Maintaining Important Distinctions

     One of the little tricks by which the Left has made steady inroads into American life is the effacement of important distinctions. While this is largely a matter of linguistic chicanery, its effects often eclipse those of any other political tactic. That makes it an important front in our political combats.

     Unfortunately, many intelligent and benevolent persons unwittingly assist the Left in this regard. They do so by failing to exercise adequate penetration into the issue under discussion.

     Yes, I have an example in mind. But it will take more coffee to address it adequately.

     Have a snippet from John Wilder’s latest:

     I can take a $100 bill and go and buy some beer and cigars and PEZ^®. I could also do that with a gun, but the fact that everyone will go along with the deal means that the dollar really is money.

     John has effaced an important distinction indeed.

     Before I proceed, allow me another snippet: this one from the first edition of Dreams Come Due: Government and Economics As If Freedom Mattered:

     Money: A medium of exchange and a store of value.

     The greatest fraud and confusion perpetrated by governments has been the substitution of unbacked currency for money. People now believe that currency is money. Nothing could be further from the truth.
     There can be no compromise to the definition of money. Many things can have one of the traits of money. Currency is a medium of exchange and land can be a store of value, but neither one is money, especially currency, because no currency in history (not one) has ever retained its value. There is no currency in the world today (including the Swiss franc) that is not losing purchasing power every year.

     In his snippet, John has described the “medium of exchange” function of money, which currency, a substitute for money, can fulfill. But owing to inflation, a government-controlled process I’ll delineate at a later time, the $100 Federal Reserve Note of which he speaks has far less purchasing power today than it did at any previous point in history. Thus, it fails to perform the “store of value” function of money.

     The first question I usually get when I present the above distinction to a class goes roughly thus: “Well, why did the shopkeeper accept the $100 bill if it isn’t money?”

     There are two reasons, above all others. First, anyone in a retail business would intend to replace the goods he’d just sold for that $100 bill – and the retailer’s vendors would, in exchange for that $100 bill, ship him more goods to sell. Of course, that merely begs the question by transferring it to those notional vendors. Why would they accept the $100 bill for the goods they ship?

     The answer appears in the corner of every Federal Reserve Note ever printed:

     Pull one out of your wallet and look. It’s in very small font, but I guarantee that it’s there. Use a magnifying glass if you must; you’ll find it.

     The “legal tender” provisions of the Federal Reserve Act make the acceptance of such notes legally mandatory. No one who sells his wares for prices denominated in dollars is permitted to refuse them. It’s a federal offense. Never mind that in recent years the Treasury Department has at times declined to enforce that law.

     If you have one of the older notes that, instead of “Federal Reserve Note,” says “Silver Certificate” at the top, you’ll find much different verbiage on it. That’s because until 1968, the law mandated that any bank in the Federal Reserve system was legally required to give you a silver dollar for it, should you demand it. The Treasury stopped printing Silver Certificates in 1964. Here’s an image:

     Incidentally, if you have any silver coins – actual silver, not the cupronickel sandwich coins imposed upon us since 1969 – you should store them somewhere safe. There’s quite a market for such coins, as they’re worth considerably more than their face value in dollars. So the distinction between money and currency matters very much. It must never, ever be effaced.

     The above is just one example, a current one of particular interest to me. There are many others. Consider the federal debt as an example. Recently, an elected cretin strove to efface the distinction between payable debts – the sort you and I routinely accumulate on our credit cards, which the law will enforce upon us should we seek to evade payment – and bad debts: the sort which will never be paid, because they’re owed by governments which will not enforce collection upon themselves. Quoth Murray Rothbard:

     If the government has incurred a huge public debt which must be paid by taxing one group on behalf of another, this reality of burden is conveniently obscured by blithely saying that “we owe it to ourselves” (but who are the “we” and who the “ourselves”?).

     In point of fact, the phrase “we owe it to ourselves” has fallen into desuetude, because the public is generally aware that “we” don’t owe it to “ourselves.” Federal debt instruments – T-Bills, mostly – are now owned principally by the Federal Reserve Bank and by foreign governments. Moreover, the interest on that debt is paid out of tax revenues: funds collected under threat of punishment from private persons and institutions. Call me naive if you like, but I see certain problems in taxing myself to pay myself, which I why I don’t own any T-Bills or Savings Bonds.

     Clearly, the distinction between payable debts and bad debts matters quite a lot.

     I could go on, and sometimes I do. Critical distinctions matter. When you hear someone say “Oh, that’s a distinction without a difference,” put one hand on your wallet, the other on your sidearm, and back slowly away, never taking your eyes off him. More often than not, the speaker will be trying to obscure a critical distinction, in the interest of some rapacious scheme he seeks to advance. While that’s not the case with John Wilder, it’s as important for good persons not to collaborate in the destruction of such distinctions as it is for us to be aware of attempts to do so.

     See also this vital Baseline Essay on the nature of money and currency.