How much money do you have in your wallet right now? $20? $100? Maybe you just got back Vegas and you’ve got a few hundred? The mean net worth in the US is well over $100,000,000 so there has to be a lot of money in a vault or something, right?
Before I deliver the punchline, let’s think about this for a minute. Several thousand years ago, money didn’t exist. Barter was the only form of commerce. Money emerged in the forms of gold and silver because they were valuable, scarce, durable, easily divisible, and portable. Paper money emerged because people didn’t want to lug gold and silver around, so banks would issue receipts entitling the bearer to a given amount of gold or silver.
Paper money was “as good as gold.” The amount of money in circulation had to equal the amount of gold and silver in bank vaults — perpetual inflation was impossible without an increase in the issuance of receipts or newfound sources of gold and silver. When prices got too high people became suspicious of banks, and would redeem their gold to quell their fears. The banks that had issued too many receipts would be exposed and would collapse. Some people would unfortunately lose money, but afterwards prices came down and the stability of the system was restored. Credit issuance never spiraled out of control for long.
After the Panic of 1907 some people got fed up with periodic bank runs. Without getting into too much detail, the proposal to remedy the situation was the Federal Reserve. After Theodore Roosevelt entered the 1912 presidential election as an independent, assuring the Democrat Woodrow Wilson of victory, the Federal Reserve was pushed through and incepted in 1913. The combination of the Federal Reserve, fractional reserve banking, the financing of World War I, and FDR led to the practical dissolution of the gold standard — for transactions paper money had replaced gold as currency. Since FDR outlawed private ownership of gold markets we’ve had perpetual inflation, with the steady erosion in the value of the dollar. A dollar today is worth less than 5% of what it was worth in 1913. For many of you with whom I’ve spoken, none of this is new information.
So what does this have to do with cash? For hard money advocates like myself, it’s bad enough that the dollar is no longer a reliable store of value, as the quantity of dollars in circulation is an uncertainty going forward and subject to the whim of politicians. But this excerpt from a Washington Post article got me thinking even more, “The $100 bill represents more than 70 percent of the $776 billion in currency in circulation, two-thirds of which is held overseas.” $776bn in actual greenbacks in circulation. 2/3 held overseas. So there is $256bn in greenbacks residing in the US. There are 300 million Americans today. This means that if we were to give each American an equal amount of all paper dollars in circulation in the US, there would only be about $830 for each of us to go around.
In day to day “Mediocristan” as Taleb might put it, this is not a problem. We can pay for things with credit cards, debit cards, checks, PayPal, etc. But say the unthinkable happened and people rushed to banks to liquidate their checkings and savings accounts, as happened with Countrywide a week ago ( Countrywide Bank Run). There isn’t nearly enough cash to go around. So we’re off the gold standard and on the fiat dollar standard. But when you do the math you realize that if the average (mean) American is worth over $100,000 and yet there’s less than $830 to go around for each of them, you come to the inescapable that we’re not really on the paper dollar standard either. We think that we can sell our house, stocks, cars, and jewelry for cash at the end of the day, but in reality we can’t. Are we as Americans all a bunch of roadrunners who have gone off the cliff but are still spinning our legs, oblivious to the 1000 foot drop below because the force of gravity hasn’t been felt in decades? It troubles me, I must admit.
Join Our Newsletter - FREE Report “10 Reasons Gold Has Farther to Run”
“I believe that if the people of this nation fully understood what Congress has done to them over the last 49 years, they would move on Washington; they would not wait for an election. It adds up to a preconceived plan to destroy the economic and social independence of the United States.”
George W. Malone, U.S. Senator (Nevada), speaking before Congress in 1957.
“The individual is handicapped by coming face to face with a conspiracy so monstrous he cannot believe it exists.”
J. Edgar Hoover
“People yield themselves with perfect docility to our molding hands.”
David Rockefeller
“The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson.”
Franklin D. Roosevelt
“In politics, nothing happens by accident. If it happened, you can bet it was planned that way.”
Franklin D. Roosevelt
“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”
Thomas Jefferson
“Give me control of a nation’s money and I care not who makes the laws.”
Mayer Amschel Rothschild
“I am a most unhappy man. I have unwillingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated in the hands of a few men.”
Woodrow Wilson 28th President of the United States
“Behind the ostensible government sits enthroned an invisible government owing NO allegiance and acknowledging NO responsibility to the people. To destroy this invisible government, to befoul this unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of today.”
President Theodore Roosevelt, 1906
“To achieve world government, it is necessary to remove from the minds of men, their individualism, loyalty to family traditions, national patriotism and religious dogmas.”
Brock Chisolm, former Director of the World Health Organization
We have restricted credit, we have restricted opportunity, we have controlled development, and we have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world… no longer a government of free opinion, no longer a government by conviction and a vote of the majority, but a government by the opinion and duress of small groups of dominent men.”
Woodrow Wilson 28th President of the United States
“The real rulers in Washington are invisible & exercise their power from behind the scenes.”
Justice Felix Frankfurter, U.S. Supreme Court.
“The high office of President has been used to foment a plot to destroy the American’s freedom,
and before I leave office I must inform the citizen of his plight.”
John F. Kennedy, speaking at Columbia University, 10 days before his assassination
Join Our Newsletter - FREE Report “10 Reasons Gold Has Farther to Run”
Jeffersonian Concerns
The founding fathers knew that the freedoms they had fought and died for could easily be lost by future generations. They understood the price would be eternal vigilance. Thomas Jefferson, in particular, seemed to have understood the potential for a loss of freedom due to banking laws, and especially “Central Banks” akin to The Federal Reserve (the latter which is probably worst than anything that Jefferson imagined in his worst nightmares).
provides an extraordinary treatise on this subject. It begins with a quote from John Steele Gordon’s Hamilton’s Blessing, The Extraordinary Life and Times of Our National Debt:
“Today we tend to think of the American Revolution as having brought ‘democracy’ to the thirteen colonies. In fact it brought no such thing. The eighteenth century was an age of aristocracy, and the American colonies were no exceptions. Each colony had its oligarchy of the rich, established families who dominated the economic and, under the control of a royal governor, political affairs of that colony.”
“…With the removal of royal control, these oligarchies inherited a near monopoly of political power in each colony.” “…The oligarchies, it need hardly be said, abused this monopoly of political power; monopolies, whether private or governmental, are always abused by those who hold them.”
Alexander Hamilton, the first Secretary of the Treasury, in response to a huge debt to pay from the excesses of the Revolutionary War, created a central bank and issued paper notes to pay the debt. It was the beginning of The Federal Reserve and a system destined to result in a condition of monumental debt. From Hamilton’s viewpoint, “A national debt, if it is not excessive, will be to us a national blessing. It will be a powerful cement to our nation. It will also create a necessity for keeping up taxation to a degree which, without being oppressive, will be a spur to industry.”
Unfortunately, such cement has become the kind used to dispatch individuals into the East River. Furthermore, what Hamilton apparently failed to realize was the ease at which a national debt can become excessive. Furthermore, such a device leaves open the door to the machinations of Banksters of every stripe, and ultimately to excessive taxation — the kind of stuff from which the Revolutionary War was fought in order to free the nation.
Thomas Jefferson, seeing the dangers of Hamilton’s thinking, was forthright in expressing his opinions about the Bank of the United States (what is today The Federal Reserve): “This institution is one of the most deadly hostiles existing, against the principles and form of our constitution.” It is “…an institution like this, penetrating by its branches every part of the Union… [which] may in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self constituted authorities, or any other authority than that of the nation…”
Jefferson realized that neither a country nor a man can be free and be in debt. This led him to believe that the Union might fall apart if Washington retired from public life. In a letter to Washington, while the latter was still the President of the United States, Jefferson said,
“It has been urged, then, that a public debt, greater than we can possibly pay… that this accumulation of debt has taken forever out of our power those easy sources of revenue… which would have answered them… and covered us from habitual murmurings against taxes and tax-gatherers… yet we are already obliged to strain the impost [imposition: literally a laying on, a tax, a deception] till it produces clamor, and will produce evasion and war on our own citizens to collect it.
“They cite propositions in Congress, and suspect other projects on foot still to increase the mass of debt…the banishment of our coin will be complicated by the creation of ten millions of paper money, in the form of bank bills now issuing into circulation.
“They think the ten or twelve percent annual profit paid to the lenders of this paper medium taken out of the pockets of the people, who would have had without interest the coin it is banishing:”
Jefferson was talking about money backed by something real or tangible, and not colored, Fiat Currency (money by decree) created by an institution over which the ordinary people who are deeply affected by its policies have no say. He saw that a system of debt impoverished the whole of life.
“…that all the capital employed in paper speculation is barren and useless, producing like that on a gambling table, no accession to itself, and is withdrawn from commerce and agriculture, where it would have produced addition to the common mass:
“…that it nourishes in our citizens habits of vice and idleness, instead of industry and morality:
“…that it has furnished effectual means of corrupting such a portion of the legislature as turns the balance between the honest voters, which ever way it is directed:
“…that this corrupt squadron, deciding the voice of the legislature, have manifested their dispositions to get rid of the limitations imposed by the Constitution by the general legislature, limitations, on the faith of which, the States acceded to that instrument:
“…that the ultimate object of all this is to prepare the way for a change from the present republican form of government to that of a monarchy…” [or totalitarianism]
“…they are still eager after their object, and are predisposing everything for its ultimate attainment.”
Other quotes from Jefferson, include:
“Because of the imperfections in human nature, evil men will always seek to gain control of the government to further their own ends. In order to prevent this, power must be vested in the people, whose interest it is to prevent the ascendancy of evil.
“Democrats consider the people as the safest depository of power in the last resort; they cherish them, therefore, and wish to leave in them all the powers to the exercise of which they are competent.”
“I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom.” “Aristocrats fear the people, and wish to transfer all power to the higher classes of society.” “The people…are the only sure reliance for the preservation of our liberty.”
“No government can continue good, but under the control of the people.”
even provides more on Thomas Jefferson.
Join Our Newsletter - FREE Report “10 Reasons Gold Has Farther to Run”
A principal (pardon the pun) definition of Money is: “a medium of exchange in the form of coins and/or paper money.” It can also be viewed, simultaneously, as wealth, property or assets convertible into currency. Thus, in the form of a medium of exchange, it can be anything agreed as currency by both buyers and sellers. It is a step above one-on-one bartering by virtue of it being construed to have specific value beyond any given exchange of products or services.
In this basic form, Paper Money as currency is the creation of governments or the governed. Any group can theoretically coin money, but the extent to which it is acceptable by those outside the group will be wholly dependent upon the nature of the currency. Gold coins, for example, issued in by a private group in Bhutan might be quite acceptable to a Chilean.
There is no requirement that the form of money, such as paper certificates of one form or another, have some manner of intrinsic value — provided that the individuals exchanging the currency have agreed to the valuation of the paper. But despite the fact that some of the world’s paper money (the so-called “hard currencies”) are readily acceptable everywhere, there is always the potential that sellers of products and services may decide at any point not to accept a particular form of paper money.
This often happens in countries where Currency Changes run rampant, where inflation — the latter being caused for any number of reasons (natural or artificial) — causes the national paper currency to lose value at a substantial rate. In the case of hyperinflation, the paper money quickly reaches the point of having so little value, that holders begin thinking in terms of papering their walls or lining their bird cages with the worthless certificates, rather than hold on to them as if they were something of value.
Any paper Money, which is not backed by something with intrinsic value, is always subject to becoming worthless once those using it begin to lose confidence in it. This was the case in the American colonies before and immediately after the American Revolution. It is also the reason that the Constitution of the resulting nation went to significant lengths to establish a national currency which was backed by tangible assets. It is also the gist of those Jeffersonian Concerns which dealt with the dangers of a Central Bank (as in The Federal Reserve), and the incompatibility of being free and in debt.
In the united States of America, paper money is illegal and unconstitutional. Article 1, Section 10, of the Constitution for the United States of America states, in part:
“No State shall.. make any Thing but gold and silver Coin a Tender in payment of Debts.”
The United States Code, Title 12, Section 152, states: “Lawful money shall be construed to mean gold or silver coin of the United States.”
Money is in fact defined as: “Coin, stamped metal; any piece of metal usually gold, silver, or copper stamped by public authority.” Bouvier’s Law Dictionary [1870, page 192] makes the definition even simpler: “Gold and silver coins. The common medium of exchange in a civilized nation.”
A 1934 Federal Reserve Note, however, contained the following statement: “This note is ‘legal tender’ for all debts public and private and is redeemable in ‘lawful money’ at the United States Treasury or at any Federal Reserve Bank.”
It might be thought curious that the Federal Reserve Note is ‘legal tender’, but can be redeemed for ‘lawful money’. Obviously, the two are not the same. In effect, Federal Reserve Notes are a legal tender, but not of the United States. Dollars are legal tender, but not all legal tender are dollars. Federal Reserve Notes cannot be “lawful money” for the United States.
More recent Federal Reserve Notes state: “This note is legal tender for all debts, public and private” Please note that there is no period at the end of the statement, suggesting that perhaps the statement is not complete. E.g. not redeemable? There is also the aspect that the note is for all debts… not necessarily a means of accumulating wealth, but merely a means of addressing debts (and not necessarily even paying off a debt!).
Take, for example, the case where a Court orders a judgment to be paid in dollars. Because the Federal government is not currently coining any Dollars (and the States are prohibited from doing so), no person can pay any debt arising from a judgment of the Court. Since there are no Dollars available to an accused to pay the debt judgment of the Court, the Court has no capacity to enforce the judgment, and therefore lacks the ability to effect a remedy (as in Remedy and Recourse). Thus, the Court has no jurisdiction in the case, and the case should be dismissed. [But don’t assume that the above constitutes legal advice, or that the Court will buy the argument for a nano-second! Their idea of remedy might be to throw you into jail! And thus not allow you to pass go.]
The founding fathers of the country specifically forbade the use of paper money as legal tender for good reason. This has been described in some detail by Robert S. Getman (an attorney, practicing with the firm of Kelley Drye & Warren in New York City) in his article, Gold and the Founding Fathers. His thoughts (and others’) include the following:
Emperors and kings in previous centuries were not totally free to increase taxes, inasmuch as they had to consider just how much their subjects were able and willing to bear. In the cases where their subjects might have reached a breaking point, the kings often resorted to skimming off some of the precious metals of their coins (thus reducing the actual weight of the coins), or more slyly, reducing the precious metal content of the coin’s alloy.
In modern times, considerable research has gone into finding ways to replace silver coins with coins of almost no silver. As a simple test, pick up an older American quarter dollar coin and compare it to a newer American quarter, one commemorating one of the States of the union. There is a noticeable difference. The newer coin is lighter! Surprise!
But this is just the tip of the iceberg. Modern governments have gone far beyond royal coin-clipping and debasement by the use of printing-press financing. Rather than openly imposing unpopular taxes, they simply create increasing quantities of paper money and credit without any regard for the resulting shrinkage of money’s value. It’s like a corporation constantly increasing the number of shares it issues, and thus causing the value of any single share to decrease due to unrestricted dilution of the company’s per-share value. It’s illegal for Corporations to do this without prior approval. Governments are not so inhibited.
Governments have, in fact, initiated “legal tender” laws that require citizens (i.e. leave them no viable alternative) to accept newly-printed paper money of increasingly less value in payment for goods and services. In this way, government raises revenues by covert theft. “The complexity, indirectness, and relative invisibility of this taxation-by-inflation has made the government’s spending activities unaccountable to the governed.”
It was because of the widespread fiscal frauds in the printing of money prior to and during the American Revolution, that the writers of the Constitution went to such great lengths to insure that gold and silver would be the only constitutional legal tender. Thus, from a constitutional point of reference the current issuance of alleged dollars in the form of irredeemable paper as legal tender is both unjustifiable and unjust.
“The Common Law Heritage is that Money is property. A basic question that the law has always faced is: Whose property — that of the government or that of the governed?
“Under the traditional legal precedents of the Common Law, this issue was framed in terms of the power of the sovereign. By the eighteenth century, the common law had progressed to the point at which it regarded money as private property whose debasement was beyond the rightful power of the sovereign.” [emphasis added]
Under the precepts of Common Law, the Rights of the governed were superior to that of the sovereign, and limited the sovereign’s power. Not the other way around! The limits on money contained in the Constitution was an attempt to ensure the Common Law aspect of limiting any sovereign or government’s ability to debase the national currency. As per the Supreme Court, the Constitution “must be interpreted in the Light of the Common Law … and [can] not be understood without reference to the Common Law.”
When the Constitution was written, the States had powers and constitutions already in place. The Constitution did not grant the States new powers, but did impose limitations on pre-existing powers (including the printing of money). At the same time, the federal government derived all of its powers from the Constitution. And under that directive, the federal government was to have no powers other than those expressly granted it.
One of those powers not granted was the power to make paper into legal tender. In the Constitution, Article 1, Section 8 gave Congress the power: “to coin Money, regulate the Value thereof, and of foreign Coin…” This principle is unambiguous, and important! The States are expressly prohibited from making anything but gold and silver as legal tender, and Congress has no power granted to it, but to coin silver and gold.
Various Justices of the Supreme Court have noted that the power of coining money and regulating its value was delegated to the Congress by the Constitution in order to create and preserve the uniformity of such a standard of value. Gold coinage was indispensable to that goal. The purpose of the Constitution’s monetary provisions was intended to exclude everything from use, except gold and silver. The intent was that the dollar might represent property and not a mere shadow of it.
The Constitution recognized the Common Law precept that money was private property and not to be debased by the government. Its framers forged a clear mandate for a metallic money, specifically one of gold and silver.
But this constitutional mandate was and is being flouted on a daily basis.
The American Civil War caused enormous damage to the Constitution for the United States of America — and not just in lives. There were unprecedented coercive measures by the government: the government forcing men into the army with the first draft law; meeting the financial cost, levying the first direct Federal tax on incomes, and by indirect means, through the depreciation of the paper money. This was followed in 1913 by the establishment of The Federal Reserve, and ultimately by granting this private corporation the rights previously restricted to the Congress. The Federal Reserve then initiated the use of worthless, colored (deceptive) paper money that had no intrinsic value, and ultimately could not be redeemed for anything of real value.
Nevertheless, the gold standard survived up until Franklin Roosevelt’s first term in office. But the “New Deal” and its devastating emergency measures, outlawed private ownership of gold by the infamous imposition of The Decree), eliminated the legal right to ensure the financial validity of contracts by tying them to the value of gold, and then progressively devalued the dollar. It wasn’t until the 1970’s that American’s right to own gold and base their contracts on real value was reinstituted. This latter effort is some of the first good news since the days of the Founding Fathers.
The idea of gold and silver as the basis for monetary policy is “an integral part of a system of free enterprise and limited government, of good faith and law, of promise-keeping and the sanctity of contract. It is this system — and the confidence to which it gave rise — that has been destroyed. It is this system that must be slowly and painfully rebuilt.”
The horrendous misuse of paper money is discussed in an article from the Rumor Mill News Reading Room Forum, a report on 30 December 2001 entitled: The Euro, Gold and the Dollar. A basic premise of the article is that the creation of paper money allows a government — specifically the United States — to acquire other nation’s natural resources, productivity, labor and wealth simply by printing up paper dollars, or even better, doing no more than making notations in a computer!
The quality of life in the USA is therefore derived in large part by a nefarious (definitely not judicious) use of banking manipulations. This technique has, however, no guarantees that it can be used indefinitely into the future, or in other words, that the con will continue to work. Judgment Day may be arriving sooner than expected! A condensed version of this scheme is provided under the heading of Eurogold, while the complete report is available at: .
The idea that only government can issue money is a fallacy. Money, like the fundamental right of free speech, properly flows from the individual. Taking the power of money creation away from the individual is, in fact, a denial of his civil rights.
By the same token, it is another lie when banks claim to be lending money, when, in fact, it is the borrower who is creating the money. But because of fractional banking, US banks can now loan anywhere from $30,000 to $70,000 for each $1,000 deposited. The lie is in the banker’s claim that the money being loaned is from the bank vault, when it is actually and simply being conjured up out of thin air.
“Now as through this world I ramble,
I see lots of funny men,
Some rob you with a six-gun,
And some with a fountain pen.”
Woody Guthrie, Pretty Boy Floyd.
Domestic banking is bad enough, but as Henry C. K. Liu (Economics Professor at the University of Colorado), international banking is more appropriately “predatory lending.”
“If a bank lends to a trust client who is a minor, or who had no business experience, to start a risky business, that resulted in the loss not only of the loan but the client trust account, the bank may well be required by the court to make whole the client.
“Now, there is a close parallel in most Third World debts, to the above example where sophisticated international bankers knowingly lend to dubious schemes merely to get the fees and high interest, knowing that ‘countries don’t go bankrupt’ as Walter Wriston famously proclaimed. The argument for Third World debt forgiveness contains a large measure of lender liability.”
There have been currency crises in 87 countries since 1975. Never in the history of the world have so many countries had such unstable banking systems. “By the late 1970s, there was a huge increase in the dollars floating around the world economy - the rate of growth in dollars between 1973 and 1980 was 20 times the growth in volume of trade.” [Adventures of the Dollar, by Howard M. Wachtel, professor of economics at the American University, Washington DC.]
The so-called “free trade” bottom line: Poor countries producing commodities cannot possibly compete against rich countries producing credit money. Yet they are being forced to do so.
Meanwhile, during the past 30 years the US has bombed or attacked Syria, Lebanon, Nicaragua, Sudan, Korea, Vietnam, Cambodia, Laos, Iraq, Guatemala, Japan, East Timor, Nicaragua, El Salvador, Colombia, Dominican Republic, Somalia, Haiti, Yugoslavia, and Panama. The common denominator of these nations is that they are all non-members of the World Trade Organization. Since the invention of the WTO only Japan has joined willingly; the South American countries have been “persuaded” by friends of the system.
Banking has become the primary “crime against humanity.”
The Banksters are, of course, domestic and Transnational Corporations, and gleefully incorporate within their beings all the horrors and dishonesties of the latter. Corporate Rule is not just based upon the producers of goods and services, it is fundamentally an economic rule made viable by a medium of exchange which has no more value than the “0” in a computer byte. The fact that governments tolerate, allow, and/or encourage this situation is simply an indicator of just how far governments have left the province of being of the people, by the people, and for the people.
On a lighter note, there is a classic Bank Letter, which has circulated through Cyberspace and recently showed up in e-mail in-boxes the world over. Perhaps, this humorous aside by also be food for thought; i.e. treat them as they’ve been treating you (sort of a reversal on The Golden Rule).
Join Our Newsletter - FREE Report “10 Reasons Gold Has Farther to Run”
RSS
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
