[PDF]Money, Bona Fide or Non-Bona Fide

MONEY, BONA FIDE OR NON-BONA FIDE, by Dr. Edward E Popp, 1970; Previously available
from the Wisconsin Education Fund, PO Box 321, Port Washington Wisconsin, 53074


TABLE OF CONTENTS

PREFACE (starts on this page)

1. SOME USEFUL DEFINITIONS (page 2)
2. MEDIA OF EXCHANGE (page 6)
3. MONEY IS A DOCUMENT (page 12)
4. MEDIA OF EXCHANGE USED IN THE UNITED STATES (page 18)
5. BORROWED MONEY AS A MEDIUM OF EXCHANGE (page 23)
6. VALUE OF MONEY OR PURCHASING POWER OF MONEY (page 26)
7. HOW TO INTRODUCE COINS IN A COUNTRY, WHERE NO MONEY EXISTS (page 31)


8. WHO, WITH JUSTICE, HAS THE RIGHT TO ISSUE THE MEDIUM OF EXCHANGE? (page 33)
9. HOW MUCH MEDIA OF EXCHANGE SHOULD BE ISSUED? WHO SHOULD DETERMINE


THE AMOUNT? (page 36)
10. HOW TO MAKE A BONA FIDE MEDIUM OF EXCHANGE ACCEPTABLE (page 37)
11. FOREIGN TRADE (page 42)
12. INFLATION AND DEFLATION (page 44)
13. INTEREST, JUST AND UNJUST (page 49)
14. CONCLUSION COVER IMAGE ON LAST PAGE (61) (page 56)
PREFACE


This book was written because the writer has not been able to find any book which gives a complete and
satisfactory definition for the word money. The definition given in most cases is a definition of the
function of money, not the essence of money. Even the dictionaries and encyclopedias do not have a
definition of what it is; they only relate its function.


The implication is that there is some mystery about the nature of money that only a few can understand.
Everyone else is supposed to accept without question whatever is given to him or her as money and to
use it as a medium of exchange. It is the writer’s intention to take the mystery out of money by
explaining what money is, how it works, what gives it its value, who should issue it, and other
interesting items relating to media of exchange.


The writer also hopes to show that if a nation borrows its money (medium of exchange) with interest, it
call never get out of debt. As long as it uses borrowed money (mostly bank credit) as its medium of
exchange, it will continue to go more and more in debt, until the interest payments become unbearable.
The end result will be a destruction of the value of the money by severe inflation or by a more violent
means.


The people in the United States have been using borrowed money (bank credit) as a medium of
exchange for many years. We can now see the end result approaching.


The writer hopes to show how the people can change from using an inflationary debt money system to a
non- inflationary debt-free system. When enough people are sufficiently informed about the real nature
of money (medium of exchange), a system for the use of bona fide media of exchange could be
established with or without the help of federal officials. However, it would be much more convenient if
Congress would permit only a bona fide medium of exchange to circulate. Congress could also prohibit
the circulation of inflationary money (bank credit) just as it prohibits the circulation of counterfeit
money. Inflation would never exist if only bona fide media of exchange were used.


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It is also the hope of the writer that, in the event the people and/or our government officials do not use
bona fide media of exchange before the money becomes worthless, they will then have sufficient
information to enable them to start over with a system using bona fide media of exchange.


While the information given in this book is primarily intended for the people in the United States of
America, the principles given can be just as useful for the people in any country in the world. People
anywhere, with a government or without a government, with or without gold or silver, may learn how to
issue a bona fide medium of exchange.


Finally the writer hopes that the chapter on interest will contribute to an increase in knowledge on the
subject of interest. (Edward Popp, Port Washington Wisconsin, January 1970)


CHAPTER 1 SOME USEFUL DEFINITIONS


BARTER

When one item of value is traded or exchanged for another item of value without any exchange of
money (medium of exchange), we call that transaction barter. When a medium of exchange is used to
make exchanges of items of value, we call such transactions buying and selling. The act of buying and
selling also is barter, but it is indirect barter. In selling we exchange an item of value for a document
(money or a credit certificate) that, if it is bona fide, is evidence of a claim for other goods or services.
The document serves as a medium of exchange which we shall give in exchange for some other item of
value. That is indirect barter. Indirect barter (buying and selling) is made convenient when a medium of
exchange (money or a credit certificate) is used. Buying an item means that we obtain complete
ownership of that item by paying money or a credit certificate for it.


TO BUY ON CREDIT

When we buy an item on credit, on partial payment, or on time payment, we usually obtain possession,
but not ownership, of the item. The owner simply makes an agreement with us that we will obtain
ownership at the time we complete the payments for the item.


If we do not make the payments according to our agreement, we then give up our possession of the item.
We do not own the item until it is completely paid for. We have not really bought the item until we have
paid for it in full.


BANK CREDIT OR BANK CREDIT MONEY

I shall try to explain bank credit by giving an illustration. A man borrowed $1000 from a bank. The bank
opened for that man a checking account for $1000, gave him a checkbook, and told him that he can now
write out checks for an amount up to $1000. The bank, for its part, wrote in its books a deposit of $1000
and a liability of $1000. When a loan is made in this manner, the bank has created $1000 worth of new
bank credit (also called bank credit money). The bank did not give out any of its own money or any of
its depositors’ money. But the bank credit money (checks that the borrower would write out) would buy
goods and services in the same manner as would real money that someone had earned.


If the collateral security pledged for that loan were items that the borrower was about to sell, then that
bank credit money was not inflationary, because goods were available to be claimed by it. However, if
the collateral security were items such as his automobile or his house, which he did not intend to sell,
then that bank credit money could be inflationary. Note: The bank credit money was not earned by
anyone. It was not earned by the bank and it was not earned by any of the depositors; it was just a
bookkeeping entry.


When the loan is paid back, the bank credit money will no longer exist. The bank’s books will show a
decrease of deposits and liabilities of $1000 each. It also will show a profit of the amount of interest it
received for the loan of its bank credit, or for its bookkeeping job. More than 90% of all the buying and
selling in the United States is done with interest-bearing bank credit.


CASH
Cash such as coins and currency, is the most acceptable medium of exchange.


BONA FIDE
Bona fide means made in good faith, without fraud or deceit. A document or written statement is bona
fide when the person is honest when he writes it. That is to say, he is telling the truth in his document.


CREDIT CERTIFICATE
In this book the term credit certificate means either a certificate of credit or a tax credit certificate, or
both.


CERTIFICATE OF CREDIT

When the possessor of goods or services writes out a certificate of credit stating someone has credit for a
certain amount of his goods or services, it means that that someone has a claim for that amount of those
goods or services; that is, those goods or services will be given to the bearer of that certificate in the
manner stated on that document. The certificate of credit is the physical evidence to prove that the
possessor of the goods or services owes (is in debt to) the bearer for a certain amount of goods and/or
services.


TAX CREDIT CERTIFICATE

A tax credit certificate is a document issued by a governmental body, which is used by that body to pay
for goods and services it needed. It is redeemed by that governmental body when it is returned as
payment for taxes. In order that the tax credit certificate be bona fide, the governmental body must levy
a tax equal in amount to the face value of the tax credit certificate.


DIVIDEND

The word dividend, in finance means a share of profit distributed to the owners of an enterprise. The
word dividend is made up from the word divide. When the profit of a company is divided among the
owners or shareholders of a company, the part given to each partner or shareholder is called a dividend.
Such payments are not called interest. In this book where the word interest is used, it is never used to
mean a dividend.


HONESTY
Honesty is the virtue that is practiced by a person who expresses himself according to reality. A person
is honest when he speaks or writes the truth.


We have heard the expression that we should have “honest money” or that we should have an “honest
money system.” It does not seem appropriate to use the word honest when it is applied to anything other
than a person. Only persons can be honest or dishonest; things cannot be honest or dishonest. Therefore,
counterfeit money or inflationary money should not be labeled dishonest money. It should be referred to
as money made or issued by a dishonest person. The same thing is true of a money system. A system is
not a person. Therefore, a system cannot be honest or dishonest. So if we have a money system that will
permit some persons to acquire an unjust gain and other persons to suffer an unjust loss as a result of the
normal use of that system, we should say the system has the qualities of an enterprise established by


persons who were not honest.


We probably would be correct if we said that there are only two kinds of documents used as media of
exchange: the one kind called bona fide, issued by persons who are honest, and the other kind, non-bona
fide, issued by persons who are not honest. The important feature about a document is to have it issued
by a person who is honest. Therefore, the most important requirement for a document which is to be
used as a medium of exchange is the practice of honesty by the person who issues the document.


JUSTICE
Justice is the virtue we practice when we give to each person that which is his due. It also means that we
are to allow each person to keep what belongs to him.


When we say we are to give to a person what is his due, we mean we are to give him what he has
earned. When we say that we are to allow each person to keep whatever belongs to him, we mean that
each person can keep whatever he has rightly acquired.


LEGAL TENDER

When the government passes a law which declares that certain documents such as notes, bills,
certificates, and coins are legal tender, it means that a person must accept these items as payment for any
money obligations due him or run the risk of not being paid. He must accept them, even if they are not
redeemable in goods or services. He must accept them, even if they are an inflationary medium of
exchange. The government has the power to make such a law, but not the right to do so. The government
has no right to force an injustice on anyone.


(A great injustice was done to many people in Germany in 1923, when they had to accept inflationary money with
little value as payment for debts contracted previously when the money had much more value.)


It would not be necessary for the government to make bona fide credit certificates into legal tender
because they would be self-evident claims for goods or services, just as the gold certificates used to be
self-evident claims for gold.


MONEY

The word money is frequently applied to anything that is used as a medium of exchange. Many items
have served as media of exchange, such as gold, silver, cattle, grain, salt, notes, checks, certificates of
credit, postage stamps, etc.


The Constitution of the United States gives the Congress (not banks) the power to coin money.
Therefore it is appropriate that the word money be applied only to the media of exchange authorized to
be issued by the United States Constitution.


MONEYLESS, CASHLESS, CHECKLESS SYSTEM

Before the year of about 1925 in the rural areas of Michigan, and probably in other states also, it was the
custom for the township highway superintendent to tell the owner of each farm the amount of highway
taxes required of him for the year. The farmer could pay those taxes with money or he could earn an
equal amount of money for his taxes by working on the road. He was allowed $2 per day for his work
with his own shovel or $4 per day if he worked with his shovel and his team of horses and a wagon
equipped for hauling gravel.


Let us say a certain farmer owed $20 for his highway taxes. The town highway superintendent informed
him that he would have to work three days with his team, wagon, and shovel, and four days with only


the shovel. He did just that and thus earned the required $20.


The highway superintendent recorded in his books that the farmer had paid (earned) his taxes. The
farmer did not receive any money, cash, or checks for his work. The town did not receive any money,
cash, or checks for the payment of those taxes. Nevertheless, the taxes were paid just as much as they
would have been if cash or checks had been used.


NOTE
In relation to money matters, a note is a document giving evidence of a debt and a promise of payment
with money.


(Since the terms United States notes and Federal Reserve notes are frequently used in this book the reader will
benefit by looking over his five dollar bills until he finds a United States note, so he will know the difference
between a United States note and a Federal Reserve note. There are not many United States notes in circulation, but
occasionally a person will receive one in the ordinary course of his business. You may be able to get one from a
bank if you ask for one.)


USURY

The word usury is generally used nowadays in reference to exceedingly high interest charges. While it is
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