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why and how has - by what article does Congress have the right and Power To Coin Money And Regulate The Value Thereof

Updated on April 7, 2011

(Article l ,Section 8 , Part 5-------Constitution of the United States)

The Congress Shall Have The Power : To Coin Money,Regulate The Value There oF And oF FOREIGN COIN.

This authority is has within it the hope of the preservation of civilization itself.For without it civilization cannot continue to exist.

An honest money system is required for civilization to continuee to prosper over time.

Sudden gyrations in the money supply can cause an economy to collaspe and steal the value from everything we own.

Not only the value of money we earn and save over the years but also the value of the money used to pay back loans to lenders

It's simple math!

Today you may be able to buy an item like a candy bar or a soft drink for about one dollar.

Twenty years ago you could buy the very same candy bar or soft drink for about 50 cents and twenty years before that they both would cost only ten cents each.

Question : Has the value of money gone up over the years?

Answer : If,money has increased in value theoretically so we should be able to buy more with the same amount of money.Right? While this may be true for some small items for things like houses and cars it may or may not be true depending on the quality and quantity of those items are at any given time.Generally speaking all things being equal then no the value of our money has accually decreased.

Question : Has the value of what we buy with our money gone up down or stayed the same?

Answer : If,an items value has gone up then we should be able to sell it for more money over time assuming the value of our money has not gone down too.. If,the value of our money has gone down then we may get the same value or less for our money more likely get less for it if we wanted to sell it.The fact is we are taking about the very same items.Same materials and everything.It was made the same way,no change at all in how it was made and the materials within it..Otherwise we could make the arguement that the cost of producing that item increased or decreased based on the value and quantity of the materials within it.and that was part of the reason for the price difference.The only other difference would be an increase in labor and energy costs or colectable value.But for my purposes here we are talking simply about the value of the money supply involved relative to the value of the goods and services we buy with it after we account for inflation..

The law of Supply and demand .says that ,if there is a low supply of something and there is a demand that outstrips the supply than the price of the item will naturally go up .How much it goes up depends on who is willing to pay the most for it.If,however the supply can be increased or the demand decreased somehow the price for it will decline accordingly.This process is not instantanious ,so those who know that the supply of goods is going to increase or the price decrease because of a lack of demand will be willing to wait until the supply or demand changes in his favor and as a result he will get the most for his money.

Money itself is considered a commodity and the money supply is increased and decreased by the federal reserve banks at will for their own reasons.Supposedly to stablize the economy.

when the amount of money is increased unnecessarily we have Inflation and when decreased unnecessarily we have deflation.

When money is needed and not provided ,that is called Stagflation.Stagflation is when the economy is in decline due to a lack of money in cirrculation to carry on business.For example loans to businesses who depend on them in order to meet their shorterm expenses at a time when money is scarce because the banks are not lending money or the need for more money to accommidate an increased need for startup capital for expansion.

In Stagflation the cost of doing business has not gone down and some businesses may need to increase production in order to bring down the cost of manufacturing an item in order to sell more goods at a reduced price in order to make enough to cover their expenses and make a order to improve the business..Under other circumstances this increase in the money supply would be Inflationary.This is when too much money is in cirrculation compared to the goods and items being sold.

In some cases where we have Staglation a businesses overhead. has to be cut back while and at the same time make enough to stay in business.If,he has competition then he is in even more trouble.This is a case where competition for business puts those who can't compete out of business.Sometimes the bigger companies resort to selling their products at cost or less in order to rid itself of it's competition .After the competition is gone and they have a virtual monopoly they usually charge whatever the traffic can bear even if in doing so,they are effectively robbing their Immoral as that is.


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    • someonewhoknows profile imageAUTHOR


      7 years ago from south and west of canada,north of ohio

      I'm sure you know about currency exchange rates!As,for the federal reserve we share the same viewpoint!

    • profile image

      Kapt. Blasto 

      7 years ago

      But here's the BIG question...

      Does "Shall have the power to (do something)..." necessarily equate to "MUST PERFORM that something and shall have the power to do it" ?

      now, if it does mean "MUST PERFORM..."

      Does the Clause "To coin money, and regulate the value thereof, and of foreign coin...." mean

      that Congress MUST provide for the citizens an ample enough amount of money coined, for their commerce? does it even have to be UNIFORM across the states, or does this clause even state that Congress must provide coined Money to the States?

      Does it mean that Congress MUST coin THIS NATION'S MONEY? Whose (or rather what) country's money does it say, EXACTLY, that Congress MUST coin?

      Could it be conceivable that if "SHALL HAVE THE POWER TO...(coin money...)" could permit Congress to coin BRITAIN's Money for Britain?

      and even charge them interest, if they decided to LOAN IT TO THEM??? Modern Money Mechanics gets to play here...

      Could it be conceivable, that given the apparently implicit aim of this piece that we are commenting about, that the "Shall have the power to..." equates to a "MUST DO" that even though CONGRESS _Must_ perform said duty...Congress could fashion ONE PHYSICAL SPECIMEN, declare THAT PHYSICAL SPECIMEN "Money", regulate THAT PHYSICAL SPECIMEN's Value by either selling shares of THAT PHYSICAL SPECIMEN, or LOANING (through a clearing house) those "SHARES" to banks, and through BANKS, to us...and SCOTUS judging the activity, *COULD* declare that activity "Constitiutional...but probably not within the "framework" of the *spirit* of the Framer's intent" while reversing any would-be court challenge to that activity of Congress.

      However. Central to the groanings that this piece touches upon, is the manner of arrangement that Government has with its creation, The Federal Reserve.

      Since when should Government, even though for instituional integrity purposes, allow itself to play "debtor" to a created-by-them entity. Even if it IS for the purposes of maintaining an "Elastic Currency" for the needs of commerce, is it wise to hamper and debauch the power of congress to Lay and collect taxes, by laying and collecting them upon the people?

    • someonewhoknows profile imageAUTHOR


      8 years ago from south and west of canada,north of ohio

      I remember when former president Nixon proposed controling the economy through wage and price controls and the idea was poo pooed by members of congress and businessmen as well,even the unions were against the idea.

      How can we have a stable economy where non are too rich and non too poor without controling both wages and prices? The problem is we all don't agree on what is fair.I would go so far as to say that there are individuals on both sides that want more than their fair share and it seems always will.That's the crux of the problem.All we need do is look at history to know that's true.It will always be true if things don't change for the better.Meaning all labor wheather it be management-white coller jobs or skilled and unskilled labor all should pay a set amount based on skill level and experiance,rather than just length of time worked.Anything above or below certain skill levels and productivity should be reflected in everyones pay accordingly.As a result of our inflated currency we have a distorted view of the value of what our money buys over a relatively short time.

      If,we think in terms of ratios ,we can see that 30 percent or less of our pretax income sould be enough to pay for our monthly mortgage.Food a certain percentage,clothing a certain percentage ,etc. The actual number is not the only thing to look at.That's why ratos can be more important. Quanities based on ratios in whatever number system is used can determine amounts of whatever denominations are required in any numerical system used.Base ten 0-10 as we normally use,or binary - base two-- 0-1,base three --0-1-2 and so-on.

    • DowntroddenInDC profile image


      8 years ago from Houston, TX

      @ Someonewhoknows, I agree. It appears you were born in the mid-fifties when some of the great wage equality existed. A CEO in 1965 made only 30-50 times what the average (median) employee at his company made, compare that to what CEO's make to their average employee and you'll see the top makes well in excess of what they used too. In real terms, the CEO's don't manage companies that are any larger or complex (if anything technology has made their jobs easier), yet they make many thousands of what the average employee makes.

      I think you and I have a lot to discuss. I think we may have a lot of the same opinions, we're just coming from different corners (to meet in the middle).

    • someonewhoknows profile imageAUTHOR


      8 years ago from south and west of canada,north of ohio

      DowntroddeninDC your right! the numbers don't lie and I was mistaken about the car I had planned to buy it wasn't an American motors car it was a Pontiac Ventura.It was $1,200 dollars ,but because I was only 18 at the time and the fact that I needed to pay for collision coverage ,which BTW cost more than my car payments,it turned out that I couldn't afford to buy it.I only made about $1.20 /hour.If,I had made ten times that much -$12.00/hour back then I would certainly have been able to buy it.

      Maybe we should take a close look at wages verses prices in the past compared to today.Nit just the average ,but lowest to highest.

      I believe wages have always lagged behind prices,but that's no surprise.

    • DowntroddenInDC profile image


      8 years ago from Houston, TX

      Nominal terms versus real terms. Nominal is just a number that doesn't have any context, real terms are adjusted to account for what things cost at a prior point.

      I looked up what a 1971 AMC Gremlin cost and it was $1,879 and then used the BLS's inflation calculator to see that $1,879 1971 dollars is equivalent to $10,115 2010 dollars. Which is about right, however the base model of a 1971 Gremlin probably lacked AC, a radio, the ability to last several hundred thousand miles, and it got less than 16mpg.

      So I'd argue we're probably better off now...

      The spike in the 1970's probably coincided with the boom and then bust years of that period. Remember the Iran Contra, the oil embargo and the energy crisis? Remember when home loans had interest rates in the mid double digits? (14-17% APR).

      Real terms will only make sense of these things, nominal terms are great for looking back and making baseless comparisons. They aren't so great at actually telling you if you're better or worse off though.

    • someonewhoknows profile imageAUTHOR


      8 years ago from south and west of canada,north of ohio

      Immartin ,I agree with you about the value of things like taosters and Irons were made to last early in the last century.Even some cars though they were gas hogs the price of gas was cheap.I can remember when candy bars that sell today for almost a dollar were in fact a quarter or less.This was in the middle to late 1950's and I remember buying a soda in a machine for a dime as late as 1965

      I remember when you could buy a brand new car for $1,200 in 1971 from American motors.Then in the late 1970's car prices started to skyrocket.I was surprised when the prices started to get into the 5 digit range that used to be exclucively reserved for luxury cars.

      $25,000 back then is like 250,000 today. The same became true of housing prices.Obviously now they are dropping like a rock.

    • lmmartin profile image


      8 years ago from Alberta and Florida

      In truth the value of the goods we are spending our inflated dollars on has decreased, in that goods purchased fifty years ago were intended to last if not a life-time, then many years, so was then considered an investment. Interestingly enough, food as a percentage of our income remains the same. You put the price of a candy bar at a dime seventy or more years ago, and yet I can remember the ten cent candy bar and I'm a lot younger than that. I also remember a house my parents built and it cost thirteen thousand -- but then, I doubt my Dad earned more than $25,000 at the time.

      The truth is, the more things change, the more they are the same. But thanks for an interesting read. Lynda


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