The destruction of the wage fund
Rittershausen also predicted the horrendous unemployment that was to hit the world economy in terms of the destruction of the wage fund. He pointed to the failure of the victorious Entente powers to rehabilitate the real bill market after World War I. In their conceitedness, the victors ignored the fact that the wage fund, out of which workers could be paid up to 91 days in advance of the sale of merchandise they are producing, was part of the aggregate of real bills in circulation. When the bill market was destroyed in consequence of the deliberate decision not to allow real bill circulation, the wage fund was also destroyed. There was no one to advance the funds out of which wages could be paid for labor whose product has not been and may not be sold for up to 91 ways. But the workers could not wait 91 days to buy food, clothes and shelter for themselves and for their offspring. In the absence of a wage fund employers had no choice but to lay off their employees.
Rittershausen’s warning was ignored by the politicians. His message is still being ignored in the world today. But make no mistake about it, unless real bill trading is rehabilitated soon, the world will face a new wave of unemployment far worse than that of the 1930’s.
Open the Mint to gold and silver!
We have seen that an increase in the velocity of gold circulation can facilitate the elimination of bad debt and it can also prevent the creation of excess debt. The converse is also true: a decrease in the velocity of gold circulation would reduce debt retirement and thus contribute to the piling up of excess debt. In the extreme case, when gold is immobilized as it is now, debt retirement comes to a complete halt.
It follows that the solution of the debt problem must start with the remobilization of gold. Gold must be coaxed out of hiding and made to circulate. This can be accomplished by opening the Mint to gold. People will bring their hoarded gold to the Mint for coining because in coined form the same gold commands a higher value.
It is extremely foolish that the world refuses to avail itself of the great pool of liquid wealth represented by its inventory of monetary gold and silver in the midst of the worst financial crisis in all history. The potency of both monetary metals would be greatly increased if they were put in circulation. All artificial obstacles to the circulation of gold and silver coins should be removed. This source of liquidity represented by gold and silver in and of itself could solve the debt crisis. The key is to open the Mint to gold and silver. After reaching the saturation point, gold and silver coins would go into circulation.
Greece, Italy and other peripheral countries are not bankrupt if we consider how much gold and silver they could draw into circulation to do the good work of extinguishing bad debt. What they have to do is to open the Greek and Italian Mints to the free coinage of gold and silver. Other countries would follow suit. Switzerland could break the ice. It could be the first country to open its Mint to gold and silver. All comers would be able to exchange their gold and silver of the right amount and fineness to standard Swiss gold and silver coins at the Mint, in any quantity.