Thomas Greco, whom we have quoted from time to
time in this report, wrote something a few years ago about the work
of E.C. Riegel:
�Throughout my career as a monetary
transformer, I have drawn heavily upon the profound and insightful
writings of Riegel (1878-1954). I�ve learned more about money from
him than from any other source.
�Riegel left a great legacy of writings and
correspondence which would have been lost to us except for the fact
that Spencer MacCallum happened to meet him a year before his death
and recognized the greatness of his work.
�As I�ve said before...Why go prospecting when
we�ve found the mother lode? Riegel�s material is the mother lode of
following introduction and article about E.C. Riegel are by
Christopher M. Quigley,
www.wealthbuilder.ie, Mr. Quigley holds a Bachelor Degree in
Management from Trinity College/College of Commerce, Dublin and is a
graduate of the Marketing Institute of Ireland. He actively trades
utilizing the principles set out in the modules of the Wealthbuilder
course, which has been developed over the last 9 years as a result
of research, study, experience and successful application.
In a life spanning over 70 years one of the
greatest students of money and its meaning was the American E.C.
Riegel. Many regarded him as a genius for his understanding of the
nature and functioning of money as a human and social institution.
This essay is an introduction to his main ideas on this subject as
increasingly people are beginning to realise the need for a more
stable monetary unit. In essence, in his book �Flight From
Inflation� he identified money as the mathematics of value and
argued that for a democracy to thrive the �money power� must be
Once given permission, the borrower now has the
legal authorization to write cheques to the extent of the loan and
tender them in trade. Upon their acceptance by a seller, who in fact
provides value, new money has come into existence. This money
remains in circulation until such time as the borrower, through
becoming a seller, recaptures money with which to liquidate the
From the premise of the natural law of money
issue it must be accepted that governments cannot qualify as issuers
because they are not in the real situation of personal enterprisers.
They cannot qualify as they do not barter. They do not bid for money
in the marketplace. Their taxing power relieves them entirely from
selling. They take by taxing.
Hence when they are admitted to the issue
power, their issue cannot be a genuine promise to deliver value in
trade. It must of necessity be counterfeit, regardless of any
statutory laws intended to validate it.
From this failure to discriminate, between
money issued through bank credit by personal enterprisers and by
governments, has come an inflationary mixture of true and false
money that will eventually threaten social order. Money cannot be
issued in perpetuity by man-made laws; it operates by its own
natural law. To ignore this law invites uncontrolled inflation.
The destructive force of inflation is not
confined to its covert taxing power. This is only its early
manifestation. Its later destructiveness lies in its power to amend
and finally to nullify the contractual relationship upon which the
social order depends.
The whole philosophy of freedom is written in
the single phrase, power to contract. While a small distortion of
the unit of account impairs contracts previously written, a
consistent inflation actually destroys all existing contracts and
prevents the making on new ones.
Adam Smith in his political economy allocated
the money power to the state, thus he anteceded Marx as a socialist.
It is his followers, unconscious socialists, and not those of Marx,
who constitute the greatest peril to the order of free exchange.
The Smith philosophy is taught in all the
schools and colleges. Students become indoctrinated by this ideology
unaware that in its monetary concept it is contrary to the true
philosophy of personal enterprise and individuality. An unnatural
monetary system begets unnatural economic manifestations. How can a
free economy work with the monetary system socialised? Rampant
inflation makes a mockery of any true accounting for any true
When the future businessman discovers that his
pride in cash was delusion and a snare; that his cash reserves which
he meant to freeze has melted and evaporated; that his balances
might have been preserved if they had been cast into materials; that
his bonds and money claims on others have shrunken and that he might
have profited had he known enough to get into debt; that his tax
refunds are far less in power than those paid in; that he must pay
capital gains taxes on what are actually losses...then that
businessman will realise that the whole contemporary inflationary
accounting picture is a delusion.
Thus we must realise that ideally the monetary
unit that is the unit of account, if it is to be of value, must be
If money is issued under the natural law of
issue, unit stability will be in evidence. Under natural law if
exchange plays no tricks on us, we are all really working for
ourselves. We will all be interested in stability. In reality we are
all buying for ourselves; we are all selling for ourselves. But just
exactly what is it we are buying and selling? In the final analysis,
it is simply human energy, mental and physical.
Labour is the basic or virgin commodity. It has
no quality of obsolescence for it is always associated with the
latest and therefore the timeliest products. It is the only value.
Others have comprehended this.
From the premise, that all value is labour and
that since money is based on value, they have reached the correct
conclusion that money must be in actual fact labour. However the
fatal error that labour money planners have made is that they set a
measure of labour, such as an hour, as a unit of value.
While it is true that labour, both physical and
mental is the only value, and therefore the sole commodity that
passes through exchange, it does not follow that all labour is of
equal value. Labour may be so unintelligently applied that it is
completely worthless. We are all labourers and therefore fountains
of wealth, because we all emit human energy.
We must however direct that energy to meet the
demands of our fellow labourers. By the measure to which we
successfully respond to this demand will our energy be valued. Money
is not a measure of value, it is a method of stating a value that
has already been determined through exchange.
Thus if money is ultimately the mathematics of
value set by exchange, what is value? Value is the relationship of
desire. It is arrived at in the mind by comparing one thing with
another. Thus, what actually takes place in trading is the
determination of values and this mental process is the act of �moneyizing.�
It is a mathematical process.
As the act of �moneyizing� is psychological, so
the act of �monetizing� is material. It of course should be noted
that both arise out of and do not antecede exchange. Hence trade
produces money; money cannot produce or induce trade. Trade, like
money, is a social phenomenon based on mutual co-operation and
In conclusion, value mathematically compared is
money. The purpose, however, of a monetary medium is to isolate
value accountancy from value itself, so that a sum of value may find
its equivalent anywhere and not be related to specific things, all
of which are constantly changing in their value content. That
orientation is the quantity wherewith money accomplishes its high
purpose of emancipating trade from barter.
The pure monetary medium, when it comes, will
be an instrument intrinsically valueless, evidencing the
transference of a value that is unidentified with any commodity, yet
has a relative re-questioning power upon all free from government
influence and therefore insulated from political inflation.
�Flight From Inflation The Monetary
Alternative,� by E.C. Riegel.
Edited by Spencer Heath MacCallum & George
The Heather Foundation of Los Angeles,