency and for a money item!

So let’s review what Thomas accomplished with his invention of our ‘currency unit’ (the $1.00). His logic is based upon a ‘mental abstraction’ ($1.00) which then led to his desire to define this mental abstraction ($1.00) in terms of some ‘thing’ which people (in the colonial marketplace) viewed as having intrinsic ‘value’. Thomas created a left/right formula (above) which created our American dollar (the currency) and then a mint which started minting these units called our money.

$1.00  =  371.25 grains of Ag (silver) became the start of a ‘currency’ unit and a ‘money’ item for Americans to use in our marketplaces. We could now buy and sell using this logic. This definition of Thomas Jefferson became ‘official’ legal tender after our first Congress adopted the Coinage Act of 1792 and then created a mint building in Philadelphia for the creation of silver coins and other subsidiary coins for the marketplace. The above logic was crucial to the logic of calculating ‘value’ and/or ‘prices’.

Thomas also created definitions for our half dollar, our quarter, our dime, nickel, and penny. All these subsidiary definitions were in terms of precious metals which colonial Americans viewed as having ‘value’. You can google the Coinage Act of 1792 to get all the definitions for our currency units. The logic of Thomas was adopted by our elected representatives (within our Congress) and this also reflected the thinking within Article I, Section 8 and 10, about our currency/money system (within our Constitution).

What we need to recognize is that there are TWO key concepts which get revealed by the above logic and math. First of all, the word ‘currency’ represents the mental abstraction which we visualize as $1.00 (a number) on the left of the = sign. The the word ‘money’ evolves as some physical item from nature (viewed as having ‘value’) which then emerges on the right side of the = sign. A ‘currency’ is our mental abstraction (virtual $1.00) and our ‘money’ is the precious metal (such as silver in the above example).

I hope this missive on the ‘origin’ of the American dollar and its ‘invention’ after our break with the British system will reveal the mindset and logic of America’s founders and why any ‘currency’ and any ‘money’ item must be differentiated. Currency must be understood and money must be understood. Today, our ‘currency’ (called ‘dollar’) has NO definition and NO tie to any ‘money’ item from nature (say silver or gold). The unit ($1.00) is purely inner and within our consciousness! We use it as a ‘accounting unit’!

This means that we are trading (with other nations) with a pure mental abstraction (a virtual unit of nothing) which derives totally from our consciousness (and not a unit which derives from nature (our material universe). We are essentially trading virtual accounting units within cyberspace (which derive today from a banker’s inner consciousness) and not from within our space/time universe. This is HUGE when understood! What is cyberspace and what specifically are virtual currencies? This must be understood if we desire to understand today’s corrupted system!

The above description of the ‘origin’ of our American money system is essential to comprehend if we are to intelligently discuss today’s issues on money and currencies. Give the above details your complete attention and then think seriously about what we use today for our dollar as compared to what was used at the start of America’s monetary system. Think of these dual concepts called ‘virtual’ currencies and ‘money’ items from nature (such as silver/gold). Think of this inner concept called ‘value’!

Ask yourself why we no longer have any definition for our $1.00 and why this unit is now a unit of consciousness. What is consciousness is also a relevant issue. Bankers derive this unit ($1.00) from their consciousness prior to ‘typing’ the unit into the computer screen for circulation (now totally within cyberspace). Think of what is now happening within all our global cyber markets. Why the instability and uncertainty? Why are all our markets (especially our bond/stock markets) subject to collapse today?

The issues are HUGE for those who can discern the issues of money and currencies. Go back to the start to discern how this game began. The logic of Thomas Jefferson was mostly responsible for our monetary system and its logic. Was he a sound thinker? Did he understand money and the abstractions of currencies? Why did he ‘define’ our dollar? My sense is that his logic was fundamental to what we now experience. Enjoy the challenge! I am:

Some additional images for your consideration:

Image result for thomas jefferson

The logic and origin of our ‘dollar’ can be attributed to Thomas Jefferson!

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Thomas recognized that our freedoms can vanish if we allow central bankers to rule over all our markets!

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Government can be responsible in their decisions and also irresponsible. The people must hold government responsible (not the unelected elitists)!

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Big centralized government and finance leads to enslavement over time!

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In addition to inventing our dollar and its definitions Thomas invented much more!

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Today’s America (the Empire of entanglements) would be anathema to Thomas!

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Today, lending institutions (called Central Banks) rule over all commerce and trade. Is this what Americans desired for their nation?

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The purpose of a currency and of a money item is to measure ‘value’ and/or ‘prices’!

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America’s first mint in Philadelphia which started in 1792 and where our first money was produced in 1794!

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America’s first dollar in 1794 (minted from silver). Any American could supply silver to the mint for coinage. Our virtual $1.00 and our money has meaning and logic. 

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The year of the origin (of the dollar) was either 1784 or 1785. The Coinage Act, however, emerged in 1792 and our first silver coins emerged in 1794! 

Image result for definition of the original dollar was 371.25 grains of silver

What is our $ today? Where does it derive from? Who creates it ‘out-of-thin air’? Isn’t it time to gain an understanding of our monetary history so we can participate in the issues which will determine our future? Let’s pass this missive around to anyone who desires to learn about money and its history! 







8 Comments leave one →
  1. therooster permalink
    June 6, 2017 1:24 pm

    Jefferson thought in real-time terms, IMO, Don. There was no way to practically implement real-time transaction in his time but he had the smarts to know that the unit of the account for payment and the unit used for measurement had to be distinct. This gave rise to the measure and the weight …. USD/oz, although it started out without a real-time relationship.

    Tiny steps.

    USD/oz of gold had a fixed relationship for a very long time before the information age came along and was able to measure gold transactions with a global price model led by way of the USD, the “measure of measures” going back to 1944. They saw the real-time pricing benefits too and although they could not implement a real-time system, they sure enough set the stage in the wake of the liquidity crisis in the 1930’s, because of the fixed price peg on gold. A fixed price peg is an abomination of market law….. especially if you want to use gold as a market currency for trade.


    • June 6, 2017 4:55 pm

      Measuring value means the $ must be fixed or specifically defined. D


      • therooster permalink
        June 6, 2017 5:05 pm

        Don…. the definition of the dollar if you are using gold as a currency in support of real economy is the definition of a real-time measurement tool. The dollar’s role in the measuring of gold’s trade value is a measurement of relativity …. used for comparison.
        It is not acting as a currency when we trade a measure of gold for a new suit.

        If gold’s trade value is to be fixed, then the society is running toward a brick wall. We saw this in the 30’s and then in the 60’s , again. The peg was the problem.

        A finite mass , if it is going to adhere to market principles, must have a price that is allowed to rise when it’s in short supply.

        The real time contribution to the symbiotic marriage of the measure and the weight now allows gold’s limited mass to have FULLY SCALABLE purchasing power …. totally debt-free. We don’t run out of gold this way. We increase it’s price, liquidity and economic reach.


  2. Muhd.Shukri Yaacob permalink
    June 6, 2017 4:37 pm

    If the world adopt what TJ had established,the trading will be fair and just.When every nation tied their currency to money the exchange will be much easier and trading in money will be abolished.Money is not goods which can be traded.Thank you Don for a valuable history lesson on money and currency.


    • June 6, 2017 4:52 pm

      You are welcome. D


    • therooster permalink
      June 6, 2017 4:53 pm

      Would that have incorporated a fixed price peg to gold ? History has taught us that if there is a fixed price peg to gold and you use gold as a currency, you will run out of liquidity as you run out of gold. Jefferson knew this, but the tools were not available to give the power to the market to adjust & readjust the trade value of gold-as-currency in TJ’s day. That has to still to come.

      The first moves to evolve toward a market driven trade value for gold was in 1944 when Bretton woods was kicked off and the floating price model was developed in the wake of the 1930;s liquidity crisis because the gold price was fixed. Gold was NOT the problem. The fixed purchasing power was the problem. The peg had to go.. The start of BW was the beginning of the end for the fixed price on gold.

      Jefferson would love to know that gold, today, is priced with floating price values by the market. What he would NOT like, however, is that it’s most all still sitting in hoards and needs to go into circulation. Static gold is useless to the economy. It greatest power is in its movement.

      A fixed price peg on gold, again, is an abomination of natural market law and specifically an affront to the law of just weights and measures.


  3. Muhd.Shukri Yaacob permalink
    June 6, 2017 5:32 pm

    Gold,silver,wheat,barley,dates or salt are monies.Exchange between the same commodity must be of the same weight.Need no price or value given to US gold or Mexico gold.Both are the same.These money materials are in abundance.Anyway,in international trade,the exchange mostly of goods,the final settlement is the different of price/value between the goods which will be of small value which can be satisfied by gold or silver reserve of the trading nations.


    • therooster permalink
      June 6, 2017 5:52 pm

      That does not define the value between different commodities from what I can see Muhd.Shukri. How do you trade different commodities such as some gold for wheat and still adhere to market law in the important attempt to try and create balance between supply and demand fundamentals ? We want trade to move but we also don’t want supplies to run short, either. People in Venezuela could surely attest to this.


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