Monetary Reform!

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Offline Geolibertarian

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Re: Monetary Reform!
« Reply #40 on: June 26, 2010, 10:06:24 AM »
To the relative newcomers reading this, if you ever hear a self-appointed know-it-all from either the controlled "Left" or controlled "Right" arrogantly dismiss out of hand the claim that the bulk of our money supply is created by private banks via fractional reserve lending, show him or her the following quotes:

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"The Wahoo bank has acquired an interest-earning asset (the promissory note which it files under 'Loans') and has created demand deposits (a liability) to 'pay' for this asset. Grisley has swapped an IOU for the right to draw an additional $50,000 worth of checks against its demand deposit in the Wahoo bank....All this looks simple enough. But a close examination of the Wahoo bank's balance statement will reveal a startling fact: When a bank makes loans, it creates money. The president of Grisley went to the bank with something which is not money--her IOU--and walked out with something that is money--a demand deposit....By extending credit the Wahoo bank has 'monetized' an IOU....If commercial banks create demand deposits--money--when they make loans, is money destroyed when loans are repaid? Yes." [Emphasis original]

--  Campbell R. McConnell & Stanley L. Brue, Economics, 14th ed., pp. 294-5


"The bulk of the money in the U.S. economy is checkable deposits of commercial banks and thrifts, not currency." [Emphasis original]

-- Ibid., p. 287


"Banks are unique among financial intermediaries in that only they can create money. When banks make loans, they put the proceeds of such loans in the borrowers' checking accounts. Insofar as demand deposits are part of the money supply, these newly created deposits constitute 'new money' that did not exist before."

-- Roy J. Ruffin & Paul R. Gregory, Principles of Economics, 7th ed., p. 549


"When a commercial bank makes a loan to a business or an individual, it credits the checking account of that business or person with the amount loaned....Banks manufacture money through this loan process because they create money by monetizing debt."

-- The Appraisal Institute, The Appraisal of Real Estate, 11th ed., p. 100


"In the course of their lending activity, banks create money." [Emphasis original]

-- Marcia Stigum, The Money Market, 3rd ed., p. 17

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"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline freedom_commonsense

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Re: Monetary Reform!
« Reply #41 on: June 26, 2010, 11:36:06 AM »
Geo, do you support Ron Paul's motion for competing currencies?

Offline Geolibertarian

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Re: Monetary Reform!
« Reply #42 on: June 26, 2010, 11:44:14 AM »
Geo, do you support Ron Paul's motion for competing currencies?

No, and here's why:

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http://globalresearch.ca/index.php?context=va&aid=16572

Congressman Ron Paul’s “Free Competition in Currency Act” Won’t Solve the Problem But Still Raises Vital Issues

by Richard C. Cook
Global Research
December 15, 2009

While Congressman Ron Paul’s Free Competition in Currency Act is not a workable proposal, it points to a deeply serious problem with the Federal Reserve System that must be faced if the U.S. economy is to have a future.

Over the last 40 years the Federal Reserve, with the acquiescence of Congress and the executive branch, has become the primary regulator of the economy. The prevailing philosophy is called monetarism, and it’s based on the raising and lowering of interest rates.

This period has been marked by the successive creation and destruction of several gigantic investment bubbles. After the Federal Reserve brought on the recession of 1979-83 by raising interest rates to over 20 percent, we had a bubble during the Reagan/G.H.W. Bush years based on business mergers and acquisitions. It was then that the fulcrum of the U.S. economy shifted from manufacturing to finance. This bubble collapsed in a recession that brought Bill Clinton to the presidency in 1992.

Then, using the strong dollar to attract foreign investment, the Federal Reserve and the Clinton administration floated the U.S. economy throughout the 1990s on what was called the dot.com or "tech" bubble. This bubble collapsed in 2000-2001 with an enormous loss of asset value to U.S. and foreign investors, including massive loss of pension funds.

In 2000 George W. Bush was elected president. Instead of taking steps to rebuild the U.S. manufacturing economy, the Federal Reserve under Chairman Alan Greenspan slashed interest rates and removed the regulatory controls, resulting in a huge inflation of home prices through the housing bubble. Cash entering the economy through mortgage lending was the economic engine for the Bush presidency. Taxes from the housing bubble paid for much of the Afghanistan and Iraq wars.

Other investment bubbles in equities, hedge funds, derivatives, and commodities also took off. All this collapsed in the financial crash of October 2008. Now, President Barack Obama is trying to restart the U.S. economy by a huge infusion of federal government money through the largest increase in the national debt since World War II.

The policy of creating economic growth through credit bubbles is speculation-based and highly inflationary. It’s why the U.S. dollar has lost 85 percent of its value since 1965. But credit will have to be tightened soon, and the federal deficit will have to be reduced to keep the value of the dollar from declining further. This is likely to lead to a very weak recovery from the current recession and will leave households, businesses, and government at all levels still deeply in debt if not bankrupt.

So Congressman Paul is saying, quite logically, that the Federal Reserve needs to be attacked in its very ability to create these destructive inflationary bubbles. The Free Competition in Currency Act would attempt to do this by introducing gold and silver as a legal currency along with Federal Reserve Notes.

Unfortunately, there is not enough gold and silver in existence to fund the monetary requirements of modern economies. Trying to restore a metallic currency that never really existed in sufficient quantity since this nation was founded would only replace control of the economy by the banking system with control by gold and silver speculators.

Congressman Paul’s solution is largely ideology-driven to satisfy his libertarian constituency. That’s why legislation like this which has no chance of passing and wouldn’t work if it were implemented is more a political protest than a genuine attempt to solve the problem.

A metallic-based currency, one of whose purposes is to uphold the value of money due to its scarcity, is based on a flawed concept. Money, even based on gold and silver, does not derive its value from being scarce nor is an abundance of money itself inflationary.

Actually, money should exist in sufficient quantity and availability to move all the legitimate trade that is waiting to be moved. Money is a medium of exchange and should be nothing more than that. When used by the banking system for wanton speculation, as money is today, it's an abuse. But to artificially restrict the availability of money when people need it to trade and earn a living is also an abuse.

The underlying purpose of the proposed Free Competition in Currency Act is actually to support the private minting of metallic coinage such as the "Liberty Dollar" and free such coinage from the sales and capital gains taxes that reduce its value. But a serious proposal to make privately-minted money usable in trade should also standardize its gold and silver content and fix its value, which this legislation fails to do. Therefore the only value of the Act would be to give the Liberty Dollar special privileges as an investment option.

Nevertheless, something must be done about the disastrous state of monetary policy, and none of the current proposals to restructure the financial regulatory system or reform the Federal Reserve would address the underlying issue of the inflationary nature of a monetary system based on federal government debt, financial speculation, and the supremacy of banking over the manufacturing sector.

A better solution would be to look at the dozens of local currency systems that are springing up around the nation, as private cooperatives begin to print and distribute their own local currencies. These currencies do what money is supposed to do. They act as a medium of exchange that monetizes the labor and resources of localities and regions.

These currencies consist of alternative paper notes and computer entries. As this movement continues, it is conceivable that someday different currencies could begin to be knitted together by computer databases and networks, so that their value would reach across jurisdictional lines and become a new type of national or even international monetary supply.

This is what governments should be promoting, Think what would happen if first cities, then states, then the federal government began to accept these currencies in payment of taxes, fees, or utility bills. Such currencies would be based on the value of production within the economy and very well could replace Federal Reserve Notes in many instances.

This is already happening in business bartering networks and with the use of other forms of value, such as airline frequent flyer miles, exchanged in trade. Of course the same thing is happening in many other parts of the world. Local currencies owned and distributed by producer cooperatives rather than dictatorial central banks allied with central governments deeply in debt may very well be the wave of the future.

Of course local currencies take us in the opposite direction of the tyranny of the international financiers and their desire to consolidate world currencies into the handful they can effectively control. Congressman Ron Paul is to be commended in challenging the legitimacy of the Federal Reserve money monopoly and getting people to look in the direction of a monetary system that serves rather impoverishes us.

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"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Re: Monetary Reform!
« Reply #43 on: June 28, 2010, 10:37:01 AM »
We are routinely told that "inflation" is the sole source of all monetary evils. However, we had deflation between 1929 and 1933 -- see: http://www.youtube.com/watch?v=AoG8R1s59Po -- yet, contrary to what Austrian School propagandists would have everyone believe, the average American was consequently worse off in '33 than in '29.

The monetary flat-earthers from the Austrian School are often so desperate to avoid this inconvenient fact of history that they'll laughingly turn reality on its head by trying to convince anyone foolish enough to listen that the avereage American was actually better off in '33 than he was several years beforehand (or at least no worse off than before).

Whenever they do this, I'm always reminded of the following:

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…the Fed actually accelerated money growth so that, in one four-week period, M-1 expanded at a startling annual rate of 27 percent. The President’s men did not object. The Federal Reserve was abandoning its monetarist principles, but so was the Reagan White House.

The White House senior officials were wise to ignore the monetarists, because none of their dire warnings came true. The most visible public embarrassment was reserved for the father of modern monetarism—Milton Friedman. The acerbic little professor would announce two stark predictions for the economy in subsequent months and both would be spectacularly wrong. First, Friedman declared, a new run-up of price inflation, perhaps approaching double digits, was now inevitable in the next year or so, given the explosive money growth the Federal Reserve was allowing. (Instead, inflation would decline even further.) Next, when Friedman analyzed a slowdown that developed in M-1 growth in late 1983, he boldly predicted that a recession would unfold in the election of 1984. (That didn’t happen either.)

"Now I was wrong, absolutely wrong," Friedman said of his predicted recession. "And I have no good explanation as to why I was wrong."

William Poole offered an explanation for the gross miscalculations by himself and Milton Friedman and the other monetarists. "I think it’s fair to say," Poole suggested, "that those of us who have developed strong theories tried to fit the world into the theory rather than the other way around." [Emphasis added]

-- William Greider, Secrets of the Temple, p. 543

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With regard to inflation, have you ever seen people at a store or shopping mall with "too much money" in their pockets and "too few goods" to spend it on?

Me neither.

Yet I continually hear well-meaning people parrot the Austrian School myth that, anytime a new paper dollar is added to the money supply, the dollars already in existence automatically become worth less, resulting in inflation ("too much money chasing too few goods").

This is misleading at best. Allow me to explain why.

If, over the course of a given year, economic output increases 3%, yet the money supply increases only 1%, then that 1% increase will be deflationary, not inflationary, because there will consequently be less money in circulation relative to the amount of goods and services available for sale.

If the expansion rate of the money supply merely keeps pace with economic output, then there is neither inflation nor deflation.

It's only when money creation dramatically outpaces the production of new goods and services that one has inflation, and even then only if there isn't an offsetting decrease in money velocity (such as we've seen since 2008 due to plummeting consumer confidence).

And the above applies merely to overhyped "demand-pull" inflation.

What almost never gets talked about is cost-push inflation; and even when it is talked about, virtually no one ever mentions the primary causative roles that are played by (a) compound interest on bank loans, and (b) land speculation.

For a better understanding of what I mean, consider the following three excerpts (the first from Ellen Brown's Web of Debt, the second from The Truth In Money Book, the third from the web site henrygeorge.org):

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The gold standard and the inflation argument that was used to justify it were based on the classical "quantity theory of money."  The foundation of classical monetary theory, it held that inflation is caused by "too much money chasing too few goods." When "demand" (the money available to buy goods) increases faster than "supply" (goods and services), prices are forced up. If the government were allowed to simply issue all the Greenback dollars it needed, the money supply would increase faster than goods and services, and price inflation would result. If paper money were tied to gold, a commodity in limited and fixed supply, the money supply would remain stable and price inflation would be avoided.

A corollary to that theory was the classical maxim that the government should balance its budget at all costs. If it ran short of money, it was supposed to borrow from the bankers rather than print the money it needed, in order to keep from inflating the money supply. The argument was a "straw man" argument -- one easily knocked down because it contained a logical fallacy -- but the fallacy was not immediately obvious, because the bankers were concealing their hand. The fallacy lay in the assumption that the money the government borrowed from the banks already existed and was merely being recycled. If the bankers themselves were creating the money they lent, the argument collapsed in a heap of straw. The money supply would obviously increase just as much from bank-created money as from government-created money. In either case, it was money pulled out of an empty hat. Money created by the government had the advantage that it would not plunge the taxpayers into debt; and it provided a permanent money supply, one not dependent on higher and higher levels of borrowing to stay afloat.

The quantity theory of money contained another logical fallacy, which was pointed out later by British economist John Maynard Keynes. Adding money ("demand") to the economy would drive up prices only if the "supply" side of the equation remained fixed. If new Greenbacks were issued to create new goods and services, supply would increase along with demand, and prices would remain stable. When a shoe salesmen with many unsold shoes on his shelves suddenly got more customers, he did not raise his prices. He sold more shoes. If he ran out of shoes, he ordered more from the factory, which produced more. If he were to raise his prices, his customers would go to the shop down the street, where shoes were still being sold at the lower price. Adding more money to the economy would inflate prices only when the producers ran out of the labor and materials needed to make more goods. Before that, supply and demand would increase together, leaving prices as they were before.

-- Ellen Brown, Web of Debt, pp. 100-101


Inflation in a debt-dominant money system, such as the system administered by the Federal Reserve, is correctly defined as: debt-induced currency devaluation. In fact, it is only in a debt-dominant money system that inflation has ever occurred, from the first recorded inflation that destroyed ancient Babylonia over 4,000 years ago, to the present day.

Inflation is characterized by the loss of purchasing power of the dollar (or any other monetary unit). Steadily rising prices are a symptom of this loss of purchasing power. It is the devaluation of the dollar that forces general price increases.

The dollar's devaluation, in turn, is caused by the inherent flaw in the debt-dominant money system, namely, the creation of most money as debt. This locks the system into a vicious cycle of escalating borrowing in a futile effort to pay both interest and principal. A debt-dominant money system is naturally deflationary, due to the built-in shortage of money to pay interest. The shortage forces continually increasing borrowing, which requires continually increasing prices to cover the cost of business borrowing.

The devaluation of the dollar leads to a valid demand for growth of the money supply. More money is borrowed into existence to meet this demand, but the amounts are never enough to keep pace with the growing cost of debt which triggered the cycle in the first place.

The growth of the money supply which occurs during times of inflation is simply the result of businesses and individuals escalating their borrowing. They do this in order to pay higher interest costs, either their own or their own plus the higher interest costs reflected in the rising prices of goods, services, and overhead. The primary cause of this escalation is a chronic shortage of money. The money shortage is equal to the uncreated, unpayable interest due on the escalating debt.

This growth of the money supply is widely mistaken to be the cause of inflation, whereas in fact it is only another symptom of inflation. The mistake of calling an increase in the money supply the cause of inflation is based on the belief that money is like a commodity which becomes more valuable when it is scarce and less valuable when the quantity available increases.

If inflation really is a condition of too much money in the system, it would be reasonable to ask every citizen to burn a $20 bill daily in order to bring down the money supply.

Also, if the theory that money is like a commodity is true, money borrowed at high rates of interest ought to be very valuable and buy more goods than money borrowed at low interest. However, recent experience has shown that money borrowed at 20% interest bought far less in 1981 than money borrowed at 8% interest several years earlier.

In the debt-dominant money system, prices increase as a reflection of the escalating interest charges being incurred by producers. The term "price inflation" clearly identifies the process of rising prices. However, the term "inflation," when applied to the economy as a whole, fails to identify the phenomenon in operation which causes prices to rise, and is therefore misleading. The more accurate and descriptive term for the mis-called "inflation" phenomenon is debt-induced currency devaluation.

-- Theodore R. Thoren & Richard F. Warner, The Truth In Money Book, revised 2nd ed., pp. 204-6


http://web.archive.org/web/20090509102114/http://www.henrygeorge.org/bust.htm



A theory of economic boom and crash is one of Henry George's two great purposes in Progress and Poverty. What is the root cause of the "paroxysms of industrial depression"?

The root cause, says Henry George, is the speculative rise of land prices, which cuts into the earnings of labor and capital. Land rents and prices rise at a faster rate than general economic growth, because of two unavoidable facts:

  • Land is fixed in supply.
  • Land is needed for all production.

When sufficient numbers of workers and capitalists cannot afford to produce at the higher rents brought about by growth and speculation, production begins to stop.

Let us examine some of the implications of this fact for modern economies:

New Construction is Limited. If builders must pay too much for building sites, it takes from their profit by raising their costs. Their profit on investing in the building itself is what stimulates investing, which in turn is what makes jobs and incomes.

Business Costs Go Up. Businesses that rent their premises also get squeezed by rising rents. Here's an example: A merchant goes into a new shopping center with a long term lease. His rent is often too high, but he pays it to hold his position for the later term when he hopes the rent will be a bargain. Landlords writing long-term leases get used to this, and hold out for high rentals.

Nonproductive Investments Become More Profitable than Productive Ones. Let’s say that you own some land, which you might decide to improve. But, you have the option of selling the land to a speculator. Why improve the land if the profits on your improvements would yield little more than merely collecting the speculation-hyped value of the vacant site? Landowners will "site-sit" and wait, if they believe future development will be much more gainful than development for the current market. When the workaday facts of today begin looking dull and prosaic next to the gleaming expectations of tomorrow, look out.

Banking and Credit is Destabilized. Builders needing land borrow to buy it, even though the price is too high, gambling that future rises in rents will let them repay the loan. If these rent rises fail to happen, they go bankrupt. Their buildings are not destroyed, but the capital they used to build on them was misdirected, so much of it is economically lost: the buildings lose their market value.

Unlike items of wealth, which are priced according to their cost of reproduction at the present time, land is not produced -- so it has no cost of production. Yet it is bought and sold, like articles of wealth. The selling price of land is determined by comparing its income potential with that of an equivalent value of wealth, through a process called capitalization. Here's how that works. However, the capitalization of current rent is only the beginning. With land, there is nearly always an added premium reflecting expected price increases in the future.

Speculation raises land prices beyond the sites' current use values. Credit is extended farther in order to accommodate this. That is, banks lend on overpriced land, counting on a further rise. When the rise slows, they extend the loans, sometimes even granting new loans for paying interest on old loans. They use political pressure to get governmental agencies (e.g. the World Bank) to extend or underwrite these risky loans (e.g. in Latin America). When the bubble bursts, the loans are not repaid. This destroys capital. The Savings & Loan fiasco of the 1980s is a case in point, but the basic dynamics are there in every recession.

This is not a new phenomenon. John Stuart Mill had written (before Henry George) of a tendency of lenders, when legitimate demand for loans dries up, to "lower the quality of credit" by accepting high-risk loans they would have spurned before. Because land value is such a large part of collateral on loans, and land values fluctuate wildly in business cycles, the tendency toward these volatile, high-risk lending practices is very strong.

Why don't capitalists needing land simply join in the speculative game? Couldn't they buy land at speculative prices and use it while it continues to rise in value? Actually, that's what they all do. No one can justify buying and holding land at today's prices without counting the future advance in price or rent as part of his or her gain. Thus everyone is hooked, forced by the market to participate in the speculative game, once it gets started. All become implicated and habituated, emotionally and politically, whether they like the principle or not. Eventually people forget that there could be any other way of doing business.

How do labor and capital resist advances in land value, when they must have land in order to produce? By ceasing production. What does this mean in real life? Labor and capital decline to buy or rent land at the high asking prices. Some will rent or buy less land, and use it more intensively. Some will sleep on the street, or sell from the sidewalk. Some will retreat to little patches of marginal land. Some will buy as much land as ever, but thus use up funds they otherwise would have used to improve it, becoming withholders themselves. Some will organize and pass counterproductive rent-control laws. The economy-wide net result will be less production, more unemployment.

The question that many modern-day economists fail to ask is this: How do investors react to a set of incentives where expected changes in land value are made part of the overall return on investment -- and land price is part of the investment on which return is figured?

This has several results:

  • Many are screened out by the increased need for credit.
  • Rising land value becomes part of the incentive to build. It can't go up forever. When it levels off at a high level, it becomes a serious drag. When it starts falling, it is worse.
  • Land value becomes collateral; its wild swings destabilize credit and money.
  • A lot of land is unused, (or run down in its present use), as the holder waits for a possible higher use that never materializes. In and after a crash, bid prices for land fall, but asking prices stay high, so sales drop like a stone. This behavior is inconsistent with the premises of the "rational expectations" theorists, but is good history: it has been extensively documented, over several giant cycles of boom and crash.

Land Speculation and Inflation?



There are as many different theories of the basic cause of inflation as there are for depressions. But since today's business cycle seems to involve a constant tension between periods of inflation and periods of unemployment/recession, the two phenomena clearly are linked.

George said almost nothing in Progress and Poverty about inflation; in his day industrial depression was a much more serious problem. However, inflation was not unheard-of in those days, and a strong connection is implied in George's reasoning. Consider the following statement regarding George's remedy (which this course is soon to consider): "Taxes may be imposed upon the value of land until all rent is taken by the state, without reducing the wages of labor or the reward of capital one iota; without increasing the price of a single commodity, or making production in any way more difficult."

What has this to do with inflation? George identifies land rent as an income that does not come from production; it is, in effect, a tax on production, the burden of which increases as production increases -- due to rising demand for the fixed supply of land. The tendency of this process is, as we have seen, to raise land rents beyond the marginal ability of labor and capital to pay them -- and depression is the result.

This process can be forestalled, temporarily at least, by increasing the money supply. Remember, the income of landowners increases as overall production increases, even though landowners make no contribution to production! The buying power that landowners gain, laborers and capitalists lose. But the effect of this can be blunted by increasing the money supply. When then supply of money increases faster than the supply of actual wealth, that's called inflation. An increase in the money supply can stimulate demand for goods, for a while -- if people have a certain amount of money to spend, they will try to spend it before it loses its value. Thus, an increase in the money supply, via lowered interest rates, can keep a period of economic growth alive -- at least until after the next election.

However, even this expediency is thwarted by the process of land speculation. As we explained here, land prices are arrived at via the process of capitalization. Essentially, the annual rent of a site is divided by the current rate of interest, and this capitalized rent is the basis for the selling price (most often a speculative premium will be added). Now, if the central bank lowers interest rates to free up the money supply, this means that the divisor, the capitalization rate, is a lower figure -- and therefore land prices will increase!

Many analysts, for example, note that the persistently low interest rates maintained by Alan Greenspan's Federal Reserve in the early 2000s played a key role in the "housing boom" that followed. Of course, in the real world a great many factors influence financial markets, and particular market situations are extremely complex. However, this by no means denies the pivotal, fundamental role played by land rent and land speculation. Eventually, in a growing economy (even if the growth is only a short-term blip brought about by fiscal stimulus), increased rents will consume the extra buying power. Then, one of two things must happen: either the money supply must be increased further, risking runaway inflation -- or there must be a recession.

[Continued...]

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Thus, contrary to what the Austrian School would have everyone believe, inflation -- under the current system -- is not caused by "government printing too much money."

First of all, the bulk of our money supply isn't even paper, but mere numeric entries on the books of some bank.

Second, the government doesn't print "money," otherwise it wouldn't have to borrow it all the time. What the government "prints" is currency. But that currency does not become "money" (legal tender) until it's been issued by the private banking system, which does so by lending it at interest.

It is thus private banks who've been causing inflation all these decades, and they've done so by (a) loaning out trillions of dollars they didn't even have, and (b) never creating the money needed to pay the usurious interest on all these inherently fraudulent loans -- thereby forcing indebted business owners, as a whole, to silently incorporate the cost of this unpayable interest debt into the selling price of virtually everything we buy (a form of "cost-push" inflation one never hears about from news anchors, media pundits, or either Austrian or Keynesian ideologues); and consumers, as a whole, to continually borrow more in order to afford the usury-induced price increases.

Land speculation then makes matters worse by driving up the location values of a fixed supply of land, and hence the cost of either renting or purchasing that land (another form of cost-push inflation one never hears about). And since land isn't a product of human labor, and since the increased cost of renting or purchasing it forces the cash-strapped masses to borrow still more, this has the effect of (a) delinking money creation increasingly further from the production of new goods and services, and thus of (b) increasing the amount of money there is in circulation relative to the amount of goods and services available for sale, thereby triggering eventual demand-pull inflation as well -- though not as much as one might think, since this is offset to a significant degree by both

* the fact that money vanishes from the money supply whenever the principal of a bank loan is repaid; and

* the deflationary impact that mortage loan defaults have on the money supply, due to the fact that pledged collateral usually sells for much less than what the bankrupted homeowner or business owner owed on it, and how this in turn forces the bank to offset the unpaid principal dollar for dollar from its capital assets. The more this happens nationwide, the less banks as a whole can lend. The less banks can lend, the more the gap between (a) the overall indebtedness of the economy (principal-plus-interest) and (b) the amount of money (principal) there is in circulation to pay it off increases (since interest debt continues to increase at a compounding rate regardless of whether the money supply increases along with it). And as that gap increases, more and more people are consequently forced into bankruptcy, thus creating a vicious, self-perpetuating cycle of bankruptcies, increased money shortages, followed by still further bankruptcies.

(The above two factors, coupled with the dramatic decrease in the velocity of money brought on by record lows in consumer confidence, are why -- in mid-2010 -- we have yet to experience the runaway hyperinflation that many were insisting as far back as late 2008 was just around the corner.)

Thus, while there is undoubtedly a certain degree of inflation that may be accurately classified as "demand-pull," much if not most of it is actually cost-push inflation (for the reasons explained above). And whatever demand-pull inflation we do have is driven primarily by usury and land speculation and the consequent delinking of money creation from wealth production.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline citizenx

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Re: Monetary Reform!
« Reply #44 on: July 09, 2010, 12:40:00 AM »
Exactly, what good does deflation do the average person, if they don't have any work or if they don't have much money to spend?  Deflation also meant depressed wages for these folk as well.  Furhter, if you can't charge very much for your goods, you have to pay less for the labor that goes in to producing them.  If not and your profit margin is narrowed, why make more?  Why produce more?  The tendency will simply be to lay more people off, and have even more people idle, which is more or less what happened and what has been happening since the financial crisis of 07' -- largely unabated, and possibly about to become even worse despite the quasi-recoverey of the markets and a deflation beneficial only to some exporters and those already relatively well off.

Offline Geolibertarian

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  • put all derivatives-infected mega-banks through Chapter 11 bankruptcy and, in the reorganization proceedings, legally void all of their derivatives contracts;
  • liquidate all of the ill-gotten assets of criminal scam artists such as Henry Paulson and Bernard Madoff, and use the resultant proceeds to help replenish whatever retirement funds they raided;

http://www.prisonplanet.com/the-horrific-derivatives-bubble-that-could-one-day-destroy-the-entire-world-financial-system.html

The Horrific Derivatives Bubble That Could One Day Destroy The Entire World Financial System

The Economic Collapse
Aug 9, 2010

Today there is a horrific derivatives bubble that threatens to destroy not only the U.S. economy but the entire world financial system as well, but unfortunately the vast majority of people do not understand it.  When you say the word “derivatives” to most Americans, they have no idea what you are talking about.  In fact, even most members of the U.S. Congress don’t really seem to understand them.  But you don’t have to get into all the technicalities to understand the bigger picture.  Basically, derivatives are financial instruments whose value depends upon or is derived from the price of something else.  A derivative has no underlying value of its own.  It is essentially a side bet.  Originally, derivatives were mostly used to hedge risk and to offset the possibility of taking losses.  But today it has gone way, way beyond that.  Today the world financial system has become a gigantic casino where insanely large bets are made on anything and everything that you can possibly imagine.

The derivatives market is almost entirely unregulated and in recent years it has ballooned to such enormous proportions that it is almost hard to believe.  Today, the worldwide derivatives market is approximately 20 times the size of the entire global economy.

Because derivatives are so unregulated, nobody knows for certain exactly what the total value of all the derivatives worldwide is, but low estimates put it around 600 trillion dollars and high estimates put it at around 1.5 quadrillion dollars.

Do you know how large one quadrillion is?

Counting at one dollar per second, it would take 32 million years to count to one quadrillion.

If you want to attempt it, you might want to get started right now.

To put that in perspective, the gross domestic product of the United States is only about 14 trillion dollars.

In fact, the total market cap of all major global stock markets is only about 30 trillion dollars.

So when you are talking about 1.5 quadrillion dollars, you are talking about an amount of money that is almost inconceivable.

So what is going to happen when this insanely large derivatives bubble pops?

Well, the truth is that the danger that we face from derivatives is so great that Warren Buffet has called them “financial weapons of mass destruction”.

Unfortunately, he is not exaggerating.

It would be hard to understate the financial devastation that we could potentially be facing.

A number of years back, French President Jacques Chirac referred to derivatives as “financial AIDS”.

The reality is that when this bubble pops there won’t be enough money in the entire world to fix it.

But ignorance is bliss, and most people simply do not understand these complex financial instruments enough to be worried about them.

Unfortunately, just because most of us do not understand the danger does not mean that the danger has been eliminated.

In a recent column, Dr. Jerome Corsi of WorldNetDaily noted that even many institutional investors have gotten sucked into investing in derivatives without even understanding the incredible risk they were facing….

A key problem with derivatives is that in the attempt to reduce costs or prevent losses, institutional investors typically accepted complex risks that carried little-understood liabilities widely disproportionate to any potential savings the derivatives contract may have initially obtained.

The hedge-fund and derivatives markets are so highly complex and technical that even many top economists and investment-banking professionals don’t fully understand them.

Moreover, both the hedge-fund and the derivatives markets are almost totally unregulated, either by the U.S. government or by any other government worldwide.


Most Americans don’t realize it, but derivatives played a major role in the financial crisis of 2007 and 2008.

Do you remember how AIG was constantly in the news for a while there?

Well, they weren’t in financial trouble because they had written a bunch of bad insurance policies.

What had happened is that a subsidiary of AIG had lost more than $18 billion on Credit Default Swaps (derivatives) it had written, and additional losses from derivatives were on the way which could have caused the complete collapse of the insurance giant.

So the U.S. government stepped in and bailed them out – all at U.S. taxpayer expense of course.

But the AIG incident was actually quite small compared to what could be coming. The derivatives market has become so monolithic that even a relatively minor imbalance in the global economy could set off a chain reaction that would have devastating consequences.

In his recent article on derivatives, Webster Tarpley described the central role that derivatives now play in our financial system….

Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.

But wasn’t the financial reform law that Congress just passed supposed to fix all this?

Well, the truth is that you simply cannot “fix” a 1.5 quadrillion dollar problem, but yes, the financial reform law was supposed to put some new restrictions on derivatives.

And initially, there were some somewhat significant reforms contained in the bill. But after the vast horde of Wall Street lobbyists in Washington got done doing their thing, the derivatives reforms were almost completely and totally neutered.

So the rampant casino gambling continues and everybody on Wall Street is happy.

For now.

One day some event will happen which will cause a sudden shift in world financial markets and trillions of dollars of losses in derivatives will create a tsunami that will bring the entire house of cards down.

All of the money in the world will not be enough to bail out the financial system when that day arrives.

The truth is that we should have never allowed world financial markets to become a giant casino.

But we did.

Soon enough we will all pay the price, and when that disastrous day comes, most Americans will still not understand what is happening.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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When Money Eats the World
« Reply #46 on: August 09, 2010, 05:18:19 PM »
http://web.archive.org/web/20061116031731/landru.i-link-2.net/monques/moneyeats.html

WHEN MONEY EATS THE WORLD

by John McMurtry, Professor of Philosophy
University of Guelph

As the wheels come off the global market juggernaut, we need to understand that the unfolding collapse has been programmed into the machine. Stay the course of capital deregulation long enough and a truly momentous wreck is guaranteed. The fact is that our political and market leaderships have ensured no intelligent thought relating to the actual life needs of societies has been listened to for 15 years. "No alternative," they incanted without a break since the Reagan revolution of mindless govenment first began stripping social infrastructures by ever lower tax rates for the rich and 20% compound interest rates on public debt. Even now as the government of France pulls out of the MAI declaration of rights for unaccountable borderless capital, Ottawa is still prating about "sticking to its commitments" to the meltdown program.

The problem is a generalized mind-seizure. As money-to-more-money circuits have become increasingly autonomous, public consciousness has fetishized money demand as the sovereign authority of the world. The lifeblood of societies has been circulated away as fast as possible to "pay off deficits as a national emergency," "reduce social costs to attract investors," "cool down the employment rate to ward off currency devaluation," "deregulate the labour and resource markets economy for greater efficiencies," and so on. The litany for expropriation of societies' common heritage and infrastructure has been recited every hour for almost twenty years, and it has always and everywhere been the disguise for highly leveraged money sequences to feed on the social life substance across the planet.

But even as the meltdown progresses across continents, the unseen seat of the disease is not yet whispered—that money sequences are overloaded far beyond the capacity of social and environmental capacities to feed them, and that they increasingly attack life-serving functions to continue their decoupled cycles.

Because these money sequences are increasingly without productive outcome of any kind, redistribute more and more wealth to the economically parasitic while stripping the civil commons and the poor, and progressively demand ever more revenue extraction from social and environmental hosts, their reproduction has become increasingly incompatible with civil and planetary life.

The overloading of the life-system by ever more ravenous money sequences is, in truth, behind every crisis people face today in the global market—behind the stressing and breaking of the planetary environment's carrying capacities, behind government debt and deficit loads and crises across the world, behind the ceaseless mergers, acquisitions and job-sheddings by corporate finance departments, behind the speed-ups of every process of work and resource extraction, behind the privatization and enclosure of evolved civil commons in every culture, and behind now the Asian meltdown and the great slump of Japan.

We need not summarize all the symptoms. But consider some figures of money-demand aggregates increasing exponentially on life systems at every level, every new unit of the escalating load requiring "more competitive performance" or "more competitive cost cutting" from individual, social and environmental life-hosts, with no limit set to what will be demanded next.

Bear in mind that the meaning of "discounted cash flow," which is the moving line and reference body of global market value, means that what is today $100 in real terms is the same as $100 + compound interest in one year ($110), two years ($121), or 20 years from now as the starting base from which every "worthwhile enterprise" is calculated. The system is a horizonlessly expanding money-demand machine engineering all that lives to extract more money value from it.

If the victim societies melt under the "free circulation" of the hot money flows, then this is because they did not "adapt effectively." If the atmosphere itself can no longer hold the pollutants dumped into it, then this is the occasion for issuing "pollution credits" to make more business out of the earth's collapse.

Canada's Pension Plan itself is now being fed to the hungry money circuits. The reason is simple. Since money grows money, why not put our national pension funds into the global market to make it pay for future pensions. Consider the rate of multiplication. An input of $10,614 in 1955 yields an output of compound-interest-plus multification to $5,309,000 in 1998. That is, an over 500-times increase in what goes to "the investor" who performs no function in the increase, nor in the productive economy to receive this increase, nor in serving the life of any life organization to be entitled to all further exponential multiplication of this money demand seeking to be still more. This is called "market freedom."

In 1998, the combined money-demand value of US pension and mutual funds to whom this multiplication is promised was $9 trillion, or 30 times the net money worth of the US's 60 richest market agents, with more new money-demand then going into these funds every quarter than all the US super-rich own together. These were predicted to grow at a sustained or rising rate. At the same time, both British and Canadian national pension funds planned to redistribute all of their public funds into the global market of transnational money sequences as well, instead of as in the past lending to governments, investing in jobs for the young, or committing to any defence or growth of life at all. Meanwhile the poverty of children, dead-end youth prospects and the slips in environmental carrying capacity in both societies continued to climb.

During this collapse of life-system bearings and money-sequence metastasis, even the once mighty machine shop of the world, Japan, came to the end of the line. It reached the surplus money wall in the early 1990's, performing as a harbinger of the disorder few saw. When the speculatively driven prices or real estate and Nikkei stocks plunged, and the richest banks in the world could not find productive enterprises to invest in and steward as their successful automobile and electronic industries had done since 1950 by long-term, careful financial ministry planning, Japan's money sequences had no way out. When the hundreds of billions of uncommitted money demand first invaded and then exited Asian stocks and currencies in 1997-98, leaving societies there on average halved in their money access to means of existence, Japan was left with hundreds of billions of debt that could not be paid by the lenders, and with no advances behind the armed force of land clearances and forced borderless markets favoured by the US corporate axis.

Japan controlled $12 trillion in loose money with no real function to perform except to become more. But with its unmoored banks loaded with $1000 billions in bad loans, Japan's government naturally had to pump over $200 billion more in public funds to back up the decoupled financial circuits.

Robotically lock-stepping to the unhinged market paradigm, the IMF and the US government demanded still more borderless financial deregulation from Japan, just as they had prescribed for all the economies of Asia that had already been melted down by such financial deregulation. Japan's government, not recognizing the gallows wit and still locked in the paradigm themselves, promised "a big bang" of more deregulation in financial markets.

We've been getting the big bang now for a long time, and it only gets bigger.

When a long-dominant paradigm fails in its prescriptions, and it calls for more of its failed prescriptions to solve its failures, its circularity becomes terminal. What is not recognized is the underlying principle of the escalating failures: that financial crises always follow from money-value delinked from real value, which has many names but no understanding of what it is. Value is what serves life itself, and the global market paradigm has no place in its metric for the life factor at any level.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Greening the Dollar
« Reply #47 on: September 07, 2010, 01:51:47 PM »
http://www.monetary.org/greenpartymonetaryplank.html

Dear Friends,

Some exciting and historic news from the U.S. Green Party!

This past week (end of August 2010) the Green Party's National Committee working on monetary and economic policy matters have approved an historic, comprehensive Monetary Reform Plank in their 2010 Platform which actually does the job, as it includes all three of the necessary elements to achieve real reform.  We're happy to report this mirrors the proposed American Monetary Act.

Monetary Reform (Greening the dollar)

"While the banking reforms outlined in the above 12 points are very important to ameliorate the present crisis in our banking system, to affect long term, transformative change, it is imperative that we restructure our poorly conceived monetary system.  The present mis-structured system of privatized control has resulted in the misdirection of our resources to speculation, toxic loans, and phony financial instruments that create huge profits for the few but no real wealth or jobs.   It is both possible and necessary for our government to take back its special money creation privilege and spend this money into circulation through a carefully controlled policy of directing funds, through community banks and interest-free loans, to local and state government entities to be used for infrastructure, health, education, and the arts This would add millions of good jobs, enrich our communities, and go a long ways toward ending the current deep recession.

To reverse the privatization of control over the money issuing process of our nation’s monetary system; to reverse its resulting obscene and undeserved concentration of wealth and income; to place it within a more equitable public system of governmental checks and balances; and to end the regular recurrence of severe and disruptive banking crises such as the ongoing financial crisis which threatens the livelihood of millions; the Green Party supports the following interconnected,

Green Solutions:

1. Nationalize the 12 Federal Reserve Banks, reconstituting them and the Federal Reserve Systems Washington Board of Governors under a new Monetary Authority Board within the U.S. Treasury. The private creation of money or credit which substitutes for money, will cease and with it the reckless and fraudulent practices that have led to the present financial and economic crisis.

2. Create a Monetary Authority, which will, with assistance from the FDIC, the SEC, the U.S. Treasury, the Congressional Budget Office, and others, redefine bank lending rules and procedures to end the privilege banks now have to create money when they extend their credit, by ending what is known as the fractional reserve system in an elegant, non disruptive manner. Banks will be encouraged to continue as profit making companies, extending loans of real money at interest; acting as intermediaries between those clients seeking a return on their savings and those clients ready and able to pay for borrowing the money; but banks will no longer be creators of what we are using for money. Many new forms of banks will be encouraged such as community banks, credit unions, etc., see 11 and 12 above)  

3. The new money that must be regularly added to an improving system as population and commerce grow will be created and spent into circulation by the U. S. Government for infrastructure, including the human infrastructure of education and health care. This begins with the $2.2 trillion the American Society of Civil Engineers warns us is needed to bring existing infrastructure to safe levels over the next 5 years. Per capita guidelines will assure a fair distribution of such expenditures across the United States, creating good jobs, re-invigorating the local economies and re-funding government at all levels. As this money is paid out to various contractors, they in turn pay their suppliers and laborers who in turn pay for their living expenses and ultimately this money gets deposited into banks, which are then in a position to make loans of this money, according to the new regulations."

----------------------------------

Now if the Greens would only wake up and smell the corporate fascist Kool-Aid they've been drinking with regard to the "carbon tax," and advocate instead the Georgist tax reform called for here, I could wholeheartedly endorse their economic policy agenda.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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Re: Monetary Reform!
« Reply #48 on: September 07, 2010, 05:09:29 PM »
One former Green, right here.  Woke up, undrank the cool-aid on GW.  Totally with you all the way on "green-backs".

(Was a (re-) co-founder of the "Bruin Greens" at my alma mater!)

Right on, Geo.  Hopefully, we will see some other folks come on over.

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The After-the-Fed Solutions Debate Begins: Greenbackers vs. Goldbugs
« Reply #49 on: October 13, 2010, 02:59:19 PM »
http://www.infowars.com/the-after-the-fed-solutions-debate-begins-greenbackers-vs-goldbugs/

The After-the-Fed Solutions Debate Begins: Greenbackers vs. Goldbugs

Eric Blair
Activist Post
October 13, 2010

The battle to expose the Federal Reserve has been long and arduous. It finally appears that after nearly 100 years of absolute economic control and near complete debasement of the dollar, the Fed’s reign may be coming to an end. Its eventual demise is certain according to Black Swan author Nassim Taleb and others. With all the recent mainstream talk and speculation about the end of the Fed, it is time to debate solutions for the future of America’s currency. This may indeed be the most important discussion of our lifetime.

First, we must be aware that the Federal Reserve, along with other foreign private central banks and the IMF, have long had plans for a global currency. This is not conspiracy theory mumbo-jumbo anymore, but rather cold hard fact. Lew Rockwell wrote an excellent article summarizing the IMF’s push for a global currency — the Bancor. The recent international currency war may be the beginning of creating a false demand for something more stable for international trade. As all major currencies race to the bottom, the private banking cartel will surely offer their global solution. We know what their solution will be — continued debt slavery with more centralized control — but what will the people’s solution be?

There seems to be another currency war brewing right here in America. The debate between the two most popular proposed solutions of adopting the Greenback or the Gold Standard has just officially begun. Last week, Gary North, a Goldbug and author of Honest Money, wrote a scathing attack of Web of Debt author Ellen Brown, a Greenbacker. He took select samples from her book in an attempt to tie her public bank solution to Hitler, but failed to address the “interest-free” philosophy of her policy. Despite that, he does manage to frame the Goldbug’s argument against the Greenback, or public banking, as inferior:

    Brown is a Greenbacker. She is open about this. Most people have never heard of Greenbackism. It has been a fringe movement in American political life ever since the 1860s. The Greenback Party in the 1870s was the first American political party to come out in favor of a pure fiat money economy, a paper money system controlled by Congress with currency irredeemable in gold coins or silver coins.

    The Greenbackers are committed to paper money. They are opposed to any form of gold standard. They are opposed to fractional reserve banking. They are opposed to central banking, unless the central bank is 100% owned and controlled by Congress.

A rebuttal piece was then written by Interest-Free Currency activist Anthony Michgels in defense of Brown and the Greenbackers where he goes after North and claims interest-bearing gold can never work:

    What it is all about is the Goldbug people versus the Interest Free Money crowd. It is one of the most crucial debates around. As I have mentioned before both on this site and elsewhere, Gold is the preferred currency of the Banking Fraternity and they plan to reinstate it in their world currency, which is coming closer every day….

    …North has managed to do something profoundly dishonest and unwise. In this enormous article of his he actually does not mention the problem of interest at all.

    This is so totally unfair to Brown’s work, because this is surely one of the most important aspects of her narrative….

    Interest free money, either printed debt free by the Government or through interest free credit either by private organizations or again by the State, is simple, proven technology and centuries old.

    Yes, many systems have been abused resulting in inflation.

    No, interest bearing Gold is definitely not an acceptable solution.

Passions already seem to be running high in the opening round of this most critical debate that surely will shape the future of our economy and society. Notably, both sides of this argument are in agreement that the Fed is a corrupt organization that must be ended. North acknowledged that Ron Paul and Ellen Brown share this common ground, but says the Tea Party movement (liberty movement) has “no economic understanding” and “They cannot distinguish Ron Paul’s opposition to the FED, based on the gold coin standard, from Ellen Brown’s opposition, based on a fiat money standard. They are intellectually defenseless.”

It seems a bit arrogant of North to suggest that the liberty movement is confused about why Ron Paul and Ellen Brown support ending the Fed, and it’s also disingenuous to say that one side of the growing movement is “intellectually defenseless” because of disagreements about the solution. Especially when Brown’s public banking movement appears to be immediately workable and is gaining ground as the first pragmatic step being to establish state banks — as proven in North Dakota, which has a state-owned bank and boasts the lowest unemployment and the only budget surplus of the United States.

The public banking movement opposes the Federal Reserve, like Paul, because it is unconstitutional, but also for a variety of other intellectually defensible positions, starting with the fact that they are a private monopoly who care not for Americans or the country. There are very real concerns that this group of banksters may maintain dominance of a gold-based system since they already have possession of most of the world’s gold — including much of the mining as well. Furthermore, if they can continue to create money on a fractional basis — even if backed partially by gold — and can continue to charge and determine interest, they’ll still possess the power to enslave-by-debt people, industry, and entire nations. Finally, the private profit motive of international banksters, driven by interest, has historically proven to encourage wars as evidenced by their funding of both sides of all wars. This would also seem to give them dubious power to determine the outcome of those wars.

In turn, it’s a given that the liberty movement supports the restoration of the Constitution which clearly states that the coinage of money shall be in gold and that only the elected Congress is authorized to issue and control it. However, the Constitution says nothing of allowing a fractional reserve gold standard run by private bankers which is promoted by some Goldbugs. Furthermore, some Constitutionalists still maintain the strange notion that the government should belong to the people. Therefore, if we were able to restore the Constitutional principle for a government of, by and for the people, it would seem that interest-free currency issued and controlled by our elected government would be considered more constitutional than the current system.

It is true that gold has been valued in society for thousands of years and it will likely continue to maintain its terrific investment value for the foreseeable future. Gold clearly has a physical value derived from the incredible energy it requires to mine and refine it. But gold, as a limited resource, is interest bearing and can be hoarded by those with the wherewithal to do so. This would seem to suggest that gold could then be manipulated by the few who control vast sums of it. And that sounds a lot like the economic tyranny we face today with the private Fed.

North attacks Greenbackers because they “are opposed to central banking, unless the central bank is 100% owned and controlled by Congress.” As if to say, how dare the people demand ownership of their own currency. It shows a blinding distrust for Constitutional government and obvious preference for private banking interests.  

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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The Hidden Slavery of Interest
« Reply #50 on: October 16, 2010, 11:13:41 AM »
http://www.infowars.com/the-hidden-slavery-of-interest/

The Hidden Slavery of Interest

Anthony Migchels
Activist Post
October 16, 2010

Most advanced political and economic debate is dominated by the Americans. Through films like Zeitgeist Addendum, The Money Masters and Money as Debt, and books like those of Thomas Greco and Ellen Brown. They have been enormously important contributions to the awakening of the many (including myself!) towards the most pressing problem of our time, our monetary “system.”

The one notable exception is interest. Of course all the aforementioned sources have dealt with interest, but to my mind there has been no really comprehensive and satisfactory analysis of interest in the Anglo Saxon world. In fact, most analysts concentrate on the fact that money is debt. There seems to be some kind of consensus that debt is the heart of the issue. But it is not. Without interest, debt would not be a problem, as I worked out here.


Interest is being payed by people borrowing money and received
by people having loads of it. So it is per definition a wealth transfer
from poor to rich.


Interest is one of the few things that is more profoundly understood in Europe, more specifically, Germany. Throughout the 20th century interest has been analyzed by some unknown, but brilliant thinkers. Silvio Gesell comes to mind, Gottfried Feder and later Helmut Creutz and their current standard bearer Margrit Kennedy.

Feder wrote a book Breaking the Shackles of Interest, and later advised Hitler, who was to say time and again, that “the kernel of National Socialism is breaking the thralldom of interest.” Maybe that did some damage by association to the theme....

Be that as it may, it is time to make fully clear what the scale of the interest problem is. We need to get rid of any misunderstanding, let alone underestimation of this most heinous tool in the hands of our Satanist masters.

Dealing with Interest

We’ll go through this point for point. Some points will in some way overlap others, but they are still worth mentioning because they widen our perspective. I’ll be quoting Margrit Kennedy a lot and I would strongly suggest going through her classic ‘Why we need monetary innovation’.

1. To begin with, I’ll put forward my standard example: a mortgage. Let’s say you want to buy a house and go the bank and get a loan. Say 200k. The simple truth is, after thirty years you will have payed back 600k. 200k for the principal and 400k (!!) in interest. Now this might be OK, or at least somewhat understandable, if you were borrowing this money from somebody else, who has been saving it. But as we know, this is not the case. The money is produced the moment the loan is granted by the bank. In a computer program. By pressing a few buttons.

So basically you pay 400k interest for pressing a button. Granted, the bank needs to manage the loan during the time it is being repaid. But the cost for this is still only a fraction of the income they get through the interest.

Now, we could stop here, because it is clear that the bank is ripping us off, also in legal terms, although they make the laws themselves, because there is no realistic service being delivered for the money.

But there is so much more, we must continue.

2. When the bank creates some money by giving you a loan, it takes the money out of circulation when you repay. Repaying debts means a diminishing money supply. The banks only provide the principal, in our previous example 200k. But after thirty years, 600k has been repaid and only 200k was created. So how can this be? How can 600k be repaid by 200k?

It can’t. Somebody else needs to get into debt to create sufficient liquidity to pay the 400k interest. And the borrower of the original loan must start competing for this liquidity with everybody else to obtain that, intrinsically scarce, cash.

This means that because of the combination of debt and interest, the money supply must grow forever. But we know that a growing money supply is the definition of inflation and that inflation is closely linked to rising prices. So inflation is inherent in the system. This sounds strange, because Central Banks raise interest rates to lower inflation, reasoning less credit will be issued because of rising prices for it. But the higher the interest rates go, the more money must be created to pay for this interest.

Just one of the perverse side effects of interest in the current wealth transfer system we call “finance.”

3. Due to interest, money circulates slower. This is a big problem, because the slower the money circulates, the more we need of it in circulation to meet our needs. And when you have interest bearing money as debt, that is quite a problem indeed. The reason for slower circulation is that it enhances the store of value function of money, with all its detrimental implications.

This phenomenon can be best seen when thinking about paying bills. If you know you can increase your money by postponing paying your bills, you will help the money circulate slower. People will be encouraged to hoard the money instead of spending it.

It is also more likely because of this reason rather than the growing cost of money which lessens inflation (or better, price rises) in the short term when raising interest rates. Because less money is circulating slower, demand falls.

4. Now, because of the fact that the principal is created but not the money to pay the interest, money is intrinsically scarce. Because of scarce money, capital is the scarce factor of production, whereas reason has it that labor should be the scarcer than capital. How else can we say we live in abundance?

I think it was Lietaer who pointed out the natural consequence of this state of affairs: competition. Economic actors in the current system compete with each other primarily for scarce working capital. Scarce money is a major driving force in the ever more competitive marketplace. Of course, the winners of this system have their lackeys (“economists”) explain that competition leads to efficiency. But common sense dictates that humans are more effective when they can cooperate. Surely there is a place for competition in the market, but it has gotten totally out of hand and it is getting worse.

Scarce money because of interest is one of the more profound reasons for this trend.

5. So what of it you think. I was raised to be conservative in these matters and one should simply not get into debt, so you won’t pay interest.

Wrong. Not only because if nobody went into debt, there would be no money, but because companies go into debt to finance their production. They pay interest (capital costs) over these loans. And like any cost this must be calculated into the prices they ask for their goods and services.

And what percentage of prices can be related to interest? It depends on the kind of business, particularly how capital intensive it is. Going from 12% for garbage collection to 77% for renting a house. All in all about 40% of prices can be traced back to costs for capital. These figures are by Kennedy and they have been corroborated by an independent study done by Erasmus University, Rotterdam, the Netherlands under the supervision of STRO, a leading monetary think tank in the Netherlands.

So, you lose 40% (!!!!) of your disposable income to interest through prices.

6. Interest is being payed by people borrowing money and received by people having loads of it. So it is per definition a wealth transfer from poor to rich.

It transpires, that about 80% of the poorest people pay more interest than they receive to the richest 10%. The next richest 10% pay as much as they receive. This means the vast majority is losing a substantial part of their money to interest. The richest own the banks or have a lot of money there.

We must keep in mind that this is totally for nothing, since most of the money is printed at the time it is loaned out.

How much money are we talking about? I have only figures for Germany, but reason suggests it is basically the same everywhere.

In Germany the poorest 80% pay 1 billion Euros in interest to the richest 10% PER DAY. Yes, that’s right, one billion euros per day. That is a grand total of 365 billion euro’s per year. That is one seventh of German GDP and extrapolating this to America, the poorest 80% must be paying at least a trillion a year.

It conclusively explains the old adage that the rich get richer and the poor get poorer.

This is the hidden tax that nobody is talking about.

This is the yoke that we carry.

This is the worst kind of slavery, because it is slavery without even realizing it.

This is interest and let it never be forgotten.

This is our mortal enemy and let us never take our eyes of it again, until it is thrown into the fire of hell, together with the usurers enslaving us with it.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline decemberfellow

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Re: Monetary Reform!
« Reply #51 on: October 16, 2010, 12:06:34 PM »
I and my wife have been turning more and more to the bartering system. It works well and I know all the elites  HATE that!  I know that this will never happen nationally because of the years of brainwashing that has been going on.  Grant it I cannot solely get by on bartering simply because there are not enough people awake to make it so. But where and when I can I use it. Works fine for me. 
Rev21:4
And God shall wipe away all tears from their eyes; and there shall be no more death, neither sorrow, nor crying, neither shall there be any more pain: for the former things are passed away.


Who am I
 https://www.youtube.com/watch?v=v7Fk6dt_uHo

Offline Geolibertarian

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World Bank chief calls for new gold standard
« Reply #52 on: November 09, 2010, 02:32:29 PM »
http://www.infowars.com/the-after-the-fed-solutions-debate-begins-greenbackers-vs-goldbugs/

It is true that gold has been valued in society for thousands of years and it will likely continue to maintain its terrific investment value for the foreseeable future. Gold clearly has a physical value derived from the incredible energy it requires to mine and refine it. But gold, as a limited resource, is interest bearing and can be hoarded by those with the wherewithal to do so. This would seem to suggest that gold could then be manipulated by the few who control vast sums of it. And that sounds a lot like the economic tyranny we face today with the private Fed.

North attacks Greenbackers because they “are opposed to central banking, unless the central bank is 100% owned and controlled by Congress.” As if to say, how dare the people demand ownership of their own currency. It shows a blinding distrust for Constitutional government and obvious preference for private banking interests.  

[Continued...]

Toward the end of The Money Masters (released in 1996), Bill Still makes the following prophetic warning:

    ''Our country needs a solid group who really understand how our money is manipulated and what the solutions really are, because if a depression comes, there will be those who call themselves conservatives who will come forward advancing solutions framed by the international bankers.

    "Beware of calls to return to a gold standard.

    "Why?

    "Simple. Because never before has so much gold been so concentrated outside of American hands, and never before has so much gold been in the hands of international governmental bodies such as the World Bank and International Monetary Fund.

    "A gold-backed currency usually brings despair to a nation, and to return to it would certainly be a false solution in our case. Remember: we had a gold-backed currency in 1929 and during the first four years of the Great Depression.

    "Likewise, beware of any plans advanced for a regional or world currency. This is the international bankers' Trojan Horse.''


Keep the above in mind as you read the following:

--------------------------------------------

http://www.marketwatch.com/story/world-bank-chief-calls-for-new-gold-standard-2010-11-07

World Bank chief calls for new gold standard

By Chris Oliver
MarketWatch
Nov. 7, 2010

HONG KONG (MarketWatch) –- The president of the World Bank said in a newspaper editorial Monday that the Group of 20 leading economies should consider adopting a global reserve currency based on gold as part of structural reforms to the world’s foreign-exchange regime.

World Bank chief Robert Zoellick said in an article the Financial Times that leading economies should consider “employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

Zoellick made the proposal as part of reforms to be considered at this week’s G-20 meeting in Seoul.

[Continued...]

--------------------------------------------

I've said it before and I'll say it again: with "opponents" like the Austrian School, the international bankers don't need any allies!
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline freedom_commonsense

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Re: Monetary Reform!
« Reply #53 on: November 22, 2010, 11:44:17 AM »
http://www.progress.org/2010/dakota.htm

A State Bank for California

The California Green Party puts forth some proposals nicely in line with geonomics. This 2010 article is from Beyond Chron.org‚ Nov. 10.

by Bernard Marszalek


The idea of a state bank -- proposed by the California Green Party -- can be found in Ellen Brown’s Web of Debt which describes the North Dakota State Bank, a financial institution dating back to 1919.

The State of North Dakota, in part because of its bank (they have oil, too, and very little land speculation), has remained solvent during the financial meltdown. Their state bank arose from a vibrant populist movement one hundred years ago.

With a public bank, how about our own money system? For years Argentina used the American dollar, until we pulled the rug out from under their economy. We could continue to use the dollar for international trade, and for local trade nothing stops us from creating our own currencies, an option some communities are discussing now.

In Alaska, each citizen receives a yearly dividend check from the tax on extracting Alaska’s oil. I am not advocating off shore drilling, but mentioning the Alaska Fund as an example of citizens sharing the bounty from their natural resources. The Bush Regime even floated this idea for Iraq.

California’s resources, however, go far beyond oil -- we have deserts, for solar energy; water (including tides) and wind; forests that could be sustainably harvested (in agreement with the federal government); minerals of all sorts, and the list goes on.

Of course, this means renegotiating with those companies that currently rip off the citizens of California mainly to benefit out-of-state investors. No self-respecting world-class economy should tolerate that. The ultimate aim of creating a state fund like the Alaska model is not to make us all rich, but to begin the process of securing our commons to generate an income for all, separate from jobs.

...

[continued at link above]

Offline citizenx

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Re: Monetary Reform!
« Reply #54 on: December 05, 2010, 04:05:58 PM »
Cheerleader for bankster economics
October 9, 2010 by FauxCapitalist

 My email to Gary North on his October 8, 2010 hit piece on Ellen Brown, the author of Web of Debt:

Dr. North,

You’re getting real desperate with today’s hit piece on Ellen Brown, “Cheerleader for Hitler’s Economics,” as you scramble to defend what more and more people are realizing to be the gold standard bankster scam to confiscate people’s wealth in the inevitable terminal phase of their latest debt with interest money scheme, all in the name of a return to “sound money.” It happened in 1933, it will happen again, and you know it.

This year alone, despite being a self-professed “gold bug,” he admitted gold was a bad investment from 1980-2001, he made the outlandish claim that 21 years is a medium-term investment to justify gold’s embarrassing performance during that time, and claimed that gold coins produced by the U.S. and Canada aren’t money, despite being legal tender.

http://fauxcapitalist.com/2010/10/09/cheerleader-for-bankster-economics/

Offline Dig

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Re: Monetary Reform!
« Reply #55 on: December 25, 2010, 04:39:02 PM »
http://www.progress.org/2010/dakota.htm

A State Bank for California

The California Green Party puts forth some proposals nicely in line with geonomics. This 2010 article is from Beyond Chron.org‚ Nov. 10.

by Bernard Marszalek


The idea of a state bank -- proposed by the California Green Party -- can be found in Ellen Brown’s Web of Debt which describes the North Dakota State Bank, a financial institution dating back to 1919.

The State of North Dakota, in part because of its bank (they have oil, too, and very little land speculation), has remained solvent during the financial meltdown. Their state bank arose from a vibrant populist movement one hundred years ago.

With a public bank, how about our own money system? For years Argentina used the American dollar, until we pulled the rug out from under their economy. We could continue to use the dollar for international trade, and for local trade nothing stops us from creating our own currencies, an option some communities are discussing now.

In Alaska, each citizen receives a yearly dividend check from the tax on extracting Alaska’s oil. I am not advocating off shore drilling, but mentioning the Alaska Fund as an example of citizens sharing the bounty from their natural resources. The Bush Regime even floated this idea for Iraq.

California’s resources, however, go far beyond oil -- we have deserts, for solar energy; water (including tides) and wind; forests that could be sustainably harvested (in agreement with the federal government); minerals of all sorts, and the list goes on.

Of course, this means renegotiating with those companies that currently rip off the citizens of California mainly to benefit out-of-state investors. No self-respecting world-class economy should tolerate that. The ultimate aim of creating a state fund like the Alaska model is not to make us all rich, but to begin the process of securing our commons to generate an income for all, separate from jobs.

...

[continued at link above]

California Green Party is following the Rothschild/Buffett/Strong path and not the North Dakota path...

**Black & Veatch: Transforming monetary policy from Petro based to Water based
http://forum.prisonplanet.com/index.php?topic=195608.0


Africa will be the new Middle East with false flags everywhere. Their plan to make natural resources the monetary base means that all water will have to be controlled by private banksters and derivitive traders.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Geolibertarian

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Re: Monetary Reform!
« Reply #56 on: December 27, 2010, 09:49:46 AM »
California Green Party is following the Rothschild/Buffett/Strong path and not the North Dakota path...

I'm not familiar enough with the CA Green Party's position on monetary reform to make that asssessment (their platform is virtually silent on the matter), but I do know that they advocate the ridiculously fraudulent, economy-destroying "carbon" tax, and that alone is cause for alarm.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Derivatives: The Real Reason Bernanke Funnels Trillions Into Wall Street Banks
« Reply #57 on: February 09, 2011, 03:05:40 PM »
If I had the power, I would simultaneously

*  put all derivatives-infected mega-banks through Chapter 11 bankruptcy and, in the reorganization proceedings, legally void all of their derivatives contracts;

*  liquidate all of the ill-gotten assets of criminal scam artists such as Henry Paulson and Bernard Madoff, and use the resultant proceeds to help replenish whatever retirement funds they raided;

http://www.prisonplanet.com/derivatives-the-real-reason-bernanke-funnels-trillions-into-wall-street-banks.html

Derivatives: The Real Reason Bernanke Funnels Trillions Into Wall Street Banks

Seeking Alpha
Feb 9, 2011

We’ve been over the numerous BS excuses that US Dollar destroyer extraordinaire Ben Bernanke has made for QE enough times that today I’d rather simply focus on the REAL reason he continues to funnel TRILLIONS of Dollars into the Wall Street Banks.

I’ve written this analysis before. But given the enormity of what it entails, it’s worth repeating. The following paragraphs are the REAL reason Bernanke does what he does no matter what any other media outlet, book, investment expert, or guru tell you.

Bernanke is printing money and funneling it into the Wall Street banks for one reason and one reason only. That reason is: DERIVATIVES.

According to the Office of the Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities for the Second Quarter 2010 (most recent), the notional value of derivatives held by U.S. commercial banks is around $223.4 TRILLION.

Five banks account for 95% of this. Can you guess which five?



[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline TheHiveMind

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Re: Monetary Reform!
« Reply #58 on: February 16, 2011, 04:43:53 AM »
Tremendously good information Geo!
"Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess." - Irving Fisher

"Neither a borrower nor a lender be."  - William Shakespeare

Offline Geolibertarian

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WISCONSIN: BROKE UNLESS YOU COUNT THE $67 BILLION . . .
« Reply #59 on: March 08, 2011, 03:04:12 PM »
WISCONSIN: BROKE UNLESS YOU COUNT THE $67 BILLION . . .

Ellen Brown
March 7th, 2011
www.webofdebt.com/articles/wiconsin.php

       Public sector man sitting in a bar: “They’re trying to take away our pensions.”
       Private sector man: “What’s a pension?”
              -- Cartoon in the Houston Chronicle

As states struggle to meet their budgets, public pensions are on the chopping block, but they needn’t be. States can keep their pension funds intact while leveraging them into many times their worth in loans, just as Wall Street banks do. They can do this by forming their own public banks, following the lead of North Dakota—a state that currently has a budget surplus.

Wisconsin Governor Scott Walker, whose recently proposed bill to gut benefits, wages, and bargaining rights for unionized public workers inspired weeks of protests in Madison, has justified the move as necessary for balancing the state's budget. But is it?

After three weeks of demonstrations in Wisconsin, protesters report no plans to back down. Fourteen Wisconsin Democratic lawmakers—who left the state so that a quorum to vote on the bill could not be reached—said Friday that they are not deterred by threats of possible arrest and of 1,500 layoffs if they don't return to work. President Obama has charged Wisconsin’s Governor Scott Walker with attempting to bust the unions. But Walker’s defense is:

    “We're broke. Like nearly every state across the country, we don't have any more money."

Among other concessions, Governor Walker wants to require public employees to pay a portion of the cost of their own pensions. Bemoaning a budget deficit of $3.6 billion, he says the state is too broke to afford all these benefits.

Broke Unless You Count the $67 Billion Pension Fund . . .

That’s what he says, but according to Wisconsin’s 2010 CAFR [.pdf] (Comprehensive Annual Financial Report), the state has $67 billion in pension and other employee benefit trust funds, invested mainly in stocks and debt securities drawing a modest return.

A recent study by the PEW Center for the States showed that Wisconsin’s pension fund is almost fully funded, meaning it can meet its commitments for years to come without drawing on outside sources. It requires a contribution of only $645 million annually to meet pension payouts. Zach Carter, writing in the Huffington Post, notes that the pension program could save another $195 million annually just by cutting out its Wall Street investment managers and managing the funds in-house.

The governor is evidently eying the state’s lucrative pension fund, not because the state cannot afford the pension program, but as a source of revenue for programs that are not fully funded. This tactic, however, is not going down well with state employees.

Fortunately, there is another alternative. Wisconsin could draw down the fund by the small amount needed to meet pension obligations, and put the bulk of the money to work creating jobs, helping local businesses, and increasing tax revenues for the state. It could do this by forming its own bank, following the lead of North Dakota, the only state to have its own bank -- and the only state to escape the credit crisis.

This could be done without spending the pension fund money or lending it. The funds would just be shifted from one form of investment to another (equity in a bank). When a bank makes a loan, neither the bank’s own capital nor its customers’ demand deposits are actually lent to borrowers. As observed on the Dallas Federal Reserve’s website, “Banks actually create money when they lend it.” They simply extend accounting-entry bank credit, which is extinguished when the loan is repaid. Creating this sort of credit-money is a privilege available only to banks, but states can tap into that privilege by owning a bank.

How North Dakota Escaped the Credit Crunch

Ironically, the only state to have one of these socialist-sounding credit machines is a conservative Republican state. The state-owned Bank of North Dakota (BND) has allowed North Dakota to maintain its economic sovereignty, a conservative states-rights sort of ideal. The BND was established in 1919 in response to a wave of farm foreclosures at the hands of out-of-state Wall Street banks. Today the state not only has no debt, but it recently boastedits largest-ever budget surplus. The BND helps to fund not only local government but local businesses and local banks, by partnering with the banks to provide the funds to support small business lending.

The BND is also a boon to the state treasury. It has a return on equity of 25-26%, and it has contributed over $300 million to the state (its only shareholder) in the past decade -- a notable achievement for a state with a population less than one-tenth the size of Los Angeles County. In comparison, California’s public pension funds are down more than $100 billion—that’s billion with a “b”—or close to half the funds’ holdings, following the Wall Street debacle of 2008. It was, in fact, the 2008 bank collapse rather than overpaid public employees that caused the crisis that shrank state revenues and prompted the budget cuts in the first place.

Seven States Are Now Considering Setting Up Public Banks

Faced with federal inaction and growing local budget crises, an increasing number of states are exploring the possibility of setting up their own state-owned banks, following the North Dakota model. On January 11, 2011, a bill to establish a state-owned bank was introduced in the Oregon State legislature; on January 13, a similar bill was introduced in Washington State; on January 20, a bill for a state bank was filed in Massachusetts (following a 2010 bill that had lapsed); and on February 4, a bill was introduced in the Maryland legislature for a feasibility study looking into the possibilities. They join Illinois, Virginia, and Hawaii, which introduced similar bills in 2010, bringing the total number of states with such bills to seven.

If Governor Walker wanted to explore this possibility for his state, he could drop in on the Center for State Innovation (CSI), which is located down the street in his capitol city of Madison, Wisconsin. The CSI has done detailed cost/benefit analyses of the Oregon and Washington state bank initiatives, which show substantial projected benefits based on the BND precedent. See reports here and here.

For Washington State, with an economy not much larger than Wisconsin’s, the CSI report estimates that after an initial startup period, establishing a state-owned bank would create new or retained jobs of between 7,400 and 10,700 a year at small businesses alone, while at the same time returning a profit to the state.

A Bank of Wisconsin Could Generate “Bank Credit” Many Times the Size of the Budget Deficit

Economists looking at the CSI reports have called their conclusions conservative. The CSI made its projections without relying on state pension funds for bank capital, although it acknowledged that this could be a potential source of capitalization.

If the Bank of Wisconsin were to use state pension funds, it could have a capitalization of more than $57 billion – nearly as large as that of Goldman Sachs. At an 8% capital requirement, $8 in capital can support $100 in loans, or a potential lending capacity of over $500 billion. The bank would need deposits to clear the checks, but the credit-generating potential could still be huge.

Banks can create all the bank credit they want, limited only by (a) the availability of creditworthy borrowers, (b) the lending limits imposed by bank capital requirements, and (c) the availability of “liquidity” to clear outgoing checks. Liquidity can be acquired either from the deposits of the bank’s own customers or by borrowing from other banks or the money market. If borrowed, the cost of funds is a factor; but at today’s very low Fed funds rate of 0.2%, that cost is minimal. Again, however, only banks can tap into these very low rates. States are reduced to borrowing at about 5% -- unless they own their own banks; or, better yet, unless they are banks. The BND is set up as “North Dakota doing business as the Bank of North Dakota.”

That means that technically, all of North Dakota’s assets are the assets of the bank. The BND also has its deposit needs covered. It has a massive, captive deposit base, since all of the state’s revenues are deposited in the bank by law. The bank also takes other deposits, but the bulk of its deposits are government funds. The BND is careful not to compete with local banks for consumer deposits, which account for less than 2% of the total. The BND reports that it has deposits of $2.7 billion and outstanding loans of $2.6 billion. With a population of 647,000, that works out to about $4,000 per capita in deposits, backing roughly the same amount in loans.

Wisconsin has a population that is nine times the size of North Dakota’s. Other factors being equal, Wisconsin might be able to amass over $24 billion in deposits and generate an equivalent sum in loans – over six times the deficit complained of by the state’s governor. That lending capacity could be used for many purposes, depending on the will of the legislature and state law. Possibilities include (a) partnering with local banks, on the North Dakota model, strengthening their capital bases to allow credit to flow to small businesses and homeowners, where it is sorely needed today; (b) funding infrastructure virtually interest-free (since the state would own the bank and would get back any interest paid out); and (c) refinancing state deficits nearly interest-free.

Why Give Wisconsin’s Enormous Credit-generating Power Away?

The budget woes of Wisconsin and other states were caused, not by overspending on employee benefits, but by a credit crisis on Wall Street. The “cure” is to get credit flowing again in the local economy, and this can be done by using state assets to capitalize state-owned banks.

Against the modest cost of establishing a publicly-owned bank, state legislators need to weigh the much greater costs of the alternatives – slashing essential public services, laying off workers, raising taxes on constituents who are already over-taxed, and selling off public assets. Given the cost of continuing business as usual, states can hardly afford not to consider the public bank option. When state and local governments invest their capital in out-of-state money center banks and deposit their revenues there, they are giving their enormous credit-generating power away to Wall Street.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Compound Interest - The 8th Wonder of the World!
« Reply #60 on: March 12, 2011, 11:36:17 AM »
http://web.archive.org/web/20110513235103/http://www.wealthmoney.org/compound-interest-8th-world/

The 8th Wonder of the World!

Often we are told of the wonderful power of compound interest (earning interest on both principal and previous interest). We are told how compound interest can make a modest investment grow into a great amount.

For example: If you invested  $10,000 at 7% compound interest for 30 years; you’d expect your investment to grow to $76,122.52.

Sounds Great!  

Compound Interest must truly make money grow!


For a moment, let’s step out of the dream world hype of banking, financial planning and Wall Street. Just HOW DOES MONEY GROW?

Where does the interest money come from?

When you put money into an interest-bearing account, does it turn into something like rabbits that mate and quickly reproduce? What happens? The increase of money in your account had to come from someplace. To understand financial planning, economics, growing public and private debts, ever increasing taxes and prices, etc. we must learn and always remember what it is we now use for money and how ALL new money is created and put into circulation.

When the economy grows and more money is needed, always remember:  “...the actual creation of money always involves the extension of credit by private commercial banks.” -- US Treasury

If the private sector doesn’t borrow it, the government must or the money cannot exist. If you invest $10,000 and 30 years later get $76,122.56; somewhere, someone in the private sector or the government had to borrow $66,122.56 before it could get into your account! Now, you have the money. They have the debt which can never be paid because there is no way to create the interest money when money is created through the lending process. Therefore, the debt must constantly grow.

Many people claim that the interest money comes from increased production (worker productivity). But, when was the last time your personal production (goods and services) turned into money? Did you ever wave a magic wand over a shoe, shirt, bushel of corn, a new car or an hour of labor etc. and see it turn into money?

There are only 2 ways to get money from what we produce.

ONE: We can use our produce as collateral for a bank loan which creates the new money.

TWO: We can sell our production to someone in exchange for money that was created as a loan.

Production NEVER turns into money.

You can create money by using a credit card by signing the forms sent to you by the credit card company and promising to pay the credit (money) back in the future with interest. The bank turns that promise to pay into collateral to create the money as a loan the minute you use your credit card to buy something.

Let me explain another way.

The Shoe Factory

Imagine that we have $10,000 total money in circulation. We invest all of it in a compound interest-bearing account. Let’s say that the money is invested in a shoe factory.

The factory spends the $10,000 for raw resources and labor to produce shoes. It sells the shoes and gathers back the total money supply and returns it to the investor. Remember, if the total money supply is only $10,000, that is all the shoe factory could return to the investor.

If the factory is going to return the original $10,000 investment PLUS compound interest, the money supply would have to be increased by at least $66,122.52 or even more if the shoe factory is going to have a profit. To increase the money supply, under the present system, it must be borrowed by someone from a bank. By borrowing the $66,122.52 needed to pay the investor 7% compound interest, the total debt drawing interest at some bank would be $76,122.52. It’s easy to understand how we have $50+ Trillion of debt drawing interest in 2006.

These facts are not clearly seen because there are vast numbers of loans being made and extinguished daily. Banks spend a large part of the interest back into circulation. However, this ‘interest-spending’ does not increase the money supply. It simply keeps money in circulation. In addition, the total amount of interest and debts that are not repaid are repudiated through business losses, repossessions and bankruptcies.

---------------------------

For more commentary by author and monetary reformer, Byron Dale, visit: www.wealthmoney.org
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Is the banker-owned Obama administration waging war on state-owned banks?
« Reply #61 on: March 30, 2011, 01:47:07 PM »
A few years ago Ellen Brown wrote the following:

-----------------------------

The story has been widely circulated that when Albert Einstein was asked what the most powerful force in the universe was, he replied, "compound interest." The story is probably apocryphal, but it underscores the force of the concept. Compound interest has allowed a private global banking cartel to control most of the resources of the world. The debt trap was set in 1974, when OPEC was induced to trade its oil only in U.S. dollars. The price of oil then suddenly quadrupled, and countries with insufficient dollars for their oil needs had to borrow them. In 1980, international interest rates shot up to 20 percent. At 20 percent interest compounded annually, $100 doubles in under 4 years; and in 20 years, it becomes a breathtaking $3,834. The impact on Third World debtors was devastating. President Obasanjo of Nigeria complained in 2000:

    All that we had borrowed up to 1985 was around $5 billion, and we have paid about $16 billion; yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors' interest rates. If you ask me what is the worst thing in the world, I will say it is compound interest.

Could the "viable economic alternative" that threatens the Western economic model be one that declares the collecting of interest to be illegal? That is the model Iran is now holding out to the world. In 1979, Iran was established as an "Islamic Republic," designed to enforce the principles of the Koran not just morally or religiously but as a matter of state government policy. Afghanistan, which is also in the cross-hairs of the U.S. war machine, and Pakistan, which the U.S. is trying hard to control, are also Islamic Republics. The economic principles of the Koran include Sharia banking, which forbids "usury." In the Koran, usury is defined as charging not just excess interest but any interest.

That is also how the term was defined under Old English law until Protestant scholars redefined it in the seventeenth century, opening the Christian world to a form of economic advantage formerly available only to Jewish money lenders. In Jewish scriptures, charging interest was forbidden between "brothers" but was allowed in dealings with "foreigners." (See, for example, Deuteronomy 23:19, "You must not make your brother pay interest," and 23:20, "You may make a foreigner pay interest, but your brother you must not make pay interest.") This point is raised here not to indict the Jewish people (who are not the "global bankers") but for its historical relevance in tracking the divergence of two religious systems. Charging interest on loans has been accepted banking practice throughout the Judao-Christian world for so long that we don't think there is anything wrong with it today, but that hasn't always been true. The history of interest is detailed in an article in The World Guide Encyclopedia, which is published in Uruguay and has a Third World/Islamic slant. It states:

    The practice of usury – lending money and accumulating interest on the loan – can be traced back 4,000 years. But it has always been despised, condemned, restricted or banned by moral, ethical, legal or religious entities. . . .

    During the prophet Muhammad's lifetime, criticism of usury became established. This stance was reinforced by his teachings in the Qur'an, around 600 AD. . . .

    Judaism's criticisms of usury are rooted in several passages of the Old Testament in which charging interest is scorned, discouraged and prohibited. . . . In Deuteronomy, the ban extends to all loans, excluding trade with foreigners. The word "foreigner" is interpreted in general as "enemy" and, armed with this text, Jews employed usury as a weapon, as other people's needs could be transformed into submission. . . .

    The prohibition of usury was adopted as a major campaign by the earliest Christian Church, following on from Jesus' expulsion of the money-lenders from the temple. . . . The Catholic Church of the 4th century AD banned the clergy from charging interest, a rule that was later extended in the 5th century to the laity. . . .

    Around 1620, according to the theologian Ruston, "usury passed from being an offense against public morality, which a Christian government was expected to suppress, to being a matter of private conscience, and a new generation of Christian moralists redefined usury as excessive interest". . . . It is interesting to contrast the clear moral mandate expressed through Pope Leo XIII's Rerum Novarum (634-644 AD) about "ravenous usury" as "a demon condemned by the Church but practiced in a deceitful way by avaricious men," with Pope John Paul II's encyclical Solicitude Rei Socialis (1987) which omits any explicit mention of usury, except for a vague reference to recognizing the Third World debt crisis.

    This "demon" governs current global relations, condemning most of the world population to living under the sign of debt: i.e., each person born in Latin America owes already $1,600 in foreign debt; each individual being conceived in Sub-Saharan Africa carries the burden of a $336 debt, for something that its ancestors have long ago paid-off. In 1980 the Southern countries' debt amounted to $567 billion; since then, they have paid $3,450 billion in interest and write-offs, six times the original amount. In spite of this, that debt had quadrupled by the year 2000, reaching $2,070 billion.

Islamic scholars have been seeking to devise a global banking system that would serve as an alternative to the interest-based scheme that is in control of the world economy, and Iran has led the way in devising that model. Iran was able to escape the debt trap that captured other developing countries because it had its own oil. Few Islamic banks existed before Iran became an Islamic Republic in 1979, but the concept is now spreading globally. With the fall of the Iron Curtain in 1989, the viable economic model that threatens the global dominance of the Western banking clique may no longer be Communism. It may be the specter of an Islamic banking system that would strip a private banking cartel of the compound interest scheme that is its most powerful economic weapon.


-----------------------------

Keep the above in mind as you read the following:

-----------------------------

http://www.prisonplanet.com/globalist-target-central-bank-of-libya-is-100-state-owned.html

GLOBALIST TARGET: Central Bank of Libya is 100% State Owned

By Eric V. Encina
21st Century Wire
March 28, 2011

One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned. The world’s globalist financiers and market manipulators do not like it and would continue to their on-going effort to dethrone Muammar Muhammad al-Gaddafi, bringing an end to Libya as independent nation.

Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability.  Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations.

When the smoke eventually clears from all the cruise missiles and cluster bombs, you will see the Allied reformers move in to reform Libya’s monetary system, pumping it full of worthless dollars, priming it for a series of chaotic inflationary cycles.

[Continued...]


http://www.prisonplanet.com/wow-that-was-fast-libyan-rebels-have-already-established-a-new-central-bank-of-libya.html

Wow That Was Fast! Libyan Rebels Have Already Established A New Central Bank Of Libya

The Economic Collapse
March 29, 2011

The rebels in Libya are in the middle of a life or death civil war and Moammar Gadhafi is still in power and yet somehow the Libyan rebels have had enough time to establish a new Central Bank of Libya and form a new national oil company.  Perhaps when this conflict is over those rebels can become time management consultants.  They sure do get a lot done.  What a skilled bunch of rebels – they can fight a war during the day and draw up a new central bank and a new national oil company at night without any outside help whatsoever.  If only the rest of us were so versatile!  But isn’t forming a central bank something that could be done after the civil war is over?  According to Bloomberg, the Transitional National Council has “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”  Apparently someone felt that it was very important to get pesky matters such as control of the banks and control of the money supply out of the way even before a new government is formed.

[Continued...]

-----------------------------

Does this mean the banker-owned Obama administration will next be dropping bombs on North Dakota in the name of "humanitarianism"?  ::)

And will privatize-everything Austrian Schoolers wink and look the other way as it does so?
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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"SOUND MONEY" = CRUCIFYING MANKIND UPON A "CROSS OF GOLD!"
« Reply #62 on: April 14, 2011, 04:41:11 PM »
"Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold." -- http://www.youtube.com/watch?v=DFKSBF6d9O4

"Author Ron Paul has been the leading champion of sound money in the Congress. He explains why sound money has meant the gold standard." -- https://mises.org/library/gold-peace-and-prosperity

In 1929 the M2 money supply was approximately $46.6 billion; four years later it was roughly $32.2 billion. This 31% decrease was all it took to bring on a depression so severe and so devastating that it was called the "Great Depression."

Thus, when Austrian Schoolers insist on instituting a new gold standard under the euphemistic guise of "sound money," we would be well advised to consider what effect this would have on the M2 money supply, and hence on the economy -- and hence on our very lives.

Let's assume that a 100% reserve gold-based money system is instituted (since that's what Austrian School icon Murray Rothbard advocated); and -- since gold standard apologists are fond of waxing nostalgic about pre-1913 America (particularly the Gilded Age) -- let's also assume that, in accordance with the Gold Standard Act of 1900, each paper dollar is made "redeemable" in 23.22 grains of gold.

To determine what effect this will have on the M2 money supply -- which is $8.9137 trillion at present -- let's further assume that the U.S. has all the gold that's ever been mined (even though it doesn't) -- 165,000 metric tonnes, or 2.546336 trillion grains, according to the World Gold Council. If we divide that figure by 23.22 grains, we have a maximum M2 money supply of $109.66 billion.

That's a minimum 98.8% decrease!

This would make the 1/3 money supply contraction that occurred between 1929-1933 -- and the magnitude of the resultant depression -- both look minuscule by comparison. The effect of such a severe contraction would be beyond devastating -- it would be GENOCIDAL!

Realizing this, what if we instead made each paper dollar redeemable in merely two grains of gold? The result would be a maximum money supply of $1.273168 trillion, and hence a M2 money supply contraction of at least 85.7%, which, although not quite as bad as the previous figure (98.8%), is still far worse than the contraction that caused the Great Depression.

And if all this wasn't bad enough, there's also the issue of how the current trade deficit would (under the system in question) cause whatever gold we had to be quickly drained from our economy, thereby contracting the money supply even further.

As Byron Dale explains it here:

----------------------------

“Ok, so now we get that, which makes the total money supply for the United States roughly $1.6 trillion. Ok, if the United States has a trade deficit, like we do right now, of $40.4 billion per month (and it goes up and down a little), it would only take 3.29 years for the total money supply -- or all the gold -- to leave the country just to pay for the trade deficit. And they’re not bringing that money back -- or they’re not buying things from us -- or we wouldn’t have that trade deficit. They’re bringing this stuff over in big ships, and then the ships are going back empty. So the money flows over and doesn’t comes back, that’s why you have a trade deficit. Ok, so now, if we just went to that, with all the gold in the world, in a little over 3 1/4 years we wouldn’t have any gold in the country left -- and no money.

“Now what are we going to do?

“Now, if you borrow the gold back at interest, so you can have it back in your country, you’ve turned the whole thing into a debt money system again."

[Continued...]

----------------------------

This is why deflation-worshiping Austrians never want to talk about specifics. They figure that, if they simply parrot the euphemism "sound money" over and over again, everyone will just blindly assume that it's a good idea, and consequently refrain from determining for themselves what the actual effect of such a system would be.

Conclusion? Although Ron Paul is by far the most honorable politician in Washington, and although he's right on many issues, he is (with all due respect) sadly wrong on the question of what we should replace our current debt-based money system with.

This is why the "end the Fed" mantra is so misleading. It causes people to falsely assume that, if we simply "end" the Federal Reserve System, a much better system will magically and automatically take its place. Yet as we now see, that's not necessarily the case. Not by a long shot.

The solution? Instead of merely "ending" the Fed, we must replace it with the debt-free money system called for on page one of this thread -- a system that avoids both currency-destroying, compound interest-driven hyperinflation AND economy-destroying deflation.

Anything short of this will prove to be, at best, the equivalent of rearranging deck chairs on the Titanic, and, at worst, the equivalent of burning down the house to roast the pig.

Must we find that out the hard way?
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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"Pay no attention to those private speculators behind the curtain!"
« Reply #63 on: April 19, 2011, 04:55:02 PM »
What destroyed Germany's national currency, the Reichsmark, in the early 1920s? According to the monetary flat-earthers from the Austrian School, the answer is the mere fact that Reichsmarks were being "printed" (i.e., issued via fractional reserve lending) at all. In reality, however, it's what they were being "printed" for that ultimately destroyed their exchange value.

Instead of being "printed" to finance, say, the construction and repair of roads, bridges and other public goods, Reichsmarks were being "printed" so that private speculators could use them to engage in the predatory "short-selling" of the very currency that had just been loaned to them by the Reichsbank (Germany's privately owned and controlled central bank).

As monetary historian, Stephen Zarlenga, explains it (all emphasis his):

------------------------------------

The great German hyper-inflation of 1922-1923 is one of the most widely cited examples by those who insist that private bankers, not governments, should control the money system. What is practically unknown about that sordid affair is that it occurred under the auspices of a privately owned and controlled central bank.

Up to then the Reichsbank had a form of private ownership but with substantial public control; the President and Directors were officials of the German government, appointed by the Emperor for life. There was a sharing of the revenue of the central bank between the private shareholders and the government. But shareholders had no power to determine policy.

The Allies' plan for the reconstruction of Germany after WWI came to be known as the Dawes Plan, named after General Charles Gates Dawes, a Chicago banker. The foreign experts delegated by the League of Nations to guide the economic recovery of Germany wanted a more free market orientation for the German central bank.

[Hjalmar] Schacht relates how the Allies had insisted that the Reichsbank be made more independent from the government:

"On May 26, 1922, the law establishing the independence of the Reichsbank and withdrawing from the Chancellor of the Reich any influence on the conduct of the Bank's business was promulgated."

This granting of total private control over the German currency became a key factor in the worst inflation of modern times.

The stage had already been set by the immense reparations payments. That they were payable in foreign currency would place a great continuing pressure on the Reichsmark far into the future.

HOW IS A CURRENCY DESTROYED?

In a sentence, a currency is destroyed by issuing or creating tremendously excessive amounts of it. Not just too much of it but far too much. This excessive issue can happen in several ways, for example by British counterfeiting as occurred with the U.S. Continental Currency, and with the French Assignats. The central bank itself might print too much currency, or the central bank might allow speculators to destroy a currency through excessive short selling of it, similar to short selling a company's shares, in effect allowing speculators to "issue" the currency.

The destruction of an already pressured national currency through speculation is what concerns us in this case. A related process was recently allowed to destroy several Asian currencies, which dropped over 50% against the Dollar in a few months time, in 1997-98, threatening the livelihood of millions.

It works like this: First there is some obvious weakness involved in the currency. In Germany's case it was World War One, and the need for foreign currency for reparations payments. In the case of the Asian countries, they had a need for U.S. dollars in order to repay foreign debts coming due.

Such problems can be solved over time and usually require national contribution toward their solution, in the form of taxes or temporary lowering of living standards. However, because currency speculation on a scale large enough to affect the currency's value is still erroneously viewed as a legitimate activity, private currency speculators can make a weak situation immeasurably worse and take billions of dollars in "profits" out of the situation by selling short the currency in question. This doesn't just involve selling currency that they own but making contracts to sell currency that they don't own -- to sell it short.

If done in large amounts, in a weak situation, such short selling soon has self-fulfilling results, driving down the value of the currency faster and further than it otherwise would have fallen. Then at some point, panic strikes, which causes widespread flight from the currency by those who actually hold it. It drops precipitously. The short selling speculators are then able to buy back the currency that they sold short, and obtain tremendous profits, at the expense of the producers and working people whose lives and enterprises were dependent on that currency.

The free market gang claim that it's all the fault of the government that the currency was weak in the first place. But by what logic does it follow that speculators take this money from those already in trouble? Currency speculation in such large amounts should be viewed as a form of aggression, no less harmful than dropping bombs on the country in question.

Industrialists should realize that when they allow such activity to be included under the umbrella of "business activity," they are making a serious error. They should help isolate such speculation and educate the populace on how destructive it is, so that it can be stopped through law.

Limitations could easily be placed on speculative currency transactions without limiting those that are a normal part of business and trading, while stopping the kind of transactions that are thinly disguised attacks on the country involved. Placing a small tax on such transactions would be a healthy first move.

TOO MANY GERMAN MARKS ISSUED

By July 1922 the German Mark fell to 300 marks for $1; in November it was at 9,000 to $1; by January 1923 it was at 49,000 to $1; by July 1923 it was at 1,100,000 to $1. It reached 2.5 trillion marks to $1 in mid November, 1923, varying from city to city.

In the monetary chaos Hamburg, Bremen and Kiel established private banks to issue money backed by gold and foreign exchange. The private Reichsbank printing presses had been unable to keep up and other private parties were given the authority to issue money. Schacht estimated that about half the money in circulation was private money from other than Reichsbank sources.

CAUSE OF THE FIRST INFLATION: SCHACHT'S FIRST "EXPLANATION"

There is often a false assumption made that the government allowed the mark to fall, in order to more easily pay off the war indemnity. But since the Versailles Treaty required payment in U.S. Dollars and British Pounds, the inflationary disorder actually made it much harder to raise such foreign exchange.

Hjalmar Schacht's 1967 book, The Magic of Money, presents what appears to be a contradictory explanation of the private Reichsbank's role in the inflation disaster.

First, in the hackneyed tradition of economists, he is prepared to let the private Reichsbank off the hook very easily and blame the government's difficult reparations situation instead. He minimized the connection of the private control of the central bank with the inflation as mere co-incidence....

THEN SCHACHT GIVES THE REAL EXPLANATION

Schacht was a lifelong member of the banking fraternity, reaching its highest levels. He may have felt compelled to give his banker peers and their public relations corps something innocuous to quote. But Schacht also had a streak of German nationalism, and more than that, an almost sacred devotion to a stable mark. He had watched helplessly as the hyper-inflation destroyed "his mark."

For whatever reasons, after 44 years he proceeded to let the cat out of the bag, with some truly remarkable admissions, which shatter the "accepted wisdom" the Anglo-American financial community has promulgated on the German hyper-inflation....

SCHACHT'S REVELATION

It was in describing his 1924 battles in stabilizing the Rentenmarks that Schacht made his revelation, giving the private mechanism of the hyper-inflation. Schacht was obviously very upset when the speculators continued to attack the new Rentenmark currency. By the end of the November 1923:

"The dollar reached an exchange rate of 12 trillion Rentenmarks on the free market of the Cologne Bourse. This speculation was not only hostile to the country's economic interests, it was also stupid. In previous years such speculation had been carried on either with loans which the Reichsbank granted lavishly, or with emergency money which one printed oneself, and then exchanged for Reichsmarks.

"Now, however, three things had happened. The emergency money had lost its value. It was no longer possible to exchange it for Reichsmarks. The loans formerly easily obtained from the Reichsbank were no longer granted, and the Rentenmark could not be used abroad. For these reasons the speculators were unable to pay for the dollars they had bought when payment became due (and they) made considerable losses."

Schacht is telling us that the excessive speculation against the mark -- the short selling of the mark -- was financed by lavish loans from the private Reichsbank. The margin requirements that the anti-mark speculators needed and without which they could not have attacked the mark was provided by the private Reichsbank!

This contradicts Schacht's earlier explanation, for there is no way to interpret or justify "lavishly" loaning to anti-mark speculators as "helping to keep the government's head above water." Just the opposite. Schacht was a bright fellow, and he wanted this point to be understood. He waited until he wrote the Magic of Money in 1967. His earlier book, The Stabilization of the Mark (1927), discussed inflation profiteering but did not clearly identify the private Reichsbank itself as financing such speculation, making it so convenient to go short the mark.

Thus it was a privately owned and privately controlled central bank, that made loans to private speculators, enabling them to speculate against the nation's currency. Whatever other pressures the currency faced (and they were substantial), such speculation helped create a one way market down for the Reichsmark. Soon a continuous panic set in, and not just speculators, but everyone else had to do what they could to get out of their marks, further fueling the disaster. This private factor has been largely unknown in America.

-- Stephen Zarlenga, The Lost Science of Money, pp. 579-87




------------------------------------

But in the ideological fantasy world of the Austrian School, private speculators are never to blame for anything; only government is -- particularly government "regulation," even if it was admittedly DE-regulation that enabled the speculators in question to wreak so much financial havoc in the first place! ::)
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Thanks, Alex!
« Reply #64 on: April 26, 2011, 07:11:40 PM »
I'd like to thank Alex Jones for having Bill Still on earlier today:

       http://www.youtube.com/watch?v=s0ZFB4UlR7g

      

Please don't let self-appointed Thought Police from the Austrian School discourage you from having him on again!
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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Re: Thanks, Alex!
« Reply #65 on: April 27, 2011, 11:27:21 AM »
A caller questioned Bill Still's proposal that only a a sovereign nation should create its currency in the public interest, saying that the government cannot be trusted with such a power. This is a legitimate question. Bill Still's answer is reasonable, saying who else are we going to trust it with then? The key to a better an answer is to allow competing currencies and the natural order of things is for countries to be sovereign. So even if the one country's fiat becomes corrupt, its effect is naturally limited, in space, because of its sovereignty, and in time, as the competing currencies of other currencies and commodities/metals becomes a refuge of safety for her citizens.

Again for the gold and silver bugs, don't worry, these will naturally be further valued, as they are being artificially suppressed in the current system.
And earthly power doth then show likest God's
When mercy seasons justice

Offline Geolibertarian

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Re: Thanks, Alex!
« Reply #66 on: April 27, 2011, 01:35:27 PM »
A caller questioned Bill Still's proposal that only a a sovereign nation should create its currency in the public interest, saying that the government cannot be trusted with such a power.

It's an Austrian School talking point I've heard a million times, and it's ridiculous on its face, because if our government can't even be trusted with the power to issue debt-free money, then -- contrary to the Constitution that Austrian Schoolers love to wrap themselves in -- it also can't be trusted with the power to declare and wage war.

Quote
This is a legitimate question.

No, it's a red herring that anarcho-capitalists posing as "Constitutionalists" incessantly invoke in a shameless attempt to fool people into presuming that ours can never be a government "of, by and for the people," and so can never be trusted to do anything that promotes or serves the "general welfare."

Austrian Schoolers don't really want to "end" tyranny; they merely want to privatize it and call it "liberty." (Not that they'll ever admit to this, of course, even though it was the Rockefeller Foundation that financed the Austrian School out of obscurity in the U.S.)

Quote
Bill Still's answer is reasonable, saying who else are we going to trust it with then? The key to a better an answer is to allow competing currencies and the natural order of things

Then why stop there? Why not -- in the name of "liberty" and the "free market" -- trust competing private interests (read: warlords) with the power to declare and wage war? (I'm sure the Founding Fathers, knowing history as well as they did, would have laughed at such a question.)

As to the question of currencies, allow me to repeat an explanation I've given elsewhere concerning this issue:

Thanks to the educational efforts of monetary reformers such as Ellen Brown, Richard C. Cook, Byron Dale, Bill Still and Stephen Zarlenga, millions of people are now aware of just how disastrous the gold standard in all its variants has consistently proven to be in the past, and of how finance oligarchs have historically promoted this system while demonizing debt-free Greenbacks.

As an apparent consequence of this, it has in recent years become fashionable among many public relations-savvy Austrian Schoolers to avoid even mentioning the discredited gold standard, and to instead peddle the notion that if we simply turned money creation entirely over to the (euphemism alert!) "free market," then we would finally have a “sound” money system, and, as a result, all of our monetarily-caused economic problems would magically "correct" themselves.

Yet there's a fatal flaw with this idea that its advocates either can't or won't see: once the government declares commodity-backed currencies A, B and C good for the payment of taxes and commodity-backed currencies X, Y and Z not good for such payment (or not as good), from that moment on the value that the former three have relative to the latter is determined more by government "fiat" than by the forces of free market "competition" -- at which point they cease to be "competing currencies" in any meaningful sense of the term.

Of course, despite the obligatory lip service they pay to the Constitution, many if not most Austrian Schoolers are in fact anarcho-capitalists, and so the likely response from the more intellectually honest among them would be that there shouldn't even be a government.

This "no government" fantasy is particularly delusional, because they simultaneously advocate the very sort of land tenure system that invariably and inevitably gives rise to oppressive "governments" in the first place:

----------------------------------

http://lysanderspooner.org/node/59

In process of time, the robber, or slaveholding, class -- who had seized all the lands, and held all the means of creating wealth -- began to discover that the easiest mode of managing their slaves, and making them profitable, was not for each slaveholder to hold his specified number of slaves, as he had done before, and as he would hold so many cattle, but to give them so much liberty as would throw upon themselves (the slaves) the responsibility of their own subsistence, and yet compel them to sell their labor to the land-holding class -- their former owners -- for just what the latter might choose to give them.

Of course, these liberated slaves, as some have erroneously called them, having no lands, or other property, and no means of obtaining an independent subsistence, had no alternative -- to save themselves from starvation -- but to sell their labor to the landholders, in exchange only for the coarsest necessaries of life; not always for so much even as that.

These liberated slaves, as they were called, were now scarcely less slaves than they were before. Their means of subsistence were perhaps even more precarious than when each had his own owner, who had an interest to preserve his life. They were liable, at the caprice or interest of the landholders, to be thrown out of home, employment, and the opportunity of even earning a subsistence by their labor. They were, therefore, in large numbers, driven to the necessity of begging, stealing, or starving; and became, of course, dangerous to the property and quiet of their late masters.

The consequence was, that these late owners found it necessary, for their own safety and the safety of their property, to organize themselves more perfectly as a government and make laws for keeping these dangerous people in subjection; that is, laws fixing the prices at which they should be compelled to labor, and also prescribing fearful punishments, even death itself, for such thefts and tresspasses as they were driven to commit, as their only means of saving themselves from starvation.

These laws have continued in force for hundreds, and, in some countries, for thousands of years; and are in force today, in greater or less severity, in nearly all the countries on the globe.

The purpose and effect of these laws have been to maintain, in the hands of the robber, or slave holding class, a monopoly of all lands, and, as far as possible, of all other means of creating wealth; and thus to keep the great body of laborers in such a state of poverty and dependence, as would compel them to sell their labor to their tyrants for the lowest prices at which life could be sustained.

The result of all this is, that the little wealth there is in the world is all in the hands of a few -- that is, in the hands of the law-making, slave-holding class; who are now as much slaveholders in spirit as they ever were, but who accomplish their purposes by means of the laws they make for keeping the laborers in subjection and dependence, instead of each one's owning his individual slaves as so many chattels.

[Continued...]

----------------------------------

As I explained on page one of this thread, the key point here is that a group of private individuals presuming to "own" all the land comes first, and the "government" (or, more accurately, the State) into which they organize out of common interest comes second. (Whether they actually call it such is irrelevant.) That's the inevitable result of allowing the concept of "private property" to be applied to the Earth on which all must live yet which none produced in the same unlimited, unconditional sense that it's applied to the products of human labor.

       http://geolib.com/sullivan.dan/commonrights.html

It's also the inevitable result of turning the power of money creation (as the Austrian School would have us do) entirely over to private interests:

    “Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."

-- attributed to Sir Josiah Stamp, Director of the Bank of England (appointed 1928)


    "...the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalistic fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences."

-- Carroll Quigley, Tragedy and Hope, p. 324


The typical Austrian School reaction to this is to shamelessly engage in hysterical fearmongering about the presumed evils of government-issued currency. Yet one could just as easily posit all sorts of ridiculous fearmongering scenarios concerning government-controlled police and government-controlled armies as a way of scaring well-meaning yet gullible readers into embracing the stateless utopian fantasy world of the Austrian School, wherein -- according to those who promote this quasi-religious fairy tale -- a mystical, God-like entity euphemistically called the "free market" magically keeps privately controlled police and privately controlled armies from terrorizing, oppressing and enslaving the masses.

Fortunately, most readers aren't quite so gullible. They know that keeping the police and military in public rather than private hands is, if nothing else, the far lesser of two evils; and that the reason certain public institutions have become so corrupt and oppressive is that they've been, in effect, "privatized" to one extent or another (case in point: the "Federal" Reserve), and that the solution, therefore, is not to mindlessly throw the baby out with the bathwater, but to reclaim from these private interests our rightful control over our own government.

I, for one, say "no" to the privatized tyranny that anarcho-capitalists would have us all living under if they had their way, and "yes" to the liberty and freedom that can only be experienced in a truly Democratic Constitutional Republic:

       http://www.youtube.com/watch?v=DioQooFIcgE (The American Form of Government)

I'm sure I'm far from alone in that regard.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Re: "SOUND MONEY" = CRUCIFYING MANKIND UPON A "CROSS OF GOLD!"
« Reply #67 on: April 28, 2011, 01:17:51 PM »
Realizing this, what if we instead made each paper dollar redeemable in merely two grains of gold? The result would be a maximum money supply of $1.273 trillion, and hence a M2 money supply contraction of at least 85.7%, which, although not quite as bad as the previous figure (98.8%), is still far worse than the contraction that caused the Great Depression.

There are undoubtedly many who believe that the preemptive solution to the deflationary nightmare referred to above is to institute a gold and silver backing of the dollar.

Is this belief based on an actual study of the matter, or is it the mere product of wishful thinking? Let's find out.

According to the Silver Institute, the total supply of silver is 1,056.8 million ounces, or 507.263 billion grains.

If we add that to the total supply of gold -- 2,546.336 billion grains at present -- we have a combined gold-silver supply of 3,053.599 billion grains (or just over 3 trillion grains).

Now, even though it took a lot more silver (371.25 grains) to make a dollar under the 1792 Coinage Act than it did gold (24.75 grains), let's assume that the newly-instituted gold/silver standard makes each paper dollar "redeemable" in either one grain of gold or one grain of silver.

Note: To understand how small a "grain" is, in the following pic the small golden disk close to the 5cm marker is a piece of pure gold weighing one troy grain:



With that sort of "backing" under a 100% reserve system, the maximum M2 money supply is $3.053599 trillion, which (surprise!) is a mere 34.26 percent of the current M2 money supply ($8.9137 trillion), and hence a minimum decrease of 65.74 percent -- more than twice the money supply contraction that caused the Great Depression. And that's assuming we have the total supply of gold and silver (we don't) and that we don't have a trade deficit that would drain however much gold and silver we actually do have out of the country within a few years (we do).

Do all of you precious metal-obsessed conservatives and libertarians finally get it now?

The very thing that makes gold and silver a great private investment is what makes them a disastrous thing on which to base a nation's entire money supply.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Re: "SOUND MONEY" = CRUCIFYING MANKIND UPON A "CROSS OF GOLD!"
« Reply #68 on: May 04, 2011, 04:12:59 PM »
http://www.youtube.com/watch?v=Bi2gOhvpOHg (The Money Masters – part 9 of 22)
http://www.youtube.com/watch?v=Pyaj30n8kZY (The Money Masters – part 10 of 22)

The following excerpts from The Money Masters can be viewed in the two youtube clips above.

------------------------------

A truly incredible editorial in the London Times explained the central bankers' attitude towards Lincoln's Greenbacks:

    "If this mischievous financial policy, which has its origin in North America, shall become endurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains, and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe." -- Times of London

[...]

Allegations that international bankers were responsible for Lincoln's assassination surfaced in Canada 70 years later in 1934. Gerald G. McGeer, a popular and well-respected Canadian attorney, revealed this stunning charge in a five hour speech before the Canadian House of Commons blasting Canada's debt-based money system. Remember: it was 1934, the height of the Great Depression, which was ravaging Canada as well. McGeer had obtained evidence -- deleted from the public record -- provided to him by Secret Service agents at the trial of John Wilks Booth, after Booth's death. McGeer said it showed that Booth was a mercenary working for the international bankers. According to an article in the Vancouver Sun of May 2, 1934:

    "Abraham Lincoln, the martyred Emancipator of the Slaves, was assassinated through the machinations of a group representative of the international bankers who feared the United States President's national credit ambitions....

    "'There was only one group in the world at that time who...had any reason to desire the death of Lincoln.

    "'They were the men opposed to his national currency program, and who had fought him throughout the whole of the Civil War on his policy of greenback currency.'"

Interestingly, McGeer claimed that Lincoln was assassinated not only because international bankers wanted to reestablish a central bank in America, but because they also wanted to base America's currency on gold -- gold they controlled. In other words: put America on a gold standard. Lincoln had done just the opposite by issuing U.S. notes -- Greenbacks -- which were based purely on the good faith and credit of the United States. The article quoted McGeer as saying:

    "'They were the men interested in the establishment of the Gold Standard...and the right of the bankers to manage the currency and credit of every nation in the world.

    "'With Lincoln out of the way they were able to proceed with that plan, and did proceed with it in the United States. Within eight years after Lincoln's assassination silver was demonetized and the Gold Standard money system set up in the United States.'"

Not since Lincoln has the U.S. issued debt-free United States notes.

[...]

With Lincoln out of the way, the money changers' next objective was to gain complete control over America's money. This was no easy task. With the opening of the American west, silver had been discovered in huge quantities. On top of that, Lincoln's Greenbacks were generally popular. Despite the European central bankers' deliberate attacks on Greenbacks, they continued to circulate in the United States -- in fact until a few years ago. According to historian W. Cleon Skousen:

    "Right after the Civil War there was considerable talk about reviving Lincoln's brief experiment with the Constitutional monetary system. Had not the European money-trust intervened, it would have no doubt become an established institution." -- W. Cleon Skousen

It is clear that the concept of America printing her own debt-free money sent shock waves throughout the European central banking elite. They watched with horror as Americans clamored for more Greenbacks. They may have killed Lincoln, but support for his monetary ideas grew.

On April 12, 1866, nearly one year to the day of Lincoln's assassination, Congress went to work at the bidding of the European central banking interests. It passed the Contraction Act, authorizing the Secretary of the Treasury to begin to retire some of the Greenbacks in circulation, and thereby contract the money supply. Authors Theodore R. Thoren and Richard F. Warner explained the results of the money contraction in their classic book on the subject, The Truth In Money Book:

    "The hard times which occurred after the Civil War could have been avoided if the Greenback legislation had continued as President Lincoln had intended. Instead, there were a series of money panics -- what we call 'recessions' -- which put pressure on Congress to enact legislation to place the banking system under centralized control. Eventually, the Federal Reserve Act was passed on December 23, 1913."

In other words, the money changers wanted two things: (1) the reinstitution of a central bank under their exclusive control, and (2) an American currency backed by gold. Their strategy was two-fold.

First of all, cause a series of panics to try to convince the American people that only centralized control of the money supply could provide economic stability.

And secondly, remove so much money from the system, that most Americans would be so desperately poor that they either wouldn't care or would be too weak to oppose the bankers.

In 1866, there was $1.8 billion in currency in circulation in the United States -- about $50.46 per capita. In 1867 alone, half a billion dollars...was removed from the U.S. money supply. Ten years later, in 1876, America's money supply was reduced to only $600 million. In other words, 2/3 of America's money had been called in by the bankers. Only $14.60 per capita remained in circulation. Ten years later [in 1886], the money supply had been reduced to only $400 million, even though the population had boomed. The result was that only $6.67 per capita remained in circulation -- a 760% loss in buying power over 20 years.

Today, economists try to sell the idea that recessions and depressions are a natural part of something they call the "business cycle." The truth is, our money supply is manipulated now just as it was before and after the Civil War.

How did this happen? How did money become so scarce? Simple. Bank loans were called in, and no new ones were given. In addition, silver coins were melted down. In 1872, a man named Ernest Seyd was given a hundred thousand pounds -- about $500 thousand -- by the Bank of England and sent to America to bribe necessary Congressmen to get silver demonetized. He was told that if that was not sufficient, to draw an additional hundred thousand pounds, or as much more as was necessary.

The next year Congress passed the Coinage Act of 1873, and the minting of silver dollars abruptly stopped. In fact, Representative Samuel Hooper, who introduced the bill in the House, acknowledged that Mr. Seyd actually drafted the legislation. But it gets even worse than that. In 1874, Seyd himself admitted who was behind the scheme:

    "I went to America in the winter of 1872-73, authorized to secure, if I could, the passage of a bill demonetizing silver. It was in the interest of those I represented -- the governors of the Bank of England -- to have it done. By 1873, gold coins were the only form of coin money." -- Ernest Seyd

But the contest over control of America's money was not yet over. Only three years later, in 1876, with one-third of America's workforce unemployed, the population was growing restless. People were clamoring for a return to the Greenback money system of President Lincoln, or a return to silver money -- anything that would make money more plentiful. That year, Congress created the United States Silver Commission to study the problem. Their report clearly blamed the monetary contraction on the national bankers. The report is interesting, because it compares the deliberate money contraction by the national bankers after the Civil War to the fall of the Roman Empire:

    "The disaster of the Dark Ages was caused by decreasing money and falling prices.... Without money, civilization could not have had a beginning, and with a diminishing supply, it must languish and unless relieved, finally perish.

    "At the Christian era the metallic money of the Roman Empire amounted to $1,800,000,000. By the end of the Fifteenth century it had shrunk to less than $200,000,000.... History records no other such disastrous transition as that from the Roman Empire to the Dark Ages." -- United States Silver Commission

Despite this report by the Silver Commission, Congress took no action. The next year, 1877, riots broke out from Pittsburgh to Chicago. The torches of starving vandals lit up the sky. The bankers huddled to decide what to do. They decided to hang on. Now that they were back in control (to a certain extent), they were not about to give it up.

At the meeting of the American Bankers Association that year, they urged their membership to do everything in their power to put down the notion of a return to Greenbacks. The ABA secretary, James Buel, authored a letter to the members which blatantly called on the banks to subvert not only Congress but the press:

    "It is advisable to do all in your power to sustain such prominent daily and weekly newspapers, especially the Agricultural and Religious Press, as will oppose the Greenback issue of paper money and that you will also withhold patronage from all applicants who are not willing to oppose the government issue of money.

    "....To repeal the Act creating bank notes, or to restore to circulation the government issue of money will be to provide the people with money and will therefore seriously affect our individual profits as bankers and lenders.

    "See your Congressman at once and engage him to support our interests that we may control legislation." -- James Buel, American Bankers Association

------------------------------

Keep the above in mind as you read the following goldbug propaganda piece:

------------------------------

http://www.thegoldstandardnow.org/key-blogs/235-not-dollar-depreciation-gold-standard

Not Dollar Depreciation but the Gold Standard

by Christopher K. Potter
May 03, 2011

Recently a New York Times article screamed “Prices Surge as Investors Rush to Safety of Gold.”  In reality there was no rush and the gold price did not surge.  Gold was up less than 0.5% on the day in question and is up only 6% in 2011, less than the increase in the S&P 500.  For 10 years, the gold price has edged quietly higher, rarely moving more than 1% up or down on any given day.  Along the way, the media argued that each new high was driven by panicked investors who were fleeing from equities.  I would argue just the opposite.  Individuals and institutions, reacting rationally to expansionary monetary policy, are merely exchanging cash balances for gold. This has little to do with geopolitical turmoil or perceived troubles in the economy and stock market.  It is a currency trade, pure and simple.

The basic mechanics of monetary policy and money creation remain a mystery to most people.  Few are aware that most new treasury debt is purchased by the Federal Reserve with brand new dollars; that China buys large quantities of dollars every day with newly minted Yuan or that Japan created 39 trillion ($481 billion) new Yen in the two weeks following the earthquake.  As James Grant points out in his March 25th Interest Rate Observer, “when the materialization of nearly a half-trillion dollars in a fortnight’s time stops astounding reporters, it’s past time for a monetary reappraisal.”  Perhaps reporters are more unaware than unimpressed.  With everyone printing at once, the value of one currency relative to another (the exchange rate) never reflects the magnitude of the new supply of money.  All currencies decline together while appearing to not decline at all.  While this provides ample cover for our central bankers to perpetuate the print-off, it results in inflation, progressively severe boom and bust cycles, perpetual deficits and an increasing inequality of wealth.

Under a gold standard, in which paper money is convertible into a fixed weight of gold, the threat of dollar to gold conversion compels monetary restraint on all central banks.  In our present unreserved monetary system, that threat has become reality and the qualities that define our money as sound have been transferred, at the margin, from paper to gold.  We have seen the creation of gold denominated shares by hedge fund manager John Paulson and others; the passage of a bill in the Utah legislature allowing gold and silver coins to be used as legal tender; and the conversion of cash balances into gold bullion by major investment and endowment funds.  Even the manufacturers of our money have been exchanging paper for gold - witness the buying of bullion by the central banks of India, Bangladesh, Sri Lanka, China and Thailand over the last year.

Economic stimulation through currency depreciation is the unwritten, unspoken policy of today’s monetary leaders.  While our Federal Reserve receives a disproportionate amount of the blame for this dangerous game, all central banks are active participants.  In response, gold is predictably performing its role as the only supply constrained currency – its price is adjusting upward.  Despite the headlines, it has done so in an orderly, methodical way for over a decade.  Other commodity prices have risen as well, but only the gold price has risen with a consistently tight correlation to the growth in world money.  This has won converts to the idea that gold must be the centerpiece of monetary reform.   It has also shortened the road forward to a modernized gold standard.

------------------------------
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline JT Coyoté

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Re: Monetary Reform!
« Reply #69 on: May 04, 2011, 05:53:40 PM »
To continue the time line for the controlling of not only the gold, but silver and debt control of all scrip... toward the absolute control of the entire country through debt foreclosure by the bank through controlling the amount of money within the economy.

Geolib ended the time-line in his last post just after 1877 which I reiterate here for continuity in italics, then I will continue the time line to where the False Bank is established in 1913...


"The next year, 1877, riots broke out from Pittsburgh to Chicago. The torches of starving vandals lit up the sky. The bankers huddled to decide what to do. They decided to hang on. Now that they were back in control, to a certain extent, they were not about to give it up.

At the meeting of the American Bankers Association that year, they urged their membership to do everything in their power to put down the notion of a return to Greenbacks. The ABA secretary, James Buel, authored a letter to the members which blatantly called on the banks to subvert not only Congress but the press:

      "It is advisable to do all in your power to sustain such prominent daily and weekly newspapers, especially the Agricultural and Religious Press, as will oppose the Greenback issue of paper money and that you will also withhold patronage from all applicants who are not willing to oppose the government issue of money.

      "....To repeal the Act creating bank notes, or to restore to circulation the government issue of money will be to provide the people with money and will therefore seriously affect our individual profits as bankers and lenders.

      "See your Congressman at once and engage him to support our interests that we may control legislation." -- James Buel, American Bankers Association..."



"1878...    

James Buel's letter clearly had some effect, as although pressure mounted in Congress for change, the press tried to turn the general public away from the truth.  An example of this is from the New York Tribune in their 10th January edition in which is stated in a bankers propaganda piece,

    "The capital of the country is organized at last and we will see whether Congress will dare to fly in its face."

This early control of the media didn't work entirely nevertheless, as on February 28th Congress passed the, "Sherman Law."  This law allowed the minting of a limited number of silver dollars, ending the 5 year hiatus.  However this did not mean that anyone who brought silver to the United States Mint could have it struck into silver dollars, free of charge, as in the period prior to Ernest Seyd's Coinage Act, in 1873.  Gold backing of the American currency also remained.

However, this Sherman Law did ensure that some money began to flow into the economy again, and coupled with the fact that the bankers now realized that they were still firmly in control, they started issuing loans again and the post Civil War depression was finally over.

1881...    

The American people elect the Republican, James Garfield as the 20th President of the United States.  This was a worry to the money changers, because as a Congressman, he had been Chairman of the Appropriations Committee, and was a member of Banking and Currency.  The money changers were therefore aware that President Garfield was in full knowledge of their scam on the American people.  Indeed following his inauguration, President Garfield stated,

   "Whosoever controls the volume of money in any country is absolute master of all industry and commerce...And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate."

Strangely enough within a few weeks of making that statement, President Garfield was assassinated on 2nd July.

1891...    

The money changers spent the last decade creating economic booms followed by depressions, so that they could buy up thousands of homes and farms for pennies on the dollar.  They were preparing to take the economy down again in the near future, and in a shocking memo sent out by the American Bankers Association, which would come out in the Congressional Record more than twenty years later, the following is stated,

    "On September 1st 1894 we will not renew our loans under any consideration.  On September 1st we will demand our money.

    We will foreclose and become mortgages in possession.  We can take two-thirds of the farms west of the Mississippi, and thousands of them east of the Mississippi as well, at our own price...Then the farmers will become tenants as in England...,"
1891 American Bankers Association, as printed in the Congressional Record of April 29, 1913.

1896...    

The central issue in the Presidential campaign is the issue of more silver money.  Senator William Jennings Bryan from Nebraska, a Democrat aged only 36, makes an emotional speech at the Democratic National Convention in Chicago, entitled, "Crown Of Thorns And Cross Of Gold."  Senator Bryan stated,

    "We will answer their demand for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold."


The bankers naturally supported the Republican candidate, William McKinley who in return favored the gold standard.  Furthermore those in the McKinley campaign, got manufacturers and industrialists to inform their employees that if Bryan were elected, all factories and plants would close and there would be no work.

This tactic succeeded, McKinley beat Bryan, albeit by a small margin.

1898...    

Pope Leo XIII stated the following on the subject of usury,

    "On the one hand there is the party which holds the power because it holds the wealth, which has in its grasp all labor and all trade, which manipulates for its own benefit and its own purposes all the sources of supply, and which is powerfully represented in the councils of State itself.  On the other side there is the needy and powerless multitude, sore and suffering.

    Rapacious usury, which, although more than once condemned by the Church, is nevertheless under a different form but with the same guilt, still practiced by avaricious and grasping men...so that a small number of very rich men have been able to lay upon the masses of the poor a yoke little better than slavery itself."


1907...    

During the early 1900's, the money changers were anxious to advance their business of setting up another private Central Bank for America.  Rothschild, Jacob Schiff, the head of Kuhn, Loeb and Co., in a speech to the New York Chamber of Commerce, stated, or rather threatened,

    “Unless we have a Central Bank with adequate control of credit resources, this country is going to undergo the most severe and far reaching money panic in its history.”

They put Rothschild agent, J. P. Morgan at the forefront of their charge.  Interestingly J. P. Morgan's father, Julius Morgan, had been America's financial agent to the British, and after Julius' death, J. P. Morgan took on a British partner, Edward Grenville, who was a long time director of the Bank Of England.

This year was the year of the money changers attack.  J. P. Morgan and his cohorts secretly crashed the stock market.  They were aware that thousands of small banks were so vastly over extended, some only had reserves of 1% under the fraudulent fractional reserve principle.  Within only a few days, bank runs became commonplace across the nation.

Morgan then stepped up and publicly announced that he would support these failing banks.  What he failed to mention is that he would do this by manufacturing money out of nothing.  And then what happened, surprise, surprise, Congress let him do it!  So, Morgan manufactured $200,000,000 of this completely reserve-less private money, purchased goods and services with it, and sent some of it to his branch banks to lend out at interest.

As a result, the general public regained confidence in money, but most importantly it meant the banking power was now further consolidated into the hands of a few large banks.

1908...    

With the widespread financial panic over, J. P. Morgan was hailed as a hero by the then President of Princeton University, Woodrow Wilson, who even crassly or arrogantly stated,

    "All this trouble could be averted if we appointed a committee of six or seven public spirited men like J. P. Morgan, to handle the affairs of our country."

President Theodore Roosevelt had also signed into law, following the financial panic, a bill creating the, "National Monetary Commission."

This commission was supposed to study the banking problem and make recommendations to Congress.  Naturally, the commission was packed with J. P. Morgan's friends and cronies.

The chairman was Senator Nelson Aldrich from Rhode Island, and he represented the Newport Rhode Island homes of America's richest banking families.  His daughter married John D. Rockefeller Jr., and together they had five sons (including Nelson who would become Vice President in 1974 and David who would become Head of the Council on Foreign Relations).

Following the setting up of this National Monetary Commission, Senator Aldrich immediately embarked on a 2 year fact finding tour of Europe, where he consulted at length with the private central bankers in England, France, and Germany, or rather Rothschild, Rothschild, and Rothschild.

The total cost of this 2 year trip to the American taxpayer?  $300,000.  Yes, three hundred thousand dollars, that is not a misprint!
1910    Senator Aldrich returns from his two year European fact finding mission on 22nd November.  Shortly afterwards some of America's most wealthy and powerful men boarded Senator Aldrich's private rail-car in the strictest secrecy.  They journeyed to Jekyll Island off the coast of Georgia.

In this group were Paul Warburg, who was earning a $500,000 a year salary from Rothschild owned firm, Kuhn, Loeb & Company.  This salary was for him to lobby for a privately owned central bank in America.  Also present was Jacob Schiff, a Rothschild who had purchased Kuhn, Loeb and Company shortly after he arrived in America from England.

The Rothschilds, Warburgs and Schiffs, interconnected by marriage, were essentially the same family.

Secrecy at this meeting was so tight that all the participants were cautioned to use only first names, to prevent servants from learning their identities.  Years later, one participant, Frank Vanderlip, President of National Citibank and a representative of the Rockefeller family, confirmed the Jekyll Island trip in a 9th February 1935 edition of the Saturday Evening Post in which he stated,

    "I was as secretive indeed, as furtive as any conspirator ...Discovery we knew, simply must not happen, or else all our time and effort would be wasted.  If it were to be exposed that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress."

It was not just the setting up of a Central Bank that was on the agenda.  Other problems for these bankers were that the market share of these big national banks was shrinking fast.  In the first ten years of the century the number of United States banks had more than doubled to over 20,000.  By 1913 only 29% of all banks were national banks and they held only 57% of all deposits.  As John D. Rockefeller put it,

    "Competition is Sin!"

Senator Aldrich later admitted in a magazine article,

    "Before passage of this Act, the New York Bankers could only dominate the reserves of New York.  Now we are able to dominate bank reserves of the entire country."

So one of the aims of these conspirators was to bring these new banks under their control.  Secondly the nations economy was so strong that corporations were starting to finance their own expansions out of profits instead of taking out huge loans from large banks.  Indeed, in the first ten years of the century, 70% of corporate funding came from profits.

Basically, American Industry was becoming independent of the money changers, and the money changers were not about to let that happen.

There was also much discussion regarding the name of the new bank, which took place in a conference room in the Jekyll Island Club Hotel.  Aldrich believed the word, "bank," should not even appear in the name.  Warburg wanted to call the legislation, the, "National Reserve Bill," or the, "Federal Reserve Bill."  The idea was not only to give the impression that the purpose of the new central bank was to stop bank runs, but also to conceal its monopoly character.

However it was Senator Aldrich, the egomaniac, who insisted it be called the, "Aldrich Bill."  So, after nine days at Jekyll Island, the group dispersed.  This group of conspirators immediately set up an educational fund of $5,000,000 to finance Professors at top universities to endorse the new bank.

The new central bank would be very similar to the old Bank Of The United States, in that it would be given a monopoly over United States currency and create that money out of nothing.  Also in order to make the public think it was under control of the Government, the plan called for the central bank to be run by a board of governors appointed by the President and approved by the Senate.

This would not cause any undue problems for the bankers, as they knew they could use their money to buy influence over the politicians, in order to ensure the men they wanted got appointed to the board of governors.
1912    

The Aldrich bill is presented to Congress for debate.  This was very quickly identified as a bill to benefit the bankers, or an expression for them which was coined at the time, "The Money Trust."  During the debate, the Republican, Charles A. Lindbergh Sr. stated,

    "The Aldrich plan is the Wall Street Plan.  It means another panic, if necessary, to intimidate the people.  Aldrich, paid by the government to represent the people, proposes a plan for the trusts instead."


As this debate continued on, the bankers realized they didn't have enough support, so the Republican leadership never brought the Aldrich bill to a vote.  Instead the bankers decided to switch their attention to the Democrats and started heavily financing Woodrow Wilson, the Democratic Presidential nominee.  The Wall Street banker, Bernard Baruch, was put in charge of the Wilson project, and as historian, James Perloff, stated,

    "Baruch brought Wilson to the Democratic Party headquarters in New York in 1912, 'leading him like one wood a poodle on a string.' Wilson received an, 'indoctrination course,' from the leaders convened there...."


During the Democratic Presidential campaign, Wilson and the rulers of the Democratic Party pretended to oppose the Aldrich bill.  As Republican representative, Louis T. McFadden, explained twenty years later, when he was was Chairman Of The House Banking And Currency Committee,

   "The Aldrich Bill was condemned in the platform...when Woodrow Wilson was nominated...The men who ruled the Democratic Party promised the people that if they were returned to power there would be no central bank established here while they held the reins of government.

    Thirteen months later that promise was broken, and the Wilson administration, under the tutelage of those sinister Wall Street figures who stood behind Colonel House, established here in our free country the worm-eaten monarchical institution of the, 'King's Bank,' to control us from the top downward, and to shackle us from the cradle to the grave."

On November 5th, Woodrow Wilson was elected, and J. P. Morgan, Paul Warburg, Bernard Baruch et al, advanced a new plan which Warburg called the Federal Reserve System.  The leadership of the Democratic Party hailed this new bill called the, "Glass-Owen Bill," as totally different to the Aldrich bill, when in fact it was virtually identical.

Funnily enough the Democrats were so vehement in their denial of the similarity of the, "Glass-Owen Bill," to the, "Aldrich Bill," that Paul Warburg, the creator of both bills, had to inform his paid friends in Congress, that the two bills were virtually identical and therefore they must vote to pass it.  Warburg stated,

    "Brushing aside the external differences affecting the, 'shells,' we find the, 'kernels,' of the two systems very closely resembling and related to one another."


However this admission by Warburg was not made public.  Instead, Senator Aldrich, and Frank Vanderlip, the President of Rockefeller's National Citibank of New York, were to publicly state their opposition to the bill in order to make people think that the bill proposed was radically different to the Aldrich bill.  Indeed, Frank Vanderlip stated years later in the Saturday Evening Post,

    "Although the Aldrich Federal Reserve Plan was defeated when it bore the name Aldrich, nevertheless its essential points were all contained in the plan that finally was adopted."


1913    With Congress nearing a vote on the Glass-Owen Bill, they called Ohio Attorney, Alfred Crozier, to testify.  However, Crozier noticed the similarities between the Aldrich Bill and the Glass-Owen Bill, and subsequently stated,

    "The...bill grants just what Wall Street and the big banks for twenty-five years have been striving for - private instead of public control of currency.  It (the Glass-Owen bill) does this as completely as the Aldrich bill.  Both measures rob the government and the people of all effective control over the public's money, and vest in the banks exclusively the dangerous power to make money among the people scarce or plenty."

The debate on this bill was not going well for the banks, with many Senators intimating the bill was corrupt and deceitful, however the bill was approved through the Senate on December 22nd.  How did this happen? Because most of the Senators had left town to return home for the Christmas holidays. Furthermore, these Senators had been assured by the leadership, that nothing would be done regarding this bill until long after the Christmas recess.

Representative Charles A Lindbergh Sr. stated,

    "This Act establishes the most gigantic trust on earth.  When the President signs this bill, the invisible government of the monetary power will be legalized.  The people may not know it immediately, but the day of reckoning is only a few years removed...The worst legislative crime of the ages is perpetrated by this banking and currency bill."

Interestingly, only a few weeks earlier, in October, Congress finally passed a bill legalizing direct income tax of the people.  This was in the form of a bill pushed through by Senator Aldrich, which is now commonly known as the 16th amendment.  The income tax law was fundamental to the Federal Reserve.  This is because the Federal Reserve was a system which would run up, essentially, an unlimited Federal debt.

The only way to guarantee the payment of interest on this debt was to directly tax the people, as they had done with the Bank Of England.  If the Federal Reserve had to rely on contributions from the States, they would be dealing with bigger entities, who could revolt and refuse to pay the interest on their own money, or at least bring political pressure to bear in order to keep the debt small.

Actually, this 16th amendment was never ratified, and therefore many American citizens do not pay their income tax and there is nothing the United States Government can do about it.  For further information on this go to  www.thelawthatneverwas.com .  Also, back in 1895, the Supreme Court had also found an income tax law similar to the 16th amendment, as unconstitutional.  The Supreme Court also found a Corporate Tax Law unconstitutional in 1909.

Another important amendment that was put through this year is the 17th amendment.  This provided for the direct election by the people of two Senators from each state as oppose to the original system of having state legislatures elect United States Senators.  More democratic, you would think, until you realize these bankers could now provide the funds for their hand picked people to run for the Senate, and thus avoid future problems like getting the Federal Reserve through the Senate.

Anyway, back to the Federal Reserve, if you are in any doubt as to whether the Federal Reserve is a private company, a basic check the public can carry out is in their phone book.  Look under the government pages and it is not listed, but you will find it listed within the business pages.

Actually some recent evidence has come forward as to who really owns the Federal Reserve, and they are the following banks:

    * Rothschild Bank of London
    * Warburg Bank of Hamburg
    * Rothschild Bank of Berlin
    * Lehman Brothers of New York
    * Lazard Brothers of Paris
    * Kuhn Loeb Bank of New York
    * Israel Moses Seif Banks of Italy
    * Goldman, Sachs of New York
    * Warburg Bank of Amsterdam
    * Chase Manhattan Bank of New York

Also some argue that the Federal Reserve is a quasi-governmental agency, yet the President appoints only 2 of the 7 members of the Federal Reserve Board of Governors, every four years, and he appoints them to 14 year terms, which is far longer than any term he could possibly serve as President.  The Senate confirms these appointments, but as we have seen, that is the idea, because these are the very people hand picked by the bankers who also finance their campaigns, ensuring loyalty to them, not the people.

Let's summarize how the Federal Reserve creates money out of nothing.  It is a four step process:

   1. The Federal Open Market Committee approves the purchase of United States Bonds*.
   2. The bonds are purchased by the Federal Reserve.
   3. The Federal Reserve pays for these bonds with electronic credits to the seller's bank, these credits are based on nothing.
   4. The banks use these deposits as reserves.  They can loan out over ten times the amount of their reserves to new borrowers, all at interest.

* Bonds are simply promises to pay or Government IOU's.  People purchase bonds in order to get a secure rate of interest.  At the end of the term of the bond, the government repays the bond, plus interest and the bond is destroyed.

Let's look at an example of how this works with a Federal Reserve purchase of $1,000,000 of bonds.  This then gets turned into over $10,000,000 in bank accounts.  The Federal Reserve in effect creates 10% of this totally new $10,000,000 and the banks create the other 90%.

To reduce the amount of money in circulation this process is simply reversed.  The Federal Reserve sells these bonds to the public and the money flows out of the purchaser's local bank.  Loans must be reduced by ten times the amount of the sale, so a Federal Reserve sale of $1,000,000 in bonds, results in $10,000,000 less money in the economy.  How does this benefit the bankers, whose representatives met at Jekyll Island?

   1. It prevented any future banking reform efforts, as the Federal Reserve was to be the only producer of money.
   2. This in turn prevented a proper debt free system of government finance, like President Lincoln's Greenbacks, from making a comeback.  Instead, the bond based system of government finance, forced on Lincoln after he created Greenbacks, was now cast in stone.
   3. It delegated to the bankers the right to create 90% of our money supply based on a fraudulent system of fractional reserve banking and allowed them to loan out that 90% at interest.
   4. It centralized overall control of our nations money supply in the hands of and for the profits of a few men.
   5. It established a private central bank with a high degree of independence from effective political control.

1914...    

The start of World War I.  In this war, the German Rothschilds loaned money to the Germans, the British Rothschilds loaned money to the British, and the French Rothschilds loaned money to the French.

One year after the passage of the Federal Reserve Bill, Representative Charles A Lindbergh Sr., outlined how The Federal Reserve created the, "business cycle," and how they manipulated that to their own advantage.  He stated,

    "To cause high prices, all the Federal Reserve Board will do will be to lower the re-discount rate..., producing an expansion of credit and a rising stock market, then when ...business men are adjusted to these conditions, it can check... prosperity in mid-career by arbitrarily raising the rate of interest.

    It can cause the pendulum of a rising and falling market to swing gently back and forth by slight changes in the discount rate, or cause violent fluctuations by a greater rate variation, and in either case it will possess inside information as to financial conditions and advance knowledge of the coming change, either up or down.  This is the strongest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed.

    The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money.  They know in advance when to create panics to their advantage.  They also know when to stop panic.  Inflation and deflation work equally well for them when they control finance."


Oldyoti

"Free trade is the serial killer of American manufacturing and the
Trojan Horse of World Government. It is the primrose path to
the loss of economic independence and national sovereignty.
Free trade is a bright shining lie."
~Pat Buchanan,
Where the Right Went Wrong


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http://www.huffingtonpost.com/stephen-zarlenga/reducing-us-debt-and-crea_b_857230.html

Reducing U.S. Debt and Creating Jobs Through Public Control of Our Money System

by Stephen Zarlenga
TheHuffingtonPost.com
May 3, 2011

Coauthored by Greg Coleridge

For all the boisterous talk and debate by Congressional leaders of both parties and the President about the many ways to reduce our nation's deficit and debt while maintaining vital services and programs, there continues to be a roaring silence about a solution that has nothing to do with the budget. It has to do, rather, with our nation's monetary system.

Be it for ignorance or by intention, few federal elected officials have examined how a change in the way money in our nation is created and issued could reduce our nation's deficit and debt and, in doing so, increase millions of vital jobs to transform our economy.

One of the few exceptions is Rep. Dennis Kucinich (D-OH), who during the last Congressional session introduced H.R. 6550, The National Emergency Employment Defense Act. A revised version is expected to be soon reintroduced. Americans would be wise to rally behind it.

The basis of the bill are three essential monetary measures proposed by the American Monetary Institute in their American Monetary Act (AMA). The AMA's recommendations are based on decades of research and centuries of experience; are designed to end the current fiscal crisis in a just and sustainable way, and are aimed to place the U.S. money system under our constitutional system of checks and balances.

The three essential measures include:

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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Monetary FAQ
« Reply #71 on: May 09, 2011, 01:51:03 PM »
http://www.monetary.org/faq.html

Twenty Frequently Asked Questions on The American Monetary Act (AMA)

(August 8, 2009)

For more background, see The Lost Science of Money (LSM) by Stephen Zarlenga, available at our website.

1) Won't the government creating new money for infrastructure and other expenses cause inflation?

No. While this is an important concern, some of it is anti-governmental propaganda and it need not cause inflation, depending on where the new money goes, for example:

When new money is used to create real wealth, such as goods and services and the $2.2 trillion worth of public infrastructure building and repair the engineers tell us is needed over the next 5 years, there need not be inflation because real things of real value are being created at the same time as the money, and the existence of those real values for living, keeps prices down.

If it goes into warfare or bubbles (real estate/Wall Street/etc.) it would create inflationary bubbles with no real production of goods and services. That is the history of private control over money creation. It must end now. Government tends to direct resources more into areas of concern for the whole nation, such as infrastructure, health care, education, etc. The AMA Title 5 specifies infrastructure items including human infrastructure of health care and education to focus on.

Also remember, the American Monetary Act eliminates ‘fractional reserve banking’ which has been one of the main causes of inflation. And remember new money must be introduced into circulation as the population and economy grow or is improved, or we’d have deflation.

2) How can we trust government with the power to create money? – Won’t they go wild (and again cause inflation)? Don’t you know that government can’t do anything right?

Two Points:

A. The U.S. Constitution binds government to represent the interests of the American people – “to promote the General Welfare” and empowers our Federal Government to create, issue and regulate our money (Article I, Section 8, Clause 5). We must hold our officeholders responsible to the laws. Do you want us to deny the Constitution? In favor of who? Enron? Bear Stearns? J.P. Morgan? Goldman Sachs? Lehman Brothers? Please get real! Our choice is to let those pirates continue to control our money system or to intelligently constitute the MONEY POWER within our government.

Under the American Monetary Act, the Congress, the President and the Board of the Monetary Authority will all be responsible if any inflation or deflation takes place, and the people will know that they are responsible. They are specifically directed to avoid policies that are either inflationary or deflationary.

Do you really trust the “ENRONS” to dominate our money? Look how they have abused that power! And Yes Damn it! Enron was on the Board of the Dallas Federal Reserve Bank!

B. Finally and most importantly, an examination of history, despite the current prejudice and massive propaganda waged against government, shows that government control of money has a far superior historical record to private control over money systems. See the AMA brochure, and the LSM, Chapter 16. History shows that government has a far superior record in controlling the money system than private money creators have. And Yes, that includes the Continental Currency, The Greenbacks, and even the German hyperinflation; which by the way took place under a completely privatized German central bank! The German hyperinflation is really an example of a private money disaster.

The Lost Science of Money book, chapter 12, uncovers the beginnings of the attack on government and found it started with Adam Smith himself in an attempt to block moves to take back the monetary power from the then private Bank of England, and put it back into government, which had done a good job in monarchical management of the money system, with only one exception under Henry VIII.

3) Why should we give the government even more power?

Because our money system belongs to society as a whole. It is too important to trust to unrepresentative and unaccountable private hands, preoccupied with private gain, with little regard for the detrimental consequences of their actions on the country, and outside our system of checks and balances. Just look what they have done!

4) How can we prevent government from abusing its power once it can create money directly?

The same way we prevent it from abusing any power, by upholding the rule of law and by participating in democratic political processes; and through reasonable structural limits.

5) Should we let private banks keep some part of the money creation privilege?

Absolutely not! History shows that the private interests, if given any privileged power over money, eventually undermine the public interest, and take over the whole thing. We know this from historical case studies in at least 4 major historical situations – the U.S. “Greenbacks”, The nationalization of the Bank of England, and the Canadian and New Zealand monetary experience. Anyone who proposes allowing the banks to keep any part of the power to create money are either ignorant of monetary history or are shilling for the banks.

Under the American Monetary Act we do have the best of both worlds. We keep the benefits of having the professionalism and expertise of a competitive banking system in the private sector, but we take away the dangers of having them dominate our monetary and public policies with their narrow short term profit focus, by removing their privilege to create money. Ultimately this is a question of morality. No such special privileges can be allowed to particular groups; especially the monetary privilege, which confers power and wealth on them at the expense of the rest of society.

6) Well then, should we nationalize all the banking business?

What kind of “Kool Aid” are you drinking and who gave it to you? The banking business is obviously not a proper function of government; but providing, controlling and overseeing the monetary system is definitely a function of government. No private party can do that properly. Markets have utterly failed to do that. They have concentrated wealth, have harmed the average American and now broken down entirely, except for assistance from our government. Who would keep money in banks today, except for the FDIC guarantees?

But banks should remain privately owned, because when reasonably structured, they perform very necessary functions, and can do it professionally and conveniently. Who within government would run the banking business? Bankers however, have nothing in their training, experience or their souls that qualifies them as masters of the universe – to control our society as the money power confers upon them.

Banks should act as intermediaries for their clients who want to get a return on a deposit or similar investment; and their clients who are willing to pay for the use of that money. But banks must not create the money. The money system belongs to the Nation and our Federal Government must be the only entity with the power to issue and regulate our money as the U.S. Constitution already mandates. We nationalize the monetary system, but don’t nationalize the individual banks. That would be a dangerous step towards fascism. Private enterprise is a powerful mechanism that can produce excellent results when properly structured and regulated. That is an important American “theme!” The AMA does not throw out the baby with the bathwater! But it most certainly gets rid of the bathwater, which is private money creation. That acts like a private tax on the rest of us!

We regard such nationalization proposals (nationalize all banking) either as an inability to understand the difference between nationalizing the money system and nationalizing the private banking business, OR as possibly attempts to actually block proper monetary reform, because you’d have to change the essence of America in order to do it. So it distracts from real reform. The AMA reform that we advocate actually puts into place the system that most people think we have now! People think our money is provided by government. They erroneously believe that the Federal Reserve is already a part of our government. They think the banks are lending money which has been deposited with them, not that they are creating that money when they make loans. Under the AMA many of those things people already believe about money and banking actually become true! It’s a natural fit with already existing attitudes.

7) Doesn’t your AMA proposal merely continue with a fiat money system? Shouldn’t we be using gold and silver instead? Wouldn’t that provide a more stable money?

Our system is absolutely a fiat money system. But that’s a good thing, not a bad one. In reaction to the many problems caused by our privatized fiat money system over the decades, many Americans have blamed fiat money for our troubles, and they support using valuable commodities for money.

But Folks! The problem is not fiat money, because all advanced money is a fiat of the Law! The problem is privately issued fiat money. Then that is like a private tax on all of us imposed by those with the privilege to privately issue fiat money. Private fiat money must now stop forever!

Aristotle gave us the science of money in the 4th century B.C. which he summarized as: “Money exists not by nature but by law!” So Aristotle accurately defines money as a legal fiat.

As for gold, most systems pretending to be gold systems have been frauds which never had the gold to back up their promises. And remember if you are still in a stage of trading things (such as gold) for other things, you are still operating in some form of barter system, not a real money system, and therefore not having the potential advantages as are available through the American Monetary Act!

And finally as regards gold and silver: Please do not confuse a good investment with a good money system. From time to time gold and silver are good investments. However you want very different results from an investment than you want from a money. Obviously you want an investment to go up and keep going up. But you want money to remain fairly stable. Rising money would mean that you’d end up paying your debts in much more valuable money. For example the mortgage on your house would keep rising if the value of money kept rising.

Also, contrary to prevailing prejudice, gold and silver have both been very volatile and not stable at all. Just check out the long term gold chart.

8} How can a bank lend money if they have to keep 100% reserves?

The 100% reserve provision applies only to checking accounts. This question results from economists classifying our AMA as a “100% reserve” plan, as the Chicago Plan was known. But our plan fundamentally reforms the private credit system, replacing it with a government money system. The accounting rules are changed.

Banks will be encouraged to continue their loan activities by lending money that has been deposited with them in savings and time deposit accounts; or lending their capital that has been invested with them. It is in the checking account departments that the banks presently create money when they make loans in a fractional reserve system. This will be stopped by new bank accounting rules. Making loans from savings account is a different matter, because real money, not credit will have been transfered into such accounts, and loaning that out does not create new money or give the bank any seigniorage, that belongs to our society. Some money loaned out of a savings type account might later get redeposited into another savings account and again be reloaned, but its the same money, not any newly created money, and will reflect that way on the bank's books. This is sufficient to solve the problem of banks creating "purchasing media" by loaning their credit which then functions as money in the present system. (for details see the wording on pages 8, 9, and 14 of the American Monetary Act at http://www.monetary.org/amacolorpamphlet.pdf)

Various types of accounts will have differing requirements: e.g. matching time deposits to loan durations, lessening the “borrowing short term and lending long term” problem. Money market and mutual fund type accounts can be very flexible. The principle applied will be to encourage good intermediation of money between clients who want a return on their money and those willing to pay for using it; but will prohibit money creation. Checking accounts will become a warehousing service, for which fees are charged. Good accountancy can achieve these results. (Please see # 9 below for more info on the many sources of money for these accounts.)

9) If banks are no longer allowed to create money, where will banks get enough money to fill client’s needs for money under the American Monetary Act?

We devote substantial space to this question because economists so used to confusing credit and money have to get used to the idea of money instead of credit. Usually they want to know how the AMA creates money within the present bank accounting framework. Well it does not! The AMA will change the accounting rules to deal with money not credit.

There will be several substantial sources of money for banks to satisfy their clients money needs:

a) Title III of the AMA converts through an accounting procedure, the existing credit the banks have circulated through loans (about $6 to 7 trillion, roughly the existing “money” supply) into US money, no longer bank credit. That process will indebt the banks to the government for the amount converted over and above their capital. At present when bank loans are repaid to the banks by their customers, those credits/debts go out of circulation/out of existence and the credit money supply contracts as loans are repaid, until they make new loans. But under the American Monetary Act, since it’s now money, those monies will not go out of circulation the way the credits did. They are repaid to the government in satisfaction of the debt the banks incurred in converting them from credit to money. That goes into a pool which can be used by Congress for the items in Title V of the AMA (as described on pages 8 and 9), or it can even be re-lent to the banks at an adjusted interest rate. Note: this action de-leverages the banks, but does not reduce the money supply.

b) Probably the most important source of funds for bank lending will be the continuing government expenditures, over and above tax receipts, such as social security and other payments by government on the items in Title V of the American Monetary Act. Also the engineers tell us that $2.2 trillion is now necessary to make our infrastructure safe over the next 5 years. That’s $440 billion new money per year. Also the health care and education provisions, and grants to states in Title V can be introduced as new money. ALL these will eventually be deposited into various types of bank accounts where provisions of the Act will allow this money to be lent or invested. The banks will be lending and placing this money that has been deposited with them; not lending credit they create, masquerading as money. They will have to compete to attract such deposits from citizens and companies.

c) Title II of the AMA specifies the repayment of US instruments of indebtedness (bonds/notes/etc). Instead of being rolled over as at present, new US monies will be paid to the bondholders as they become due. Those people/institutions will be looking for places to invest that money. One place would be in bank stock, which is a source of lending funds for banks. Of the $5 to 7 trillion in US bonds and notes privately held, about 3.5 trillion is due within 1 to 5 years; .72 trillion is due in 5 to 10 years; .35 trillion is due in 10 to 20 years. All these amounts will represent newly created US money and will eventually find their way to becoming new lend-able or investable bank deposits and even investments in banks.

d) Finally the AMA does not allow the banks to decide their own leverage situations. The Act essentially eliminates most leverage from the banking system in a healthy, non deflationary way. That will be good. They will no longer be able to pretend they were “banking” when they made bad loans overextending their positions and creating bubbles, in order to grab huge bonuses on imaginary profits. In other words banks will no longer be able to make loans in a bubble creation process. That will be a big improvement!

10) How will the U.S. Treasury create the money?"

The same way the Federal Reserve does now, as simple account entries, but as income, without the accompanying debt obligations. It’s described in the AMA, Sec. 103 NEGATIVE FUND BALANCES: The Secretary of the Treasury shall directly issue United States Money to account for any differences between Government appropriations authorized by Congress under law and available Government receipts.

11) Is there any chance the AMA could eliminate the federal income tax?

It “could,” and though that’s not likely in the near future, it is the direction the AMA goes in. Thanks to the immense savings our government will experience through control over its money system, taxation should decline substantially for middle and lower income groups. It should be raised for the super rich.

In addition the AMA should directly lead to substantial reductions in interest rates, because as the US pays off its national debt in money rather than rolling it over, those receiving those payments will be looking for places to loan and invest those funds. Interest rates should drop substantially.

12) Why does the American Monetary Act have an 8% maximum interest rate, including all fees?

Because before 1980/1981, forty nine States had “anti-usury” laws which limited normal interest rates to a maximum of between 6% and 10% p.a. (one state had 12%). The American Monetary Act takes the middle of this range to represent a restoration of the interest rate limits prevailing across the country prior to 1980/1981. See page 9 of the AMA.

13) Won’t you be breaking the sanctity of contracts when you convert the existing bank credit already in circulation, into U.S. Money?
 
No. First of all a contract requires understanding of the terms by all parties to it, and that certainly did not exist. But more likely it will be viewed as very acceptable by the banks, considering the security it confers on banking, especially when the alternative is going broke. There would be no reason to extend the legal tender privilege (acceptance for taxes) to the credits of any disagreeing banks.

14) How would the ACT affect our position with China?

The ACT would have a number of positive effects on Chinese - American Trade. Particularly it would encourage the Chinese to use more of their dollar earnings to really trade with us rather than just sell to us, and then invest their earnings in US bonds as at present. More details forthcoming!

15) What about other countries, and international systems such as the IMF (International Monetary Fund) and the BIS (Bank for International Settlements)?
 
We’d expect other countries to follow quickly in our footsteps to each obtain the advantages of issuing their own national monies. The United Nations is already putting forward suggestions that member states shift now to nationally created, debt free; interest free moneys. They are way ahead of the US Congress just now. A much reformed IMF, already organized under United Nations Article 57; #3, will see a greatly expanded role for the SDR and more responsibility for international accounts clearing as well as real assistance to member states, rather than acting as a destructive collection agent for the big banks. The role and importance of the BIS should be rapidly reduced, and perhaps eliminated. Just look at the mess created under their guidance and rules. Some job they did!

16) The latest craze “question” making the rounds in the organized disinformation campaign that is attacking our national psychology, is not a question at all, but a vicious assertion:

“Government is so corrupt and so much in the hands of the worst people and they won’t ever let you do this reform! Or any good thing”


This popped up simultaneously from LA to Seattle. I’ve told friends to put that stupidity out of their minds. This assertion, designed to discourage, is a variant of the Sun Tzu method of winning the battle by convincing the opposition not to fight because they can’t win. It reminds me of the cyborg "Borg Wars" line “Resistance is futile” from the Star Trek New Generation series. Don’t fall for it!

As our people suffer more deeply from the unfortunate monetary/banking system, any remaining bad elements in government can and must be cleansed. That’s what we’ll do instead of whining about it. Become a part of the solution not a cry-baby! Get up and fight for your family and nation!

“Put a stone in your stomach!” is an old phrase of Zulu warriors when summoning courage. Earlier tonight I saw an electric message on a local banks billboard:

“If you think you can, you can. If you think you can’t, you can’t!”

Yeah! We never said all bankers are evil, but there’s a very bad controlling element among them.

17) Why didn’t nationalized money systems work in the former Soviet countries?

Because their monetary systems were still controlled from within their banking systems, using the same faulty methods. The 1966 Federal Reserve publication Money, Banking, and Credit in Eastern Europe states:

    “In the communist countries, money is created in the same way as in capitalist countries – through the extension of bank credit. This fact is not generally recognized or accepted in the various countries of Eastern Europe. The result is that a good deal of confusion emerges from their economic literature with regard to the nature of money and the role of the monetary process and the function of the banking system.… Since Marx identified money with gold, the official theory holds paper money to be merely a substitute for gold and ignores deposit money.” (p. 42-43)

Sound familiar? Their politicians and economists were as dumb as ours!

18) Won’t we get hyper-inflation like Zimbabwe?

No. For governments or anyone to issue money, there has to be a functioning society with enough rule of law and physical and social infrastructure to support the creation of values for living. Zimbabwe unfortunately does not have those pre-requisites; thus their society is falling apart.

19) Should we have the individual 50 states own banks? Like North Dakota?

More Kool-Aid and distractions…Look folks the objective is to get the banks out of the Money creation field, not to get the government into banking!! A highly distracting idea that does not in any way accomplish any necessary reform! Instead it gives our fraudulent banking system a moral free pass! It is mind boggling that progressive people fall for this. (see the home page for an in depth article by Jamie Walton on this)

20) How about local currencies?

Local currency movements can help people to understand the money problem but it would be an illusion to think that local currencies would stop a mismanaged, unjust national system from unfairly concentrating wealth; from being a motivating factor for warfare; from financing harmful polluting activities even when saner alternatives exist. Understand also that a national currency properly placed under governmental control gives much greater local control than the present national currency under private control, because locally, our voting power can exert influence on national policy.

And remember the principle of subsidiarity put forward by E.F. Schumacher. His slogan was not “small is beautiful.” What E.F. Shumacher actually said is what the AMI is saying: Use an “Appropriate scale”- do things on an appropriate scale. That dominant scale in the currency area is national and will continue to be for the foreseeable future. The appropriateness of acting on the national level must be recognized.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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Forbes Predicts U.S. Gold Standard Within 5 Years
« Reply #72 on: May 11, 2011, 01:02:40 PM »
Toward the end of The Money Masters (released in 1996), Bill Still makes the following prophetic warning:

    ''Our country needs a solid group who really understand how our money is manipulated and what the solutions really are, because if a depression comes, there will be those who call themselves conservatives who will come forward advancing solutions framed by the international bankers.

    "Beware of calls to return to a gold standard.

    "Why?

    "Simple. Because never before has so much gold been so concentrated outside of American hands, and never before has so much gold been in the hands of international governmental bodies such as the World Bank and International Monetary Fund.

    "A gold-backed currency usually brings despair to a nation, and to return to it would certainly be a false solution in our case. Remember: we had a gold-backed currency in 1929 and during the first four years of the Great Depression.

    "Likewise, beware of any plans advanced for a regional or world currency. This is the international bankers' Trojan Horse.''


Keep the above in mind as you read the following:

http://www.humanevents.com/article.php?id=43439

Forbes Predicts U.S. Gold Standard Within 5 Years

by Paul Dykewicz
Human Events
05/11/2011

A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS.

“What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said.

Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending, the media mogul and former presidential candidate said.  The United States used gold as the basis for valuing the U.S. dollar successfully for roughly 180 years before President Richard Nixon embarked upon an experiment to end the practice in the 1970s that has contributed to a number of woes that the country is suffering from now, Forbes added.

If the gold standard had been in place in recent years, the value of the U.S. dollar would not have weakened as it has and excessive federal spending would have been curbed, Forbes told HUMAN EVENTS.  The constantly changing value of the U.S. dollar leads to marketplace uncertainty and consequently spurs speculation in commodity investing as a hedge against inflation.

The only probable 2012 U.S. presidential candidate who has championed a return to the gold standard so far is Rep. Ron Paul (R.-Tex.).  But the idea “makes too much sense” not to gain popularity as the U.S. economy struggles to create jobs, recover from a housing bubble induced by the Federal Reserve’s easy-money policies, stop rising gasoline prices, and restore fiscal responsibility to U.S. government’s budget, Forbes insisted.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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INFLATION FEARS: REAL OR HYSTERIA?
« Reply #73 on: May 11, 2011, 01:29:50 PM »
INFLATION FEARS: REAL OR HYSTERIA?

Ellen Brown
May 10th, 2011
www.webofdebt.com/articles/inflation_fears.php

Debate continues to rage between the inflationists who say the money supply is increasing, dangerously devaluing the currency, and the deflationists who say we need more money in the economy to stimulate productivity. The debate is not just an academic one, since the Fed’s monetary policy turns on it and so does Congressional budget policy.

Inflation fears have been fueled ever since 2009, when the Fed began its policy of “quantitative easing” (effectively “money printing”). The inflationists point to commodity prices that have shot up. The deflationists, in turn, point to the housing market, which has collapsed and taken prices down with it. Prices of consumer products other than food and fuel are also down. Wages have remained stagnant, so higher food and gas prices mean people have less money to spend on consumer goods. The bubble in commodities, say the deflationists, has been triggered by the fear of inflation. Commodities are considered a safe haven, attracting a flood of “hot money” -- investment money racing from one hot investment to another.

To resolve this debate, we need the actual money supply figures. Unfortunately, the Fed quit reporting M3, the largest measure of the money supply, in 2006.

Fortunately, figures are still available for the individual components of M3. Here is a graph that is worth a thousand words. It comes from ShadowStats.com (Shadow Government Statistics or SGS) and is reconstructed from the available data on those components. The red line is the M3 money supply reported by the Fed until 2006. The blue line is M3 after 2006.


The chart shows that the overall U.S. money supply is shrinking, despite the Fed’s determination to inflate it with quantitative easing. Like Japan, which has been doing quantitative easing (QE) for a decade, the U.S. is still fighting deflation.

Here is another telling chart – the M1 Money Multiplier from the Federal Reserve Bank of St. Louis:


Barry Ritholtz comments, “All that heavy breathing about the flood of liquidity that was going to pour into the system. Hyper-inflation! Except not so much, apparently.” He quotes David Rosenberg: “Fully 100% of both QEs by the Fed merely was new money printing that ended up sitting idly on commercial bank balance sheets. Money velocity and money multiplier are stagnant at best.” If QE1 and QE2 are sitting in bank reserve accounts, they’re not driving up the price of gold, silver, oil and food; and they’re not being multiplied into loans, which are still contracting.

The part of M3 that collapsed in 2008 was the “shadow banking system,” including money market funds and repos. This is the non-bank system in which large institutional investors that have substantially more to deposit than $250,000 (the FDIC insurance limit) park their money overnight. Economist Gary Gorton explains [.pdf]:

    The financial crisis . . . was due to a banking panic in which institutional investors and firms refused to renew sale and repurchase agreements (repo) – short-term, collateralized, agreements that the Fed rightly used to count as money. Collateral for repo was, to a large extent, securitized bonds. Firms were forced to sell assets as a result of the banking panic, reducing bond prices and creating losses. There is nothing mysterious or irrational about the panic. There were genuine fears about the locations of subprime risk concentrations among counterparties. This banking system (the “shadow” or “parallel” banking system)-- repo based on securitization -- is a genuine banking system, as large as the traditional, regulated banking system. It is of critical importance to the economy because it is the funding basis for the traditional banking system. Without it, traditional banks will not lend, and credit, which is essential for job creation, will not be created.

Before the banking crisis, the shadow banking system composed about half the money supply; and it still hasn’t been restored. Without the shadow banking system to fund bank loans, banks will not lend; and without credit, there is insufficient money to fund businesses, buy products, or pay salaries or taxes. Neither raising taxes nor slashing services will fix the problem. It needs to be addressed at its source, which means getting more credit (or debt) flowing in the local economy.

When private debt falls off, public debt must increase to fill the void. Public debt is not the same as household debt, which debtors must pay off or face bankruptcy. The U.S. federal debt has not been paid off since 1835. Indeed, it has grown continuously since then, and the economy has grown and flourished along with it.

As explained in an earlier article, the public debt is the people’s money. The government pays for goods and services by writing a check on the national bank account. Whether this payment is called a “bond” or a “dollar,” it is simply a debit against the credit of the nation. As Thomas Edison said in the 1920s:

    If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good, also. The difference between the bond and the bill is the bond lets money brokers collect twice the amount of the bond and an additional 20%, whereas the currency pays nobody but those who contribute directly in some useful way. . . . It is absurd to say our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people.

That is true, but Congress no longer seems to have the option of issuing dollars, a privilege it has delegated to the Federal Reserve. Congress can, however, issue debt, which as Edison says amounts to the same thing. A bond can be cashed in quickly at face value. A bond is money, just as a dollar is.

An accumulating public debt owed to the IMF or to foreign banks is to be avoided, but compounding interest charges can be eliminated by financing state and federal deficits through state- and federally-owned banks. Since the government would own the bank, the debt would effectively be interest-free. More important, it would be free of the demands of private creditors, including austerity measures and privatization of public assets.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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Re: "SOUND MONEY" = CRUCIFYING MANKIND UPON A "CROSS OF GOLD!"
« Reply #74 on: May 13, 2011, 02:56:13 PM »
To determine what effect this will have on the M2 money supply -- which is $8.9137 trillion at present -- let's further assume that the U.S. has all the gold that's ever been mined (even though it doesn't)

From http://www.prisonplanet.com/central-banks-purchase-127-tons-of-gold-in-q1.html:

"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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FEDS TO STATES: “DROP DEAD.” STATE BANK MOVEMENT PICKS UP STEAM
« Reply #75 on: May 19, 2011, 07:33:33 PM »
FEDS TO STATES: “DROP DEAD.”
STATE BANK MOVEMENT PICKS UP STEAM


Ellen Brown
May 17th, 2011
www.webofdebt.com/articles/feds_states2.php

“Ford to New York: Drop Dead,” said a famous headline in 1975. President Ford had declared flatly that he would veto any bill calling for “a federal bail-out of New York City.” What he proposed instead was legislation that would make it easier for the city to go bankrupt.

Now the Federal Treasury and Federal Reserve seem to be saying this to the states, which are slated to be the first ritual victims in the battle over the budget ceiling. On May 2, Treasury Secretary Timothy Geithner said that the Treasury would stop issuing special securities that help state and local governments pay for their debt. This was to be the first in a series of “extraordinary measures” taken by the Treasury to avoid default in the event that Congress failed to raise the debt ceiling on May 16. On May 13, the Secretary said these extraordinary measures had been set in motion.

The Federal Reserve, too, has declared that it cannot help the states with their budget problems -- although those problems were created by the profligate banks under the Fed’s purview. The Fed advanced $12.3 trillion in liquidity and short-term loans to bail out the financial sector from the 2008 banking collapse, 64 times the $191 billion required to balance the budgets of all 50 states. But Fed Chairman Ben Bernanke declared in January that the Fed could not make the same cheap credit lines available to state and local governments -- not because the Fed couldn’t find the money, but because it was not in the Fed’s legislative mandate.

The federal government can fix its own budget problems by raising its debt ceiling, and the too-big-to-fail banks have the federal government and Federal Reserve to fall back on. But these options are not available to state governments. Like New York City in 1975, many states are teetering on bankruptcy.

A Beacon in the Storm

Many states are in trouble, but not all. North Dakota has consistently boasted large surpluses, aided by a state-owned bank that is showing landmark profits. On April 20, the Bank of North Dakota (BND) reported profits for 2010 of $62 million, setting a record for the seventh straight year. The BND’s profits belong to the citizens and are produced without taxation.

Inspired by North Dakota’s example, twelve states have now introduced bills to form state-owned banks or to study their feasibility. Eight of these bills have been introduced just since January, including in Oregon, Washington State, Massachusetts, Arizona, Maryland, New Mexico, Maine and California. Illinois, Virginia, Hawaii and Louisiana introduced similar bills in 2010. For links, dates and text, see here.


The Center for State Innovation, based in Madison, Wisconsin, was commissioned to do detailed analyses for Washington and Oregon. Their conclusion was that a state-owned bank on the model of the Bank of North Dakota would have a substantial positive impact on employment, new lending, and government revenue in those states.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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The Federal Reserve Cartel: The Eight Families
« Reply #76 on: June 01, 2011, 07:42:46 PM »
http://www.globalresearch.ca/the-federal-reserve-cartel-the-eight-families/25080

The Federal Reserve Cartel: The Eight Families

by Dean Henderson



Global Research
June 1, 2011

(Part one of a four-part series)

The Four Horsemen of Banking (Bank of America, JP Morgan Chase, Citigroup and Wells Fargo) own the Four Horsemen of Oil (Exxon Mobil, Royal Dutch/Shell, BP Amoco and Chevron Texaco); in tandem with Deutsche Bank, BNP, Barclays and other European old money behemoths.  But their monopoly over the global economy does not end at the edge of the oil patch.


According to company 10K filings to the SEC, the Four Horsemen of Banking are among the top ten stock holders of virtually every Fortune 500 corporation.[1]

So who then are the stockholders in these money center banks?

This information is guarded much more closely.  My queries to bank regulatory agencies regarding stock ownership in the top 25 US bank holding companies were given Freedom of Information Act status, before being denied on “national security” grounds.  This is rather ironic, since many of the bank’s stockholders reside in Europe.

One important repository for the wealth of the global oligarchy that owns these bank holding companies is US Trust Corporation - founded in 1853 and now owned by Bank of America.  A recent US Trust Corporate Director and Honorary Trustee was Walter Rothschild.  Other directors included Daniel Davison of JP Morgan Chase, Richard Tucker of Exxon Mobil, Daniel Roberts of Citigroup and Marshall Schwartz of Morgan Stanley. [2]

J. W. McCallister, an oil industry insider with House of Saud connections, wrote in The Grim Reaper that information he acquired from Saudi bankers cited 80% ownership of the New York Federal Reserve Bank- by far the most powerful Fed branch- by just eight families, four of which reside in the US.  They are the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of Paris; and the Israel Moses Seifs of Rome.

CPA Thomas D. Schauf corroborates McCallister’s claims, adding that ten banks control all twelve Federal Reserve Bank branches.  He names N.M. Rothschild of London, Rothschild Bank of Berlin, Warburg Bank of Hamburg, Warburg Bank of Amsterdam, Lehman Brothers of New York, Lazard Brothers of Paris, Kuhn Loeb Bank of New York, Israel Moses Seif Bank of Italy, Goldman Sachs of New York and JP Morgan Chase Bank of New York.  Schauf lists William Rockefeller, Paul Warburg, Jacob Schiff and James Stillman as individuals who own large shares of the Fed. [3]  The Schiffs are insiders at Kuhn Loeb.  The Stillmans are Citigroup insiders, who married into the Rockefeller clan at the turn of the century.

Eustace Mullins came to the same conclusions in his book The Secrets of the Federal Reserve, in which he displays charts connecting the Fed and its member banks to the families of Rothschild, Warburg, Rockefeller and the others. [4]

The control that these banking families exert over the global economy cannot be overstated and is quite intentionally shrouded in secrecy.  Their corporate media arm is quick to discredit any information exposing this private central banking cartel as “conspiracy theory”.  Yet the facts remain.

The House of Morgan
 
The Federal Reserve Bank was born in 1913, the same year US banking scion J. Pierpont Morgan died and the Rockefeller Foundation was formed.  The House of Morgan presided over American finance from the corner of Wall Street and Broad, acting as quasi-US central bank since 1838, when George Peabody founded it in London.

Peabody was a business associate of the Rothschilds.  In 1952 Fed researcher Eustace Mullins put forth the supposition that the Morgans were nothing more than Rothschild agents.  Mullins wrote that the Rothschilds, “…preferred to operate anonymously in the US behind the facade of J.P. Morgan & Company”. [5]

Author Gabriel Kolko stated, “Morgan’s activities in 1895-1896 in selling US gold bonds in Europe were based on an alliance with the House of Rothschild.” [6]

The Morgan financial octopus wrapped its tentacles quickly around the globe.  Morgan Grenfell operated in London.  Morgan et Ce ruled Paris.  The Rothschild's Lambert cousins set up Drexel & Company in Philadelphia.

The House of Morgan catered to the Astors, DuPonts, Guggenheims, Vanderbilts and Rockefellers.  It financed the launch of AT&T, General Motors, General Electric and DuPont.  Like the London-based Rothschild and Barings banks, Morgan became part of the power structure in many countries.

By 1890 the House of Morgan was lending to Egypt’s central bank, financing Russian railroads, floating Brazilian provincial government bonds and funding Argentine public works projects.  A recession in 1893 enhanced Morgan’s power.  That year Morgan saved the US government from a bank panic, forming a syndicate to prop up government reserves with a shipment of $62 million worth of Rothschild gold. [7]

Morgan was the driving force behind Western expansion in the US, financing and controlling West-bound railroads through voting trusts.  In 1879 Cornelius Vanderbilt’s Morgan-financed New York Central Railroad gave preferential shipping rates to John D. Rockefeller’s budding Standard Oil monopoly, cementing the Rockefeller/Morgan relationship.

The House of Morgan now fell under Rothschild and Rockefeller family control.  A New York Herald headline read, “Railroad Kings Form Gigantic Trust”.  J. Pierpont Morgan, who once stated, “Competition is a sin”, now opined gleefully, “Think of it.  All competing railroad traffic west of St. Louis placed in the control of about thirty men.”[8]

Morgan and Edward Harriman’s banker Kuhn Loeb held a monopoly over the railroads, while banking dynasties Lehman, Goldman Sachs and Lazard joined the Rockefellers in controlling the US industrial base. [9]

In 1903 Banker’s Trust was set up by the Eight Families.  Benjamin Strong of Banker’s Trust was the first Governor of the New York Federal Reserve Bank.  The 1913 creation of the Fed fused the power of the Eight Families to the military and diplomatic might of the US government.  If their overseas loans went unpaid, the oligarchs could now deploy US Marines to collect the debts.  Morgan, Chase and Citibank formed an international lending syndicate.

The House of Morgan was cozy with the British House of Windsor and the Italian House of Savoy. The Kuhn Loebs, Warburgs, Lehmans, Lazards, Israel Moses Seifs and Goldman Sachs also had close ties to European royalty. By 1895 Morgan controlled the flow of gold in and out of the US. The first American wave of mergers was in its infancy and was being promoted by the bankers. In 1897 there were sixty-nine industrial mergers. By 1899 there were twelve-hundred. In 1904 John Moody - founder of Moody’s Investor Services - said it was impossible to talk of Rockefeller and Morgan interests as separate. [10]

Public distrust of the combine spread. Many considered them traitors working for European old money. Rockefeller’s Standard Oil, Andrew Carnegie’s US Steel and Edward Harriman’s railroads were all financed by banker Jacob Schiff at Kuhn Loeb, who worked closely with the European Rothschilds.

Several Western states banned the bankers. Populist preacher William Jennings Bryan was thrice the Democratic nominee for President from 1896 -1908. The central theme of his anti-imperialist campaign was that America was falling into a trap of “financial servitude to British capital”. Teddy Roosevelt defeated Bryan in 1908, but was forced by this spreading populist wildfire to enact the Sherman Anti-Trust Act. He then went after the Standard Oil Trust.

In 1912 the Pujo hearings were held, addressing concentration of power on Wall Street. That same year Mrs. Edward Harriman sold her substantial shares in New York’s Guaranty Trust Bank to J.P. Morgan, creating Morgan Guaranty Trust. Judge Louis Brandeis convinced President Woodrow Wilson to call for an end to interlocking board directorates. In 1914 the Clayton Anti-Trust Act was passed.

Jack Morgan - J. Pierpont’s son and successor - responded by calling on Morgan clients Remington and Winchester to increase arms production. He argued that the US needed to enter WWI. Goaded by the Carnegie Foundation and other oligarchy fronts, Wilson accommodated. As Charles Tansill wrote in America Goes to War, “Even before the clash of arms, the French firm of Rothschild Freres cabled to Morgan & Company in New York suggesting the flotation of a loan of $100 million, a substantial part of which was to be left in the US to pay for French purchases of American goods.”

The House of Morgan financed half the US war effort, while receiving commissions for lining up contractors like GE, Du Pont, US Steel, Kennecott and ASARCO. All were Morgan clients. Morgan also financed the British Boer War in South Africa and the Franco-Prussian War. The 1919 Paris Peace Conference was presided over by Morgan, which led both German and Allied reconstruction efforts. [11]

In the 1930’s populism resurfaced in America after Goldman Sachs, Lehman Bank and others profited from the Crash of 1929. [12] House Banking Committee Chairman Louis McFadden (D-NY) said of the Great Depression, “It was no accident. It was a carefully contrived occurrence...The international bankers sought to bring about a condition of despair here so they might emerge as rulers of us all”.

Sen. Gerald Nye (D-ND) chaired a munitions investigation in 1936. Nye concluded that the House of Morgan had plunged the US into WWI to protect loans and create a booming arms industry. Nye later produced a document titled The Next War, which cynically referred to “the old goddess of democracy trick”, through which Japan could be used to lure the US into WWII.

In 1937 Interior Secretary Harold Ickes warned of the influence of “America’s 60 Families”. Historian Ferdinand Lundberg later penned a book of the exact same title. Supreme Court Justice William O. Douglas decried, “Morgan influence...the most pernicious one in industry and finance today.”

Jack Morgan responded by nudging the US towards WWII. Morgan had close relations with the Iwasaki and Dan families - Japan’s two wealthiest clans - who have owned Mitsubishi and Mitsui, respectively, since the companies emerged from 17th Century shogunates. When Japan invaded Manchuria, slaughtering Chinese peasants at Nanking, Morgan downplayed the incident. Morgan also had close relations with Italian fascist Benito Mussolini, while German Nazi Dr. Hjalmer Schacht was a Morgan Bank liaison during WWII. After the war Morgan representatives met with Schacht at the Bank of International Settlements (BIS) in Basel, Switzerland. [13]

The House of Rockefeller

BIS is the most powerful bank in the world, a global central bank for the Eight Families who control the private central banks of almost all Western and developing nations. The first President of BIS was Rockefeller banker Gates McGarrah- an official at Chase Manhattan and the Federal Reserve. McGarrah was the grandfather of former CIA director Richard Helms. The Rockefellers- like the Morgans- had close ties to London. David Icke writes in Children of the Matrix, that the Rockefellers and Morgans were just “gofers” for the European Rothschilds. [14]

BIS is owned by the Federal Reserve, Bank of England, Bank of Italy, Bank of Canada, Swiss National Bank, Nederlandsche Bank, Bundesbank and Bank of France.

Historian Carroll Quigley wrote in his epic book Tragedy and Hope that BIS was part of a plan, “to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole...to be controlled in a feudalistic fashion by the central banks of the world acting in concert by secret agreements.”

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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The Global Debt Crisis: How We Got In It, and How to Get Out
« Reply #77 on: June 06, 2011, 07:40:59 PM »
http://www.globalresearch.ca/the-global-debt-crisis-how-we-got-in-it-and-how-to-get-out/25154

The Global Debt Crisis: How We Got In It, and How to Get Out

by Ellen Brown



Global Research
June 6, 2011

Countries everywhere are facing debt crises today, precipitated by the credit collapse of 2008.  Public services are being slashed and public assets are being sold off, in a futile attempt to balance budgets that can’t be balanced because the money supply itself has shrunk.  Governments usually get the blame for excessive spending, but governments did not initiate the crisis.  The collapse was in the banking system, and in the credit that it is responsible for creating and sustaining.

Contrary to popular belief, most of our money today is not created by governments.  It is created by private banks as loans.  The private system of money creation has grown so powerful over the centuries that it has come to dominate governments globally.  The system, however, contains the seeds of its own destruction.  The source of its power is also a fatal design flaw.


The flaw is that banks advance “bank credit” that must be paid back with interest, continually requiring more money to be repaid than was created as loans; and the only way to get additional money from the private banking system is to take out yet more loans, at interest. The system is, in effect, a pyramid scheme. When the banks run out of borrowers to support the pyramid, it must collapse; and we are nearing that point today.

There are more sustainable ways to run a banking and credit system, as will be shown.

How Banks Create Money

The process by which banks create money was explained by the Chicago Federal Reserve in a booklet called “Modern Money Mechanics.” It states:

“The actual process of money creation takes place primarily in banks.” [p3]

“[Banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts. Loans (assets) and deposits (liabilities) both rise [by the same amount].” [p6]

“With a uniform 10 percent reserve requirement, a $1 increase in reserves would support $10 of additional transaction accounts.” [p49]

A $100 deposit supports a $90 loan, which becomes a $90 deposit in another bank, which supports an $81 loan, etc.

That’s the conventional model, but banks actually create the loans FIRST. (Picture how a credit card works.) Banks need deposits to clear their outgoing checks, but they find the deposits later. Banks create money as loans, which become checks, which go into other banks. Then, if needed to clear the checks, they borrow the money back from the other banks. In effect, they borrow back the money they just created, pocketing the spread between the interest rates as their profit. The rate at which banks can borrow from each other in the U.S. today (the Fed funds rate) is an extremely low 0.2%.

How the System Evolved

The current system of privately-issued money is traced in “Modern Money Mechanics” to the 17th century goldsmiths. People who left gold with the goldsmiths for safekeeping would be issued paper receipts for it called “banknotes.” Other people who wanted to borrow money were also happy to accept paper banknotes in place of gold, since the notes were safer and more convenient to carry around. The sleight of hand came in when the goldsmiths discovered that people would come for their gold only about 10% of the time. That meant that up to ten times as many notes could be printed and lent as the goldsmiths had gold. Ninety percent of the notes were basically counterfeited.

This system was called “fractional reserve” banking and was institutionalized when the Bank of England was founded in 1694. The bank was allowed to lend its own banknotes to the government, forming the national money supply. Only the interest on the loans had to be paid. The debt was rolled over indefinitely.

That is still true today. The U.S. federal debt is never paid off but just continues to grow, forming the basis of the U.S. money supply.

The Public Banking Alternative

There are other ways to create a banking system, ways that would eliminate its ponzi-scheme elements and make the system sustainable. One solution is to make the loans interest-free; but for Western economies today, that transition could be difficult.

Another alternative is for banks to be publicly-owned. If the people collectively own the bank, the interest and profits go back to the government and the people, who benefit from decreased taxes, increased public services, and cheaper public infrastructure. Cutting out interest has been shown to reduce the cost of public projects by 30-50%.

In the United States, this system of publicly-owned banks goes back to the American colonists. The best of the colonial models was in Benjamin Franklin’s colony of Pennsylvania, where the government operated a “land bank.” Money was printed and lent into the community. It recycled back to the government and could be lent and relent. The system was mathematically sound because the interest and profits were returned to the government, which then spent the money back into the economy in place of taxes. Private banks, by contrast, generally lend their profits back into the economy, or invest in private money-making ventures in which more is always expected back than was originally invested.

During the period that the Pennsylvania system was in place, the colonists paid no taxes except excise taxes, prices did not inflate, and there was no government debt.

How Private Banknotes Became the National U.S. Currency

The Pennsylvania system was sustainable, but some early American colonial governments just printed and spent, inflating the money supply and devaluing the currency. The British merchants complained, prompting King George II to forbid the colonists to issue their own money. Taxes had to be paid to England in gold. That meant going into debt to the English bankers. The result was a massive depression. The colonists finally rebelled and went back to issuing their own money, precipitating the American Revolution.

In an international first, the colonists funded a war against a major power with mere paper receipts, and won. But the British counterattacked by waging a currency war. They massively counterfeited the colonists’ paper money, at a time when this was easy to do. By the end of the war, the paper scrip was virtually worthless. After it lost its value, the colonists were so disillusioned with paper money that they left the power to issue it out of the U.S. Constitution.

Meanwhile, Alexander Hamilton, the first U.S. Treasury Secretary, was faced with huge war debts, and he had no money to pay them. He therefore resorted to the ruse used in England known as fractional reserve banking. In 1791, Hamilton set up the First U.S. Bank, a largely private bank that would print banknotes “backed” by gold and lend them to the government.

The ruse worked: the paper banknotes expanded the money supply, the debts were paid, and the economy thrived. But it was the beginning of a system of government funded by debt to private bankers, who lent banknotes only nominally backed by gold.

During the American Civil War, President Lincoln avoided a crippling war debt by returning to the system of government-issued money of the American colonists. He issued U.S. Notes from the Treasury called “Greenbacks” rather than borrowing at usurious interest rates. But Lincoln was assassinated, and Greenback issuance was halted.

In 1913, the privately-owned Federal Reserve was authorized to issue its own Federal Reserve Notes as the national currency. These notes were then lent to the government, eliminating the government’s own power to issue money (except for coins). The Federal Reserve was set up to prevent bank runs, but twenty years later we had the Great Depression, the greatest bank run in history. Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, wrote in 1934:

“We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve.”

For the bankers, however, it was a good system. It put them in control.

Setting the Global Debt Trap

Prof. Carroll Quigley was an insider groomed by the international bankers. He wrote in Tragedy and Hope in 1966:

“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.

“The apex of the system was to be the Bank for International Settlements [BIS] in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank... sought to dominate its government by its ability to control Treasury loans…."

The debt trap was set in stages. In 1971, the dollar went off the gold standard internationally. Currencies were unpegged from gold and allowed to “float” in currency markets, competing with other currencies, making them vulnerable to speculation and manipulation.

In 1973, a secret agreement was entered into in which the OPEC countries would sell oil only in dollars, and the price of oil would be dramatically increased. By 1974, oil prices had increased by 400% from 1971 levels. Countries lacking oil had to borrow dollars from U.S. banks.

In 1981, the Fed funds rate was raised to 20%. At 20% compound interest, debt doubles in under four years. As a result, most of the world became crippled by debt. By 2001, developing nations had repaid the principal originally owed on their debts six times over; but their total debt had quadrupled because of interest payments.

When debtor nations could not pay the banks, the International Monetary Fund stepped in with loans -- with strings attached. The debtors had to agree to “austerity measures,” including:

*  cutting social services

*  privatizing banks and public utilities

*  opening markets to foreign investors

*  letting currencies “float.”

Today, austerity measures are being imposed not just in developing countries but in the European Union and on U.S. States.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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The Federal Reserve Cartel: Freemasons and The House of Rothschild
« Reply #78 on: June 08, 2011, 01:51:09 PM »
http://www.globalresearch.ca/the-federal-reserve-cartel-freemasons-and-the-house-of-rothschild/25179

The Federal Reserve Cartel: Freemasons and The House of Rothschild

by Dean Henderson



Global Research
June 8, 2011

(Part two of a four-part series)

In 1789 Alexander Hamilton became the first Treasury Secretary of the United States.  Hamilton was one of many Founding Fathers who were Freemasons.  He had close relations with the Rothschild family which owns the Bank of England and leads the European Freemason movement.  George Washington, Benjamin Franklin, John Jay, Ethan Allen, Samuel Adams, Patrick Henry, John Brown and Roger Sherman were all Masons.


Andrew Hamilton

Roger Livingston helped Sherman and Franklin write the Declaration of Independence. He gave George Washington his oaths of office while he was Grand Master of the New York Grand Lodge of Freemasons. Washington himself was Grand Master of the Virginia Lodge. Of the General Officers in the Revolutionary Army, thirty-three were Masons. This was highly symbolic since 33rd Degree Masons become Illuminated. [1]

Populist founding fathers led by John Adams, Thomas Jefferson, James Madison and Thomas Paine- none of whom were Masons- wanted to completely severe ties with the British Crown, but were overruled by the Masonic faction led by Washington, Hamilton and Grand Master of the St. Andrews Lodge in Boston General Joseph Warren, who wanted to “defy Parliament but remain loyal to the Crown”. St. Andrews Lodge was the hub of New World Masonry and began issuing Knights Templar Degrees in 1769. [2]


General Joseph Warren

All US Masonic lodges are to this day warranted by the British Crown, whom they serve as a global intelligence and counterrevolutionary subversion network. Their most recent initiative is the Masonic Child Identification Program (CHIP). According to Wikipedia, the CHIP programs allow parents the opportunity to create a kit of identifying materials for their child, free of charge. The kit contains a fingerprint card, a physical description, a video, computer disk, or DVD of the child, a dental imprint, and a DNA sample.

The First Continental Congress convened in Philadelphia in 1774 under the Presidency of Peyton Randolph, who succeeded Washington as Grand Master of the Virginia Lodge. The Second Continental Congress convened in 1775 under the Presidency of Freemason John Hancock. Peyton’s brother William succeeded him as Virginia Lodge Grand Master and became the leading proponent of centralization and federalism at the First Constitutional Convention in 1787. The federalism at the heart of the US Constitution is identical to the federalism laid out in the Freemason’s Anderson’s Constitutions of 1723. William Randolph became the nation’s first Attorney General and Secretary of State under George Washington. His family returned to England loyal to the Crown. John Marshall, the nation’s first Supreme Court Justice, was also a Mason. [3]

When Benjamin Franklin journeyed to France to seek financial help for American revolutionaries, his meetings took place at Rothschild banks. He brokered arms sales via German Mason Baron von Steuben. His Committees of Correspondence operated through Freemason channels and paralleled a British spy network. In 1776 Franklin became de facto Ambassador to France. In 1779 he became Grand Master of the French Neuf Soeurs (Nine Sisters) Lodge, to which John Paul Jones and Voltaire belonged. Franklin was also a member of the more secretive Royal Lodge of Commanders of the Temple West of Carcasonne, whose members included Frederick Prince of Whales. While Franklin preached temperance in the US, he cavorted wildly with his Lodge brothers in Europe. Franklin served as Postmaster General from the 1750’s to 1775 - a role traditionally relegated to British spies. [4]

With Rothschild financing Alexander Hamilton founded two New York banks, including Bank of New York. [5] He died in a gun battle with Aaron Burr, who founded Bank of Manhattan with Kuhn Loeb financing. Hamilton exemplified the contempt which the Eight Families hold towards common people, once stating, “All communities divide themselves into the few and the many. The first are the rich and the well born, the others the mass of the people...The people are turbulent and changing; they seldom judge and determine right. Give therefore to the first class a distinct, permanent share of government. They will check the unsteadiness of the second.”[6]

Hamilton was only the first in a series of Eight Families cronies to hold the key position of Treasury Secretary. In recent times Kennedy Treasury Secretary Douglas Dillon came from Dillon Read (now part of UBS Warburg). Nixon Treasury Secretaries David Kennedy and William Simon came from Continental Illinois Bank (now part of Bank of America) and Salomon Brothers (now part of Citigroup), respectively. Carter Treasury Secretary Michael Blumenthal came from Goldman Sachs, Reagan Treasury Secretary Donald Regan came from Merrill Lynch (now part of Bank of America), Bush Sr. Treasury Secretary Nicholas Brady came from Dillon Read (UBS Warburg) and both Clinton Treasury Secretary Robert Rubin and Bush Jr. Treasury Secretary Henry Paulson came from Goldman Sachs. Obama Treasury Secretary Tim Geithner worked at Kissinger Associates and the New York Fed.

Thomas Jefferson argued that the United States needed a publicly-owned central bank so that European monarchs and aristocrats could not use the printing of money to control the affairs of the new nation. Jefferson extolled, “A country which expects to remain ignorant and free...expects that which has never been and that which will never be. There is scarcely a King in a hundred who would not, if he could, follow the example of Pharaoh – get first all the people’s money, then all their lands and then make them and their children servants forever...banking establishments are more dangerous than standing armies. Already they have raised up a money aristocracy.” Jefferson watched as the Euro-banking conspiracy to control the United States unfolded, weighing in, “Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions begun at a distinguished period, unalterable through every change of ministers, too plainly prove a deliberate, systematic plan of reducing us to slavery”. [7]

But the Rothschild-sponsored Hamilton’s arguments for a private US central bank carried the day. In 1791 the Bank of the United States (BUS) was founded, with the Rothschilds as main owners. The bank’s charter was to run out in 1811. Public opinion ran in favor of revoking the charter and replacing it with a Jeffersonian public central bank. The debate was postponed as the nation was plunged by the Euro-bankers into the War of 1812. Amidst a climate of fear and economic hardship, Hamilton’s bank got its charter renewed in 1816.

Old Hickory, Honest Abe & Camelot

In 1828 Andrew Jackson took a run at the US Presidency. Throughout his campaign he railed against the international bankers who controlled the BUS. Jackson ranted, “You are a den of vipers. I intend to expose you and by Eternal God I will rout you out. If the people understood the rank injustices of our money and banking system there would be a revolution before morning.”

Jackson won the election and revoked the bank’s charter stating, “The Act seems to be predicated on an erroneous idea that the present shareholders have a prescriptive right to not only the favor, but the bounty of the government...for their benefit does this Act exclude the whole American people from competition in the purchase of this monopoly. Present stockholders and those inheriting their rights as successors be established a privileged order, clothed both with great political power and enjoying immense pecuniary advantages from their connection with government. Should its influence be concentrated under the operation of such an Act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the independence of our country in war...controlling our currency, receiving our public monies and holding thousands of our citizens independence, it would be more formidable and dangerous than the naval and military power of the enemy. It is to be regretted that the rich and powerful too often bend the acts of government for selfish purposes...to make the rich richer and more powerful. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by acts of Congress. I have done my duty to this country.”[8]

Populism prevailed and Jackson was re-elected. In 1835 he was the target of an assassination attempt. The gunman was Richard Lawrence, who confessed that he was, “in touch with the powers in Europe”. [9]

Still, in 1836 Jackson refused to renew the BUS charter. Under his watch the US national debt went to zero for the first and last time in our nation’s history. This angered the international bankers, whose primary income is derived from interest payments on debt. BUS President Nicholas Biddle cut off funding to the US government in 1842, plunging the US into a depression. Biddle was an agent for the Paris-based Jacob Rothschild. [10]

The Mexican War was simultaneously sprung on Jackson. A few years later the Civil War was unleashed, with London bankers backing the Union and French bankers backing the South. The Lehman family made a fortune smuggling arms to the south and cotton to the north. By 1861 the US was $100 million in debt. New President Abraham Lincoln snubbed the Euro-bankers again, issuing Lincoln Greenbacks to pay Union Army bills.

The Rothschild-controlled Times of London wrote, “If that mischievous policy, which had its origins in the North American Republic, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed, or it will destroy every monarchy on the globe.” [11]

The Euro-banker-written Hazard Circular was exposed and circulated throughout the country by angry populists. It stated, “The great debt that capitalists will see is made out of the war and must be used to control the valve of money. To accomplish this government bonds must be used as a banking basis. We are now awaiting Secretary of Treasury Salmon Chase to make that recommendation. It will not allow Greenbacks to circulate as money as we cannot control that. We control bonds and through them banking issues”.

The 1863 National Banking Act reinstated a private US central bank and Chase’s war bonds were issued. Lincoln was re-elected the next year, vowing to repeal the act after he took his January 1865 oaths of office. Before he could act, he was assassinated at the Ford Theatre by John Wilkes Booth. Booth had major connections to the international bankers. His granddaughter wrote This One Mad Act, which details Booth’s contact with “mysterious Europeans” just before the Lincoln assassination.

Following the Lincoln hit, Booth was whisked away by members of a secret society known as Knights of the Golden Circle (KGC). KGC had close ties to the French Society of Seasons, which produced Karl Marx. KGC had fomented much of the tension that caused the Civil War and President Lincoln had specifically targeted the group. Booth was a KGC member and was connected through Confederate Secretary of State Judah Benjamin to the House of Rothschild. Benjamin fled to England after the Civil War. [12]

Nearly a century after Lincoln was assassinated for issuing Greenbacks, President John F. Kennedy found himself in the Eight Families’ crosshairs. Kennedy had announced a crackdown on off-shore tax havens and proposed increases in tax rates on large oil and mining companies. He supported eliminating tax loopholes which benefit the super-rich. His economic policies were publicly attacked by Fortune magazine, the Wall Street Journal and both David and Nelson Rockefeller. Even Kennedy’s own Treasury Secretary Douglas Dillon, who came from the UBS Warburg-controlled Dillon Read investment bank, voiced opposition to the JFK proposals. [13]

Kennedy’s fate was sealed in June 1963 when he authorized the issuance of more than $4 billion in United States Notes by his Treasury Department in an attempt to circumvent the high interest rate usury of the private Federal Reserve international banker crowd. The wife of Lee Harvey Oswald, who was conveniently gunned down by Jack Ruby before Ruby himself was shot, told author A. J. Weberman in 1994, “The answer to the Kennedy assassination is with the Federal Reserve Bank. Don’t underestimate that. It’s wrong to blame it on Angleton and the CIA per se only. This is only one finger on the same hand. The people who supply the money are above the CIA”. [14]

Fueled by incoming President Lyndon Johnson’s immediate escalation of the Vietnam War, the US sank further into debt. Its citizens were terrorized into silence. If they could kill the President they could kill anyone.

The House of Rothschild

The Dutch House of Orange founded the Bank of Amsterdam in 1609 as the world’s first central bank. Prince William of Orange married into the English House of Windsor, taking King James II’s daughter Mary as his bride. The Orange Order Brotherhood, which recently fomented Northern Ireland Protestant violence, put William III on the English throne where he ruled both Holland and Britain. In 1694 William III teamed up with the UK aristocracy to launch the private Bank of England.

The Old Lady of Threadneedle Street- as the Bank of England is known- is surrounded by thirty foot walls. Three floors beneath it the third largest stock of gold bullion in the world is stored. [15]

The Rothschilds and their inbred Eight Families partners gradually came to control the Bank of England. The daily London gold “fixing” occurred at the N. M. Rothschild Bank until 2004. As Bank of England Deputy Governor George Blunden put it, “Fear is what makes the bank’s powers so acceptable. The bank is able to exert its influence when people are dependent on us and fear losing their privileges or when they are frightened.”[16]

Mayer Amschel Rothschild sold the British government German Hessian mercenaries to fight against American Revolutionaries, diverting the proceeds to his brother Nathan in London, where N.M. (Nathan and Mayer) Rothschild & Sons was established. Mayer was a serious student of Cabala and launched his fortune on money embezzled from William IX- royal administrator of the Hesse-Kassel region and a prominent Freemason.

Rothschild-controlled Barings bankrolled the Chinese opium and African slave trades. It financed the Louisiana Purchase. When several states defaulted on its loans, Barings bribed Daniel Webster to make speeches stressing the virtues of loan repayment. The states held their ground, so the House of Rothschild cut off the money spigot in 1842, plunging the US into a deep depression. It was often said that the wealth of the Rothschilds depended on the bankruptcy of nations. Mayer Amschel Rothschild once said, “I care not who controls a nation’s political affairs, so long as I control her currency”.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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Wasn't all the gold that's allegedly at Fort Knox unjustly confiscated from the American people?

If so, then doesn't it follow that it was never the legitimate property of the U.S. government in the first place, and is therefore not "theirs" to sell?

If so, then why are so many cheerleading the idea of selling it off in order to pay down the national debt -- particularly in view of the fact that eliminating the national debt without first instituting a debt-free money system would destroy our money supply and, consequently, our entire economy?

Or am I a thought criminal merely for asking that question, since this idea has been wrapped in the flag of "liberty"?
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0