To: John F.
From: Thomas Lee Abshier, ND
Re: Fiat Money is NOT imaginary money
(But, fiat money IS less reliable than Gold Certificates)

Premise: The FRN is not imaginary money: In previous correspondence, you declared Federal Reserve Notes (and all fiat monies) were imaginary.  You made statements to the effect that the FRN became fully imaginary in 1971 when the Silver Certificate was abandoned by President Nixon.  I agree that the FRN became less reliable, but I totally disagree with the concept that the FRN, or any major fiat money, is imaginary.

Defining “Imaginary”: The word “imaginary” means that an object/concept exists only in the mind as a possibility or imagination -- an image in the mind, not in the manifest physical universe.  But, the word “imaginary” does not imply that it cannot be in the physical universe.  There are two categories of the imaginary, 1) Those images in the mind that cannot be brought from the metaphysical realm into reality, and 2) Those mental images which can be made manifest.  The unicorn would be an example of an imagination, having no physical reality associated with the mental picture.  But, the unicorn may be made real someday by some future genetic engineering technology.  Many imaginations are probably in this category.  The problem is that we humans do not know which of our mental images can cross the threshold from imagination to reality, simply because we do not know what is possible with a sufficiently advanced technology.  This is a way of saying that we have not yet discovered all of the God’s modes of exerting force.  The fact is, that many imaginations can be brought from the metaphysical realm of images in the mind, into the physical realm of atoms in configuration.  Such processes are the stuff of invention and human power to organize God’s creation.  Truly, it was God who created the physical and the metaphysical realms.  He created the substrate of  the physical objects such as mass, space, time, and energy.  But, also created a suite of metaphysical objects, qualities, and concepts that superimpose upon the physical, such as: love, fear, hot, cold, pain, pleasure, joy, sorrow, red, yellow, truth, justice.  Man has been given the ability to also create in the metaphysical realm.  Each time we sit on a stump, and call it a chair, we have brought a metaphysical reality into physicality.  When we invent a new configuration of physicality, and give it name we are operating in the metaphysical world in a creative way.  The concept of a functional physical object such as a chair, car, etc;  And ultimately, to bring this discussion back to the point of the discussion, we as humans, have defined the metaphysical concepts of the units of measure such as meter, foot, and of course, the dollar.  Each of these metaphysical entities have been given physical representation, and thus brought into the realm of reality.  The foot/second/pound and coulomb were not units that God ordained, but God probably did make the metaphysical reality of “units”.  

The dollar as metaphysical concept: The dollar is a unit of measure of value, and as such has no tangible reality.  A dollar cannot be felt or seen, and thus only examples of the “dollar” in use can be given.  The dollar is intangible in the same way as a “meter”, “second”, “kilogram”, or “coulomb”.  We can produce examples or physical representations of these units, but the unit itself cannot be isolated, held, or seen.  Examples of the dollar are the paper bills, coins and ledger entries that report our holdings in banks, bonds, stocks, and title deeds.  But, the dollar can never be touched, it is an entirely metaphysical entity.  

What is the dollar?  The dollar represents an increment of “All-Value”.  The total amount of all value available for consumption is divided into dollar sized pieces according to how many dollars there are in circulation.  Thus, if the number of dollars decrease, each dollar represents a greater quantity of value, and conversely, if the quantity of dollars increases the value represented per dollar decreases.  This gives a clear example and understanding of what happens when government prints and pays government debts with newly printed money.  Printing more dollars process produces no new goods and services.  Putting more dollars in circulation to compete for the same pool of consumable value reduces the amount of value that each dollar represents.

FRNs and Gold Certificates are both symbols/tokens representing value: The trade value of a 1 dollar Gold and Silver Certificates is identical to the trade value of a 1 dollar Federal Reserve Note.  Both the FRN and Gold Certificates are essentially worthless scrip taken by themselves, divorced from their accepted trade value as symbols.  That is, the FRN and Gold Certificates are at their essence both tokens that represent value, but in themselves, the symbols, have little inherent physical value.  But, as tokens of exchange (as symbols of the value associated with pending contracts, or value already produced), they are redeemable for actual consumable value in the market.  The society/market honors the ownership of these tokens because they are obtained (directly or indirectly) by work which has produced (or will eventually produce) value.  To the extent that these symbols are introduced into circulation without the initiating/sanctifying principle of work and production of consumable value, the increment of value represented by the scrip is degraded.

Reliability of Redemption Gold Certificate vs. FRN: There is a legal distinction between the gold/silver certificates and FRNs.  The gold/silver certificate are legally redeemable for gold and silver upon demand.  Thus, the gold/silver certificates have the possibility of redemption for an alternative valuable substance.  Of course, the value of such an alternative is qualified by the fact that:
1) Few people need silver or gold for anything vital to their survival or utility, thus the backup value (in gold/silver) is not identical to its primary value and purpose, which is its use in exchange for consumable value.  (Money is a symbol representative of value produced, and thus carries the stored value corresponding to work and utility produced.)
2) The amount of gold/silver in storage for possible redemption is almost certainly only a fraction of the total number of gold/silver certificates in circulation.  Thus, most gold/silver certificates (i.e. paper money redeemable for metal on demand) is probably not 100% convertible to, or backed by, alternate value.  

Gold Certificates are more reliable than FRNs: Gold/Silver certificate money is more trustworthy in its unit of value than the FRN, because of its possible dual-value redemption.  Obviously, any system with a redundant system (a backup, an alternative function capability) installed to allow continued function if one system fails, will be more reliable.  And, the overall system of which it is a part will be less susceptible to failure.

Again, in comparison, the alternate value-redemption possibility of Gold/Silver Certificates makes the FRN less reliable as a symbol of wealth.  And, this is because the FRN has only the one possibility of its redemption for an increment of All-Value, compared to gold certificate’s dual redemption possibility in gold or in increments of All-Value.  

The Point of Contention: The primary point I am making in this essay is to confront your declaration of FRNs as Imaginary and Fraud.  I concede readily and without reservation, that FRNs are less reliable as a store of value than Gold Certificates.  But, less reliable, does not translate into “no value”, “imaginary”, or “fraud”.  Any fiat money (FRN, Euro, Yen, Yuan, Pound, Ruble) will be less reliable than money connected with the legal right to withdraw gold/silver.  And, the reliability of gold/silver certificates improves even more with verifiable Treasury ownership of gold/silver stores.  That is, the reliability of the Gold/Silver Certificates increases as the ratio increases of stored gold/silver to gold/silver certificates in circulation.

Gold Certificates and FRNs are in the same Family/Class/Type of Money: The following argument shows the family connection between the FRNs and Gold/Silver Certificates.  The Gold/Silver Certificate is in the same family of money as the FRN.  Both are real in the sense of representing a claim to redeem an increment of value from the pool of All-Value.  The distinction between the two being that the Gold/Silver certificate has a redundant promise of value redemption, one from the private economy, and one from the government’s store of silver/gold.  The Gold/Silver Certificate is a note that given covenantal promise to the bearer the right to redeem it for gold/silver.  The FRN and Gold/Silver Certificate are both redeemable for value in the market and trusted as symbols of value.  But, the the FRN is less stable in its representation of value.  Thus, I agree that the various strategies of commodity-backed currency (e.g. a gold standard, or any valuable, transportable, QMS system that is used as money to trade for increments of All-Value) will be more stable/trustworthy than a fiat money.  Fiat money depends on proper regulation of money supply in relation to All-Value.  To the extent that you call the FRN imaginary, fictional, unreal, or fantasy, I totally disagree with your concept, declaration, belief, and argument.

Comparison of Gold and All Value in terms of Trade Value & Inherent Value: There is no such thing as inherent value.  Value only exists in the eye/heart/mind/soul of the observer.  But, having said that, there are substances (both tangible and intangible) that resonate strongly, and almost universally with the human soul.  Thus, when referring to inherent value, it is this general resonance to which we refer.  And, along those lines, Gold has a high inherent value, because people value gold for its beauty, weight, scarcity, durability, and utility, thus gold has an widely appreciated/inherent soul value, which in turn gives ownership of gold it enduring trade value over time and cultures.  Likewise, All-Value also has an inherent soul value, because people value it for its beauty, utility, survival/protection, joy/entertainment, etc.  Thus, ownership of an increment of All-Value has a trade value.  The point being, All-Value has an inherent soul appeal and trade value, just as gold has an inherent soul appeal and trade value.

Comparison of Gold Certificates with the FRN: Governments have made gold certificates to represent stores of gold, and those gold certificates are trade-able for units of All-Value, or units of gold.  Government has made FRNs, and those certificates are trade-able for units or All-Value, or units of Gold.  Gold certificates are “Imaginary Money”, just as much as FRNs are imaginary money.  But, both gold certificates and FRNS are real and valuable, because they can both be redeemed for an amount of gold or a quantity of All-Value.  Gold certificates and Fiat money are both real, and/or both imaginary  The evaluation of its real-ness or imaginary-ness depends upon which perspective/frame you wish to consider. Pick one, and I will agree with you, but do not cross frames, do not consider one metaphysical, and the other real.  Cross frame comparison yields nonsense conclusions.  This is the error of logic which has precipitated this analysis of the elemental nature of paper and gold money.

Gold and FRNs both Real and Metaphysical: Regarding crossing frames, you can’t make a true statement, or meaningful comparison between gold certificates and fiat money, if you declare gold real and “All Value” imaginary.  Likewise, you can’t choose to call All-Value real and gold imaginary.  Both gold and All-Value have elements of real realness and metaphysical imaginary-ness. The value of gold is just as imaginary or subjective as the value of All-Value (i.e. all goods and services). The value of both is subjective.  Thus, the value of a gold certificate is just as imaginary as the value of an FRN.  The reality of Gold is just as real as the reality of “All Value”.  With regard to the consideration of inherent value, there is in essence no philosophic or substantive difference between Gold and All-Value.

The difficulty in defining the value of All-Value: Granted, it is harder to quantify, measure, and define the substance of All-Value than the QMS of gold, but both do have measure, quantity, and substance. The exact measure of All-Value may be seen only from a God’s-eye view, but even from the human perspective, All-Value is real – even though from any man’s perspective, we can all only see a small portion of it.  The value of All-Value is metaphysical and subjective, as is the value of Gold.  Both Gold and All-Value are truly real in their substantive existence, and both Gold and All-Value are metaphysical when considering their value to the human soul.

The Subjective Nature of Value: Everything on earth has value (that is, everything tangible and intangible has utility, pleasure, and benefit to the soul in some way), and thus the sum of all goods and services has value.  Likewise, the unit increment of gold, and total of all gold has a value.  But, the value of gold is just as imaginary as the value of All-Value.  Value is subjective regardless of the object under consideration.  Both gold and All-Value are very real are objective, because both are substantive.  Likewise, both gold and All-Value are subjective in their value because all men judge their soul benefit differently.

The symbolic nature of gold certificates and FRNs: When you trade in gold certificates, you are trading in representative/symbolic money. Gold Certificates have a dual value representation, 1) a measure of gold that the certificate can be redeemed for, and 2) a measure of All-Value proportional to the total number of gold certificates in circulation, and the total amount of All-Value available for consumption.  Alternatively, when trading in FRNs, trading in symbolic/representative money it represents only one value, 1) a fractional percentage of All Value (which includes gold/silver and all things precious).  The value of the FRN corresponds to the ratio of All-Value to Total # of FRNs in circulation.  Both gold certificates and FRNs will inflate and deflate in their substance-redemptive ability based on the number of them in circulation.  And yes, the gold certificate is also susceptible to inflation by excess printing.  The trustworthiness of the gold/silver certificate for gold/silver physical redemption, is as dependent upon the trustworthiness of the stores of gold and printers of certificates as is the FRN.  Thus, the trade value of the gold certificate and the FRN are both dependent on the ratio of the number of certificate units in circulation to substance available.  Possibly the gold certificate would be more stable because of the perception that it could be redeemed for alternate value, but ultimately, its trade value will be largely determined by the number in circulation compared to the total amount of All-Value available for consumption.  

Conclusion -- Gold and Silver increase the reliability of a money supply, but a fiat money is real too, to the extent of the ratio of All-Value to Dollars: Ultimately, both gold and All-Value have only subjective value.  The primary purpose of money is to store value in symbolic form for later exchange of those symbols of value for increments of All-Value.  The use of gold/silver/valuable QMS as money, or the use of gold/silver certificates as money with alternate redemption value is of secondary importance, but does give money increased reliability.  

T.