Gary North on current economic affairs and investment marketsGary North -- Specific Answers
HomeContact MeTell a FriendText SizeSearchMember Area
Gain immediate access to all of our current articles, the question-and-answer forums, dozens of free books, and article archives. Click here for details on how to join.

About This Site
Academic Gaps
Articles
Capitalism and the Bible
Clichés of Protectionism
College Finances
Debt Management
Ellen Brown: Critique
Federal Reserve Charts
Gary North's Free Books
Get Published Here!
Gold Price & My Report
Keynes Project
Price Index (U.S.A.)
Questions for Jim Wallis
Remnant Review
Social Security/Medicare
Sustained Revival
Tea Party Economist
U.S. Debt Clock
Yield Curve
Your YouTube Channel
Gary North's Miscellany
Advertising
Blogging
Budgeting for Wealth
Business Start-Up
Career Advancement
Digital Tools
Education That Works
Evernote: Free Notes
Federal Reserve Policy
Fireproof Your Job
Goal-Setting for Success
Great Default
Inheritance Strategies
Insurance
International Investing
Investment Basics
Job and Calling
Keynesian Economics
Leadership
Marketing Case Studies
Obamanomics
Precious Metals
Real Estate
Retirement
Safe Places
State of the Economy
Stocks and Bonds
Video Channel Profits
War With Iran
Members' Free Manuals
Our Products
Contact Me
Help
Tell a Friend
Text Size
Your Account
My 100% Guarantee
Privacy Policy
Terms of Use


This site powered by MemberGate

Historical Error #4: Pre-Revolutionary Colonial Pennsylvania's Government Avoided Most Taxes Because It Issued Fiat Loans.

Gary North
Printer-Friendly Format

Ellen Brown makes this amazing claim:

From 1723 until the French and Indian War in the 1750s, the provincial government collected no taxes at all. The loan office was the province's chief source of revenue, supplemented by import duties on liquor. During this period, Pennsylvania wholesale prices remained stable. [Web of Debt, p. 39]

This was a miracle! Or was it?

First, the provincial government did nothing much. It built some buildings. Local property taxes supported the colonial governments, because almost all political power was local. We forget this. That was a very different world.

Second, there were import duties. Import duties are sales taxes on imported goods. She says these revenues were supplemental. She offers no evidence.

Third, the province issued very little of this pseudo-money: loans for farms. So, prices did not rise.

Fourth, when the French and Indian War came in 1755, the province started issuing many more of these fiat loans, and prices denominated in this non-money rose rapidly.

Fifth, hardly anyone used paper money exclusively. Most money in the cities was Spanish: silver coins called "pieces of eight." This currency had no legal standing in 1755, but it was the universal currency in the colonies in the 18th century, up to and after the Constitution. It served as legal tender in the United States until 1857.

Sixth, at least 90% of the population was rural. Trade was mostly by barter. This was true in all of the colonies. People rarely used money, except to pay taxes and to import luxury goods, which few farmers could afford.

Seventh -- not a mistake, but deadly for her theory of sovereign money issued by the government -- these paper bills were not legally money. She relies on Alvin Rabushka's 2004 article, "Representation Without Taxation," to make her case. But Rabushka was clear: "From a legal standpoint, colonial paper money was not official paper money. The British government did not allow colonial governments to issue official paper money, mint coins, or even establish local note-issuing private banks."

Ellen Brown uses this example to support her case that government-issued paper money is both practical and noninflationary. But this example does not support her case. It was not legally money, and eventually there was inflation from the issue of these loans. For Greenbackers, money that is not lawful money -- issued by a government -- is not money, as she argues constantly. This example disproves her thesis, for this was not lawful money.

She tried to respond to my analysis here:

http://webofdebt.wordpress.com/response-to-gary-north-2

Read my response here:

http://www.garynorth.com/public/7121.cfm

For a detailed critique of Ellen Brown's economics, go here:

http://www.garynorth.com/public/department141.cfm


Printer-Friendly Format
 Tip of the Week
Sign up for my free
Tip of the Week
Verification Characters:    Type     V  Q  H  S  B     here   


Tip of the week archives
On what this icon
means, and how it
can help you,
click here
 Q & A Forums
General Q&A Forum
Advertising and Resumés
Affiliates
American History Topics
Backyard Food Gardening
Banking and Politics
Blog Sites and Web Sites
Books Worth Reading
Bumper Sticker Slogans
Business Forum
Buying Smart
Christian Service Forum
College -- The Cheap Way
Copywriting
Education Alternatives
Food Storage
For Women Only
Fukushima
GNC Benefits
GNC Testimonials
Gold and Silver
Great Default Forum
Health and Diet
Health Insurance
Homeschooling
Investments Forum
Iran War
Job, Calling, and Career
Leadership Development
Legacy Building
Less Dependent Living
Local Political Action
Non-Retirement Forum
One Good Idea
Police State
Privacy
Public Speaking
Real Estate Forum
Remnant Review Forum
Safe Places Forum
Taxation Policy
Typographical Errors
Video Production Basics

 Archives
Reality Check
 Discussion Forum
Search Discussion


Recent Forum Posts
• Foreigners Stop Buying Treasury IOU's
• Technical Analysis
• Blood Moons Tetrad
• 60 mins piece, stock market rigged! Why Invest.
• 60 mins piece, stock market rigged! Why Invest.
• Sean Hyman Absolute profits secret calendar
• Investment Portfolio - Inverse Funds
• DowJones Ind Avg is a hoax
• Digital textbooks
• Joint Venture Oil & Gas Investing
• Trading Or Gambling?
• 5 year return on investment in Stock Market
• Bottom for Mining Stocks?
• Home Equity Loan for investment
• 770 accounts, has anyone heard of them?
• Buying a home/ putting it in child's name
• CNNFN Rent rate tool
• proposed elimination of 1031 exchange
• Business card for real estate
• Buy rentals in NW Indiana
• Market and Timing
• Housing Advice Sought...
• Too many Eggs in one basket???
• edit
• Sit On Two Mortgages?
• Motivated sellers
• Recommendations for Pre-Approval for Mortgage?
• Rental properties in hurricane country
• Rental Property in Houston - Harris Ctny Appraisal
• Weighing Options on Potential Rental Property
• Middle Class squeezed out of Chicago
• An Article on Chile
• 5 Amazing, Cheap Places to Live as an Expat
• Oil Field Job Security
• Moving to TriCities Area
• PJ ORourke on the Baby Boom
• Is Vegas DOOMED?
• Mint.com
• Second Passport- Mexico?
• Radiation dangers to US,World Confirmed
• Safety in numbers? Questions…..
• Best in Asia?
• Simple Exercise
• Coming to an airport near you ...
• S.W. New Mexico not looking so safe...
• I take it Retirement Armageddon is not available
• Post Retirement Career
• Social Security - when to start collecting
• 401K Risk
• Detroit Retirees Fight 83% Health Care Cut
• Lump Sum Early DROP
• Underfunded pensions
• 401k strategy
• Can I Avoid Medicare Entirely?
• Looking for a Financial Planner/CPA
• How to calculate retirement needs
• Two IRA questions:
• Rentals
• Why?
• Teaching in non-retirement
• Rodent Congressmen
• Evernote and Moleskine team up to create smart bus
• Up Credit Limit on Card?
• New study warns on effects of wireless technology
• 3D Printer RepRap
• India's Reagan - NOT
• Welcome Letter ?
• The USPS wants to mine and sell data gathered from
• Searching for past posts
• Gary's suggestion for inner-city schools
• Michael C Ruppert --- has died --suicide
• Is Nevada something akin to an Indian Reservation
• Major Study Finds The US Is An Oligarchy
• Bloomberg
• Critique of Thoreau
• Fair joint ventures?
• Intern to Equity Holder
• Oil field business ideas?
• Turning Over Tables on Craigslist
• This might be crazy. Maybe not. I don't know.
• Best Ways of Starting an Online Business
• Copyright Law for Textbook Problems
• Help Needed with Music Appreciation Course
• Engineer starts rubber band braclet business
• Is my USP unappealing?
• Startup of a Daycare
• Last payment
• Employee Death
• Start a busines for free: Denny Hatch
• Dick Cabela's Legacy: Obsess on the Customer