Jekyll_text

580 THE CREATURE FROM JEKYLL ISLAND
Another possible solution would be to redefine the new dollar
to contain a smaller quantity of silver. The advantage would be that
we could continue to use our present coinage. On the negative side,
however, is the fact that it would create headaches after the
transition, because coinage then would be too cheap. Instead of
changing over now, we would merely be postponing the task for
later. Now is the time to do it—and do it right. The original value of
a silver dollar was determined after centuries of trial and error. We
don't have to reinvent the wheel. We know that it will work in the
long run.
In the past, the banks have enjoyed a bountiful cash flow from
interest on money created out of nothing. That will change. They
will have to make a clear distinction between demand deposits and
time deposits. Customers wilJ be informed that, if they want the
privilege of receiving their money back on demand, their deposit of
coins or Treasury Certificates will be kept in
the vault and not
loaned to others. Therefore, it will not earn interest for the bank. If
must charge
the bank cannot make money on the deposit, then it
the depositor a fee for safeguarding his money and for checking
services. If the customer wants to earn interest on his deposit, then
he will be informed that it will be invested or loaned out, in which
case he cannot expect to get it back any time he wants. He will
knowingly put his money into a time deposit with the agreement
that a specified amount of time must pass before the investment
matures.
The effect of this practice on banking will be enormous. Banks
will have to pay higher interest rates to attract investment capital.
They will have to trim their overhead expenses and eliminate some
of the plush. Profit margins will be tightened. Efficiency will
improve. They used to offer "free" services which actually were
paid out of interest earned on their customers' demand deposits.
Now they will charge for those services, such as checking and safe
storage of deposits. Customers probably will grumble at first at
having to pay for those things, and there will be no more free
toasters.
Electronic transfer systems will probably become popular for
their convenience, but they will be optional. Cash and check
transactions will continue to play an important role. Government
monitoring will be illegal. Although there will be fewer dollars in
circulation than there were Federal Reserve Notes, the value of
A REALISTIC SCENARIO 581
each one will be correspondingly greater. Each person will end up
with the same purchasing power he had before the conversion. For
a
short period, both the old and the new money will circulate
together, and some people will have difficulty making the necessary
calculations to determine their relative values. But that is
routine operation for people who live in Europe or for anyone who
travels to a foreign country. There is no reason to think that
Americans are too stupid to handle it.
SOME BAD NEWS AND SOME GOOD
We should not delude ourselves into thinking that this will be
an easy transition. It will be a very difficult period, and people will
have to get used to a whole new way of thinking and doing. The
freeze on the current money supply may trigger panic in the stock
market and the business community. Stock prices could tumble,
causing paper fortunes to disappear back into the computers from
which they came. Some businesses may fold for a lack of easy
credit. Weak banks will be allowed to close rather than be bailed
out with taxes. Unemployment may worsen for a while. Those who
have been used to a free ride will now have to walk or push or pay
their way. The masses on welfare will not give up their checks and
food stamps quietly. The media will fan the flames of discontent.
The Cabal will be at every switch to derail the train.
This will be the moment of our greatest danger, the moment
when the people could tire of their hard journey in the desert and
lose interest in the promised land. This is the time when they may
long for a return to captivity and head back to the slave pits of
Pharaoh.
The important point, however, is that most of these problems
would be temporary. They would be present only during the
period of transition to a new money. As soon as free coinage is
available at the Mint, and as soon as people see how much demand
there is for silver and gold coins, there will be a steady stream of
miners and jewelers who will add great new stores of precious
metal to the nation's monetary stock. Foreigners undoubtedly will
add to the inflow. Old silver and gold coins will also reappear in
the market place. Very quickly, as the stores of precious metal
respond to supply and demand, the quantity of money will
increase and its per-unit value will drop to its natural equilibrium.
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