Preface
This book was written to give students and others a more detailed explanation of some of the items discussed in textbooks on money and banking. An introduction to the subject is given in my first book, Money-Bona Fide or Non-Bona Fide. In addition to a general expansion on the topics discussed in the previous text, the present work includes a study of effects on the economy of the fractional reserve banking system and the operations of the Federal Open Market Committee.
The word "dollar" is frequently used, and yet, few know its origin and the different meanings people apply to it. Debts are accepted as if it is normal for people and governmental bodies to be perpetually in debt. Few writers warn us of the evils of debts and almost no one tells us how to avoid incurring them.
Today we find ourselves overwhelmed with money problems such as inflation, deflation, government debts and balance of payments deficits. These problems are not caused by ineptitude or wrongdoing on the part of [p. 4] the producers and the distributors of goods and services, nor are they caused by the private enterprise system. Neither are they accidental.
These problems are created principally by the widespread use of what is called bank credit. Textbooks call it credit, credit money, money, or money supply. It is a substitute for bona fide coins, bona fide credit certificates, or bona fide warehouse receipts which could be used as media of exchange.
We have been led to believe that the items that serve as media of exchange are scarce and can be obtained only by borrowing them and paying interest for their use. I have tried to disprove that assumption and to propose a better system. To improve our money system it is neither necessary nor wise to destroy our present system. It is only necessary to produce a better product and to introduce it gradually. For nearly six hundred years the government of England issued and used a bona fide currency without the use of gold or silver and without borrowing it. We can do the same.
We can issue enough interest-free bona fide currency so that the commercial banks can operate on a 100% reserve banking system for demand deposits, thus preventing the banking system from legally inflating or deflating the money supply.
It is easy to see that there is something wrong when we have to incur such enormous interest-bearing debts just to have sufficient media of exchange for the normal exchanging of our goods and services. These burdensome debts, especially the debts incurred by governmental bodies, are the result of the use of bank credit as our principal medium of exchange.
This is an interesting and timely subject. I hope the viewpoints I present will stimulate greater interest in a field that demands more broadly based knowledge.
Edward E. Popp
Port Washington
Wisconsin 53074 [p. 5]
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