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THE FEDERAL RESERVE SYSTEM
It is well enough that the people of the nation do not understand
our banking and monetary system, for if they did, I believe there would
be a revolution before tomorrow morning. Henry Ford
The Federal Reserve System (Fed) either began or was started by wealthy people who wanted more control worldwide of the banking system. It is now a means for other nations to dominate the United States banking system and is a major aid to those who want world government and an international currency in place of the American dollar. To achieve this goal, the economic system of the U.S. must collapse. Consequently, the Fed, with the aid of ACORN, created a "bubble" of bad loans for U.S. lending agencies. This was done by reducing the interest rates on the loans and having ACORN pressure the lending agencies to lend at the low interest rates - variable interest loans were used and the interest rates were raised again after a time so that the borrower could not pay off the loan, leading to a crisis where people were losing their homes and the lending agencies were stuck with homes that they could not sell. This was a part of the economic crunch that we are now in.
But perhaps a more important cause of the economic crunch is the way that the Federal Reserve manipulates us using other consequences of cycles. When interest rates are low, people feel that they can make payments on a new mortgages, so they begin to buy homes. This leads to many jobs in home construction and pay for those in that industry. This makes more money available to buy products of other industries, and we have an economic "boom". This is the pinnacle of the bubble that the Fed now bursts.
Raising the interest rates when the bubble is ripe causes less homes to be sold and a reduction in construction jobs. This leads to less money for buying products from other industries and more lay-offs from jobs. When those with mortgages suddenly lose their jobs, they can no longer pay their mortgages and the lending agencies take the homes, leaving many people homeless. The big banks are the winners because they loaned money that was not theirs to loan and received property that should not have been theirs, thus increasing their wealth (those of their stockholders and higher administrators). This is possible because each bank is allowed to loan 9 dollars for every single dollar that they actually have. In other words, they are loaning with what amounts to counterfeit dollars.
It appears that it is still possible for the United States economy to recover from the bubble created by the Fed and ACORN. So now the Fed is busy creating another bubble designed to kill the U.S. economy for good - so that a worldwide Communist economy can take over.
The actions of the Fed are not audited, and Soros along with other billionaires are involved in its workings as well as stock market manipulation. There has been a movement to audit the Fed - and it should be audited. Once its secret deals have been exposed, legislation might be created that eliminates the Federal Reserve System entirely. But elimination of the Fed through more direct means would be better. A partial explanation of the creation of the Fed and its workings follows.
The Colonial Period
The early settlers in America had no capital resources, and needed money to transact their businesses. This fact led to "land" banks being organized by the colonists under English rule. Holders of stock in these banks pledged their land as security for bank notes which then circulated as money. However, the notes were issued in excess, and note holders often experienced difficulty in exchanging their paper for coins. Coins at that time were usually based upon the British pound and the Spanish dollar.
The Post-Revolutionary Period
Following the American Revolution, there were little or no restrictions on the formation of banks. As a result, many attempts were made in many states to found banks which would be recognized as official. Such banks received their charters and official support from the state, and sometimes the state owned shares of the banks. In many communities, local banks were established which took the name of the state banks even though their shares were owned by the public - and in some instances they were private partnerships. Most of these banks issued currency and engaged in lending. However, there was no real volume of deposits because there was no general surplus of wealth in the country.
In 1785, under the Articles of Confederation, Congress adopted the dollar as the monetary unit. And in 1792, the Mint Act provided for national coinage in silver and gold.
The Federal Banks
The first bank to be chartered by Congress was the Bank of North America, which was organized in Philadelphia in 1781 - but the first bank of national importance was Bank of the United States which began business in Philadelphia in 1791 with a worth of $10 million and a charter of incorporation for a period of 20 years. This bank was intended to be the federal government's bank as $8 million of its capital was subscribed by the public and $2 million by the government. The bank did well, but experienced serious political opposition from Americans who feared the centralization of power in the federal government. Congress refused to renew its charter and the bank was liquidated in 1811. It met its obligations in full.
The second Bank of the United States was chartered in 1816, with 20 of its directors chosen by stockholders and 5 appointed by the President. It had a subscribed capital of $35 million, and issued notes in denominations of $5 and over which were legal tender equal to treasury notes. This bank was successful but also met with political opposition and was forced to close when its charter expired in 1836.
During subsequent years, there was a considerable increase in local banks. Up until this time, bank notes were the primary accepted means of payment. When large amounts of gold and silver became available for coinage and gradual adoption of bank checks as means of payment, bank notes were no longer so indispensable. During these years, bank failures were fairly common, and attempts were made to organize banks into groups for the purpose of insuring deposits. Member banks deposited a percentage of their capital annually with the treasurer of the state until they had paid a certain total percentage. If a bank became insolvent, the fund was to be used to pay the debts and redeem the notes of the bank. However, such a system did not prevent suspensions and failures among the associated banks, primarily because the period was one of general expansion in which times of inflation were followed by times of crisis and panic.
The National Bank Act
Gold and silver coin remained the only legal tender until the Civil War when irredeemable federal currency (the "greenback") was declared legal tender for payment of all private debts. During the war, gold and silver largely disappeared from circulation and paper money depreciated in value. In 1879, the government began redeeming greenbacks almost entirely in gold.
Monetary confusion had resulted from each bank issuing its own currency. This climaxed during the Civil War years as the supply of paper currency vastly expanded and its purchasing power nearly vanished. To cure the problem, the national banking system was established by Congress through adoption of the National Bank Acts of 1863 and 1864, which provided for a uniform currency throughout all of the states. Under the new law, banks were required to pledge United States bonds with the Treasury to secure their note issue. A tax of 1 percent of their average issue was collected from banks that entered the national system, and the note issues of state-chartered and other non-member banks were taxed at a rate of 10 percent. The Office of the Comptroller of the Currency was also established which helped to stabilize the system by checking on the soundness of charter banks.
The National Bank Act not only established a stable and valid currency, but it also provided a market for government bonds which aided the government in financing large ventures such the costs of the Civil War and the reconstruction needed thereafter. Under the acts, the national banks increased rapidly in number.
Under the new system, bank reserves were not concentrated where they would be available in time of need, and there was no efficient system for clearing checks among the states. The new system also failed to provide for the establishment of branches of American banks in foreign countries, and growing overseas business of the country made such facilities a necessity.
The Gold Standard Act of March 14, 1900, established gold as the standard for U.S. currency. In the year 1900, the United States entered into a period of unprecedented growth, supported by steadily increasing production of industries and farms. The banks reflected this growth. In 1900 there were 10,382 banks of all classes in the United States. In 1920, the number had grown to 30,189. However, the number of banks declined after 1920 until in 1953, there were only approximately 14,575. This was due to a trend toward larger and more stable banking and better means of transportation and communication.
In 1907, there was a steady decline in the stock market and the situation was brought to a climax in October with the suspension of the Knickerbocker Trust Company in New York. Suspensions of other banks followed. J.P. Morgan quickly loaned $25 million to the New York banks and the government increased bank deposits by issuing Panama Canal bonds and permitting the banks to retain 90 percent of the proceeds on deposit. The crisis was short-lived but led to a realization of the economic dangers of "inelastic" currency. As a result, the Aldritch-Vreeland Act of 1908 authorized the issue of emergency currency by groups of banks organized as "national currency associations". None of this emergency currency was issued until the financial disorganization from World War I necessitated the issue of $1,121,000,000 of such notes in 1914.
The national bank notes in the United States offer an object lesson of the shortcomings of a bond-secured currency. These notes were inversely elastic because it was to the interest of the banks to sell bonds and retire their notes in anticipation of increased business activity which would cause bond prices to decline. In other words, they would sell bonds and retire notes at the very time when business needed more currency. Conversely, it was to the interest of the banks to buy bonds and force notes into circulation when business had no need for additional currency. When all of the government bonds carrying currency issue privilege were retired, it was no longer possible to issue national bank notes.
Prior to 1933, the currency of the United States could be redeemed in gold. In 1933, the gold certificates were withdrawn from circulation and national bank notes were eliminated. Silver certificates and "greenbacks" remained as currency. The Gold Reserve Act of January 30, 1934, called for the government to take possession of all monetary gold in the country and, in essence, made gold the property of the government from whatever source is should come. Gold could only be used (1) by the Federal Reserve banks for settling international debts; (2) for industrial, artistic, or professional use; and (3) for such other purposes as the Secretary of the Treasury deems consistent with the purposes of the act. Today, our currency is not backed by anything but faith. If the communist triumvirate is not stopped, our currency will be worthless.
Beginning of the Federal Reserve System - Aldritch
Nelson Wilmarth Aldritch was an American legislator born in Foster, Rhode Island on November 6, 1841. He was the son of a farm family of "modest means". At age 17 he went to work in Providence and by age 24 he was a partner in the largest wholesale grocers' firm in Rhode Island. In later years the firm had extensive interests in banking, sugar, rubber, and utilities.
After a time, Aldritch decided to devote himself to politics rather than business. He was a Republican member of the Providence common council (1869-1875), the state legislature (1875-1876), and the national House of Representatives (1879-1881). In 1876 he won the Senate seat made vacant by the death of General A. E. Burnside, and at the same time establishing his control of Republican politics in the state of Rhode Island.
Aldritch had a strong, attractive personality, and he soon entered the inner circle of Republican leadership in the Senate. He was now secure in his political position in his home state, had great skill as a parliamentary tactician, and expert knowledge of economic and financial matters, considerable wealth, and many business connections. These qualities made him indifferent to public opinion - and he stuck to his conservative principles, representing the interests of eastern industrial, commercial, and financial groups in resisting the demands for tariff and monetary reform from the west. He consistently supported high protective tariffs and the gold standard [too bad he was not here to keep us from getting off of it]. He led the Senate in its struggle with Theodore Roosevelt for dominance in the government, yet relations between the two men were generally amicable and mutually respectful.
The great interest of Aldritch' last years was a plan for banking reform [which was badly needed at the time]. As a result of the panic of 1907, the Aldritch-Vreeland Act was born, providing for the creation of a National Monetary Commission of which Aldritch became chairman to investigate the banking problem. Studies of European banking and currency systems in 1908 and consultations with American bankers preceded the publication in 1911 of the "Aldritch Plan", which contained many features which were later embodied in the Federal Reserve Act of 1913.
Aldritch retired from the Senate in 1911 and died in New York city on April 16, 1915.
The propaganda for the public to digest as fact states that the Federal Reserve was created to stabilize our economy. In fact, it has not done so. As Griffin stated in his book, The Creature from Jekyll Island, it presided over the crashes of 1921 and 1929; the Great Depression of 1929 to 1939; the recessions of 1953, 1957, 1965, 1975, and 1981; a stock market "Black Monday" in 1987; and 1,000 percent inflation which has destroyed 90 percent of the purchasing power of the dollar.
The actual reasons that the cartel created the Federal Reserve were:
1. To stop the growing influence of small rival banks, and to insure that control over the nation's financial resources would remain in the hands of those who created the cartel.
2. To make the money supply more "elastic" in order to reverse the trend of private capital formation, and to recapture the industrial loan market. "Elastic" actually means "quickly and easily increased" - and this has reached its zenith with today's electronic accounting.
3. To pool the meager reserves of the nation's banks into the large reserve so that all banks will be motivated to follow the same loan-to-deposit ratios. This would protect at least some of them from currency drains and bank runs. But there is no large reserve - it is all an electronic counterfeiting system - an illusion created to fool the taxpayer while the inflation it creates provides a huge tax that is invisible.
4. In case of the foregoing leading to collapse of the entire banking system, the losses were to be shifted from the banks to the taxpayers.
5. To create a deception that would convince Congress that the scheme was a measure to protect the public. The name "Federal Reserve" was created to avoid the word "bank" which immediately frightened the "masses". By using the word "federal", the people of the time (1910) would be lulled into thinking that the government was taking care of them. In reality, the Fed is not Federal nor does it have a reserve.
A Barton Hepburn in a speech a to the Chase National Bank stated of the Federal Reserve: "The measure recognizes and adopts the principles of a central bank. Indeed, if it works out as the sponsors of the law hope, it will make all incorporated banks together joint owners of a cental dominating power". As G. Edward Griffin stated, "that is about as good a definition of a cartel as one can find."
Creation of the Federal Reserve Act
The Federal Reserve Act of December 23, 1913, was the result of the efforts of three major bankers: J.P. Morgan, Paul Warburg, and John D. Rockefeller. These three bribed a large number of senators. By not telling any of the opposing senators of their plan, these senators met during Christmas vacation and passed the Federal Reserve Act - at least this is one version of what happened. Another version is that they used the time just prior to Christmas vacation to vote in the Act, a time when most of the senators were either preparing to leave or were already gone. The Act was deliberately written in a manner that was both ambiguous and subject to alterations later. Such tactics are not very different to what has been happening today.
"We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest of consent." - Paul Warburg in an address to the U.S. Senate on February 17, 1950.
The Federal Reserve was given this name so that people would think of it as a legitimate government agency. Actually it is formed of private bankers who are more interested in their own power, enrichment, and a world banking system than in the welfare of the economy of the United States. The only thing that keeps things from being worse is the fact that the economies of the world are tied together along with the wealth of those who are part of the Federal Reserve. Very likely, Fort Knox has already lost most of its gold by now, but no one knows because the Federal Reserve has not been properly audited. Even auditing by Congress at this point is not necessarily wise because Congressmen are so easily bribed or intimidated even if they are usually on our side.
The Constitution gives Congress the right to print money for the nation. The forming of the Federal Reserve is unconstitutional. The Federal Reserve now "prints" money, loans it to the government at interest, the Federal Government uses us to pay the interest and keeps the money most of the time as the national debt. If Congress had been printing the money, there would be no interest for us to pay on the national debt. But this process continues largely because as someone said, "Those in the Federal Reserve can now easily buy the politicians who would gladly sell their souls." Actually, there is no printing of the money now because our banking system is based upon electronic book keeping, and "money" is "created" in the books when the banks or the feds make loans.
I am not a fan of Abraham Lincoln, but he did say:
"The government should create, issue, and circulate all the currency. Creating and issuing money is the supreme prerogative of government and its greatest creative opportunity.
"Adopting these principles will save the taxpayers immense sums of interest and money will cease to be the master and become the servant of humans."
Looking at it from the other side, those in the Federal Reserve tell us what the interest rate is to be, collect the immense sums of interest, and cause us to be slaves.
The bankers who started the Federal Reserve knew that whoever issues the money for the nation would control the government - and whoever controls the U.S. government has a leg up in controlling the world. Henry Kissenger said, "Who controls money controls the world." Bear in mind that Kissinger was a member of the Council on Foreign Relations (CFR) which was started by Communists (progressives) and their useful idiots - those who started the CFR were young idealistic pseudo-intellectuals (real intellectuals do not think of themselves as such) who were stupid enough to think they knew better than anyone else how to run the world. Kissinger was correct except that he should have said "Who controls money controls or ruins the world."
"The new world order will be built on an end run on national sovereignty, eroding it piece by piece will accomplish much more than the old fashioned frontal assault." - from Council of Foreign Relations Journal - 1974.
If you have ever wondered what is wrong with the press today for not reporting the unpleasant truths, the answer follows.
"We are grateful to the Washington Post, the New York Times, Time Magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost 40 years.
It would have been impossible for us to develop our plans for the world if we had been subjected to the lights of publicity during those years.
But now the world is more sophisticated and prepared to march towards a world government.
The supra-national sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries."
David Rockefeller, Private Banker, Council of Foreign Relations, June 1991.
And the attitude of the CFR on the military men who actually do keep the oath they took to defend the Constitution:
"Military men are just dumb, stupid animals to be used as pawns in foreign wars." - Henry Kissinger, Council of Foreign Relations.
The real rulers in Washington are invisible and exercise power from behind the scenes." - Felix Franfurter, U.S. Supreme Court Justice.
The Federal Reserve System
The Federal Reserve System was authorized by the Federal Reserve Act of December 23, 1913, to establish Federal Reserve Banks, furnish "elastic" currency, afford a means of rediscounting commercial paper, establish more effective supervision of banking in the United States, and for "other purposes".
The System comprises the Board of Governors; the Federal Open Market Committee; 12 Federal Reserve Banks and their 24 branches situated in different sections of the United States; the Federal Advisory Committee; and the member banks, which include all national banks within the United States and such state banks and trust companies as to have voluntarily applied to the Board of Governors for membership and have been admitted to the System.
The Board of Governors is composed of seven members appointed by the President by and with the advice and consent of Senate. The term for each is 14 years. When appointing these members, the President is supposed to have due regard for financial, agricultural, industrial, and commercial interests in the geographical divisions of the country.
The board determines general monetary credit and operating policies for the system as a whole, and formulates the rules and regulations necessary to carry out the purposes of the Federal Reserve Act. The board's principal duties consist of exerting an influence over credit conditions and supervising the Federal Reserve Banks and member banks.
Each member of the Board of Governors is also a member of the Federal Open Market Committee. Five representatives from the Reserve banks, each elected annually by the members of the boards of those banks, are the also members of the committee.
Open market operations of the Reserve banks are conducted under regulations adopted by the committee with a view to accommodating commerce and business, and with regard to their bearing upon the general credit situation of the country. The Reserve banks are authorized to purchase and sell in the open market certain securities and bills of exchange and bankers' acceptances of the kinds and maturities eligible for discount by the Reserve banks.
The Federal Advisory Council acts in an advisory capacity, conferring with the Board of Governors on general business conditions and making recommendations concerning matters within the Board's jurisdiction. The council is composed of 12 members, one from each Federal Reserve district being selected annually by the board of directors of the Reserve bank of the district. The council is required to meet in Washington, DC, at least four times each year, and more often if called by the Board of Governors.
The Naked Truth
The Federal Reserve is a private cartel - not a government organization. It has been given the right to counterfeit U.S. currency.
1. It prints counterfeited money (just paper - no gold or silver to back it up). [Today it usually shows a "credit" for the government (digitized money) so that the money is not even material - just a figure on a piece of paper or in a computer. However, it has the effect of counterfeited money and will be shown as such in the following.]
2. It loans the counterfeited money (credit) to our government.
3. It charges interest on the counterfeited dollars it created.
4. It grows in wealth from the interest on counterfeited money.
5. It thus causes the taxpayer to pay for its new wealth in two ways.
A. The taxpayer has to pay income tax to pay for the interest that increases the wealth of the Federal Reserve.
(Income tax is part of the three-pronged attack: graduated federal income tax, the Federal Reserve Act, and the work of the Council on Foreign Relations).
B. The taxpayer's dollars inflate which raises his income tax bracket and reduces his standard of living.
6. Federal spending helps the Federal Reserve to gain more on interest and increase its power even more quickly.
John F. Kennedy was the only president purported to attempt to reduce the power of the Federal Reserve. To begin the process, he issued Executive Order Number 11110 which returned to the Treasury Department the constitutional authority to "issue silver certificates against silver bullion, silver, and standard silver dollars in the Treasury." [Apparently, he was not sure that there was still any gold left.]
Three weeks after Kennedy issued the Executive Order Number 11110, he was dead.
The alleged purpose of the Federal Reserve is to stabilize our economy. Since it was formed, we have had the Great Depression, the recession of the 1980s, the crash of 1987, and the crisis we are in today. So what good is the Federal Reserve?
Bankers do not like inflation when they give loans at a certain interest rate. Inflation drives down their profits from the interest and lessens the value of the balance due on the loan itself. However, when variable-rate interest was created, it became possible to have even that loophole covered as they did all that they could to have the government increase spending.
There are times when the Federal Reserve appears to outsmart itself - not so. When excessive numbers of homes are repossessed, the banks are stuck with them and must take losses in upkeep and lower sale value. This hurts everyone and while they are hurting, the Fed lowers interest rates again. Excessive lending by the banks, regardless of the interest rate and regardless of pressure applied by ACORN or like groups, can lead to disaster. But this is a deliberate cycle started by the Federal Reserve so that at one point it cannot fail to take down our economic system. Meanwhile, lower interest rates on loans accompanies lower interest rates on savings accounts and certificates of deposit - and this hurts older Americans who use the interest to either survive or maintain their standard of living - and the older Americans who are not sufficiently brainwashed are targeted for removal. When recovery appears possible, the Fed can again raise interest rates, cause more people to become homeless, and cause more smaller banks to fail - which allows the larger banks to have more control, leading to a time when there are only a few large banks controlled by a socialist government.
Power corrupts and absolute power is beyond corruption. Our system was created by the founding fathers to achieve a balance that prevents absolute power from being attained by any government entity or private organization, but this balance has been upset time after time by the corruption of our politicians and our failure to adhere to the Constitution. The creation of the Federal Reserve and its continued existence is unconstitutional.
I am a most unhappy man. I have unwittingly ruined my country.
A great industrial nation is now controlled by its system of credit.
We are no longer a government by free opinion, no longer a government
by conviction and the vote of the majority, but a government by the
opinion and duress of a small group of dominant men. Woodrow Wilson
Most of the foregoing was taken from a 1960 Americana Encyclopedia set and condensed to fit into something short enough to be read more easily. Some of it was taken from a DVD by Aaron Russo, America - Freedom to Fascism, Lies the Government Told You by Judge Andrew P. Napolitano, None Dare Call It Treason - 25 Years Later by John A. Stormer, and The Creature from Jekyll Island by G. Edward Griffin. The last book mentioned is the most complete account of the Federal Reserve (Fed) from its beginning, at a highly illegal and secret meeting on Jekyll Island in 1910, to the present. Cartels are both illegal and dangerous in a free-enterprise society. The Fed is both. There is now a 5th edition and a 34th printing of The Creature from Jekyll Island. Everyone should be made aware of its contents.
The Creation of Misery
The Fed gains more power by reducing interest rates on bank loans, allowing more people to afford homes. The building of homes provides jobs for the contractors and their subcontractors. This causes more purchases from those with jobs and more and more jobs are created so that the economy booms. Now we have a booming economy and many people have mortgages on their homes which must be paid with money from their employment.
Once the economy is booming and many people are paying off their mortgages or auto loans, the Fed raises interest rates on loans. This causes less homes to be built and less loans provided for other purposes (such as loans for new cars). The loss of jobs in certain industries causes less purchasing power overall, and less is being produced. With less production, workers are laid off in all industries and are not able to make their monthly payments on their mortgages or loans. Now the banks can take the property of those who were laid off - even though the mortgages were based upon money that had absolutely no backing (fiat money - essentially counterfeit). So the banks (the big bankers) obtain property for doing nothing (effectively stealing it). Now they can sell the property to the highest bidder and become even more wealthy.
Not only have the big bankers stolen the property that was being paid for by real labor, but they have found a means to have more money to loan at a ten to one ratio, compounding the problem for the people and taxing them through inflation. This is outright stealing and has been going for many years. Today, the few families that constitute the thieving elite are powerful enough influence almost everything in our lives and even control organized crime. In fact, I was told by county assessor that has been watching what happens to the repossessed property, that the property is being sold to the Russian mafia here in the United States.
As are many pieces of legislation promoted by Congress, the Federal Reserve Act looked like a great leap forward - which it was in most ways. However, hidden within it were the means to what could become a world society based upon feudalism.
Dr. Harold Quigley wrote a book with the title, TRAGEDY AND HOPE - A HISTORY OF THE WORLD IN OUR TIME which was first published in 1966. Quigley was proud of the fact that he was one of what is now sometimes referred to as the Shadow Party. As a rule, the members of that party do not want anyone to expose them - yet Quigley did so even though he was in favor of their agenda. Quigley believed that it was time for this group to tell the world about themselves because they had advanced to the point that others could not stop them - and others could have the choice of either going along with their agenda or of suffering the consequences. If others would go along with them and aid their agenda, these others would have hope - otherwise, they would suffer tragedy. Quigley's book is very long and detailed, so W. Cleon Skousen wrote an abbreviated version with his own comments - much like a book report. Skousen called his book The Naked Capitalist.
According to information found in The Naked Capitalist, copyrighted in 1970, the operation of the Federal Reserve System is one of the most interesting and mysterious combines in the country. Since it was founded in 1913, it has successfully resisted every attempt to conduct an audit of its affairs. The system consists of 12 "National Banks" but the only one of any significance is the one in New York. The New York bank has always been managed by someone completely congenial to the interests of international bankers. It is important to realize that the Federal Reserve System is not a bona fide Government agency. Technically, the stock is owned by the 12 National Banks which receive a dividend of six percent each year. Any profits from the System are supposed to be turned over to the U. S. Treasury. In fact, the President appoints seven members of the Federal Reserve Board for fourteen-year terms, but in spite of all this window dressing the Federal Reserve Board is completely independent in its decisions [and has defied several Presidents - which may be all right at times considering the expertise and/or quality of some of our Presidents].
The The Naked Capitalist is essentially the history and evolution of the "Shadow Party" which manipulated the adoption of the Federal Reserve System so that it would serve as a means to allow the most wealthy international bankers and those who were involved with them to covertly influence all governments and financial institutions - with the end in view of a world government in which they would be the dictators. The name "Shadow Party" is not mentioned as that is one given by David Horowitz and Richard Poe. However, the history is very precise and eventually leads to modern times in which Soros and his fellow billionaires are key players.
The book mentions that the Shadow Party billionaires do not trust democracies in any form because democracies prevent feudalism in a society in which the wealthy elite should be dictators. The Shadow Party billionaires believe themselves to be above the rest of humanity, that a democratic republic will always cater to those in the middle of the bell curve in intelligence, and therefore humanity should be under a dictatorial regime - preferably socialistic as such a regime, by its innate nature, is ruled from the top. Bear in mind that such a philosophy from these egocentric billionaires is logical because men who strive for such wealth and power are mentally unbalanced. Many do not consider them to be truly human as they are lacking empathy (the major problem with psychopaths).
The The Naked Capitalist also explains how and when the Democratic Party was taken over by the Shadow Party, and how both the Democrats and the Republicans have been influenced in such a way as to sink us farther into the quicksand of slavery. When one is in quicksand, he can attempt to pick up his left leg and the rest of his body will sink farther. Then he can attempt to pick up his right leg and the rest of his body will sink farther. Attempting to pick up the left leg is what we are doing when voting for the Democrats, and attempting to pick up the right leg what we are doing when voting for the Republicans. Either way we sink farther down. We seldom have ways to elect those we want in office because candidates in both parties are usually bad for us - but each in a different way.
Before the Federal Reserve Act was legislated into existence, the majority of the politicians did not trust those who ran the banks - and they were probably correct in their lack of trust. The bankers made a great show of not wanting the Federal Reserve System - but this was a means to trick the politicians into moving in the preferred direction. Those legislators who finally created the system, probably believed in it and had no idea what it would become in the long run.
One point that is made in the The Naked Capitalist is how much these psychopathic Shadow Party members still fear exposure. The European royalty was the older equivalent of the Shadow Party. They were related to one another just as many in the Shadow Party have been and are related through either blood or marriage. The European royalty thought they would be in charge in their feudalistic societies until the end of time. Yet, they were overthrown.
Regardless of what Quigley said, the Shadow Party can be beaten.
Letters to Editor
The Elegant SystemEditor: The diabolical and elegant simplicity of the Federal Reserve System is something that all Americans should properly appreciate. The Federal Reserve (Fed) is not federal at all. It is a private cartel of bankers who have been allowed by bribed U.S. senators to print our money. According to the Constitution, Congress has the power to "coin money" and regulate its value - not to give this power to a private cartel.
The Fed today prints counterfeited money (just paper without gold or silver to back it up), loans the counterfeited money to the government at interest, and takes the interest for the cartel. In so doing, it causes the taxpayer to pay the interest through income tax while it inflates the currency as would any other counterfeiter so that the taxpayer moves into a higher tax bracket with dollars that are worth less.
The Fed loves federal spending because it can loan the the government more counterfeit dollars and collect more interest and power.
John F. Kennedy new the Fed was causing the government to pay interest that would not have been the case had the U.S. Treasury printed the money, and he was the only president to attempt to abolish the Fed. To begin the process he issued Executive Order 11110 which gave the Treasury the constitutional authority to once again issue money based on silver. He seemed to fear that the Fed had already taken our gold as it had been in the care of the Fed since 1913. Three weeks after his executive order was issued, Kennedy was killed.
Lew Price, Garden Valley
More on the Federal ReserveEditor: Thomas Jefferson is supposed to have said "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."
Our current economic problem was created largely by the Federal Reserve (Fed) which is a private cartel of big bankers, created by those bankers, and put into law by bribed U.S. senators. The Fed first printed money, lowered interest rates, and had the lending agencies provide home-loans to those who could not afford them. The usual method employed was the variable-interest loan which looked good to the borrowers until the feds increased the interest rates and the borrowers were unable make their payments.
It is true that banks don't like to be stuck with repossessed homes that they can't sell, but the Fed is composed of big bankers with an agenda against competing small banks. The immediate intent is to eliminate small banks because a few large banks will eventually become a monopoly which can be easily taken over by a socialist government. By using large government-controlled and government-aided agencies like Fannie Mae and Freddie Mac, the process can be easily completed in less time.
Once the housing bubble was formed it burst, and there were a lot of children waking up homeless. Now the Fed is setting up another bubble so that it can eventually burst and make more children homeless - just like Jefferson predicted.
The Federal Reserve is actually promoting a world banking system - not a U.S. banking system - and the Fed is in league with those like George Soros and those in the Council on Foreign Relations. Their goal is to weaken this nation and allow it to be overcome by a socialist world government. The Fed was formed unconstitutionally through a corrupt means, and should be eliminated as soon as possible.
For those who have computer access, please go to www.softcom.net/users/greebo/fedres.htm for more complete details on the Federal Reserve System. For more on the Council on Foreign Relations, please go to www.softcom.net/users/greebo/cfr.htm.
Lew Price, Garden Valley
Federal Reserve not in the public's interestEditor: On April 21, Glenn Beck did a program on the Federal Reserve which was less than accurate on two particulars.
First, the past inflation rate that he quoted was much too low. Second, the Fed is actually a cartel (first created at a secret meeting on Jekyll Island) of the large U.S. bankers who were tired of competing with one another.
A cartel is illegal in a free-market society such as ours because it is a monopoly to control a particular industry or industries. The Fed is not federal and it has no reserves. The name was coined to prevent us from realizing that it was a group of big bankers bent upon stealing from us so that they could live like kings.
The actual purposes of these bankers were (1) to eliminate the influence of any smaller banks over the nation's financial resources, (2) to make our money "elastic" so that it could be created without any backing and still be loaned to collect interest, (3) to standardize the loan-to-deposit-ratios of all banks, (4) to shift to the taxpayer any losses they would create, and (5) to convince Congress that all this was being done to protect the public.
The "Creature from Jekylly Island" by G. Edward Griffin is the most complete book I have read about the Fed. It explains very clearly precisely how and why the banks, the Federal Reserve, the World Bank, and related cartels operate as they do.
We are the unwitting slaves of the worst kind of thieves and our lot will only become worse unless we eliminate Fed. The aforementioned book is available for bulk prices if anyone wishes to band together and acquire several copies.
Lew Price, Garden Valley
Some Interesting Information on the U.S. Banking SystemEditor: The Federal Reserve (Fed) is a cartel (private monopoly) of member banks which hold the "reserve" of the Fed. The Fed can "legally" write a Federal Reserve Check (FRC) which has no monetary value whatsoever. It is like you writing a check from a bank account that does not exist. The FRC is given to the U.S. Treasury as a loan in exchange for government bonds that are equally worthless except that they can be paid in the future from dollars taken from the taxpayers. Interest is charged on the loan that will also be paid by the taxpayers. If the loan cannot be paid except by means of another loan and more bonds, the new loan and the bonds are created from nothing. The bonds and the interest are both listed as "assets" or "reserves" of the Fed. So the "reserve" of the Fed is not a reserve, but a promise by the government to pay the Fed from future taxes.
The counterfeit money created from the FRC is used by the U.S. government to pay its bills, and becomes part of our economy, going into private bank accounts to become deposits. "Deposits" are called "reserves" even though they are not kept as reserves.
The banks can legally loan 9 dollars for every dollar in "reserve". Each loan is on paper and no dollars actually change hands. The loans collect interest that is your hard-earned dollars, and the bank then has more assets. In fact, once you have accepted a loan from a bank, the amount of your loan is on the bank's books as an asset because you are expected to either pay the bank back for money that never existed, or to give the bank your home, automobile, or whatever.
You write checks from your loan which go to other people, and they deposit those checks in the banking system so that more "reserves" are there for the banks to use to create more money from nothing. Since the bank can make $9 for every $1 that is deposited, it calls the profits "assets" and then loans more money created from nothing. This cycle can continue again and again until the actual "money" in the bank as a reserve is a tiny fraction of the "money" loaned.
The actual "money" the bank has is very low and could never handle a run on the bank when people are asking for cash. But most people do not want cash and are satisfied that a check will do. So a bank deficient in "reserves" needs something to provide checks to those who suddenly want to take out their deposits.
The solution is for the bank to borrow money electronically from the "reserve" of the Fed. Borrowing money from the Fed enriches the Fed because of the interest charged for the loan, and enriches the bank because the bank can use the loan as another asset and make more loans with it at a rate of 9 to 1.
The greatest theft is from the taxpayers in the form of inflation which increases every time money is borrowed. If all the loans were paid off and no more borrowing occurred, there would be no inflation. For many reasons, this won't happen - and if it did we would be in worse shape because we are "married" to a corrupt system for reasons that are explained in one of my favorite books, The Creature from Jekyll Island. The book does show a way out. In the meantime, we can help a little by having those who can manage such things pay back their debts and NOT borrow again. Borrowing includes using credit cards. If you pay off your credit card debt every month so that no interest is charged, the card is a convenience. Otherwise, it is a personal liability.
Lew Price, Garden Valley
Mass Murder for ProfitEditor: The formula for the Federal Reserve (Fed) was created by Mayer Amschel Bauer in the 18th century in Frankfurt, Germany. There was a sign over the door of the family business with a red shield and an eagle on it. The German words for "red shield" are "roth schild". Bauer changed his name to "Rothschild". He adopted the practice of fractional-reserve banking - loaning out more than what was in reserve, and very similar to the Ponzi scheme we call social security. This was not new, but so extremely well employed by Mayer and his five sons that they were able to expand their operation throughout much of the civilized world. The Bank of England adopted the Rothschild formula, and the criminals who created the Federal Reserve Act in the United States used the Bank of England as their blueprint.
The big bankers enjoyed the greatest profits during wars because they found that they could invest in companies that made arms and ammunitions. Wars were certain to happen because the big bankers caused them. When the government of a country borrowed money from the bankers, that government became one of their puppets.
As ruler of France, Napoleon would not cooperate with banking cartels. He refused to borrow money, and backed French currency with gold. Knowing that Napoleon had too little gold to finance a war, the bankers of his time turned their puppet governments against France. A war would force him to borrow newly-created, unbacked currency at interest. However, Napoleon obtained the funds he needed by selling Louisiana to the United States. He ultimately lost the ensuing wars only because the bankers were able to "adjust" critical events to their liking.
Even before they created the Federal Reserve, the big bankers were grooming Woodrow Wilson as their own "intellectual", paving his way to becoming President of Princeton University, and a eventually their "pacifist" candidate for President of the U.S. As our President, he played a key role in the sinking of the Lusitania. The deaths of its American passengers caused a normally quiescent public to anger and accept entry into what was to become World War I - more profit and more power for the bankers. And at the end of WWI, the big bankers began to finance Adolph Hitler's rise to power, leading to World War II.
These are but a few examples of wars created by those whose most influential current incarnation is the U.S. Federal Reserve. These people, whose only goal is power through extreme wealth, are the most cold-blooded mass murderers in history. They have killed your relatives and your friends, and have no loyalty to any government. For great detail on precisely how they they have accomplished the foregoing and much more, please read The Creature from Jekyll Island by G. Edward Griffin. We must eliminate the Fed if we are to survive as a free nation.
Lew Price, Garden Valley
Inflation and PropagandaEditor: The Federal Reserve (Big Bankers' Cartel) creates inflation that is compounded each year. For example, a low average rate of 4 percent annually for 9 years (2002 to 2011) compounds to a total inflation of 42 percent. Every administration chooses to "adjust" real inflation by contaminating or leaving out parts of the equation. Real inflation is that of the basics needed for survival: food, shelter, transportation, utilities, clothing, etc.
The Fed or its allies "buy" many of our politicians so that laws will be made that interfere with the free-market economy. These politicians use propaganda to either lie about or mask the intentions of the Fed. By quoting a lower value for inflation, the public will not be awakened to the truth. It is the leftwing politicians that are most often used by the Fed, and every leftist "knows" that a law will cure any problem. The law's constitutionality or feasibility are irrelevant.
Good propaganda blends fact with fiction and exaggeration. Feinstein's letter in the July 14 Gazette is an excellent example. She is correct about the 134 percent for medical premiums since 2002 (ours has been almost exactly that). When she says 134 percent is 5 times the overall rate of inflation, she is exaggerating. That would make overall inflation only 27 percent for that period. Using only 4 percent annually, the total for the same period is 42 percent - while real inflation since 1960 averages about 6 percent annually. Lately, inflation is much greater - as anyone knows who buys groceries. But let's give Feinstein the benefit of the doubt and assume that she is the victim of bad math.
So why pass a bill that is another leftist bandaid requiring more bureaucrats to enforce it? Why not eliminate any restrictions against the free-market economy instead - like encouraging more health care insurers to operate across state lines? Healthy competition regulates prices all by itself (no additional bureaucrats) when it is not shackled by government regulation.
Lew Price, Garden Valley
"Big Bankers' Cartel" created income taxEditor: The first U.S. income tax was a Civil War measure. An attempt to re-establish it was made during the depression of the 1890s. However, the Constitution states that direct taxes must be "apportioned" among the states according to population. "Apportion" means that the tax must be equal for all, and "income" means "gain" as regards corporations rather than individuals trading labor for money. The Supreme Court declared the proposed tax unconstitutional.
According to the Constitution, Section 8 (Powers of Congress), "The Congress shall have the power to lay and collect taxes, duties, imposts, and excises shall be uniform throughout the United States." An excise is a tax on the manufacture, sale, or consumption of various commodities within a country.
In 1909, Congress passed an income tax bill, designated as an excise on the privilege of doing corporate business, while proposing a Constitutional amendment to permit the enactment of an unequal tax. This was adopted in 1913 with a measure that imposed a top rate of 6 percent on incomes in excess of $500,000. The 16th Amendment was supposedly created for a graduated income tax, but it only states: "Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration." In subsequent cases the Supreme Court ruled that the 16th Amendment had no new content because the term "income" applied only to corporate gains, and there was nothing in the Amendment which stated that an individual's wages must be taxed. The Court still considered an individual's wages as a trade for his labor.
To adopt an amendment, according the Constitution, it must first be proposed by 2/3 of both houses of Congress, or upon the application of the legislatures of 2/3 of the States - each may call a convention for proposing amendments. Once proposed, an amendment must be ratified by the legislatures of 3/4 of the States or by conventions of 3/4 of the States.
Income tax was forced upon us by the Big Bankers' Cartel (BBG) that is called the Federal Reserve to (1) pay the interest on their loans of counterfeit money to the government, (2) redistribute wealth, and (3) control the people. At the time, no new tax was necessary. The common defense was paid for by corporate taxes, education was paid for by state and local property taxes, and federal highways were paid for by gasoline taxes. According to the Constitution, the federal government has no other responsibilities. Furthermore, before 1913 the government did very well with the taxes collected.
The proposed amendment was not ratified by the appropriate number of states. Congress and the President (Woodrow Wilson) were aware that the 16th "Amendment" was fraudulent according to Judge James C. Fox, presiding before a district court case in July of 2003. The Secretary of State, Philander Knox, lied to the people, stating that the 16th Amendment had been legally ratified by the States when, in reality, it had not. During World War I, the tax rate was rapidly increased and an excess profits tax was added.
Lew Price, Garden Valley
More on Federal Income TaxEditor:
Bill Benton finished a tour of all the state capitols in 1984. He found that no state had legally ratified the 16th (income tax) Amendment. Ratifications from 36 states were needed for the proposed amendment to become part of the Constitution. Even if the mistakes in spelling, capitalization, and punctuation were ignored, only 2 states had actually ratified the proposed amendment. Thirty-three states had engaged in the unauthorized activity of altering the language of the proposed amendment.
The Kentucky Senate voted upon the resolution and rejected it (22 against and 9 for). The Oklahoma Senate changed the language of the proposed amendment to make it have precisely the opposite meaning. The California Assembly never recorded any vote on any proposal to adopt the 16th Amendment. Minnesota did not send anything to Secretary of State Philander Knox. Yet Knox fraudulently stated that all four of these states had ratified the proposed amendment.
On January 10, 2008, the Federal District Court in Chicago Issued a permanent injunction against Benton on the grounds that he was falsely telling people that the 16th Amendment had not been ratified. The court refused to look at his evidence, claiming that any evidence he had was not relevant (Use "search" on-line with "bill benton" and "income tax" to see more details).
There was not, and has never been, any attempt by Congress to place an inflation index on income tax. Nor has it been indexed to the gross national product. Instead, members of Congress and the Federal Reserve have used the tax as a political football to manipulate the U.S. economy. They know that as inflation continues, it (1) increases the rate at which we are taxed and (2) acts as a means to create more inflation. Thus, the great hidden tax of inflation continues while any visible reductions in income tax are accepted by us like a dog accepts a bone - and of course the Federal Reserve uses income tax to pay interest on the counterfeit dollars that the Fed loans the government.
The 16th Amendment (forced upon us in 1913) that supposedly created income tax is but one part of a three-pronged national embezzlement scheme by the Big Bankers' Cartel we call the Federal Reserve and its allies. The other two parts are the Federal Reserve Act (passed in 1913) and the creation of the Council on Foreign Relations (formed in 1919). In our ignorance, we have been unwitting slaves.
Lew Price, Garden Valley
Reasons to Abolish the FedEditor:
In his book, The Creature from Jekyll Island, Griffin lists the reasons for abolishing the Federal Reserve: (1) it is incapable of attaining its stated goals because they are not its actual goals; (2) it is a cartel that is against the public interest; (3) it is the supreme instrument of usury; (4) it generates our most unfair tax (inflation); (5) it encourages war; (6) it destroys the economy; and (7) it is an instrument of totalitarianism, a means of moving toward a sophisticated and total form of feudalism.
Income tax was created at essentially the same time as the Federal Reserve - and by the same people. This tax was never necessary until it was needed to pay the interest on loans by the Fed to our government - and it uses your labor to repay debts which were created by Federal Reserve Checks written on a "bank account" that never existed.
The private cartel that is the Fed is not ever audited. It controls the World Bank and the International Monetary Fund. The Council on Foreign Relations is its ally. Its members are in league with George Soros and his minions. They use insider trading to influence the stock market and ruin the economy. However, there is nothing personal or vindictive in their actions. They just want money and power at your expense.
The Fed does not care how it attains its real goals, so it moves within and against all types of societies. Communist nations, dictatorships, democracies, republics, etc. all suffer as it gorges itself on their wealth. Under it, the poor get poorer and super-rich get richer.
Lew Price, Garden Valley
Steps in abolishing the FedEditor: There are a number of consecutive steps that must be taken in eliminating the Federal Reserve (Big Bankers' Cartel) if we are to prevent a severe depression. These are found in The Creature from Jekyll Island (Griffin).
1. There are "legal-tender" laws that force us to accept Federal Reserve Notes (FRN), (our "fiat" paper money), as payment in monetary transactions. These laws must be repealed so that we have a choice on what to accept as payment.
2. Freeze the current supply of FRN - no more must be put into the economy.
3. Define a new currency in terms of precious-metal (preferably silver) content.
4. Gold must be established as an auxiliary monetary reserve but not at a fixed price - the ratio between the value of silver and gold must be market-based and will change from one time to the next.
5. Free coinage must be restored at the U.S. mint so it can issue silver dimes, quarters, half-dollars, dollars, and gold pieces.
6. The national debt was created with FRN. We should pay it back with the same fiat money.
7. At times past, it was illegal to own gold, and private holdings were confiscated. The amount that was taken should be returned to the private sector. The rest of the government gold and silver belongs to the people (they paid for it in taxes and through inflation).
8. "Pledge" that the FRN currently in circulation be backed by all the government's remaining stockpiles of gold and silver.
9. Determine the weight of all government gold and silver and calculate the total in terms of "real" (silver) dollars.
10. Determine the number of FRN in circulation and calculate their real-dollar value by dividing the value of the goverment gold and silver by the number of FRN.
11. Retire all FRN from circulation by offering to exchange them for real dollars at the calculated ratio.
12. Convert all contracts that were written based on FRN to real dollars using the calculated ratio.
13. Issue silver certificates so people have the option of using either these or silver dollars.
14. Abolish the Federal Reserve System with the possible exception of using their banks as check-clearing houses (but not as parts of a central bank). They would not be allowed to receive government subsidies to operate, and would be in competition with one another.
15. Introduce free banking, eventually eliminating regulation and allowing competition between banks to operate as it did before the Big Bankers' Cartel was established.
16. Reduce the size and scope of government by eliminating all socialist-based government bureaucracies.
17. Restore national independence by reversing all programs leading to disarmament and economic interdependence. We should get out of the U.N. and rescind hundreds of treaties and administrative agreements, keeping only those that are of mutual benefit to us and other nations. Otherwise, we may be engulfed by global tyranny.
Lew Price, Garden Valley
See Thrive on this website for a link to more information on the Fed.
The following is the introduction to GOLD WARS by Kelly Mitchell, from Clarity Press.
This book should be well worth reading.
The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title – anonymous
At opening bell of April 30, 2012, an anonymous player sold short $1.24 billion worth of gold. At three quarters of a million ounces, the sale slammed through over 1000 bids, up to 8400 ounces apiece in a fraction of a second. Even the Wall Street Journal ran an article on manipulation – the dump exceeded an entire average day’s trading. The perpetrator broke the law and took rapid losses of $75 million as the gold price reasserted itself in a few hours.
The WSJ failed to note that these contracts were not longs liquidating, but naked shorts – a party selling gold they did not have. These are done without posting margin. The activity is blatantly illegal.
Nonetheless, sells of this type (though not this size) are fairly common. Many occur in a thinly traded period of the day – 3am – making it doubly suspect from a profit point of view. Without multiple buy orders to hold up the price, the seller gets less and less money with each bid filled. No trader would do this for profit – if they were seeking a profit, they would have parceled it out over a period to avoid dropping the price.
The Fat Finger has been offered as an explanation. A trader could have keyed in an extra zero after the number of contracts. While this is possible, it’s highly unlikely that a sophisticated trader or trading system would have no safeguards against hundred million dollar losses because of a single accidental keystroke. The accident theory is implausible. The move more or less screams manipulation. Somebody controlling a lot of money wanted to slam the price of gold and could afford to take a sizeable loss. But why do it?
One potential seller works at the Bank for International Settlements (BIS). Mikael Charozé’s bio at the BIS listed “interventions [and]… proprietary positions on all currencies including gold,” until the Zerohedge website posted it. A few days later, those parts of his job description had been removed from the BIS site. It cannot be proved, of course, because everything lies under layers of what seems to be intentional confusion. And central banks have a wall of silent policy against any criticism, especially from the people they claim to serve. It’s all part of the gold wars.
The logic is simple enough from the bird’s eye view. A swiftly rising gold price reveals the mismanagement of the currency, like the expiring canary in the mine. Therefore it is suppressed surreptitiously. Because paper currencies rely totally on faith, central bankers take it as part of their duty to manage that faith and maintain confidence in the currency. If gold shot up to $10,000, world banks and investors would become very, very concerned about their dollar holdings. Most other items are openly managed – food and oil prices (through subsidies and reserves), inflation, inflation perception, interest rates, money supply and financial risk. Those who question the manipulation of gold should be asking the polar opposite question: why wouldn’t it be manipulated? It’s the key metric of faith-based currencies. Managing the gold price is a central banker’s job.
The gold wars are the cornerstone of a much larger overall context – currency, trade and actual wars. As part of the gold wars presentation, it’s important to establish that the financial system is secretive, corrupt and highly beneficial to a few. In short, it’s rigged. To prove this contention, it’s necessary to establish motive, means, and escape. The motive here is to preserve a failing system, the means is control of regulators, and escape from public detection is through control of public perception – the cover-up. People never know what really happened. The MF Global fiasco and other financial crimes that we will explore are an easy way to prove corruption and elite benefit. The Petrodollar/ global reserve currency system and its stunning hegemony over world politics is the principal motive. The primary means is by control of the currency. The secondary means include repeal of the Glass-Steagall Act, emplacement of corporate execs into regulatory bodies, the entrenchment of too big to fail notions and policies, and countless other methods. The escape vehicles include the loss of independent media, consolidation of media into a few companies, ignoring the public, foot- dragging investigations, obfuscation, ridicule of opposition, and secrecy by claiming national security interests. These are among the topics to be covered.
The diminishing marginal productivity of debt in the US is scary. Around 1965, the debt to GDP ratio crossed 1:1. Before then, a dollar of debt created at least a dollar of GDP increase. That’s sustainable. Since then, the long-term chart is vicious and steadily downward. In 2010, it crossed the zero bound – more debt created no GDP increase. It’s actually been forced to occur sooner because of the enormous extent of monetary creation since 2008. The sharp jag below zero is clear and striking. Debt saturation is in full swing. Incomes have not kept pace – they can no longer service the debt. It’s tough to say what happens now, but probably (and strangely) new debt will contract GDP. As the zero bound is more clearly left behind, economic dislocations become more and more violent. Volatility goes haywire. The debt creation becomes a black hole. As this book shows, we’re already there.
The central economic problem in the world today is debt saturation. This is a direct offshoot of the current monetary system – fractional reserve banking. The public has almost no understanding of how money is created and that’s extremely unfortunate. “It is well enough that people of the nation do not understand our banking and money system,” Henry Ford said. “For if they did, I believe there would be a revolution before tomorrow morning.” Money, in today’s world, is created from debt. All money is created when a bank loans it into existence. It is extinguished when the loan is paid off, but sufficient money to also pay the interest (bank profit) is not created. Consequently, there is always much more debt than money to pay it – scarcity is built in to the system. Numerous problems result, some obvious, some not. We will explore this strange system in much greater detail, but one salient fact is most disturbing. It requires perpetual growth at an increasing rate to sustain the system without implosion because of the inbuilt shortages of money. It inevitably leads to a debt crisis, as Ludwig von Mises postulated six decades ago. He called it a systemic crack-up – a global reset. Leaders have greatly increased sovereign debt in response, but the solution to debt is not more debt. It is default. What cannot go on forever not only must but will end.
In the past, money was directly issued and backed by precious metals. Or it was coinage. This required no debt and no perpetual growth. It was stable. Gold systems are not perfect – no system is. However, they have proved far more durable and self-sustaining than debt based money. True gold standard economies do not need to be centrally planned – they have built in self-corrections to prevent modern excesses. Central bankers express great disdain for such systems publicly because they prevent excesses. Gold is the mortal enemy of modern money.
Without the gold anchor, the world economy has become seriously unbalanced. Greek one-year debt hit a high of 140% interest in 2011. Under Generally Accepted Accounting Principles, the 2011 US deficit exceeds $5 trillion – far more than the government-accounted $1.5 trillion. The entire US obligations would be $60 to $200 trillion, depending on who did the estimating. The total of accounted for derivatives is $600 trillion by BIS measures and undisclosed bets might easily double that total to over a quadrillion – twenty times the world’s economy. Central bank balance sheets are bleeding red from buying worthless paper to prop up failing banks. Financial giants are leveraged at many times their reserve assets, making them insolvent in even a slight downdraft. The Federal Reserve has issued $23 trillion in zero interest loans since 2008. Something is seriously wrong. The global economic system is dying and the illness is being hidden from view.
Trust is one of the great missing elements of today’s system. That lack is a primary reason that precious metals will continue to steepen in demand –they alone require no trust. There are many components of trust necessary for a strongly functioning economic system. Virtually all of these components are now AWOL. A citizenry must believe that its leadership has their best interests at heart, even if the actions taken are less than perfect. If the leaders are seen not as flawed, but as corrupt, deeply self-interested, or worse, tyrannical, then many decades of trust will evaporate in a few years. We are close to that point.
Likewise, the citizens must believe the banks are functional utilities serving a basic societal need rather than profit-driven entities focused on investment and returns. Today, most people think that banks are wildly speculative enterprises, risking the nation’s very health. The truth is less important than the perception. Some make the case that in actuality leadership and finance have been utterly self-interested for a very long time and have simply managed to disguise that fact from the public through skillful and extensive PR. Because the increasing systemic strains are making it impossible to paper over, the truth is emerging. The evidence of long-scale deception is an interesting topic we will address.
One very strange lacuna in our civilization is the lack of monetary knowledge. In a well-educated system which prides itself on fundamental capitalist values, a knowledge of money would seem to be de rigeur. America lives and breathes money: it “makes the world go ’round.” Yet mysteriously, almost no one understands this most basic and essential fact of our lives. What is money? Where does it come from? The old saw that money does not grow on trees is no longer true – money is paper. Gold has been de-monitized. It is less than paper in the case of electronic money – it is just a number in a computer.
Why the ignorance? It seems fair to blame the educational system. According to John Taylor Gatto, the missing substance is deliberate. Gatto, named Teacher of the Year, the highest honor in education, condemned the system in his acceptance speech. He roundly criticized it for deliberate mal- education of the entire population. The Department of Education was more or less designed by large private endowments. Big capital, Gatto claimed, wants a society of citizens poorly informed about many things, especially money creation and its link to their exploitation and manipulation. Citizens are kept more compliant due to their ignorance and far less willing to question the system of big capital presently in place, or who benefits. This is breeding a society of workers, not entrepreneurs capable of innovative and nimble planning, whether on a micro scale suited to meager resources, or larger. We have a system of unbridled paper money creation, a citizenry totally ignorant of its mechanics, and a deliberate veiling of the powers that actually control it. If money is power, then the government-given authority to create it affords the exponential manifestation of that power. Keeping citizens uninformed safeguards the power holders from revolution – or at least, revolution directed at them. Cattle are easy to control.
The deeper implications of these facts are frightening when fully understood, and history bears this out many times over. Governments with too much centralized power – whether from misguided public trust or harsh repression – inevitably abuse the privilege of unbacked currencies. We’ll get into some instances in the hyperinflation section. The warfare/welfare state is as old as repressive government. Rome achieved citizen compliance through a system of public dole and extravaganzas, featuring slaughter of undesirables; historians called it ‘bread and circuses.’ Politicians buy loyalty or enforce obedience. Both are extraordinarily expensive, beyond a sound currency’s ability to support. Paper (or digital) currencies permit terrible abuses, including unrestrained war, and tyranny because there is no check on spending (or rather, printing.) The current system is out of all control. Black Swan events are causing bouts of alternating debt deflation and the policy response of firehose monetary inflation. The real economy is being destroyed by the far larger speculative economy. Short term solutions are only making the long-term problems worse.
There is now a tremendous amount of confusion, complexity, and uncertainty in the financial system. It might even be described as chaos. New terms are emerging – debt holocaust, Europocalypse, and financial Armageddon. Phrases such as “uncharted territory,” “never before seen conditions,” seem to be popping up all over the net and even in the mainstream. No one fully comprehends the depth and breadth of the issues – it’s too vast. Therefore no one can create a real solution to save the existing mechanisms. Indeed, no solution may be possible. The reset button has been hit before – four times in the twentieth century. But this time the problems are much larger and aggravated by real resource constraints. The planet is tapped out. Growth is at its maximum. The wall is right in front of us and we are flying towards it at full speed. The system may somehow muddle through, but fools ignore these problems at their peril. In such situations, vast wealth has a historical tendency to disappear. That’s because this paper-based wealth is largely illusory.
Some wealth denominators, like derivatives, are far more insubstantial than others, like the value of precious metals. Derivatives require trust in the system and the organizations holding the other end of the contracts. The system must hold fast the value of the currency, the other party must honor the letter and intent of a complex contract, a regulatory agency might be needed to enforce it, that agency must not be compromised, and the other institution must have both the solvency and liquidity to back it up. That’s actually a lot of links requiring trust. It’s been taken for granted – up to now. We will examine recent events that have shaken the system upside down. Hordes of honest investors and deep pockets are jumping out of major markets. They cite manipulation, lack of confidence, and even fear of outright theft.
Precious metals (PMs), held in one’s own possession, require very little trust. Gold is corruption insurance. It has no counterparty obligation. There is no other entity required to uphold the value of PMs – society as a whole is the guarantor of value (though a concern remains re their market manipulation). Metals have retained value for thousands of years – their manipulation is only short-term, and largely unsustainable. Unlike paper, gold never goes to zero. Other than that, the only risk is theft of actual physical holdings – a relatively low risk, especially if holdings are kept secret and are well-secured. In times of massive distrust, fear, and economic corruption, gold and silver become highly valued for many reasons. Systems which seek power and control hate gold. The gold wars are not new. In ancient China, people were put to death for refusing the paper currency and demanding gold. Likewise in 18th Century France. Examples are plentiful and we will cover some very instructive ones.
Nowadays, serious problems, even crises, are popping up more frequently. Fear and suspicion reign. Class war is raising its head. According to Warren Buffet, class war is already ongoing and his class, the wealthy, is winning. That’s because only the wealthy understand the need to pay attention to economics. This failure by the middle class is already destroying it. People who are otherwise well educated have lost their life savings in a puff of rehypothecated smoke. Today’s financial markets are little more than casinos. The long cold trade war between the uneasy great power allies – China and the US – is heating up. It is becoming a currency war. Bank runs are already happening silently (because uncovered by the mainstream media) in southern Europe. The Greek government has failed. Portugal, Spain, and even Italy are teetering on the cliff of default. The derivatives based on their sovereign bonds number in the hundreds of trillions of dollars – they’re like quicksand under the global banking system. Sovereign debt is going parabolic — rising at an ever-increasing rate. Realistic unemployment numbers are approaching Great Depression levels. Tent cities are appearing nationwide. Municipalities are going bankrupt. Bizarre crime is escalating.
States are beginning to rise against the Federal government. Federal laws like Obamacare and NDAA are being rejected by state governments as unconstitutional. Some even declare a right and intent to arrest federal agents enforcing unconstitutional laws. Ron Paul made a serious run at the presidency by bucking the establishment. He fathered a groundswell of public outcry to audit the Federal Reserve, even shut it down. Occupy Wall Street became a global movement against the bankers. Particularly targeted is Goldman Sachs, which has or has had former executives as head of the European Central Bank, the Federal Reserve, the Bank of Canada, the NY Fed, the US Treasury, and in line for the Bank of England, as well as serving as unelected prime ministers of Greece and Italy, and as creators of the Euro currency. GSax has a less flattering moniker – the great vampire squid with its tentacles sucking blood from the world economy. The policy of too big to fail has created moral hazard on a scale that threatens the world’s financial system.
The drums of war beat louder every day against the oil-rich Middle East and especially Iran to forestall or divert attention from financial collapse. Bizarre political issues arise, such as birthers questioning Obama’s natural born citizenship status and claiming he is thereby an unconstitutional president. Meanwhile, the executive branch conducts wars without Congressional approval, burdening the nation with out-of-control debt. The world grows increasingly skeptical of US good intentions and perhaps more worrying for its leadership, of its capacity to enforce its will, leading to increasingly open hostility towards the United States. No one trusts anyone anymore. Amidst these situations, the idea of the world economy erupting in flames appears not only more and more possible. To those paying attention, it’s already happening.
This lady is instrumental in curing the problem we call the Federal Reserve. See her at Karen Hudes videos.
I believe that banking institutions are more dangerous to our liberties than standing
armies. If the American people ever allow private banks to control the issue of their
currency, first by inflation, then by deflation, the banks and corporations that will grow
up around the banks will deprive the people of all property until their children wake-up
homeless on the continent their fathers conquered. Thomas Jefferson
Shredding the American Constitution
A Nation of Sheep
Moving to Total Control
William Pawelec Interview
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