The Trivium Series: How Does Currency Work?

Hello! My name is Mike and I am NotYourAverageMillennial…

I will be starting a series called “The Trivium Series” which will be a logical look into certain topics that have may or may not been investigated using critical thinking. Today’s topic in the Trivium Series is about how currency works. Before we delve into this topic, I feel it to be wise to those who are not familiar with the Trivium way of learning to explain what it is.

Trivium, translated from Latin, means “three roads”. These roads refer to the three ways anyone can learn about anything. The trivium is a liberal arts form of education that consists of grammar, logic, and rhetoric, Grammar consists of the knowledge you take in about a certain subject. Logic is how you process this information through rational critical thinking. This is known as understanding. Rhetoric is how you speak the knowledge that you have processed through critical thinking. This is known as wisdom. So we are going to use this form of learning to understand how currency works.

Money and Currency: Grammar Stage

In order to get a full understanding of this subject, we have to understand money is and what currency is.

Currency is defined as a system of money in general use in a particular country.

Money is a current medium of exchange in the form of coins and banknotes. It can also be defined as the assets, property and resources owned by someone or something. Money is true wealth because it is store of value.

One difference that you have to understand between currency and money is that money has a store of value while currency does not.

Gold and silver would be considered real money that has a store of value while currency (such as the U.S. dollar) does not have any true store of value except for the faith and credit of the government and its citizens.

Money and Currency: Logic Stage

Were you aware that the currency that we use is actually against the Constitution? Here’s the proof:

Article I, Section 10

“No State shall enter into any Treaty, Alliance or Confederation; grant Letters of Marque and Reprisal; coin Money, emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payments of Debts; pass any Bills of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

Now we can go on about this whole section, but I specifically want to focus on the “emit Bills of Credit” part. As it turns out we have a central bank here in America called the Federal Reserve that issues the nation’s currency (not money). The currency are bills of credit. Not only that, if you look at any U.S. dollar, it is called a Federal Reserve Note. So what is the legal definition of a note? Black’s Law Dictionary gives us the answer:
NOTE – 1) A written statement by an individual to pay a sum of money to another individual, or the bearer of the note at a specified period in time.

2) A bond that matures in five years or less.

3) A bill of exchange issued by the notary public that is addressed to the payer in the event of nonpayment or nonacceptance

So basically a note is an I.O.U. A Federal Reserve Note is a debt based currency. Real money can never be a debt because a debt is not a store of value.

Let’s take this a little further. We see in the legal definition of note that the word “bond” appears. So let us find out how Black’s Law Dictionary defines a bond.

BOND – A contract by specialty to pay a certain sum of money; being deed or instrument under seal, by which the maker or obligor promises, and thereto binds himself, his heirs, his executors, and administrators, to pay a designated sum of money to another; usually with a clause to the effect that upon performance of a certain condition (as to pay another and smaller sum) the obligation shall be void.

So read the first sentence of the definition of bond: “A contract by specialty to pay a certain sum of money…” A bond is also a debt because it is a promise to pay, not actual payment.

Here is another thing for you to think about: If our nation’s currency is debt-based, how would we pay of the national debt? If the Federal Reserve prints a currency of debt notes which is loaned to the country at interest, how would you pay the interest? Allow me to explain. When the Federal Reserve prints one dollar of currency and loans it out with interest, the country now owns two when there is only one dollar in existence.

So again I ask: How would you pay off the interest? The answer is that you can’t. You can’t pay off two dollars when only one dollar physically exists. So when there isn’t enough currency to cancel out the debt, the whole system implodes.

A Fiat Currency Gone Wrong

At one point in time, the U.S. dollar was backed by gold meaning that the paper currency was basically a receipt that you can turn into any bank and the bank would pay out the amount of gold that the receipt was worth. So a $20 receipt at the time was worth $20 in gold coin. This kept the money system honest.

However, in 1971, Richard Nixon took the U.S. dollar off of the gold standard and it officially became at fiat currency backed by nothing. Although the dollar is still the world reserve currency since other countries are required to buy oil in U.S. dollars (petrodollar), this paradigm is rapidly coming to an end as countries such as Russia, China, India, Iran, North Korea are finding ways to ditch the petrodollar.

The important thing that you must know about fiat currencies is that eventually all of them go to their true value of ZERO, especially when a government keeps printing more and more currency. This results in inflation because the more currency printed, the higher prices will be. Eventually the prices will have to catch up to the amount of inflated currency which can result in hyperinflation. This is what happened in the Weimar Republic in Germany and is also what is happening now in Venezuela.

When you place your hope in paper assets such as stocks, bonds, 401k’s and IRA’s, you are putting yourself at risk as you believe that because you have these that you have wealth. However, this is not the case. This is not true wealth but merely numbers on a screen. Since all fiat currencies eventually implode, the paper assets will implode as well because they were purchased using the same fiat currency that we have discussed. Remember, all fiat currencies are merely I.O.U.’s. They are not money because they don’t have a store of value. Our current monetary system is just debt, bonds, notes and I.O.U.’s. There is no money is our current system.

Fractional Reserve Banking

Let us talk about fractional reserve banking. This form of banking is when a bank holds a percentage (usually 10 percent) of your deposit and loans out the other 90 percent to other bank customers. Now you may be thinking, if the bank loans out 90 percent of my deposit, how come there is 100 percent of it in the bank. Well the answer is simple. They just type the remaining 90 percent that was loaned out into your account. So let’s use a simple example:

If you deposit $1000 in a bank, the bank holds $100 while digitally typing in $900 into your account. They just digitally created currency out of nowhere by typing in numbers. Now remember I said that the bank takes 90 percent of your deposit and loans it out to other customers. This customer takes this currency and buys some good and services from someone who in turn deposits that $900 into their bank. Referring back to the fractional reserve banking system, 90 percent of that deposit ($810) is loaned while 10 percent ($90) is deposited in their account and then the bank digitally creates $810 in that account. This process goes on and on until the country is flooded with currency.

Fractional reserve banking is a dishonest system because:

1) Your currency is being lent out without your consent; and

2) They replace your currency with digital I.O.U.’s which came out of nowhere.

Money and Currency: Rhetoric Stage

So let us simplify this post into a way where we can explain it to anyone who may not be aware of how the monetary system in America works.

Money has a store of value while currency does not. Gold and silver is a true form of money while fiat currencies such as the U.S. dollar does not. This is because fiat currencies can be printed into oblivion and once hyper inflated to the point of no return, the fiat currencies will drop to its real value of zero.

Our currency in America is real a system of debt where what we call money are really notes which are promises to pay. Hence, every dollar is an I.O.U’s whether in paper or digital form. This is also done through fractional reserve banking where a bank accepts a deposit, holds a percentage of the deposit in your account, creates the remaining 90 percent digitally out of thin air, and loans the 90 percent out to other bank customers where this process is repeated.
This is the reason that the national debt will never be paid off because it is not designed to be paid off. This is for the simple fact that you can’t pay off debt with debt. Not only that, if a debt-based currency is being loaned out with interest, there is never enough currency to pay off the interest so you are just left with more debt and this will cause the system to implode.

If we are ever to experience true liberty, the current financial system is not the one we should be following. We should return to real stores of value such as gold and silver which have true intrinsic value and maintains this value throughout history.

Please feel free to leave your comments about this post and if you found value in it please share it with others. Through awareness, we can get to liberty.



8 thoughts on “The Trivium Series: How Does Currency Work?

  1. Interesting descriptions and comparisons of money vs currency. It is all quite mind-boggling how the system just doesn’t implode. I do feel that money should hold a value for something of real value such as gold, silver, or some other rare item so that the world can’t be overstocked and a balance can be maintained. It will be interesting to see where all this digital currency will change the economics of the world.

    1. Hello Paul! I appreciate the kind words. The only reason why the monetary system hasn’t imploded yet is because the Federal Reserve are printing more money while at the same time keeping interest rates low. Not to mention they are all manipulating the stock market to make it look like the Dow Jones Industrial is doing well. I personally recommend investing in silver for the fact that most people can afford it being $16-$17 per ounce. If you can invest in gold if you have the money. As far as digital currency, remember it is still fiat currency because it is backed up by nothing, but on top of that, it isn’t tangible. It is only numbers in a computer. Nothing more. Thanks for the comment!

  2. This is very good information, as well as timely. I look forward to reading the rest of your series. It is frightening to know that these things are happening. A lot of people will deny that it’s as bad as it is. But there are plenty of us that have known things aren’t right, and will accept the truth for what it is. Ignorance is NOT bliss, people!!! Making a stand will be a daunting task, but if enough of us unite, we will be strong enough to make a difference. Thanks for sharing!

    1. Hello Ashley! I am pleased that you enjoy my posts and even more pleased that you are aware of what is happening in the world. As you said: Ignorance is NOT bliss! Thanks for the comment!

  3. Jaime

    It’s interesting that there are so many reflections of the last post I saw from you, with the focus on the trinity. Even in money and education, it seems things come in threes. That was just a minor observation and something that popped into my head now that I’m thinking in those terms. I love that you’re starting a Trivium series and I think we can learn a lot from that.

    With regard to money, there is no doubt that our system is absolutely horrendous and makes no sense anymore. Unfortunately, it’s controlled by people who tend to get rich off of it, but it’s nice to have some directional advice. So, thanks again. 🙂

    1. Mikey Somersall

      That’s an astute observation Jaime. Yes I am hoping that The Trivium Series can help people who are new to the Trivium a chance to see how it is used when learning about any subject.

      I am also glad to know that you see through the ponzi scheme of the current monetary system. It just goes to show that this work will not be in vain. Thanks for the comment!

  4. Dave Sweney

    I have long felt that the entire financial system in place currently is unsustainable. For the very reasons you mention, it is not based on anything but faith or belief…

    Actually digging yet deeper…

    The way the US Federal Reserve came into existence is a subject for a documentary or long post all on its own (maybe you can do an expose on this?)…

    It appears to me…

    Control the money and control the country. The monetary system is one where we the people have given the power to bankers and organizations that have their own interests in mind at the end of the day…

    Politicians that supposedly represent us did this, but the special interests bought their cooperation to make it happen…It started well before Nixon, but certainly, he changed the game…

    My further thoughts…

    There are more measures of how an economy is doing than how many jobs there are, how much profits the companies are making, etc.

    The currency that is used by all to survive can be worthless in a short time if that faith or belief goes away…That is not comforting to me, and I am sure others feel the same…

    The overall wealth of a society goes far beyond the currency it uses/has on hand I think.

    How does that society take care of its people? What is the quality of life that is created for all? Is there a health care system in place? How are old people treated? How are the schools?

    These and so many more are the kinds of questions that need to be asked when you speak of ‘currency’…

    The current system you mention in this trivium series that controls how the actual currency used is created (out of thin air) validates my thoughts…

    In my opinion, and it appears you agree, it is not a good one nor is it sustainable…Thanks for this insightful article! I had to read through it twice!

    1. Mikey Somersall

      Hello Dave. I would like to do a documentary about the Fed (although their are a lot of them on YouTube).

      Mayer Amschel Rothschild said, “Give me control of a nation’s money, and a care not who make its laws.”

      True wealth is in tangible goods and wealth. Things that will be crucial during a financial collapse like food, water, medicine, first aid, means of self-defense, some silver coins for bartering.

      Also investing in some gold and silver is a good way to hedge against inflation and preserve your wealth. This would be after the smoke clears from a collapse.

      In a post-dollar world, we would have the chance to start fresh. So the possibilities are infinite and we can thrive provided that we don’t make the same mistakes that we have before. Some ideas could be a resource based economy, gift economy, or a precious metal economy. Maybe taking what could work from each idea, provided that society remains committed to the principles of liberty.

      This would start with education which is why I am an advocate for the Trivium method of learning. When we learn in this fashion we can teach ourselves about anything provided that we remain open-minded to hearing opposing views while not believing them either. In learning this way we become permanent students of life. This is because we never stop learning.

      We as a species actually have an opportunity to change our lives in a positive way, but so many have been asleep at the wheel so playing catch up would be wise.

      Thanks for the comment!

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