mathematically perfected economy™ (MPE™)    1  :   the singular integral solution of  1) inflation and deflation,  2) systemic manipulation of the cost or value of money or property, and  3) inherent, artificial multiplication of debt into terminal systemic failure;    2  :  every prospective debtor's right to issue legitimate promises to pay, free of extrinsic manipulation, adulteration, or exploitation of those promises, or the natural opportunity to make good on them;    3  :  our right to certify, to enforce, and to monetize industry and commerce by this one sustaining and truly economic process.

Think of that.

Four hundred points or so of further unearned taking, based on information indicating that usurers would not let the side of unearned taking fail  while all the cost of all these unjustified acts was to be heaped upon we who as a consequence, could only fail; and all so that thus the gambling could yet continue for more unearned gain from us, ostensibly altogether as proof of our betterment.

mike montagne (regarding "the market" rebound upon the Bear Stearns bailout, imposed of course on tax payers)

MORPHALLAXIS, January 14, 1979.


Friday, April 25, 2008


First political cartoon, Benjamin Franklin.

The Constitution neither establishes a monetary system, or the means and bounds of just taxation: It neither offers concepts or means for regulating a circulation consistent with the industry and prices we need a circulation to sustain and to represent.

Not only is no necessary relationship prescribed or maintained, no desirable relationship can be maintained, because a) the Constitution prevents a circulation exceeding the volume of gold and silver as is necessary to sustain any greater volume of industry; and b) because at all times, the relatively static circulation it prescribes directly conflicts with the only principle which is consistent with intended price stability and industrial sustainability, which is to maintain a constant ratio of circulation committed to any potentially varying volume/value of production. The Constitution not only fails to sustain that necessary ratio, it prevents doing so.

Worse, the Constitution condemns these faults to further ruin by tolerating further, obfuscated currencies subject to interest. Because any different currency essentially exists in different principles, tolerance of any further currency itself makes it impossible for intended constitutional principles to prevail at least by dilution, if not by conflict. But as tolerance of the obfuscations of interest condemns us to attempt to fulfill obligations to pay principal and interest out of a circulation comprised of never more than remaining principal, any practical implementation of this obfuscation (being as the intent is to multiply debt) thus obligates us to maintain a vital circulation by re-borrowing principal and interest paid out of our possession, as subsequent sums of debt, perpetually increased so much as periodic interest.

This of course further undermines the inability to maintain a circulation which is in whole, proportional to the remaining value of production, because it further dedicates ever more of a vital circulation to servicing debt, leaving ever less to sustain industry. The costs of servicing the ever escalating sum of debt furthermore drive up the costs of all subject industry, which in turn erodes solubility, and perpetually forces prices upward, perpetually devaluing the currency. Worse, the irreversible multiplication of debt inevitably generates a terminal sum of debt which prevents sustaining industry, and results in monetary failure.

These faults now explain more than two centuries of monetary turmoil, readily averted only by eradicating the exploitation imposed by the obfuscated currencies, and by maintaining a circulation which at all times equals the remaining value of all production, and is dedicated solely to the purpose of representation. Solution therefore is impossible without eradicating interest, because the necessary circulation is regulated only by monetizing our production and paying the resultant obligations at the rate of consumption or depreciation.

In the credit we duly grant the founders' vision for rule by consent of the governed, we readily forget that no actual science of monetary rectitude had yet been developed. Worse, their revolution prevailed amidst conflicting efforts on the one hand to develop economy, and on the other to exploit our prosperity under the guise of sustaining it. To our own discredit then, this controversy has played out since, with no recognition of solution on our own part, even after suffering one world wide depression as a consequence, and as we watch yet a second approach.



Remarkably, Franklin writes his "Enquiry Into the Nature And Necessity of a Paper Currency" at a mere 23 years of age. We begin our own inquiry with this essay because it introduces the issues of our necessary guidelines, and because it demonstrates the raw evolution of the thinking of his time. That is, while it's a remarkable and necessary questioning of the relevant issues, it exemplifies a largely unfinished process which no more than organizes some of the vital material as a preparation for formal solution. Those who want to read Franklin's whole essay are encouraged to use the link immediately below.




To proceed, then,

There is a certain proportionate Quantity of Money requisite to carry on the Trade of a Country freely and currently; More than which would be of no Advantage in Trade, and Less, if much less, exceedingly detrimental to it.

This leads us to the following general Considerations.

mike montagne


After announcing a "Subject that is now the chief Concern of my Countrymen," Franklin begins to collect and address the relevant issues with this introductory clause.

Benjamin Franklin's introductory clause is as important now as it was then, not just because his country is concerned with the same issues, but because he begins at the very foundation we must resolve if we are to develop a fitting monetary science which can serve us.

He begins his thesis announcing in this way that the material to follow will be grasping for, assuming, or proving an important principle  a fundamental question of monetary theory which must be resolved as a proof of a circulatory theorem, for if we are to convey trade by money we must determine how much, and how to circulate it to serve whatever purposes are to be served.

This means too then that from the beginning we should also be articulating what purposes are to be served. From much of the text which follows, we may or may not correctly deduce that Franklin largely agrees money would most desirably have a consistent value even if his experiences and observations point out that it has not; but he seems to fall on the idea that there is no way to ensure such a thing, and so he subsequently resorts to citing the many ways its value can be affected if it is not so protected by some unperceived principle, that advantages or disadvantages are suffered or enjoyed at times of vacillation.

Expectably nonetheless, to determine how money is to be circulated should be to determine how much (his "proportionate quantity"); and so the basic challenge of all this is to determine the lifespan of money which serves the purposes of [real] industry: where does each penny's existence begin; where does it end  all in such a way that industry is served as we intend?

In the further parts of his enquiry, Franklin generally does not attempt to enumerate the classes of injury or effect as we might organize our observations to solve them uniformly. Instead, after this initial observation, he rambles on, citing different effects, postulating causes which may or may not be either definite, or the singular cause, or subject to different conditions  the questions of which drive us to discover all the relevant issues.

He thus carries on for many paragraphs after this relatively obtuse, indefinite, but agreeable proposition, citing cases of observed effects which are not even intended to be conclusive. He understands and intends this unfinished form of the thinking to suffice for the purposes of the essay (which are to apprise his fellow citizens of the questions), because in the end he apologizes for it and invites its rectification.

What then are our possible conclusions, or what can we take from this first proposition so far?

Frankly, I'm compelled to dwell on his first proposition until I can get comfortably beyond it.

Yes, adverse effects will be imposed by a failure to maintain some "right" circulation; but what are they; how are they imposed; and then how do we rectify them?

Scanning ahead, I see wandering and a wont of categorical organization from which I can see the answers I want to find. With this being my only interest in the material, I am forced to do that work myself.

To answer these questions, I break down the ensuing material differently.

What first are the cases?

Always test first by examining extremes, working your way inward to discover the important margins which distinguish the relevant cases. We know that Franklin's obtuse observation is true at least because of the extreme cases:

  1. if there is no circulation, we can conduct no trade whatever by it, and
  2. if there is infinite circulation distributed everywhere, then at least someone has got something for nothing, which violates any principle that money represent value when it is exchanged.

From the latter observation we can immediately deduce that whenever a circulation exceeds the value of the assets which it represents, then someone has received something for nothing; and so this becomes a guiding principle that the upper limit of a proper proportionate circulation is the remaining value of the assets it represents.

From this principle and the first observation, we further can deduce that the minimum sufficient circulation is prescribed by the remaining value of whatever assets might be transferred over a given timespan. So long as there is so much circulation, the intended commerce can be conveyed.

So we readily perceive the upper and lower bounds of what he declares on the first hand will provide no advantage (but will actually damage the system), and what on the second hand prescribes a minimum, below which we may suffer the damages he calls exceedingly detrimental.

At the same time however, there is obviously one and one only circulation which is never damaging; and that circulation is at all times equal to the remaining value of the related assets.

With no more effort then, we have our guiding principle for our ideal. How do we maintain such a circulation?

The answer to this is the least difficult of all.

We can only maintain such a circulation if we issue it to convey the first trade of any asset, and if we pay off the asset at the rate of its depreciation or consumption (which must be understood to be equivalent). Then and then alone do we maintain a circulation which across its sum is always equal to the remaining value of all related assets; always is redeemable in the very assets it is intended to represent; always can pay off the resultant obligation(s); always can support whatever industry is necessary to doing so; and does so without cost.

Thus too then, the money cannot be subject to interest, for if it is, it is impossible to pay just for a thing with an equal measure of work as produces it; and in seeing that the money we need to deploy for all these purposes is simply an ensurable obligation to pay for consumption with an equal measure of production which is only ensurable if the remaining value of the property redeems the obligation, we know too from this that the money cannot be subject to interest; and that we must issue men's promises to each other without cost, and particularly without cost imposed by an extrinsic party which produces nothing and only issues the promises we would be better advised to issue ourselves.

So even without realizing too that interest will only multiply debt upon the circulation until terminal debt is imposed, still the only way we can achieve the natural ideals of free transmission of trade, consistent value, redeemability, and sustainability which Franklin can introduce in the rest of his treatise, is mathematically perfected economy™; and already we are done with Franklin's problem.

But as our interest in this case is to understand where he and others went awry from these vital perceptions, let us look at a few further parts of his paper.


First, A great Want of Money in any Trading Country, occasions Interest to be at a very high Rate. And here it may be observed, that it is impossible by any Laws to restrain Men from giving and receiving exorbitant Interest, where Money is suitably scarce: For he that wants Money will find out Ways to give 10 per Cent. when he cannot have it for less, altho' the Law forbids to take more than 6 per Cent....

Without justifying interest or determining its overall consequences, he offers up conditions for which men who impose interest might maintain high rates of interest. The only guidelines he follows or which provide ostensible justification of interest are traditional practice, of which neither does he provide or cite any justification.

In other words, Franklin simply skips beyond the questions of the propriety of interest at all; and thus the remainder of his work is subject to any faults that engenders. As a consequence, his enquiry is condemned largely to explore matters within the consequences of interest. And yet he never either gets to the question of the overall systemic consequences of interest.


Secondly, Want of Money in a Country reduces the Price of that Part of its Produce which is used in Trade: Because Trade being discouraged by it as above, there is a much less Demand for that Produce. And this is another Reason why Land in such a Case will be low, especially where the Staple Commodity of the Country is the immediate Produce of the Land, because that Produce being low, fewer People find an Advantage in Husbandry, or the Improvement of Land....

He observes some consequences of an insufficient circulation, including not how it truly affects value, but how insufficient circulation affects price which may be fetched (even if he does not make the distinction).


As we have already experienced how much the Increase of our Currency by what Paper Money has been made, has encouraged our Trade; particularly to instance only in one Article, Ship-Building; it may not be amiss to observe under this Head, what a great Advantage it must be to us as a Trading Country, that has Workmen and all the Materials proper for that Business within itself, to have Ship-Building as much as possible advanced: For every Ship that is built here for the English Merchants, gains the Province her clear Value in Gold and Silver, which must otherwise have been sent Home for Returns in her Stead; and likewise, every Ship built in and belonging to the Province, not only saves the Province her first Cost, but all the Freight, Wages and Provisions she ever makes or requires as long as she lasts; provided Care is taken to make This her Pay Port, and that she always takes Provisions with her for the whole Voyage, which may easily be done. And how considerable an Article this is yearly in our Favour, every one, the least acquainted with mercantile Affairs, must needs be sensible; for if we could not Build our selves, we must either purchase so many Vessels as we want from other Countries, or else Hire them to carry our Produce to Market, which would be more expensive than Purchasing, and on may other Accounts exceedingly to our Loss. Now as Trade in general will decline where there is not a plentiful Currency, so Ship-Building must certainly of Consequence decline where Trade is declining.

Here in not the clearest language, he appears to associate a plentifulness of paper currency to prosperity. The linkage is ambiguous, but not necessary incorrect in its summary.


Thirdly, Want of Money in a Country discourages Labouring and Handicrafts Men (which are the chief Strength and Support of a People) from coming to settle in it, and induces many that were settled to leave the Country, and seek Entertainment and Employment in other Places, where they can be better paid....

These are trivial observations which lend little to answering the bounds and necessary process of his initial proposition.


Fourthly, Want of Money in such a Country as ours, occasions a greater Consumption of English and European Goods, in Proportion to the Number of the People, than there would otherwise be....

More trivial, and furthermore questionable observations. But these nonetheless are the same matters modern "economists" concern themselves with in lieu of the question of interest.


Thus we have seen some of the many heavy Disadvantages a Country (especially such a Country as ours) must labour under, when it has not a sufficient Stock of running Cash to manage its Trade currently. And we have likewise seen some of the Advantages which accrue from having Money sufficient, or a Plentiful Currency....

Fine. But these are effects, not bounds of what is "sufficient" or undetrimental, and not causes which we must find if we are to deliver solution.


The foregoing Paragraphs being well considered, we shall naturally be led to draw the following Conclusions with Regard to what Persons will probably be for or against Emitting a large Additional Sum of Paper Bills in this Province....

So now he engages in assessing the distributed popularity of potentially errant circulations, without determining the necessary bounds for our purposes or the ultimate ramifications of interest to which his circulation is left subject. He considers the obtuse proposition of "a large Additional Sum of Paper Bills," without regard to a definitive prescription for how much tokens of existing value should be circulated to represent the existing value.


It remains now that we enquire, Whether a large Addition to our Paper Currency will not make it sink in Value very much; And here it will be requisite that we first form just Notions of the Nature and Value of Money in general....

Still observing effects by means which will not determine bounds.


For many Ages, those Parts of the World which are engaged in Commerce, have fixed upon Gold and Silver as the chief and most proper Materials for this Medium; they being in themselves valuable Metals for their Fineness, Beauty, and Scarcity. By these, particularly by Silver, it has been usual to value all Things else: But as Silver it self is no certain permanent Value, being worth more or less according to its Scarcity or Plenty, therefore it seems requisite to fix upon Something else, more proper to be made a Measure of Values, and this I take to be Labour.

Here he introduces a vital concept to determining value, although documentation of the paper indicates Franklin "lifted" this principle:

Franklin also presented a labor theory of value; that is, he attributed the relative prices of goods to their relative labor inputs. This idea was central to classical economics in the early 19th century, and Franklin is sometimes credited with being among the first to advance it. However, William Wetzel argues persuasively in Ben Franklin as an Economist, Baltimore, 1895, pp. 30-31, that Franklin lifted his discussion of the labor theory of value from Sir William Petty's Treatise on Taxes and Contributions (1662).


By Labour may the Value of Silver be measured as well as other Things. As, Suppose one Man employed to raise Corn, while another is digging and refining Silver; at the Year's End, or any other Period of Time, the compleat Produce of Corn, and that of Silver, are the natural Price of each other; and if one be twenty Bushels, and the other twenty Ounces, then an Ounce of that Silver is worth the Labour of raising a Bushel of that Corn. Now if by the Discovery of some nearer, more easy or plentiful Mines, a Man may get Forty Ounces of Silver as easily as formerly he did Twenty, and the same Labour is still required to raise Twenty Bushels of Corn, then Two Ounces of Silver will be worth no more than the same Labour of raising One Bushel of Corn, and that Bushel of Corn will be as cheap at two Ounces, as it was before at one; ceteris paribus.

Sir William Petty's treatise thus introduces an important principle regarding the purported merits of the gold standard eventually implemented in the Constitution.

Specifically, he registers the fact that a finite circulation fixed in sum by monetary reserves and ostensibly fixed in value by a resource, cannot ensure and does not ensure the intended, consistent value of money. We may observe for instance that even the cost of the very resource which ostensibly fixes the value of the money in truth vacillates according to other matters such as involved labor (versus a purported vacillating cost of labor).

So why does a precious metal monetary standard fail to preserve the cost or value of money or property?

  1. The real cost of harvesting the resource varies (and should determine its value); and
  2. The varying ratio of circulation to assets itself undermines a principle which cannot be sustained by an alternate monetary asset, insufficient in quantity to redeem a circulation equivalent to a greater sum of other wealth.


Thus the Riches of a Country are to be valued by the Quantity of Labour its Inhabitants are able to purchase, and not by the Quantity of Silver and Gold they possess; which will purchase more or less Labour, and therefore is more or less valuable, as is said before, according to its Scarcity or Plenty. As those Metals have grown much more plentiful in Europe since the Discovery of America, so they have sunk in Value exceedingly; for, to instance in England, formerly one Penny of Silver was worth a Days Labour, but now it is hardly worth the sixth Part of a Days Labour; because not less than Six-pence will purchase the Labour of a Man for a Day in any Part of that Kingdom; which is wholly to be attributed to the much greater Plenty of Money now in England than formerly. And yet perhaps England is in Effect no richer now than at that Time; because as much Labour might be purchas'd or Work got done of almost any kind, for 100 then, as will now require or is now worth 600.

In the next Place let us consider the Nature of Banks emitting Bills of Credit, as they are at this Time used in Hamburgh, Amsterdam, London and Venice.

Franklin makes further observations of the historic fact of the vacillating price/cost/value of gold, thus further confirming these faults as a purported monetary standard.


As those who take Bills out of the Banks in Europe, put in Money for Security; so here, and in some of the neighbouring Provinces, we engage our Land. Which of these Methods will most effectually secure the Bills from actually sinking in Value, comes next to be considered.

Trade in general being nothing else but the Exchange of Labour for Labour, the Value of all Things is, as I have said before, most justly measured by Labour. Now suppose I put my Money into a Bank, and take out a Bill for the Value; if this Bill at the Time of my receiving it, would purchase me the Labour of one hundred Men for twenty Days; but some time after will only purchase the Labour of the same Number of Men for fifteen Days; it is plain the Bill has sunk in value one fourth Part. Now Silver and Gold being of no permanent Value; and as this Bill is founded on Money, and therefore to be esteemed as such, it may be that the Occasion of this Fall is the increasing Plenty of Gold and Silver, by which Money is one fourth Part less valuable than before, and therefore one fourth more is given of it for the same Quantity of Labour; and if Land is not become more plentiful by some proportionate Decrease of the People, one fourth Part more of Money is given for the same Quantity of Land, whereby it appears that it would have been more profitable to me to have laid that Money out in Land which I put into the Bank, than to place it there and take a Bill for it. And it is certain that the Value of Money has been continually sinking in England for several Ages past, because it has been continually increasing in Quantity. But if Bills could be taken out of a Bank in Europe on a Land Security, it is probable the Value of such Bills would be more certain and steady, because the Number of Inhabitants continue to be near the same in those Countries from Age to Age.

For as Bills issued upon Money Security are Money, so Bills issued upon Land, are in Effect Coined Land.

Franklin further observes how the varying ratios between gold and other things of value impose improprieties upon intended industry. Ultimately he arrives on a principle which would allow us to derive currency to convey trade/industry we cannot otherwise, if we are subject to an insufficient circulation.

So he is striving to solve the problems solved by mathematically perfected economy™, but arrives only on an abstract proposition of deriving further money from land only (which has not been financed), when this too will be insufficient to engender circulations sustaining all possible wealth. He only has the problem still however, because he failed to determine that an ideal circulation required loaning the value of each asset into circulation at the juncture of its first trade.


If we enquire, How much per Cent. Interest ought to be required upon the Loan of these Bills; we must consider what is the Natural Standard of Usury: And this appears to be, where the Security is undoubted, at least the Rent of so much Land as the Money lent will buy: For it cannot be expected that any Man will lend his Money for less than it would fetch him in as Rent if he laid it out in Land, which is the mose [most] secure Property in the World.

He assumes interest is justified without even raising the question of what the nature of the money is; that it is an agreement between us which not only another cannot ensure, but which the costs of interest preclude ensuring. Of course, he still fails to explore the ultimate ramifications of interest or the fact that the money needs to be new money if it is to sustain the commerce  thus it cannot be the property of lenders in the first place.


As this Essay is wrote and published in Haste, and the Subject in it self intricate, I hope I shall be censured with Candour, if, for want of Time carefully to revise what I have written, in some Places I should appear to have express'd my self too obscurely, and in others am liable to Objections I did not foresee. I sincerely desire to be acquainted with the Truth, and on that Account shall think my self obliged to any one, who will take the Pains to shew me, or the Publick, where I am mistaken in my Conclusions, And as we all know there are among us several Gentlemen of acute Parts and profound Learning, who are very much against any Addition to our Money, it were to be wished that they would favour the Country with their Sentiments on this Head in Print; which, supported with Truth and good Reasoning, may probably be very convincing. And this is to be desired the rather, because many People knowing the Abilities of those Gentlemen to manage a good Cause, are apt to construe their Silence in This, as an Argument of a bad One. Had any Thing of that Kind ever yet appeared, perhaps I should not have given the Publick this Trouble: But as those ingenious Gentlemen have not yet (and I doubt never will) think it worth their Concern to enlighten the Minds of their erring Countrymen in this Particular, I think it would be highly commendable in very one of us, more fully to bend our Minds to the Study of What is the true Interest of PENNSYLVANIA; whereby we may be enabled, not only to reason pertinently with one another; but, if Occasion requires, to transmit Home such clear Representations, as must inevitably convince our Superiors of the Reasonableness and Integrity of our Designs.

B. F.

Philadelphia, April 3, 1729

And so he apologizes for the shortcomings of his efforts, offering admirably his desire to be acquainted with the truth.


So in and according to this work at least, Franklin swerves from mathematically perfected economy™ because:

  1. he never ascertains the bounds of the necessary or ideal circulation even as he identified this to be the objective;
  2. because lacking this fundamental determination, neither then can he ascertain when or how to introduce and retract whatever circulation should be maintained; and
  3. because he never explores the justice or ramifications of interest which would certainly have re-focused him on the initial question of how much to circulate, and then how to maintain that circulation, which gives us our ultimate prescription to circulate so many tokens of value as value exists, and to pay the resultant obligations as we consume of the respective property.


A few quotes of Jefferson illustrate some disturbing inconsistencies. All except my version of the first (memorized) quote can be found at the following University of Virginia link.




If the American people ever allow banks to issue their currency, first by inflation and then by deflation [by having to maintain a vital circulation by perpetually re-borrowing principal and interest as subsequent sums of debt, increased perpetually so much as periodic interest], the banks and [bank owned] corporations which will grow up around them will deprive the people of all property, until their children wake homeless on the continent their fathers conquered.

[Recalled from memory as cited in the 1975 Alaska presentation.]

mike montagne

In my mind this assertion is exemplary, in that it seems at least cryptically or hermetically to express how maintaining a circulation (deflation and inflation being paying principal and interest, and re-borrowing that as principal respectively) dispossesses the people until they are stripped of all property.

I assumed originally that by this he meant to indicate he understood the process of maintaining a circulation inherently multiplies debt in proportion to a circulation.


That paper money has some advantages is admitted. But that its abuses also are inevitable and, by breaking up the measure of value, makes a lottery of all private property, cannot be denied.

Thomas Jefferson to Josephus B. Stuart, 1817. ME 15:113


We have already visited the principles in the analysis of Franklin's paper by which we should adamantly dispute this assertion.

Not giving us a model of a perfected currency, Jefferson appears practically to associate the defects of known/practised currencies with their material composition  a proposition which is not only absurd inasmuch as we are only seeking to perfect what amounts to a token of value (the material and other respects of which are irrelevant unless they materially affect our ability to circulate the tokens as intended), but which therefore in the terms he makes his assertion can and will thereafter be misleading to any aspiring student of the material who too fails to perceive how to perfect currency, and, respecting Jefferson, ineptly interprets his reference to paper to be binding.

Moreover, what I would find disturbing about the assertion even if I were to make it, is its evident vulnerability. That is, it is an unfinished thought which begs challenge, because for instance if paper were to serve as a token of gold (and was thus bound strictly to serving inertly as a token of gold), then how could paper currency possibly fail to serve us but in any way which is directly attributable instead to the usage of gold?

After all, any inert token of the gold can only be serving as the gold can serve (or fail to serve) by faults or perfection of the monetary prescription. Specifically for instance, if finite gold reserves precluded issuing a circulation sufficient to sustain the trade of wealth far in excess of the monetary reserves, the fault of the system is obviously attributable to the prescription's faulty adherence to the limited quantity of gold; and of course this itself then would comprise the very "breaking up the measure of value" *which* "makes a lottery of all private property."

So the assumable improprieties of experience are certainly not attributable merely to the fact of the token being paper, but to the faults of failing first to ascertain how much currency to circulate, and thereupon how to maintain that circulation.

Our analysis of Benjamin Franklin's paper already determines there is but one circulation which can never injure our purposes; and this circulation is equal to the very value after all which we intended to represent by a circulation, the individual units of which represent any of the value in existence! So what is even the trick of all this, but unconvincing ourselves that "interest" is justified, so that we can practice the only proposition we can qualify; and that is to introduce such circulation as an obligation when the property/production is first traded, and to compel payment for the consumption of the property/production as the production is consumed?

After all, Franklin and Jefferson's mistaken assumption that no private person would loan money without interest is at fault because our first principle, to introduce new currency with the trade of new production, is impossible if the currency does not come from outside the pool of existent circulation  which makes the source of private funding representing [already] earned wealth impossible.

Specie is the most perfect medium?

Specie is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.

Thomas Jefferson to John Wayles Eppes, 1813. ME 13:430

Obviously, if by the expression "preserve its own level," Jefferson means that specie inherently maintains a proper circulation, he is incorrect if our ideal is to maintain a circulation equal to wealth in existence which can differ and almost always will differ markedly with the possible or practical quantity of specie.

The rest then is equally disputable, because for instance if coexisting currency is subject to interest, multiplication of debt by interest as we can only attempt to fulfill the resultant obligations (always inherently exceeding the original principal) by re-borrowing whatever we pay against principal and interest as subsequent debts, perpetually increased so much as periodic interest... this multiplying dispossession will itself consume the gold/specie all the while it generates an eventual terminal sum of debt; and then, under that debt, when the people have already been robbed of most of their gold, what indeed can gold actually be worth to them, when a tomato can be eaten; gold cannot; and no one can any longer even employ themselves at industry or consumption of anything which can thus have a use for gold?

So Jefferson is very wrong here. His claim of automatic maintenance of a serviceable circulation is impossible, if indeed this is what he means.

Moreover, if on the other hand he means specie perpetuates a consistent value, Franklin's observations already disprove this. The varying costs of harvesting the material in different conditions and the perpetually varying proportion of the relatively finite/fixed quantity of the material available forces the quantity of specie to compete with constantly varying leverage for the wealth it cannot directly represent.

Even more absurdly, we are occupying a valuable and even exceedingly costly resource for nothing but to serve as imperfect tokens for the wealth it cannot represent.

Paper is poverty?

Paper is poverty... it is only the ghost of money, and not money itself.

Thomas Jefferson to Edward Carrington, 1788. ME 7:36

Not only pompous, but unqualified, wrong and misleading to anyone incapable or disinclined to uncover relevant fact.

Inherently dangerous and obstructive to the objects of the republic then, should inexpensive, properly regulated tokens of value be vital to our very prosperity.


Experience has proved to us that a dollar of silver disappears for every dollar of paper emitted.

Thomas Jefferson to James Monroe, 1791. ME 8:208

As we have already observed, this is absolutely inevitable if any of the paper is subject to interest.

Thus the proposition is prophetic of the consequences of attempting to revert to imperfect gold or precious metal monetary standards, should any form of currency be allowed to coexist subject to interest.

But in effect then, because of the aforesaid imperfections of precious metal [or other such] monetary standards, this assertion would ultimately have to advise us never to revert to a precious metal monetary standard.


It is a [disputed] question, whether the circulation of paper, rather than of specie, is a good or an evil... I believe it to be one of those cases where mercantile clamor will bear down reason, until it is corrected by ruin.

Thomas Jefferson to John W. Eppes, 1813. ME 13:409

The editorial insertion, [disputed] originates in the source document at the University of Virginia; and I have preserved it here even though I lean toward thinking it unwarranted.

Cautiously I would say it is possible Jefferson is recognizing that the question of whether a proper paper or other such currency can exist is still to be answered by the eventual perfection of a monetary system. He may from time to time accept this question exists; perhaps not.

Nonetheless, he does not prove the question cannot exist by proving it is literally and materially impossible to perfect a monetary system of the evils he recognizes.

our medium should be so proportioned to our produce (production)

It would be best that our medium should be so proportioned to our produce [production], as to be on a par with that of the countries with which we trade, and whose medium is in a sound state.

Thomas Jefferson to John W. Eppes, 1813. ME 13:430

Good, and true; but impossible and inherently injurious unless all countries adopt a perfected economy.

Where is the set of principles his goal requires; and why not develop them with the little intellectual expense required to do so?


Our public credit is good, but the abundance of paper has produced a spirit of gambling in the funds, which has laid up our ships at the wharves as too slow instruments of profit, and has even disarmed the hand of the tailor of his needle and thimble. They say the evil will cure itself. I wish it may; but I have rarely seen a gamester cured, even by the disasters of his vocation.

Thomas Jefferson to Gouverneur Morris, 1791. ME 8:241

All the capital employed in paper speculation is barren and useless, producing, like that on a gaming table, no accession to itself, and is withdrawn from commerce and agriculture where it would have produced addition to the common mass... It nourishes in our citizens habits of vice and idleness instead of industry and morality... It has furnished effectual means of corrupting such a portion of the legislature as turns the balance between the honest voters whichever way it is directed.

Thomas Jefferson to George Washington, 1792. ME 8:344

We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth. It is vain for common sense to urge that nothing can produce but nothing; that it is an idle dream to believe in a philosopher's stone which is to turn everything into gold, and to redeem man from the original sentence of his Maker, 'in the sweat of his brow shall he eat his bread.'

Thomas Jefferson to Charles Yancey, 1816. ME 14:381

These are excellent complaints of further unearned gain imposed at the expense of a monetary system, and as presently imposes suffocating stress on ours.

Today indeed, commodity traders who produce nothing are allowed to bid up the cost of the last grain of rice the people may afford to eat, that for the sake of unearned gain rice might be stored away for its sufficiently profitable day, while the people who produce it starve.


That we are overdone with banking institutions which have banished the precious metals and substituted a more fluctuating and unsafe medium, that these have withdrawn capital from useful improvements and employments to nourish idleness, that the wars of the world have swollen our commerce beyond the wholesome limits of exchanging our own productions for our own wants, and that, for the emolument of a small proportion of our society who prefer these demoralizing pursuits to labors useful to the whole, the peace of the whole is endangered and all our present difficulties produced, are evils more easily to be deplored than remedied.

Thomas Jefferson to Abbe Salimankis, 1810. ME 12:379

General observations.

He says a "more" fluctuating and unsafe medium. I wish he would have made the effort to articulate exactly how so, because these are the observations which would compel solution. Why stop short of that, I have no idea.


The monopoly of a single bank is certainly an evil. The multiplication of them was intended to cure it; but it multiplied an influence of the same character with the first, and completed the supplanting the precious metals by a paper circulation. Between such parties the less we meddle the better.

Thomas Jefferson to Albert Gallatin, 1802. ME 10:323

This observation is as relevant today as it was then. If multiple competing banks charge interest for currency, there is no elimination of inherent multiplication of debt whatever. Only by eradicating interest and unearned gain can true producers of wealth prosper according to the fruit of their doings.

Thus solution requires ascending beyond the current concept of "a bank," which is not merely a bank at all, but the imposition of an inherently detrimental and inevitably terminal process.


So we see that Jefferson recognizes many of the important principles and ramifications. Yet without a satisfactory accounting, and with likewise no disciplined exploration of the issues of interest or the perfection of recognized irregularities, he leans toward the deficiencies of a precious metal monetary standard which have already been raised by Franklin.


  1. he observes improprieties in the intentionally imperfect paper of bankers, but never attempts to solve them;
  2. owing to that he holds wrongly, or at least to some confers the idea, that all possible paper currencies are faulted;
  3. in turn owing to this he is disposed without qualification to prefer metallic substance to paper;
  4. and finally owing then to all of this together, he condemns all policy and recommendation to the faults of a precious metal monetary standard, however quietly he recognizes or ignores those faults.


For whatever the reasons, the founders had not reached monetary solution. It is our mistake then to blindly follow any path without qualification, proof or theorem, knowing already that two centuries of world history attest to faults — only the singular resolution of which determines actual solution.

"To find the players in all the corruption of the world, 'Follow the money.' To find the captains of world corruption, follow the money all the way."

mike montagne — founder, PEOPLE For Mathematically Perfected Economy™, author/engineer of mathematically perfected economy™ (1979)

While 12,000 homes a day continue to go into foreclosure, mathematically perfected economy™ would re-finance a $100,000 home with a hundred-year lifespan at the overall rate of $1,000 per year or $83.33 per month. Without costing us anything, we would immediately become as much as 12 times as liquid on present revenue. Transitioning to MPE™ would apply all payments already made against existent debt toward principal. Many of us would be debt free. There would be no housing crisis, no credit crisis. Unlimited funding would immediately be available to sustain all the industry we are capable of.

There is no other solution. Regulation can only temper an inherently terminal process.

If you are not promoting mathematically perfected economy™, then you condemn us to monetary failure.

© COPYRIGHT 1979-2009 by mike montagne and PEOPLE For Mathematically Perfected Economy™. ALL RIGHTS RESERVED.COPYRIGHT 1979-2009 by mike montagne and PEOPLE For Mathematically Perfected Economy™. ALL RIGHTS RESERVED. TRADEMARKS: PEOPLE For Mathematically Perfected Economy™, Mathematically Perfected Economy™, Mathematically Perfected Currency™, MPE™, and PFMPE™ are trademarks of mike montagne and PEOPLE For Mathematically Perfected Economy™, perfecteconomy.com. ALL RIGHTS RESERVED.


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