|Until 1968, the 'Silver Certificate' shown above was redeemable in silver coin or bullion.
|The sample note and coins above show how my proposed gold money could appear.
The 'Silver Certificate' shown above is from 'Series 1935 C'. Since 1968 they have been
redeemable only in Federal Reserve Notes , but are still valid legal tender.
Series 1928 $10 Gold Certificate (The yellow lettering is for this display piece only)
The above 1928 US 'Gold Certificate' was redeemable for gold!
Welcome to Edition 6 (April-2013)
(Note: Chapter 6 was added to create the 'Investor's Guide'...)
Monetary Revolution USA
Let Private Mints Issue Gold as Money, Abolish Legal Tender Laws and the Fed, Adopt Dave’s
‘Private Gold Standard’
The US Monetary System
15A Brief History of Money 15
US Central Banks
the Fed 20
Structure of the Fed 23
2 Effects of the Fed and Other Central Banks 29
The Impact of Fake Money 29
The Feds’ Record of Results 36
Heroin Analogy and Price Inflation 38
Monopoly Money and
Legal Tender Laws 41
Banking Worldwide 50
The US Banking and Securities System 57The System 57
Abuse of the System by Banks and Congress 58
Causes of the
Sep-2008 Wall Street Debacle 67The Bad News 74
Politicians Use Fake Money to Keep Their Jobs 77
4 Use of Gold as Money
Why Gold? 81
Redick’s Four Monetary Rules 85
Five-Step Plan to Convert to Gold as Money 93
The New Gold Money Era
The Challenges of Introducing Gold 109
Bullion Coins and Private Mints 110
Benefits of a Gold-Money World 112
Investment Strategy (only in 'Investor's Guide' book)
Recommended Authors and Sources 115
List of Tables and Figures Page
The Honest National Debt
Table 2: National Gold Reserves vs $M1
Table 3: Gold
Reserves per Person 102
Table 4: World Central Bank Gold Reserves
Table 5: Bullion
Coins and Medallions 111
Table 6: Weight Conversion (for precious metals) 134
Monetary Base (M0) 1918 to 2011 46
Figure 2: The Shrinking
"Give me control of a nation's money
and I care not who makes it's laws" – 1790, Mayer Amschel Bauer Rothschild (1743 -1812), Founder of the worldwide
Rothschild Banking Dynasty
Definition of Revolution:
Activity or movement designed to effect fundamental
changes in the socioeconomic situation (Merriam-Webster)
9 : Introduction
This book is written
to educate a broad audience, from citizens and students, to professors and bankers, on what is wrong with our monetary system,
and how to fix it. The USA needs a Monetary Revolution to
end distortions and losses in our economy, and end corruption in government and the financial services industry. Most of our
citizens have accepted the immoral and counterproductive attitude that: 1. The government should and will bail out most people
and businesses that get in financial trouble, even if due to irresponsible, self-serving, conduct, and 2. It is proper to
tax others (typically ‘the rich’ and ‘corporations’) to fund benefits for yourself, which I call gang-theft-by-vote.
Federal money feeds these bad habits. The Liberals and Progressives want ‘their’ politicians to fund their projects
(to get their votes), but object when other politicians support subsidies and favors for the ‘capitalism and ‘corporations’
they hate. Of course, once the door is opened a bit for the government to ‘help’ and ‘manage’ social
and business projects, it swings wide open! The economic and moral decline of our country and its worldwide empire are the
result. What does our monetary system have to do with
this? The key underlying issues are:
1. Internationally, the US dollar is the world’s primary reserve currency
(while this status lasts), so we can create dollars out of thin air to pay our foreign debts (imports and loans) with our
own currency (most nations must buy US Dollars) without facing exchange rates (very handy for our big spending government
2. Our central bank, the Federal Reserve System, creates new fake money to fund the excessive federal spending
(politicians like that better than raising taxes), plus recent massive bailouts of firms run by their friends, using phony
reasons such as ‘too big to fail’.
In addition to ‘normal’ borrowing to fund deficits,
our federal debt increases because, 1. Our foreign suppliers often invest in US Treasury securities with the dollars we pay
them for our imports, thus making it easier for us to borrow and spend more, and 2. More borrowing and new money is needed
because US states become dependent on federal money as they seek and accept grants, pork, and federally funded state projects
with strings attached (happily provided by vote-seeking congresspersons). All of this federal spending leads to an excess
increase in our money supply, which causes price inflation and eventual failure of the US dollar as its value drops worldwide.
Thus, our present mode of operation is not sustainable and must end. As my effort to
avoid further decline of our USA, this book focuses on problems and solutions about our monetary system, and how we fund government
at all levels (city to federal), and banking. My prior book, ‘Rebuild America Now’ covers other economic and social
problems. Broadly, a ‘monetary system’ for
a nation is the
system used to provide and control the exchange of money.
It includes the currency (physical coins and paper,
or their electronic form; see Glossary), mints, various types of private (not government owned) banks, and usually a ‘central
bank’ which manages the system and stores the nation’s reserves (gold, currency of other nations, etc.). In most
nations, the central bank is owned and operated by the government, but our Federal Reserve System is a so-called ‘private’
corporation, but operates in secrecy and kow-tows to pressure from politicians; more on that in Chapter 2.
developed nations today control their monetary systems tightly, including ‘legal tender’ laws that in various
ways force people to use the ‘official’ government money. History shows us that private money (issued by non-government
mints) and banking always works well, where anyone can create money and run a bank, and the only government role is to prevent
fraud and theft (see ‘Private Gold Standard’ on pages 94 and 129, and Core Principle on pages 13, and 128). The
crooks that create and push (as in dope ‘pushers’) fake money are soon discovered and no one will use their money
or bank. However, when the government is the crook, and uses legal tender laws to force use of their fake money, it is harder
for the citizens to make corrections! Politicians always try to gain control of the system so they can manipulate it to fund
projects to keep and enhance their jobs, egos, and power. They make new fiat money out of thin air, debase coins (reduce precious
metal content or coin size), etc. ‘Fiat’ means the government declares the ‘face value’ of metal or
paper money without regard to the market-based value of the material of which it is made. They also borrow money
from banks and other nations, usually by selling bonds. Bankers have the same incentive to control government (with loans,
bribes and threats), and thus the monetary system, and history shows they have been successful at it. Their favorite method
is to control the central bank of a nation, and it is said they arrange ‘troubles’ (wars, assassinations) for
those who won’t cooperate.
The Rothschild banking family has been preeminent worldwide in starting and controlling
central banks. The formative days of banking and securities dealers in the U.S. (through 1930) were dominated by the families
of Morgan, Rockefeller, Warburg, Carnegie, Harriman, du Pont, Astor, and Kennedy. Their legacy of government control is still
with us. Thus, the world has a long history of nations that have failed due
to abuse of their monetary system to fund wars, excess spending, and corruption. The failed empires (they had lots of colonies)
of Rome, France, Portugal, Spain and England are examples. Sadly, the USA is in the late stage of a failing empire for the
same reasons. We don’t have colonies, but with our over 800 bases in 130 countries (and growing), we exert a lot of
control, which has the same effect. See Chapter 2 in my book ‘Rebuild America Now’ for more discussion on empires. Given those historical trends, where are we today? It is not surprising that our monetary system, and those in most
of the world, are controlled by corrupt politicians, securities dealers (aka ‘Wall Street’), and bankers. Learned
economists join the group-thought to have secure jobs.
The greed and treachery of these financial industry leaders
and their willing dupes caused the world depression that started in 2007 and is still unfolding as I write in January, 2012.
Greed is a human trait and present wherever humans operate, and in any type of political or economic system (Capitalism, Socialism,
Fascism, Communism; see Glossary). Crooked leaders and their gangs are worst in the more centralized and authoritarian systems,
where the authority of government, and its fake money, protect their jobs and feed their growth. When these self-serving people
get control of a government, and a country’s financial system, major distortions, wars, and then economic and moral
failure, always occur. This book will analyze where we are today, and
offer a comprehensive plan on how we can repair the damage and recover. The purpose of my work and books is to promote a form of government
that creates more liberty, peace, prosperity, justice and morality. I find that free-market capitalism (run by willing buyers
and sellers, no ‘crony’ government ‘favors’) is best.
All of my recommendations comply
with my core principle: ‘'The government's proper role is to protect the
personal and property rights of its citizens and legal residents, as individuals, from threat to, or violation of, their rights by others”. Our
Constitution supports this approach.
more information, and updates on topics herein, see my web site www.Forward-USA.org. Please send comments to Dave@Forward-USA.org.
Thanks for your
interest and support, Dave Redick
Dave’s Brief Bio (see page 135 for details)
Personal and Education:1935: Born in MI (near Detroit)1958: BS-Engineering, University of Michigan, Ann Arbor, MI1965: MBA-Economics, Santa Clara University, Santa Clara, CA
Career:1958 -1969: Aerospace Engineering and hi-tech sales1970 -2004: Telecommunications sales and management1993 -2000: VP Sales then CEO of consultant HNTelecom.com2000 -2001: VP and Cofounder of $6 mill. venture capital funded startup Fiberstreet.com (closed, use Google)2004 - Present: a) Speaker and Author on Economics,
Better Government, and Trends, and b) Energy Consultant
Politics: Active in ‘limited government and sound
money’ political work since 1978. Candidate for US Congress (3 times), and State Assembly (2).
Chapter 1: The US Monetary System
A Brief History of Money
In the World
Various items of value (shells, hoes, tobacco) have been used as money, and all served the need for a
medium of exchange, unit of account, and a store of value, but gold always emerges as best, as described below. People made
token coins of base (not rare, precious) metal for local use.
Metal objects were introduced as money around 5,000 B.C. By 600 BC, the Lydians (now Turkey) became the first in the Western
world to make coins of a certain weight and shape. Some of the earliest known paper money was about AD 960 in China. The money
made of material with little or no market value when not used as money was often abused by over-production, and became worthless.
The world’s first central bank was the Bank of England, founded in 1694. It was a privately owned bank, but was given
special privileges by the King, such as buying royal bonds with their paper notes. At first, the notes were redeemable in
specie (gold or silver), but excess creation of ‘notes’ soon started, redeemability ended, and their value dropped.
In 1699 King William III appointed physicist Sir Isaac Newton as Master of the Mint to develop rules for management of the
banks’ money. Newton developed what we now call the Classical Gold Standard with paper notes, or base-metal token coins,
redeemable in a certain weight and purity of gold at the issuing bank or mint, by bearer on demand. The rules started in 1707,
but were again soon broken and price inflation followed. The British Pound still survived as a ‘good as gold’
coin and the world’s reserve currency until 1914 when they suspended gold redemption so they could inflate the money
supply to pay for WW1. The Bank of England was nationalized in 1946.
In the USA
colonies created ‘colonial scrip’ (paper money not backed by a commodity such as gold). It worked well for a few
years but it was abused by excess expansion of
supply (monetary inflation) in some areas, and became worthless.
This gave our Founders fair warning about the poblems with paper money. The King of England frowned on their attempts at monetary
independence and their scrip was banned by English Parliament in the ’Currency Act of 1764’. This caused a depression in the colonies, and was one of the reasons for the American Revolution. Notice that this is not in the government-approved history books in our schools! The
Colonies and early US used many types of currency from other nations, and had no ‘official’ U.S. money. The ‘Spanish
Milled Dollar’ (or ‘8 Reales’) was prominent due its known silver content (27.07 grams of 0.903 fine
silver). People often cut these coins into pie-slice
shaped halves, quarters, and eighths (or ‘bits’) to make change. These are the famous “pieces of eight”,
and the origin of ‘2 bits’ equals a quarter dollar. Following Alexander Hamilton’s recommendations to create a national currency,
Congress enacted the ‘Coinage Act of 1792’ (The Mint Act). It established gold and silver as the monetary standards of
the United States with the gold standard regulated at 15 times the value of silver. This fixed ‘bi-metallic’ standard caused
trouble later! The initial US silver dollar coins were struck of 26.96 grams of 0.8924 fine silver
alloyed with copper. The diameter was 39 to 40 millimeters with a lettered edge reading ‘HUNDRED CENTS ONE DOLLAR OR UNIT’. The act also allowed for the creation of a national mint. It
was the world’s first decimal-based monetary system
Between the adoption of the Constitution and the Civil War the United States government did not issue paper money as we know it today, but on many
occasions it did issue short term debt called Treasury Notes. They also issued Demand Notes that were intended to function as money, and were authorized within the legal
framework of Treasury Notes. This was a ‘sneaky’ ploy since the U.S. was not generally assumed to have the authority
to issue banknotes at that time.The
Congress had issued Continental
dollars between 1775 and 1779 to help finance the American
Revolution. The paper Continental dollars nominally entitled the bearer to an equivalent amount of Spanish
Milled dollars but were never redeemed in silver and lost 99% of their value by 1790 despite the American victory. Some claim
that British General Howe printed thousands of Continentals and sold them cheaply in order to destroy its value. With the
fate of the Continentals in mind, the Founding
Fathers put no provision for a paper currency in the Constitution, and they forbaide the states to use anything but
gold or silver as legal tender. As a result, the pre-Civil War circulation of banknotes in the United States consisted of
private issues, including issues by private federally chartered banks such as the First and Second banks of the U.S. (more
below).In 1861 Lincoln needed
money to finance the so-called ‘Civil War’ (actually a war against the South to retain them as a source of cotton,
and a market for Northern manufactured goods; see page 120), so he went with his Secretary of the Treasury to New York to
apply for the necessary loans. The Bankers (money changers), wishing the Union forces to fail, offered loans at annual rate
of 24% to 36%. Lincoln declined the offer. An old friend of Lincoln's, Colonel Dick Taylor of Chicago, was put in charge
of solving the problem of how to finance the war. His solution is recorded as this: "Just get Congress to pass a bill
authorizing the printing of full legal tender treasury notes... and pay your soldiers with them and go ahead and win your
war with them also." It worked for a few years.Then came the ‘National Bank Act of 1863’ that established a system of national charters for banks. It encouraged development of a national currency based on bank holdings of U.S. Treasury
securities, the so-called National
Bank Notes. It also established the Office
of the Comptroller of the Currency (OCC) and US Mint as part of the Department
of the Treasury. The next
major banking law was the ‘Fourth Coinage Act of 1873’ led by Pres. Grant that demonetised silver and effectively
put the US on the gold standard, which replaced the gold and silver bimetallicstandard that had been created by Alexander Hamilton.
Many of the poorer citizens saw this as a "crime," which prompted passage of the Bland-Allison Act by Congress on February 28, 1878. It did not provide for the "free and unlimited coinage of silver" demanded by
Western miners, but it did require the United States Treasury to purchase between $2 million and $4 million of silver bullion
from mining companies in the West, to be minted into coins that would be legal tender for all debts, like gold. Paper ‘Silver
Certificate’ money was first issued in 1878 and bore the words; ‘Silver
Certificate, This certifies that there is on deposit in the Treasury of the United States of America ‘x’ Dollars
in silver payable to the Bearer on Demand’, and ‘This Certificate is Legal Tender for all Debts, Public and Private.’
Most were $1, $2, and $5. Redemptions were paid in $1 silver coins ( 0.8 ounces of 90% pure silver).The Gold Standard Act of 1900 ended bi-metalism (use of both gold and silver coins and note redemption), and required
the US Mint must hold at least 40% gold reserves to redeem notes.The
bankers conspired to get the Federal Reserve System approved on December 23,1913 (see page 20). Today’s ‘Federal
Reserve Notes’ only bear the words ‘This Note is Legal Tender for all Debts Public
and Private.’ Pres. Johnson approved
the ‘Coinage Act of 1965’ which ended silver content in coins (their bullion market value had exceeded their face
value), thus 1964 and prior coins are valued for their silver (a dollar has 0.8 oz of 0.9 purity, thus 0.72 oz; four quarters
or ten dimes have the same total). Redemption of Silver Certificates ended in Oct-1967, but they remained legal tender. Nixon
abrogated the Bretton Woods Agreement in August, 1971 (see page 45), ending all US money ties to precious metal. Starting
in Dec-1971 the ‘Smithsonian Agreement’ tried to set fixed exchange rates but failed in March, 1973, and Nixon increased the meaningless ‘official’ price
of gold to $42.22 ounce.
US Central Banks
Politicians like central banks that control the national monetary system because they can manipulate them to gain
funding without politically unpopular taxation. In 1791, the ‘First Bank of the United States’, (BUS-1), was started,
but it failed in 1811. The second attempt was the ‘Second Bank of the United States’ (BUS-2), which was chartered
in 1816, with a renewal required in 1836. “The
predominant reason that the Second Bank of the United States was chartered was that in the War of 1812, the U.S. experienced severe inflation and had difficulty in financing military operations. Subsequently, the credit and borrowing status of the United States were
at their lowest levels since its founding. The Second B.U.S. was in no sense a national bank but rather a privately held banking corporation. The bank had a unique relationship (special deals, monopolies,
etc.) with the federal government that gave it access to substantial profits. President Andrew Jackson strongly opposed the renewal of the ‘second’ bank’s charter, and built his
platform for the election of 1832 around doing away with the Second Bank of the United States, which he did in Sep-1833.” (wikipedia.org)
Creating the Fed
The Federal Reserve System should be considered
the third U.S. central bank (BUS-3). The secret plan to create the financial monster now known as the ‘Fed’ was
consummated on November 22, 1910 at a private club on Jekyll Island, Georgia. Congregated at his clandestine meeting were
some of the most powerful political and financial people in Europe and America including: Nelson
W. Aldrich: Republican "whip"
in the Senate, chairman of various committees including the Committee on Finance and Chairman of the National Monetary Commission.
Aldrich was a business associate of J. P. Morgan and father-in-law to John D. Rockefeller, Jr. Frank
Vanderlip: President of the National City
Bank of New York, which at the time was one of the most powerful banks in the US and was under the control of William Rockefeller
and the international investment banking house of Kuhn, Loeb & Company. He wrote a book in 1935 ‘From Farmboy to
Financier’ which revealed the secret events on Jekyll Island. A. P. Andrew: Assistant Secretary of the United States Treasury Henry P. Davison:
Senior Partner of J. P. Morgan Company, emissary of J. P. Morgan Charles
D. Norton: President of the Morgan-dominated
First National Bank of New York Benjamin
Strong: Head of J. P. Morgan's Bankers
Trust Co. and loyal lieutenant of J. .P Morgan Paul Warburg: A recent émigré from Germany, partner in the
banking firm of Kuhn, Loeb & Co. who was the agent of the German Central Bank (Reichsbank) and the Rothschilds and Warburgs
banking dynasties based in Europe. He wrote a book in 1930 which revealed the secret events on Jekyll Island, and about how
they contrived passage by Congress and approval by Pres. Wilson. ‘The
sole intention of these conspirators was to draft a blueprint for a strong central bank that served their interests. This
blueprint was the Federal Reserve System and the prize was the future control of the money supply and credit
of the United States. Because
the Federal Reserve System was to be a bank of issue then, just as the plotters understood all too well, it was unconstitutional
from its inception. And, here was the second greatest challenge to the schemers – to prepare a program of fundamental
banking reform and get it past the scrutiny of patriotic Congressmen and the American public. (www.overlordsofchaos.com) Aldrich headed a commission in 1911 to study the role and need for central banks. He came home from a study trip
to Europe claiming to be a new supporter of them, but that was a ploy to cover the existing plans from Jekyll Island in 1910.
The Aldrich Commission's report was submitted to Congress in 1912. Although Woodrow Wilson, a Democrat, won the 1912 election,
the Republican Aldrich's plan shaped the extensive debate that followed. A Democrat, Carter Glass of Virginia, shepherded
the Federal Reserve Act through the Congress. On Dec. 23, 1913, when many Congresspersons, including major opponents of central
banking, had already left town, Congress adopted the Federal Reserve Act, also known as the Owens-Carter Act. Even the name
was meant to deceive, so they chose: 1. ‘Federal’ to make it seem to be part of the government, and
2. ‘System’ instead of ‘Bank’ because many Congresspersons opposed a federal bank. They planned the
‘system’ with twelve regional banks (each a privately owned corporation) to satisfy private bankers that their
regional concerns would be heard. A further fake ‘selling point’ to gain support from the people and Congress
was to declare that the dual mandate of the Fed was to maintain; 1. Stable value of the Dollar, and 2. High employment. They
ignored the real purpose of; 1. A ‘flexible’ source of new money for politicians to spend (causing price inflation,
a hidden tax),and 2. The ‘lender of last resort’ role to bail out banks and other firms with good political connections! ‘
One sees the fine hand of Warburg in this final strategy. Some of the bill's most vocal critics had already left Washington.
It was a long-standing political courtesy that important legislation would not be acted upon during the week before Christmas,
but this tradition was rudely shattered in order to perpetrate the Federal Reserve Act on the American people.
The "unprecedented speed" with
which the Federal Reserve Act had been passed by Congress during what became known as "the Christmas massacre" had
one unforeseen aspect. Woodrow Wilson was taken unaware, as he, like many others, had been assured the bill would not come
up for a vote until after Christmas. Now he refused to sign it, because he objected to the provisions for the selection of
Class B. Directors.
William L. White relates in his biography of Bernard Baruch that Baruch, a principal contributor
to Wilson's campaign fund, was stunned when he was informed that Wilson refused to sign the bill. He hurried to the White
House and assured Wilson that this was a minor matter, which could be fixed up later through "administrative processes".
The important thing was to get the Federal Reserve Act signed into law at once. With this reassurance, Wilson signed the Federal
Reserve Act on December 23, 1913. History proved that on that day, the Constitution ceased to be the governing covenant
of the American people, and our liberties were handed over to a small group of international bankers.’ (from www.goldismoney.info)
Structure of the Fed
‘The Federal Reserve System consists of the Board
of Governors of the Federal Reserve System, the 12 Federal Reserve banks, the Federal Open Market Committee, the Federal Advisory
Council, and, since 1976, the Consumer Advisory Council. There are also within the system several thousand member banks. The
Board of Governors of the Federal Reserve System, domiciled in Washington DC, determines the reserve requirements of the member
banks within statutory limits, reviews and determines the discount rates established by the 12 Federal Reserve banks, and
reviews the budgets of the reserve banks. Each Federal Reserve Bank is a privately
owned corporation established pursuant to the Federal Reserve Act of 1913 to supposedly serve the public interest.
A board of nine directors governs each Federal Reserve Bank, six of whom are appointed by the member banks and three of who
are appointed by the Board of Governors of the Federal Reserve System. The 12 Federal Reserve banks are located
in Boston, New York, Philadelphia, Chicago, San Francisco, Cleveland, Richmond, Atlanta, St. Louis, Minneapolis, Kansas City
and Dallas. Determination of Federal Reserve Bank policy in the purchase and sale of securities on the open market is the power of the
Federal Open Market Committee (FOMC) consisting of the seven members of the Board of Governors and five members elected by
the Federal Reserve banks. The Federal Advisory Council consists of 12 members, one of whom is elected by the board of directors
of each of the Federal Reserve districts, and whose role is purely advisory. Federal Reserve Act of 1913 demands that all
US national banks are required to be members of the Federal Reserve System, while state banks may become members if they meet
membership qualifications. The supreme regulatory powers in fiscal affairs gifted to this private monopoly called the Federal
Reserve System manifest in several ways but the most important are the instruments of so-called direct or indirect control. 1. Of direct control, one method used is
adjusting the legal reserve ratio (i.e. the proportion of its deposits that a member bank must hold in its reserve account)
thereby increasing or reducing the amount of new loans that the commercial banks can make. Thus, in this
way the potential money supply is expanded or reduced because loans give rise to new deposits. 2. Another direct control mechanism to influence potential money supply is by the
manipulation of the discount (rediscount) rate, which is the rate of interest charged by Federal Reserve banks on short-term
secured loans to member banks. Loans are usually sought to maintain reserves at their required level, and so an increase in
the cost of such loans has an effect similar to that of increasing the reserve requirement. 3.
Of indirect control, the classic method is through open-market operations. It was first used in the 1920s but is now employed
daily to make small adjustments in the market. This control mechanism has the Federal Reserve Bank selling or purchasing securities
on the open markets that causes a reduction or increase the size of commercial-bank reserves. That is, when the Federal Reserve
sells securities, the purchasers pay for them with checks drawn on their deposits, thereby reducing the reserves of the banks
on which the checks are drawn' 4. A supplemental control mechanism occasionally
used by the Federal Reserve Board is that of changing the margin requirements involved in the purchase of securities.’ (from www.overlordsofchaos.com) Notice that the
word ‘reserve’ is used extensively above, both in the name of the Fed, and its activities. This is because if
a private bank gets low on reserves (compared to the legal requirements at the time), it can’t make new loans, and this
could be widespread in bad economic times. While a new bank depends on investments by shareholders for its initial reserves,
profits and borrowing from the Fed become major sources as it grows. Hence, the Fed’s role in loaning banks money to
boost their reserves is a powerful tool in ‘managing’ the level of economic activity nationwide. It also allows
the Fed, as ‘lender of last resort’, to do bail-outs in bad times! The above description
shows how the so-called ‘privately owned’ Fed bank controls the US monetary system. Not mentioned, is that most
of its meetings and actions are secret, even to Congress, and that it is heavily politicized and controlled by the Federal
government. It’s annoying to see the liar Bernanke plead that Rep. Ron Paul’s bill HR-1207 to audit the Fed will
reduce its independence. What a joke!; he really wants the right to secrecy to help their ‘friends’! Nelson
Hultberg (www.AFR.com) said it well in his essay ‘The
Fed is a Fascist Cartel’: “The Federal Reserve, in my opinion, should not be classified
as a private corporation. It should be termed a government-run fascist cartel. There are several important reasons for this.
For example, 1.
All nationally chartered banks in the Federal Reserve system are forced by the government
to join the cartel. 2.
Bernanke and his board of governors are appointed by the President and approved by the Senate. 3. The Federal Reserve came into being because
of an act of Congress, and it can be altered or legislated out of being at anytime by Congress. These
factors are not how private corporations are created or operated. The Fed entails government involvement in a massive way. Without the special monopoly privileges legislated by Congress
that sustain the Fed, it disappears.” But take heart! It’s never too late to abolish the Fed and return to the proven
gold standard. Due to rapidly increasing lack of confidence in the Fed since the crash started in 2008, in Nov-2010 a ground
swell of support for the gold standard erupted. Here
are three examples; 1.
Over the weekend of November 6-7, 2010, World Bank president, Robert Zoellick, proposed, in a column written
for the Financial Times, that the global economy once more be linked to gold as an anchor to help maintain currency stability
and reduce inflationary expectations in international markets. He soon ‘clarified’ his comment, but the uproar
had started!, 2.
On November 9, 2010, Dr. Richard Ebeling, Professor of Economics at Northwood University (Northwood.edu), posted the article
‘A Return to the Gold Standard?’ in the Daily Bell (dailybell.com) commenting on Mr. Zoellick’s
statement, and the Nov. 1 article that Financial Times (FT.com) columnist Martin Wolf had written asking, "Could
the World Go Back to the Gold Standard?" Dr. Ebeling wrote; ‘At one point in his article, Martin Wolf
mentions that some have called for an even more radical monetary reform than even a government-managed new gold standard:
the abolition of central banking and a full separation of money from the state, through a monetary system based on
competitive, private free banking. Wolf sets that alternative aside as well, thinking that the world is certainly
not ready for such a change, even if it was workable. But, in fact, this is the ultimate and most reasonable of all
the alternatives to the existing system of monetary central planning through the government institution of central banks.’ For a detailed plan for conversion of our fiat ‘Fed Note’ and coin system to use of gold as money, which
includes a form of Prof. Ebeling’s plan for allocation of US gold to redeem Fed Notes and coins, refer to my ‘Six
Step Plan’ on page 93. The plan was in the 1st edition of this book in Jan-2010.3.
In a Nov-2010 article from bi-me.com, global investor Jim Rogers (JimRogers.com) said he finds the idea that you can solve
a period of excessive borrowing and consumption with more borrowing and more consumption and destroying more balance sheets,
"ludicrous on its face". (see Heroin Analogy on page 38), and said; "We will be better off without
central banks." There
is a growing movement to end corrupt government. As the 2011 ‘Occupy Wall Street’ folks would say; ‘We are
tired of paying for crony capitalism and bailouts for the well-connected ‘1%’. Fight On!
Chapter 2: Effects of the Fed and Other Central Banks
The Impact of Fake
You won't read the following analysis in the newspapers or in a college economics course. Most government and
industry leaders, and professors like the present system because their jobs, grants, and social life depend on having and
supporting it! They want to be viewed as 'normal', not a radical 'gold bug' who respects the importance of
sound, or ‘real’, money which means gold or silver coins, and paper redeemable in gold by anyone, on demand. This
requires an ethical lapse where the fake nature of the money is ignored in order to (hopefully) gain an advantage from it. The creation of fiat ‘official’ government money has had a profound effect in history and on our nation
and the world today. ‘Fiat’ means it is worth whatever the government says it is (its ‘face value’),
although the material of which it is made may have more or less market value (examples: valuable silver dollars and worthless
paper, both declared worth $1, and today’s American Eagle bullion coin with a ‘face value’ of $50 for one
ounce of gold!).
KEY POINT ! Normally, when a natrion creates too much fake money, sellers
avoid it for payment, or stop buying its bonds, due to the falling value of both, and the party is soon over. However,
the US is in a unique position never seen in the history of the world. Our fiat paper
money (‘fiat’ means face value declared by government; not redeemable in precious metal) is the primary de facto
(not ‘formal’, since 1971) world’s ‘reserve currency’ (anyone will accept it for payment, and
keep it as cash, or as a dollar-denominated asset). We can create new money (paper or electronic) out of thin-air by the billions
and sellers of goods and services worldwide (and in the US) will accept it, and we can pay our debts with it, even as the
federal government spends to excess. We have abused the 'privileged’ status of the US$ in many immoral and counterproductive
ways. It is the underlying cause (funder) of our major problems with jobs (exported due to excess imports of goods), banking
and securities (strange deals based on loose money), excess personal spending and debt (borrow, buy and play now, pay later!),
and wars (expensive). The official FY2011 (started Oct. 1, 2010) US budget was updated
in August, 2011 by the Treasury and Office of Management and Budget (OMB) to $ 2,302 billion receipts, and $3,601 bn spending,
thus a deficit of $ 1,299 bn. Private analysts estimate it will be about $1,600 bn!
Table 1: The Honest National Debt ($ Trillions)
$ 89.3 Medicare; A=$36.7, B=$37.0, D=$15.6 (unfunded
promises as of Jan-2009) 17.5 Social Security (unfunded promises
as of Jan-2008)
National Debt (known liabilities that it is legally
Obliged to fulfill; includes federal gov’t held debt
9.4, military and civilian
pensions and retiree health
____ benefits 5.6, and state and local gov’t 5.2)
$ 120.9 tn Total
(Soc. Sec. & Medicare Trustees, usatoday.com/news June 7, 2011)
‘official’ government debt figures ignore the Table 1 Medicare and SS items, plus potential trillions that loom
due to losses among the about $5.3 trill. of mortgages owned by Fannie and Freddie, now government-owned (who as of Nov-2011
warn they may need $400 bn more). The deceit is exposed by the fact that after
Congress increased the federal debt limit to $12.104 trill. in Feb-2009 (80% of GDP), in Feb-2010 they increased it again
to $14.3 trill.! Congress huffed and puffed about an increase in August, 2011, but ended in gridlock. I say, ‘How about
the uncounted trillions?’ Government accounting is loaded with hypocrisy. They ignore the normal accounting rules and
honesty that apply to mere citizens, in order to hide the problems they have created. They prosecute private firms for doing
the same thing! Note that the above figures do not count the trillions that Obama’s new health plan will cost. In 1970 the national debt was $380.9 bill., and
37.6% of the GDP (see Glossary). In 2010 it is estimated at $14,456.3 bill., and 98.1% of the GDP. Most of the
increases occurred after 2002. No one believes this will ever be paid. To eliminate it, we can, 1. Increase taxes a lot, 2.
Do an overt default (repudiation), and refuse to pay most of it (a serious possibility; Russia and Brazil did!), or 3. Create
new fake money, but this would likely cause hyper price inflation, and destroy the US dollar and economy. Horrible choices,
all thanks to irresponsible government leaders, and their willing dupes, on Wall and Main Street. Of course consumer debt (cars, home mortgages – first and second -, credit cards, TVs, etc.) zoomed upward
because of the easy (lax terms, sub-prime), cheap (low interest) fake money created by the Fed in 2000 to 2007. As more people
lose their jobs, more bills go unpaid, and the defaults and foreclosures are now doing the upward zoom. Sad. New fiat money, and lax terms, funded the debt explosion. This excess credit creates and feeds the abusive and corrupt
Wall Street and Main Street excess spending and debt. One cannot underestimate the importance of our ability to pay debts
to other nations, and not be required to convert to their money. We can simply create new dollars to pay our debts, with only
a minor impact on its value in the short-term. Conversely, other nations must buy dollars (or Euros) to pay for most imports
or loans, and face declining exchange rates if they have expanded their money supply too much. We have abused this 'reserve'
status and in mid-2010 other nations started seeking alternatives (yuan, yen, a 'basket of currencies', etc.). Most
people are not aware that the 'reserve' currency is used for most payments between other nations (example: India pays
Brazil for coffee with US$). Hence, all nations keep a supply of US$ to use in trade. All banks are required
to have sufficient ‘reserves’ to show a strong asset base for the bank’s obligations (mainly demand and
time deposits). Since the US$ has been valued by the world system as ‘good as gold’, it is known as a ‘reserve
currency’ and used instead of gold to fund these bank reserves. The Dollar has been used in about 90% of international
transactions since its ascendancy in the 1920’s (the English ‘Pound Sterling faded), but it has become weaker
since 2000, and declined to 70% or less in 2010. About 30% of international deals are now done
in Euros and Yen, but that is increasing as the economies and currencies of China and others grow stronger. Indeed, China
started using its yuan for international transactions in mid 2010, and also allowed foreign firms to create a yuan-denominated
private equity funds. There was a 13-fold increase in trades settled in yuan in the first half of 2011 from the prior year,
but many firms avoid the yuan due to the cost and inconvenience of complying with government rules. This outweighs the potential
cost of an unfavorable move in the yuan-dollar exchange rate. While ‘inflation’
of the money supply (like a balloon) reduces the value of every US dollar, the US government prefers this to deflation because
‘free money’ from inflation helps pay off federal debts to other nations. In the extreme, this is a form of default,
since the lender gets paid in near-worthless paper money. In mid-2010, our lenders (China, etc.) voiced concern about this
possibility. The federal funds target interest rate were at
historic lows of about 1% during 2001 to 2005, which was done to stimulate recovery after the ‘dot-com’ bubble
burst on NASDAQ in March-2000. In Jan-2006 Fed
Chairman Greenspan increased interest rates to 5.25% to ‘put the brakes on’, just as he ended his final term and
handed the reins (and whip?) to Bernanke. The sudden
Fed increase caused mortgage rates to rise, which in turn triggered the 2007 decline in housing prices and purchases, and
started the worldwide depression. Fed intervention strikes again! The U.S. economy failed quickly because many banks and Wall
Street firms were highly leveraged (over 25:1) in risky investments and could not tolerate losses. During the 2000 to 2007
boom times, Wall Street had been ‘securitizing’
bundles of various weak and bad debt instruments (subprime mortgages, credit card debt, etc.) into ‘mortgage-backed
securities’ (MBS), then getting their complicit rating agencies (Moodys, S&P, Fitch) to falsely label them AAA.
By doing so, they could sell them worldwide to get them off their books, and then make more money by making new loans to other
weak borrowers. Massive amounts of cheap fake money, supplied by the Federal Reserve System started and supported these debacles.
More money was created for Bush’s $700 billion TARP program (Troubled Asset Relief Program) in 2008, with the Fed pouring
about $2.2 trillion into the economy for their bailouts, and then $787 bill. more for Obama’s Feb-2009 Recovery plan.
It’s like pouring gas on a fire! This combined $2.987 trillion is now called ‘Quantitative Easing-1’, or
‘QE-1’, and showed meager results. On Nov. 3, 2010, the Fed announced QE-2 of $600 billion! Bernanke specialized
in study of the ‘Great 1930’s Depression’ for his doctoral program. He claimed that the Fed should have
increased the money supply in 1929 when the depression started, instead of reducing it. He was determined to not let that
mistake happen again, so he flooded the economy with new money in 2008! As of Nov-2011, results have been disappointing as
unemployment gets worse and prices rise. So much for fixing by flooding. Thomas G. Donlan,
Editorial Page Editor of ‘Barron's’ (Barrons.com) said it well in Oct-2010; ‘TARP is just part of a bailout-and-stimulus program that is
a huge loser. The government has borrowed money and shoveled it out the window for more than two years. A little of it has
leaked back in under the door.’ Most of our current
economic problems were created by the Fed (with cheering from Congress) by flooding the nation with cheap, fake, money as
a stimulant since the early ‘90s. It should surprise no one that people, bankers, and Wall Street reacted by seeking
high-return, risky investments (derivatives, etc.) to help them beat the price inflation caused by this easy money (low interest,
lax terms), and excess expansion of the money supply. A second cause of seeking excess profits and risk was the ‘moral
hazard’ of knowing they would probably be bailed out by the Fed if they got in trouble. Since its creation in 1913,
and with a surge since 2000, the Fed has expanded (‘inflated’) the money supply by twenty times. ‘Price
Inflation’, a secondary effect caused by inflating the money supply, has reduced the US dollars’ (US$) purchasing
power by 95% (20:1) since 1913, So much for government management ! Many people claim
that ‘unfettered free-market Capitalism’ was the cause of the 2008 crash, and call for more regulation. They have
re-defined 'capitalism' and 'corporations' so they have straw men to attack. In fact, Capitalism is
just an ‘economic system' based on private ownership, free enterprise, and minimal regulation, and corporations
are primarily just a way to raise money through sale of shares. Capitalism offers more than economic results, it is
a moral system that depends on the activity of willing buyers and sellers within the rule of law, not coercion and
control by others (the government power folks). Socialists, Liberals, and Progressives have distorted the meaning to call
it a ‘social system based on greed and power for the rich’. They blame ‘corporations’ for most of
the abuse, while ignoring that in any system (government, church, club, etc.), concentrated power and self-serving, unethical
people are always the cause. What they also ignore, through ignorance or bias, is that we have not had a free market since
1913 (when the Fed was born), and worse since 1933 when FDR declared that the government was our mother and boss, and responsible
to provide convenience and security for all, and have ‘someone else’ (the government or ‘the rich’)
pay for it. This pushed a dagger into the heart of our citizen’s sense of ethics and personal responsibility. Now Liberals
tout ‘shared responsibility’ or ‘the rich were just lucky, so should pay more’ as their basis for
taxing others to fund their projects (health, welfare, education, etc.). They forget (or don’t know) that the top 1%
(by income) of citizens have 20% of the income and pay 38% of the taxes, while 51% of lower income people pay none. Liberals
grab for a higher percent but ignore that ‘dollars paid’ is what counts (have you ever paid for something with
‘percent’?), and on this basis of 38-to-1, ‘the rich’ are already paying more than ‘their share’.
Our nation‘s culture and economy have been sliding downhill ever since Progressive Taxation started. Unconstitutional
government programs and intervention in the free market have caused our problems. This result shows in every country run by
central authority in history, and worldwide today. History
shows us that free market capitalism always provides more liberty, peace, prosperity, morality, and justice for all. I recognize that people violate ethics and justice under capitalism,
but this relates to bad people and can occur in any economic system (or church or club). Capitalism still comes out best.
Centralized systems such as Socialism give more power to the bad guys.
The Fed’s Record of Results
power of the US dollar (US$) has dropped by more than 95% since 1913, all due to excess creation of new money (expansion of
the money supply; monetary inflation). This hurts the people (especially those on limited or fixed incomes, and those with
savings), but the bankers have done well, since they make money selling US debt (T-bills, etc.) and get bailed-out when in
trouble due to their own greed (Bear-Stearns in 2008, etc.). Most Fed meetings are secret, and proceedings are not even available
to Congress; Preposterous ! Some economists say the Fed is needed in order to assure adequate 'liquidity' or ‘elasticity’
for growth by proper expansion of the money supply, equal to growth of the economy; about 3 to 5% per year. The problem is
that such powers are ALWAYS abused by governments (by expansion of 10 to 20% per year,
or more!), though some (the Swiss) less than others (the US is among the worst of the major currencies).
We cannot, and should not, trust the government or Fed to 'manage'
our monetary system. This excess money
causes bad spending and investment decisions at both the business and personal level, which creates financial distortions
(big peaks, then valleys), as seen in: 1. Bailing-out England after WW1, leading to mal-investment (too much money around)
and the crash of 1929 when, after ten years of excess expansion, the money supply was suddenly reduced by about 30% by the
Fed, and 2. The 2007-2008 housing price and construction collapse due to a Fed interest rate increase of 4.25% (from 1 to
5.25%) in 2006, and 3. Many other large peaks and valleys, and 90% loss of purchasing value, since the Fed was created. So
much for government 'management' of currency and the economy!! As James Quinn wrote on his web site
www.TheBurningPlatform.com, in his article ‘Grand Illusion – The Federal Reserve’:
“The average American might just conclude that prices always go up, so what’s the big deal about inflation.
This is where the Federal Reserve and politicians have pulled the wool over your eyes. The CPI was 30.9 in 1964. Today, it
is 211.1. This means that prices have risen 683% since 1964. The only problem is that your wages have not risen at the same
rate, even using the government manipulated CPI. Using a true CPI figure, average weekly earnings are 64% below what they
were in 1964. This explains why a family of five could live well with one parent working in 1964, but even with both parents
working and using debt in prodigious amounts, the average family does not live as well today.” When nations used real money (gold coins, and tokens and certificates redeemable for gold), they had small highs
and lows in their economies, but they were 'self-liquidating' (private investors stop putting limited funds into bad
deals), and they never had the huge variations now caused by excess fake money (investors and the government have lots of
money to keep funding lots of deals; good and bad). The analogy below
helps demonstrate what fake money does to an economy, its firms, and people.
The injection of heroin into your body, or a
large increase in the money supply (over 5% per year) into an economy, are both 'stimulants', but cause illness when
used to excess. When the stimulants are ended to solve the bad effects, your body suffers from withdrawal, and the economy
from recession, or worse! Creating fake money to fund 'stimulus' risks price inflation (reduced purchasing power of
the US dollar), but or 'leaders' in DC like it because it is a quick 'fix' (shows that they are ‘doing
something’), and also helps them payoff their friends (campaign donors) on Wall Street, and federal debt, with cheap
dollars. This is part of the heroin analogy, where our 'leaders' (Obama, Geithner, Bush, Paulson, Bernanke (Fed Chm.
since February 1, 2006), Greenspan, and most Congresspersons) are shameless, dishonest pushers and dealers with their ‘bailout’
programs. Their priority is to get re-elected (or keep their appointed job) by doing favors for voters, their bosses, and
campaign donors, no matter what the long-term harm. Global investor
Jim Rogers (JimRogers.com) said in Nov-2010; “The banks who lent the money and made the mistakes should lose
money. The bondholders and the stockholders of those banks should lose money. It’s that simple.” The
logic applies equally in the USA, but campaign donors and pals got bailed-out instead. As shown in the May 5, 2009 issues of Gary North's Reality Check, Issue 854, www.GaryNorth.com, “The FED is engaged in a gigantic system of misrepresentation.
It is misrepresenting the solvency of large banks and financial firms in debt to banks.The FED is doing its best to conceal
the degree of risk and uncertainty in the capital markets. Central banks around the world are cooperating with the FED. This
is an international effort by central bankers to deceive the public. To the extent that this deception is working, investor
confidence will increase.
On April 15, 2008, the FED held $866 billion in assets,
which served as the monetary
base for the nation. On April 15, 2009, it held $2.2 trillion! “ These increases
are the same as giving more heroin to a sick addict. See more on inflation below. Some say the Fed
should be eliminated because it is a preposterous, damaging, and unconstitutional scheme. Others prefer to just reform it
(audits, transparency, etc.). I am in the former camp, and add that we should convert to gold money as discussed in Chapter
4. The world will soon follow as fake money is refused by Sellers; a reverse form of; a) Gresham's Law (without legal
tender laws), and b) Nixon’s cut of the dollar’s tie to gold in 1971. In this case, good money drives out bad.
This would end the justification by all governments for money control and manipulation groups such as central banks worldwide,
the BIS, World Bank, IMF, FDIC, legal tender laws, etc., all of which should be abolished. Bernanke and his pals worldwide
would need to look for useful, productive, honest work. Good riddance! The above heroin analogy sends the message that you will always get counter-productive conduct when you flood a system
(nation, industry, family) with money.
Examples are: 1. Student Loans: Student loans and Pell Grants (no repayment) seem like a ‘nice’
thing for governments to provide, but they have resulted in the annual cost of attending college (tuition, books, fees, housing,
and meals) going up over three times faster than starting salaries for graduates since the 1960s. This is due to higher teacher
and administrator salaries, more teachers (often with a low teaching load) and support staff, excess construction, the growing
inefficiency of tenure, etc. ‘Hot’ professors get raises due to bidding wars between schools that want them. GROWTH
is a top goal for most college presidents! These expenses are primarily fed by an unending supply of money from students.
The college ‘industry’ is the only one that can keep raising prices without losing customers (students); they
just borrow more!
Government Payments: Health care costs
have soared since Medicare started in the 1960’s. When it costs them little or nothing, patients don’t care what
a service costs, or if excess services are used. Econ 101 says we
should expect price increases in any industry (college and health above, or any other) where the firms and customers can get
money from the government at special rates or free, and there is little connection to ‘return on invetsment’!
It’s an old story of unsustainable distortions caused by government meddling with the economy (social-engineering, stimulants,
depressants, controls, etc., etc.). This also causes price inflation (reduced purchasing power of the Dollar), but government
people like monetary inflation because they have more money to pay off their debts, though the creditor gets less- valuable
paper. This is a form of partial default. The solution is
to use real money and free markets so there is a stable supply of money, and 1. Thus not enough funding for wars and other
corrupt deals, and 2. Failing deals aren't funded for long (with fiat money, government deals usually get MORE money when
in trouble!). Not perfect, but many times better results (peace, prosperity, justice, etc.) than produced by government 'management'
and meddling (intervention in the free market)!
Monopoly Money and Legal
Tender Laws Alan Greenspan was Chairman of the Federal Reserve Bank from 1987 to 2006 and was thus the chief, self-serving, 'pusher,
dealer' of heroin (excess increase in money supply) into the US economy. He did this to keep his job (Presidents and Congress
hate to run out of money) with full knowledge of, a) the risk of 'distortions' that the equally complicit Congress
and Presidents would use it for (war costs, cheap loans for houses), and b) the resulting reduction in value (purchasing power
vs. other currencies) of the US$. His meek excuse in Nov-2008 that: 'I erred in trusting the free market' is a lie,
and he should be treated as a self-serving liar. He knew he was doing harm, as all heroin pushers do. I remember being asked
sometime in the 1990’s whether I thought Greenspan was doing a good job. I replied that ‘It’s not a matter
of who has the job, I don’t want the Fed to exist!’ Congressional 'leaders' like Sen. Dodd and Rep. Frank
deserve equal shame, plus others. Only a few people in Congress (Senators Hagel, McCain, Dole and others, and Rep. Paul) raised
the red flag in the 2000 to 2005 period about the risks of excess and fake money, but they were ignored. The crash of Oct-2008
was the result! The Fed measures the quantity of U.S. money ('money
supply') worldwide in four ways, in order of liquidity: M0= basic money supply (notes and coins = currency), M1 = M0 +
checkable deposits, M2 = M1 + near-money (savings accounts, mutual funds, etc; quick conversion to money), and M3 = M2 + large
time-deposits (over $100k). They stopped publishing M3 in 2006 claiming high costs, but do they actually have something to
hide? Private sources estimate M3 at $14 trillion in mid 2010, of which $6 trill. is overseas. Less than ten percent of M1
is coins or paper (= 'currency'). The rest is only in electronic form on computers. But
there is another part of the money supply, namely unused credit (credit ‘lines’). As John Mauldin, of www.frontlinethoughts.com,
penned on April 17, 2009: " It's a bit misleading to talk about money supply, because money really is roughly
$2 trillion of cash and then $50 trillion in credit. Because what do the banks do? They take deposits in and then they borrow
money to leverage them up (this is their deal with the Fed: maintain about ten percent 'reserves', the actual deposits,
and then borrow your 'lending money' from the Fed). I take my credit card and I spend with it. I borrow against
a house. I have an asset that rises, and I borrow against it. We have
$2 trillion of actual cash propping up $50 trillion in credit. If we all decided to settle and pay off everything, we couldn't
do it because there is not enough cash. There would be massive asset deflation. We, as a nation, are leveraged 25 to 1, or
we were. Now, that $50 trillion is in a real sense the money supply because that is what we are all pretending is real money.
I lend you money and you pretend you are going to pay me back. Then you pretend he is not going to call your debt for cash,
and we are all going to keep the system going. "
In addition to creating the Fed, the government tampers with money in other ways, such as 'Legal Tender'
laws. Early controls, such as Art.1, Sec. 10 of the Constitution shown below, were used to assure that only ‘real’
commodity-based money was produced by the government, but politicians find ways to avoid these limits. Ignoring the Constitution
is a convenient method, and no one seems to mind! Later, laws were designed to force people to accept fake money, such as
Civil War ‘Greenbacks’, rather than insist on gold, etc. This forced Sellers to accept government money when offered
(tendered) if they wanted legal recognition of deals (i.e., enforceable in court). These laws are usually a sign of weakness
and fraud in a monetary system. Primary U.S. monetary laws are now as follows: “The
U.S. Constitution, Art. I
Sec. 10 Cl. 1, states, in part: ‘No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and
silver Coin a Tender in Payment of Debts; ...’. During the early American
Civil War, the federal government first issued United States Demand
Notes (the first greenback notes) which were redeemable in gold and silver coin, which were then in shortage due
to hoarding. However, due to eventual difficulties in redeeming Demand Notes, a money-strapped Congress which had to pay for
the war, eventually adopted the Legal
Tender Act of 1862, issuing United
States Notes backed only by treasury securities, and compelling people to accept these as payment for debts. Thus forced
to accept federal banknotes, the recipients wanted to be able to use them to pay their own debts to each other, and this led
to litigation from those who did not want to accept them, but instead preferred coin. The United
States Supreme Court ruled the practice unconstitutional in Hepburn
v. Griswold in 1870, but later reversed this decision following the appointment of two new judges by President Ulysses
S Grant. The Court held that paper money, even that not backed by specie such as the United
States Notes can be legal tender, in the Legal
Tender Cases, ranging from 1871 to 1884.On the other hand, coins made of gold or silver may not necessarily be legal tender, if they are not fiat money in
the jurisdiction where they are preferred as payment. The United
Act of 1965 states (in part):‘United States coins and currency (including Federal Reserve notes and circulating notes of Federal reserve
banks and national banks) are legal tender for all debts, public charges, taxes and dues. Foreign gold or silver coins are
not legal tender for debts.’Title
31 of the US Code outlines the role of legal
tender. Foreign gold or silver coins are not legal tender for debts. ‘ This statute means that all United States money as identified above are a valid
and legal offer of payment for debts when tendered to a creditor in the U.S..” (from www.wikipedia.org) Another example of serious tampering is when FDR issued the Gold
Recall Act (illegal Executive Order 6102) in 1933 that made it illegal for US citizens to own gold anywhere in the world,
except for jewelry, and as rare coins. This was codified by the Gold Reserve Act of 1934. It demonetized gold, and increased
the government holdings. There are two explanations for this action: 1. The ‘mainstream’ version is that FDR was worried because foreign nations were redeeming their paper
US$ to gold because they knew the U.S. was running out of it. To replenish the government supply the people were forced to
sell it to the government in exchange for $20.67 of paper Fed Notes per ounce, and then FDR increased the 'official'
price to $35 oz ! (a bonus for the government !). It also voided contracts, and prohibited new ones, that called for settlement
in gold (a ‘gold clause’).These restrictions on gold ownership were weakened over the years, and ended in 1975.
2. The ‘alternate’
version is that FDR wanted to create new money to pay for his planned New Deal programs so used the above confiscation as
a tricky way to end the right of gold redemption by citizens concerned about such inflation. The Act also established the Exchange Stabilization Fund (ESF), which is still active. Initially funded by the above
‘bonus’ from gold confiscation, it had assets of $51.2 bill. as of June-2008. Its function is to use this special
fund to: a. purchase or sell foreign currencies (manipulate the market!), b. hold U.S. foreign exchange and IMF-created ‘Special
Drawing Rights’ (SDR) assets, and c. to provide financing to foreign governments, all aimed at bringing stability to
the foreign exchange market (read, ‘manipulate it to suit the US’). There is strong evidence that it was used
in the 1990s to intervene (i.e., sell US gold) in the public gold market to suppress the price of gold (a high gold price
makes fiat money look bad). The Sec. of the Treasury has broad discretion in use of the money, and only his signature is required,
and the transactions are not made known, even to Congress. What a nice slush fund! Hence, we need to audit the Fed to reveal
how much gold they still have in physical possession, and of what quality. While the1933 confiscation
of gold effectively ended redeemability of paper ‘money’ for gold by mere people, the 'Bretton Woods
Agreement’ made it formal. This deal is named for the resort area in NH where major
nations met to arrange world money ‘management’ in July, 1944. They set rules to: 1. Allow only nations to redeem
paper for gold between each other (not people; a form of the Gold Bullion Exchange standard), 2. Create the International
Monetary Fund (IMF) to handle its foreign exchange transactions, and promote ‘stability and cooperation’ between
nations (also used to bailout banks indirectly), 3. Create the World Bank (1 of 5 orgs in this group) to make loans to developing
nations to reduce poverty (or bribe dictators), and 4. Set the US$ as the ‘official’ (not determined by
market usage) world’s reserve currency, with a fixed value of $35 per ounce of gold. The US engaged in so much
monetary expansion (inflation of the money supply) after WW2 it lost much of its value and due to high spending there, flooded
Europe with so-called 'Euro-dollars'. France finally started demanding gold for most of their paper dollars, which
peaked with De Gaulle’s famous press conference on Feb. 4, 1965 where he described the U.S. as having an ‘exorbitant
privilege’ as the world’s reserve currency, which allowed us to pay our debts with money created out of thin air!
He said: "There can be no other criterion, no other standard, than gold. Gold that never changes, that can be shaped
into ingots, bars, coins...that has no nationality and that is eternally and universally accepted as the ultimate fiduciary
value par excellence." France started redeeming their paper dollars to gold, but Nixon soon refused to remit gold
to any nation (we were running out), and then abrogated Bretton Woods on Aug. 15, 1971, setting the dollar 'afloat'
with no redeemability. Within a few years, all nations had done the same, including conservative Switzerland. Whoopee! Everybody
could make money out of thin air!
Figure 1: Monetary Base (M0) 1918 to 2011
Figure 1 shows how the US money supply increased rapidly after 1971
(Nixon ended the tie to gold) and then spiked with Fed Chm. Bernanke’s ‘Quantitative Easing’ (create new
money) in 2008.
of Figure 1: The Federal Reserve System
started in 1913, helped fund WW1, did large M0 increase in early 1920s to help England after WW1, then reduced M0 quickly
due to market frenzy in mid ‘20s, a major cause of the 1929 depression. The Fed increased M0 to fund WW2, and increased
it in the ‘80s as a stimulant after ‘80-81 recession, which led to the ‘dot.com bubble’ in ‘90s.
Interest rates were reduced by Greenspan in 2000 to 2006 to boost housing and recover from the dot.com bubble crash in March-2000.
‘Easy money’ became the underlying cause of the 2002-7 housing bubble, then its burst, as this money fed the CRA,
Fannie, Freddie, Main Street, and Wall Street binges of excess spending, debt, and fraud! The ‘Bernanke Spike’
of $2 trill. in late 2008 was to stimulate the economy after the housing bubble burst in 2007. It didn’t work. Constant
meddling fails ! ****************The Fed destroys the value of our money by excess
expansion of the money supply (‘monetary inflation’) and other meddling. Proof is shown in the start and end "purchase
power" amounts below, which are from www.measuringworth.com: 1774 to
1912: It took $1,202.05
in the year 1912 for the same "purchase power" as $1,000 in the year 1774 (a 17.7% loss
in 138 yrs, or 0.13 % per yr).1913
to 2008: It took $22,427.40 in
the year 2008 for the same "purchase power" as $1,000 in the year 1913 (a 95.5% loss in 95 yrs,
or 1.0% per yr). Almost eight times worse than before the Fed! 2009
thru 2011: The US Federal
Reserve held between $700 billion and $800 billion of Treasury notes on its balance
sheet before the recession. In late November 2008, the Fed started buying $600 billion in Mortgage-backed
securities (MBS). By March 2009, it held $1.75 trillion of bank debt, MBS, and Treasury notes, and reached a peak of $2.1 trillion
in June 2010. Further purchases were halted as the economy had started to improve, but resumed in August 2010 when the Fed
decided the economy wasn't growing enough. After the halt in June holdings started falling naturally as debt matured and
were projected to fall to $1.7 trillion by 2012. The Fed's revised goal became to keep holdings at the $2.054 trillion
level. To maintain that level, the Fed bought $30 billion in 2–10 year Treasury notes a month. In November 2010, the
Fed announced a second round of quantitative easing, or "QE2", buying $600 billion of Treasury
securities by the end of the second quarter of 2011. The Fed admitted loaning almost
$3 tn to European banks, along with large loans to US banks and businesses (especially those with good political connections).
All this was done secretly with no Congressional oversight. No wonder there is a movement to ‘End the Fed’. The above favors to businesses end up as a hidden ‘inflation tax’ on US citizens. A decline in purchasing
power of the dollar, and thus price increases, always follows a rapid and excess (over 5% per year) increase in the money
supply (monetary inflation). As shown in Figure 2 below, the dollar lost 95% of its value from 1913 (when the Fed started)
to 2000, but the largest percentage increases in the money supply occurred after Nixon cut the Bretton Woods tie to gold in
1971. Other factors, such as a reduced supply of goods and services, can cause price increases, but monetary inflation has
caused the most harm (See Figure 1 above). An example of distorting the supply of consumer goods is the payroll for workers
in aerospace and military industries, where the workers have more money, but the things they produce are not available for
Figure 2 (not shown) Source: Byron King, www.agorafinancial.com
The US dollar has lost over 95% of its purchasing power since 1913 due to excess
monetary inflation by the Fed (creating
new money for the government to pay bills). This has been the main cause of the 2,000 % increase (20X) in price inflation
since 1913. Excess money creation prior to 1913 resulted in short-term inflation and ‘panics’ (runs on insolvent
banks), but the Fed allowed long-term abuse by bailing-out such banks, which in turn caused the moral hazard of the banks
taking excess risks by seeking ‘casino’ profits (now 97 years, and counting!).Internationally, the US$ emerged as the world's reserve currency (good as gold) after WW1 because all fiat paper
money (not redeemable for a commodity) is actually viewed as a share in the economy of the issuer. Thus, the paper of a large
and stable government and economy has good value (the best choice within the world’s fake money). Until recently (2008)
the US was without question the world’s strongest economy, and thus the US$ had good value as a ‘share’
(like ‘stock’) in 'USA, Inc.'. Since 1971, the US has abused its currency by inflating its supply even
more than other countries, borrowed and spent to excess, and the dollars’ value has decreased (prices increased) rapidly
ever since (look at any chart) on both the international exchange basis (about 4:1 against western Europe 'legacy'
currencies from 1971 to 1999, then a loss of about 2:1 against the Euro from 1999 to 2008; 0.8 to 1.5 US$ per Euro !), and
by about 10:1 domestically (price increase of cars, pizza, etc.; things not subsidized or under price controls). Thus our
‘share of USA Inc.’ money is decreasing in value and confidence as viewed by other nations, and they are seeking
less dependency on the US$ as the primary reserve currency for the world. This has massive implications on our ability to
create new money to pay our bills to other countries, and could result in a crash (loss of 50% or more of purchasing power)
of the US$!!
The various central
banks worldwide, and the parasitic politicians, staff, and bailout recipients who feed off them, are another layer of monetary
manipulation and damage. With a self-regulating (if allowed) gold standard, they would all be looking for useful, honest work.
Good! Major organizations
A. Bank for International Settlements (BIS): The BIS, established by the Hague agreements of 1930 to handle German debt from WW1, is an international organization of 55 central banks, based in Basel, Switzerland. It claims to "foster international monetary and financial cooperation and serves as
a bank for central banks" , and says it seeks to make monetary policy more predictable and transparent among its member central banks. Although a private corporation, the BIS, its offices, employees, directors and members share an incredible immunity
from virtually all regulation, scrutiny and accountability, with quasi diplomatic status granted and supported by the Swiss
government. Many believe the BIS is; 1. Controlled
by elite bankers to serve not just the interests of their nation, but also of business and personal ‘friends’,
and 2. Is the cause of most currency-related problems, such as inflation, devaluations, and depressions. Stay tuned!
B. The Central Bank Gold Agreement (CBGA): Also known as the ‘Washington Agreement on Gold’,
it was announced on September 26, 1999. It followed a period of increasing concern that uncoordinated central bank gold sales
were destabilising the market, driving the gold price sharply down.Central banks held around 33,000 tonnes of gold in September 1999 (then to 30,563 in 2011), nearly a quarter of all
the gold estimated to be above ground, so their actions were of key interest to the gold market.Much of this interest focused on the central banks of Western Europe.
Many of these held - and still hold - substantial stocks of gold in their reserves. Some (Netherlands, Belgium, Austria, Switzerland
and the UK) figured among those banks which had recently sold gold or announced plans to do so. At the same time, with rising
demand for borrowed gold, a number of central banks were increasing their use of lending, swaps and other gold derivative
instruments (hence the need for audits; see ESF on page 44). Due to the workings of the gold derivatives market, an increase
in gold lending normally results in additional gold being sold. That’s why this growth in lending was adding to the
amount of gold supplied to the market.In addition to the destabilising effect of these sales, market fears about central bank intentions were causing further
falls in the price of gold. The market falls caused considerable pain for gold producing countries. In response to these concerns, fifteen European central banks (those
of the then 11 Eurozone countries plus the European Central Bank and those of non-member Sweden, Switzerland and the UK) drew
up the first Central Bank Gold Agreement in 1999. A far better plan would have been to trash the fake Euro, and convert all
the nations to the Gold Standard! The Euro crisis, ongoing since early 2011, confirms this.
C. The Bilderberg Group: This is a private club for ‘world leaders’. The original Bilderberg
conference was held at the Hotel de Bilderberg, near Arnhem in the Netherlands in1954. It was initiated by several people concerned about the growth of anti-Americanism in Western Europe. Now its focus is on world monetary affairs and holds an annual invitation-only conference of around 130 guests, most of whom are persons of influence in the fields of politics, business, and banking. The participants talk about a variety of global issues; economic, military, and political.
D. G-20: This group of 20 major nations, and the European Community Bank (ECB), started in 1999, and has an annual meeting in a major city (and fancy hotel) to discuss ‘money
problems’. Gary North said in his Nov. 4, 2011 newsletter: ‘The G-20 was created to deal with the first major threat
to the New World Order's plan to launch the Euro in 2000, as the first step in the establishment
of a worldwide managed currency.’Their web site, and press releases after their meetings, make grand statements on how they will save the world’s
financial system, but they accomplish little because the group has little authority. The meeting in Cannes, France in Oct-2011
is a good example. It was followed by a special meeting there in Nov-2011 to deal with the critical Greek situation (default,
leave Euro?) and other problems in the Euro-Zone of seventeen nations (not all are in G20). The European Community Bank (ECB;
the Euro-Zone central bank) is running short of funds, so there was much talk of ‘mandating’ the IMF to print
more of its Special Drawing Rights (SDR; an IOU that countries can exchange for cash in major currencies; US$, Yen, Sterling
and Euros) so nations can use them to strengthen their central banks reserves, and allow more borrowing. Great, our world
leaders try to solve a debt problem with more debt; Bernanke must be smiling! The Oct-2011 Group of 20
did nothing to solve the euro crisis, but the (ultimately rejected) suggestion that Germany put up its gold to back up a bailout
fund confirmed that gold is once again going to become an important part of the world monetary system. Greg
USAWatchdog.com observed. “When
the next financial calamity hits, the Fed
and other central banks will have two choices. They can print money to try and save
the system they love, or let it implode.”
vision of the BIS, CBAG, Bilderberg Group, and
G20 for world prosperity (under their control)
will fail because it is based on fiat money that has no commodity-based market value, is subject to excess creation of new
money, meddling in the market by self-serving (builds power, income, career security, and vanity) banksters and politicians,
and thus unsustainable. The members and guests of these groups love to pontificate about ‘problems’ and how they
will solve them; always with more government intervention. They fear the free market, where high-risk deals, or incompetent
owners and managers, are allowed to fail (and their investors or depositors lose), and better players take their place. They
prefer the perverse incentive of bailouts (central banks admit they are ‘lender of last resort’) where they can
play for high risk-reward deals and never lose! With nations, central banks, and the IMF providing the bailout funds, the
bad deals and firms are propped-up and the citizens pay in the form of national debt or price inflation. All empires fail in part due to running out of purchasing power when their fake
money becomes almost worthless. The failed empires of Rome, Italy, Spain, France, England, USSR, etc. are examples. Another
sign of failing is decadence of the citizens. Look at how the content of TV, movies, and magazines have changed since the
‘50s, with more sex,
violence and cursing. Just as Romans wanted bread and circuses, with lions and gladiators, our people thrive on the violence
of NASCAR and cheating and fighting in sports, or the silliness of ‘Dancing with the Stars’. Starting in the late ‘90s, Pres. Clinton and Rep. Barney Frank (the worst mortgage abusers) pushed Fannie and
Freddie to ‘help the poor’ (and vote for me) by making more subprime loans, many of which were then sold to Wall
Street to be securitized. As Peter Schiff (www.peter-schiff.com) wrote on Feb. 14, 2009; “Developed primarily over
the last 10 years, securitization permitted loans of all shapes and sizes to be packaged into investment-ready securities.
The system worked, fueling unprecedented levels of lending in the home, auto, student, and credit card sectors. But in the
last few years, as the collateral underpinning of these securities has collapsed in value, the trillions of dollars of securitized
debt now in circulation has become the toxic sludge at the bottom of our financial pit.” Foreign banks and investors happily bought trillions of dollars of these securities because they were primarily based
on US real estate, had high interest income, and were apparently backed by the US government. The process was corrupt from
the start, but was pushed by Congress and Wall Street elites. As the false prosperity slowed, and caused loss of US jobs,
then mortgage foreclosures, these fake securities lost value, and the worldwide crash started in late 2008.From the beginning of the Greek debt crisis in
April 2010, the Greek bailout has been about saving the banks that had purchased the Greek government's IOUs. The member
states must be provided with euros, so that they can continue to make interest payments to the banks.The northern nations are using the European Financial Stability
Facility (EFSB) to support the south, but this has proven insufficient to control the panic. Another bailout facility
is now being considered, one that is much bigger and more permanent. It is called the European Stability Mechanism
As I write in Jan-2012, the Euro is at risk of failure, as all fiat currencies eventually
do. ‘Fiscal Integration’ will only delay it. Stay Tuned!The countries we buy imports from (China leads) accumulate billions of US$ and buy our T-bills to get some interest
(and help feed future purchases?). This is a re-cycling of fake money, with interest paid by fake money, with all parties
hoping it will last forever!
The IMF is pushing to implement the ‘Bancor’, which has been introduced as the currency name for the basket of currencies called
‘Special Drawing Rights’ (SDR; see more at ‘D. G-20’ on page 52 above). Gadhaffi was pushing use of
the gold Dinar for all sales of oil by African nations. This, along with evicting the 35,000 Chinese workers in Libya, and
controlling their oil, was the real reason we and NATO invaded in Apr-2011. Part of Saddam Hussein’s death warrant was
to convert Iraq oil sales to payment in Euros in 2002. China and Russia suggested at the Jan-2009 ‘World Economic Forum’
in Davos that a new system is needed to replace the US$ as the world’s primary reserve currency, then they agreed to
trade in their own currencies.
In Aug-2011, China
and France agreed to form a task force to discuss how the Yuan could become part of the SDR. It is said they want 20% USD
(was 45%), 20% Yuan, 20% Yen, 20% Euro, and 20% Pound Sterling. In Dec-2011 China and Japan agreed to trade in their
own currencies. In Jan-2012 Iran said it would sell oil in India in Rupees. The USD is sliding from its perch!
the solid Swiss Franc is under pressure. In Sep-2011 the Swiss National Bank (their central bank) announced they would buy
Euros ‘as needed’ to reduce the strength of the Swiss Franc which had been hurting exports. Thomas Jacob, a monetary
activist in Zurich, has started http://www.goldfranc.org/ to seek parliamentary approval to issue a Swiss coin containing gold, in parallel with existing currency. Good luck Thomas!
the US Dollar fades, watch for; 1. Increased use of BRIC (Brazil, Russia, India, China) currencies for international trade
(Canada and Australia too?), and 2. More activity on the Bancor (the IMF ‘SDR’), and other ‘new currency’
projects around the world. In mid-2011, China started allowing more ‘off-shore’ transactions with its currency.
The trend is to use less of the US$ as a ‘reserve currency’ for international transactions. This will;
1. Reduce demand for dollars, and result in a major (50 to 80% ?) drop in value, and 2. Limit the USA’s ability to get
US$ denominated loans at low rates (by selling bonds), and then repay them with newly created dollars; Our Exorbitant
Chapter 3: The US Banking and Securities System
1. 'Commercial Banks', which provide services to large
firms, and accept customer deposits,2. 'Retail Banks', which provide services
to small firms and individuals (1 and 2 are sometimes called 'National banks' if multi-state), and accept customer
deposits,3. 'Investment Banks' which invest their own capital in bonds, securities,
mortgages, etc. (not to be confused with securities brokers or dealers), and until 1999 did not accept customer deposits,4.
'Savings and Loan Institutions' ('Thrifts'), which provide home mortgages, and accept customer deposits, and5. Stock Exchanges (SE), which sell securities (shares) issued by corporations. Examples are: New York SE, Pacific
SE, NASDAQ, etc. The 'system' is regulated by the: 1.
'Federal Reserve System' 2. 'Securities and Exchange Commission'
(SEC), created in 1934 to regulate securities markets,3. 'Federal Deposit Insurance Corp.'
(FDIC) which insures deposits against bank failures,4. 'Office
of Control of Currency' (OCC) was established in 1863 as a bureau of the U.S. Department of the Treasury. The OCC is headed
by the Comptroller, who is appointed by the President. The
OCC was created by Congress to charter national banks, and to oversee a nationwide system of banking institutions.5. 'Commodity
Futures Trading Commission’ (CFTC) is an independent agency of the US government. Its mission is to protect market users and the public from fraud, manipulation, and abusive practices
related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound
futures and option markets, 6. 'Office
of Thrift Supervision' (OTS), an agency of the United States Department of
the Treasury, is the primary regulator of federal savings associations (sometimes referred to as federal thrifts). Federal savings associations include both federal savings banks and federal savings and loans. The OTS is also responsible for supervising savings and loan holding companies (SLHCs) and some state-chartered institutions.
The OTS was established by Congress as a bureau of the Department of the Treasury on August 9, 1989 as part of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989.7. 'The Federal Housing Finance Agency' as conservator to regulate Super
GSE's FannieMae and FreddieMac. (formed in Sep-2008 as part of the bailout), and8. The 'Troubled Assets Relief Program'
(TARP) became the manager of the Oct-2008 $700+ billion bailout of Wall Street and banking firms. The initial plan was to
buy toxic mortgage-based assets from Walll Street firms, but by Nov-2008 the target had shifted helping with frozen consumer
debt. What is Next in this 'Panic to Patch' ??
The System includes,
Abuse of the System by Banks and Congress It’s bad enough that self-serving politicians and bankers created the Fed to supply money for themselves and
their career-enhancing (job saving) projects and wars, but that’s only part of how the banks abuse their customers,
the people, and the government. They pay off politicians to get laws that accommodate their schemes to increase profits by
entering into high reward but risky deals, while protecting themselves from the risk. The casino culture that caused the 2008
crash and ensuing bailouts of Wall Street form a perfect example. They sell the toxic
CRA mandated ‘no-doc’, ‘fake appraisal’, ‘sub prime’ home mortgages to GSEs Fannie and
Freddie the same day they make them. This takes the risk and loan funding off their books while they continue to earn fees
for ‘servicing’ the deal by collecting payments, etc. With the prior deals sold, they still have the reserves
needed to make new deals. A real profit churn, with the taxpayers at risk via the GSE’s. Prudent bankers are wary of high-risk projects so they won’t go insolvent due to project failures. This became
‘no problem’ when they created the Fed to be ‘lender of last resort’ to replenish their reserves,
even when the ‘market’ would avoid them. This is called a ‘moral hazard’ (acting imprudently because
you know you will be bailed-out). The same applies to any business or person with good government ‘connections’. The ownership of deposits has been distorted by friendly judges and Congresspersons to give an advantage to the banks.
Deposits were originally considered to remain the property of the depositor (a ‘bailment’), but courts ruled that
since the specific pieces of money could not be identified in the case of losses that the banks were not accountable. Thus
deposits became more like loans to the bank that they could use however they wished (loan to others, etc.). 'Fractional reserve' banking is a big part of the problem. When the Fed sets the legal reserve at a typical
10%, banks can loan ten times more than they have. Example: If you deposit $100, they can loan $1,000 (newly created money),
and still have your deposit as a 10% reserve. Note that every time a loan is made, or a credit card issued, the money supply
increases, and value of all US$s go down. Another key problem
is the Federal Deposit Insurance Corp. (FDIC). This fake 'insurance' (rates not set by market risks; not adequately
funded) was created by the government in 1933 so depositors wouldn't get suspicious of fake money and worry enough to
withdraw, or avoid making deposits, and now covers
$250,000 per depositor per bank. It back-fired in 1991 when the also
fake Federal Home Loan Banks ('Savings and Loan' banks) were deregulated in 1990 (as to rates paid to depositors),
yet were still insured. White-collar crooks started or bought S&Ls, offered excess high interest rates to attract deposits,
then paid themselves high salaries and bonuses before going bankrupt due to high costs! It was planned that way. A federal
taxpayer-funded bailout ensued as yet another unintended consequence of government intervention in the free (honest) market.
As the FDIC bailed-out depositors of failed banks in the 2008 crash, they replenished their depleted fund by fees imposed
on the well-managed surviving banks. Why should the prudently managed banks be forced to bail-out the greedy casino banksters?
Another rip-off! With sound money the FDIC is not needed. The FHA (Federal
Housing Administration), created in 1934, insures lenders against default by homebuyers. This is another distortion of the
market that weakens our economy. Sure enough, use of the FHA was broadened in the 2008 home mortgage crisis to bailout home
'owners' who signed-up for loans they couldn't afford, and lenders who knowingly approved their bad or insufficient
credit. This is another case of the government pouring good money after bad, rather than liquidating past counterproductive
'help'. Another counterproductive monetary intervention
is the 'Pension Benefit Guaranty Corporation'. It is an independent agency of the federal government that was created
to support (bail-out?) private pension plans. How in the world does Congress justify using taxes (or fake money, or under-funded
insurance premiums) to bail out private pension plans? Well, it is called 'buying votes' from pensioners. This is
what economists call a 'moral hazard' (or perverse incentive), because it allows firms to under-fund their pension
plans without penalty; thus more do it. The same applies to 'Federal Disaster Insurance' (passed by Congress in Nov-2007),
and 'National Flood Insurance' (NFIP, 1968) which forces all taxpayers to subsidize rates for 'other people'
or land developers (including fees tagged-on to home loans, even in areas with extremely low flood risk; such as a small creek
nearby !!) so they can get 'affordable' (subsidized) insurance to build (or rebuild) in high risk (flood, hurricane.
etc.) areas. All this applies to FEMA, the disastrous Federal organization that is supposed to help us after disasters, which
in fact should be treated as State and local issues! This is more counterproductive 'vote getting' with fake money
(the States run out of money, but the Federal government doesn't; it is another form of Federal pork)! FEMA should be
abolished. Yet other damaging contrivances (they distort
financial markets) are the federally chartered GSE (Government Sponsored Enterprise) corporations. A. Congress
created the first GSE in 1916 with the Farm Credit System; B. it initiated GSEs in
the home finance segment of the economy with the creation of the Federal Home
Loan Banks in 1932; and C.
it targeted education when it chartered Sallie Mae in 1972 (SLM Corporation, NYSE: SLM; commonly known as Sallie Mae; originally the Student Loan Marketing Association); it became a fully private institution via legislation in 1995). D. Federal National Mortgage Association (FMNA,
Fannie Mae, was founded in 1938
by FDR, www.fanniemae.com/). Pres. Johnson converted Fannie to a publicly
traded corporation, (FNM) in 1968 so it wouldn't be 'on the books' as part of the US budget deficit caused by
the Viet Nam war.E. Federal
Home Loan Mortgage Corp. (Freddie Mac, in 1970, www.freddiemac.com These fake organizations were created in part to allow banks
to issue 30-year fixed-rate home mortgages (sometimes with liberal terms to qualify; such as 'no job, no money') to
'help' make home purchases 'affordable' (with fake, not market-based rates and terms). The problem is that
no sane banker would ever guarantee a rate for 30 years! The game is that private banks sell these loans to home buyers, and
then re-sell them to Fannie or Freddie the same day (to get rid of such garbage). Both are listed on the NYSE (FNM and FRE),
and because their debts were semi-guaranteed by the U.S. Government ('fully' as of Sep-2008), they are able to borrow
at low rates. A further deal is that they pay no state or local taxes, and are not required to disclose internal 'problems'
as normal banks are. We saw the predictable result of corrupt management policies in Sep-2008 when the US Treasury and Fed
invoked the new 'Housing and Economic Recovery Act of 2008' to bail-out (buy?) failing Fannie and Freddie, then set
up 'The Federal Housing Finance Agency' (FHFA) to regulate them. A better solution would have been to liquidate them
in bankruptcy! They were key originators of the ‘2008 Crisis’ by fraudulently representing their weak loans (poor
borrower credit) as prime when they sold them to Wall Street to be securitized.
On September 17, 2008, Byron W. King
of www.DailyReckoning.com said: “It used to be that the job of the Federal Reserve was, as former Chairman William
McChesney Martin Jr. told it, “to take away the punch bowl just as the party gets going.” Now it seems like the
Fed is laying a direct pipeline to the distillery to keep everyone loaded.” A third player, Ginnie Mae (GNMA), Government National Mortgage Association also provides a link between capital
markets (the lenders) and the Federal Housing markets. This makes mortgage-backed securities more attractive to investors,
such as pension funds and the like. The main difference between this company and Fannie Mae lies in the government backing.
While the backing was only perceived in Fannie Mae (until the government ‘bought’ it on Sep. 7, 2008), it is real
in the case of a Ginnie Mae backed security or mortgage since the US Government owns Ginnie. About 95% of all home loans through
FHA (Federal Housing Authority) and the VA (Veterans Administration) are backed by GNMA. These organizations distort our financial system, since at their fake low loan rates, excess money goes into housing
because low wage earners can buy bigger houses. This is nice for politicians who want votes, but is a misallocation of resources
in the overall economy! Of course, the Federal Reserve is part of the game with its rate and reserve manipulations. This is
what caused the 'subprime' mortgage crash in 2008! Further, the banks 'borrowed-short, and lent-long', which
puts the lender at high risk, and no sane banker would do it. BUT, in the US the Fannie-Freddie twins buy these toxic loans
from the banks, and take on the risk. Even socialist Canada,
while amortizing the
principal over 30 years, requires
the interest rate to be adjusted ‘to market' every five years, and interest is not tax deductible. They have no
Fannie or Freddie equivalents to distort the market, and allow national branch banking to spread risk. Hence, Canada has been
doing welI since the US economy plunged in 2008. I recommend that the Canadian approach be adopted by the US. Part of the
fun in the US is that Mom and Pop borrower get to pay-off their loan with cheap dollars (the US$ value declines every year,
10:1 since 1975, and most wages and salaries go up to partially compensate). In 1999 the ‘Banking
Act of 1933’ (called the ‘Glass-Stegall Act’; yes the same Rep. Carter Glass who helped push the
Federal Reserve Act through in 1913!), which created the FDIC and separated investment and commercial bank dealings, management,
and ownership, was amended by the ‘Gramm–Leach–Bliley Act’. This effectively removed the separation
that previously existed between investment banking (which issued securities) and
commercial banks (which accepted deposits). The deregulation also removed conflict
of interest prohibitions between investment bankers serving as officers of commercial banks. Many view this change as the
‘flexibility’ that Wall Street banksters used to commit their rip-off of customers that was a big part of the
crash of 2008! Excess money (combined with greed) also hurts
the 'big guys'. The Mar-2008 bailout of investment bank Bear-Stearns by the Fed (and injection of over $200 bill.
'liquidity' for others) was to prevent the bankruptcy of Bear Stearns, and its ripple effect on others, caused by
high-risk, high-leverage (up to 40:1), high-profit investments that got into trouble. The Fed stepped in to save the US 'financial
system'. What a pathetic, costly joke! They damage the system with 'loose' money, then try to fix it with more
of the same. Guess who loses?; The taxpayers and little guys!. Here are some words that came out of the April 3, 2008 Senate Banking Committee hearing investigating the near collapse
of Bear Stearns: "20 years ago the Fed would have let Bear Stearns go bust. Today, it is too interlinked to fail." Not
too big to fail…, too interlinked to
fail. Which describes the world of derivatives, and hedge funds. The proliferation of a vast array of complex financial instruments
that are sliced and diced and recombined in a bewildering variety of forms and bought and sold and traded by thousands of
parties across the globe (and sometimes labeled ‘AAA’ even though backed by junk loans; can you say FRAUD) has
woven everyone tightly together into one big knot. It wasn’t just Bear-Stearns, but the entire system of globally interlinked
financial markets and Crony Capitalism that got bailed out! Again, the Insiders win, and the People lose! ‘Too big
to fail’ is a phony concept to justify bailouts. The greedy and incompetent managers get saved, as their prudent competitors
pay for FIDC insurance. The ‘moral hazard’ (perverse incentive)
here is that Wall Street knows they will get bailed-out the next time their high-risk, highly leveraged ventures fail. Oh
sure, Paulson and Bush promised ‘sweeping changes’ with new regulations and powers for the Fed, but the changes
will be minor, and Wall Street will find a new away around them. In Nov-2009 Sen.
Dodd, Chairman of the Senate Banking Committee, unveiled a sweeping regulatory reform bill that would strip the Federal Reserve
of nearly all of its power to oversee banks. It was quickly watered down. It all comes back
to the unspoken core problem; Fake Money. Without the hundreds of billions of ‘liquidity’ the Fed poured into
the financial system since the ‘90s, these games couldn’t be played. The toys they play with are the fake sub-prime
home mortgages, plus other loose-money-based securities. In the past, we
could keep spending this fake money worldwide (by both people and government) because the US$ was still the world's primary
'reserve currency' (anyone would accept it as payment, and hold assets denominated in it) because despite our
problems, others have been worse (past tense; others are becoming attractive, namely the Euro, Yen, and Yuan). The US$ now
has competition! Our formerly strong economy set the confidence level that the dollar won't become worthless, (but in
early 2008 it started falling because the US is bankrupt due to debt and spending, with no cure in sight. For fear of starting
world-wide panic by selling too much, those countries who own a lot of US$ (trillions in China, Japan, etc. due to payments
for exports to the US) can't afford to dump them as their value declines, but history shows us that something always triggers
panic selling, and a crash in value. Due in part to its mercantilist policy of ‘pegging’ the yuan (at 6.83) to
the falling dollar. China now leads the world in value of annual exports as of Dec-2009 (passing Germany), and also in foreign
reserves at $2.4 trillion, $799 bill. (33%) of which are in US Treasury securities. For example, as of mid 2008, individuals and businesses worldwide started to avoid transactions, investments, and
savings in US$. They feared ongoing loss of market value in dollar-denominated assets. They were right, and this is how worldwide
crashes in a currency can start! As should be expected, in late-2009, China and others started to: 1. Use their own currency
for international trade, and 2. Reduce their 'reserves' of US$ (slowly, to avoid a panic). Governments play the 'hold-and-hope' game with 'other people's money', but people and businesses
avoid a failing currency since their own money and assets are at risk!! The crash could start from the bottom up, as merchants
and producers refuse to accept dollars ! One of the risks
foreign governments fear is that the US will pay off the debt they own (U.S. bonds, etc.) by using cash created out of thin
air. This would greatly reduce the value of the dollar, and is a form of default. They should be concerned. The US has huge
debts (some are even 'off the books', such as future obligations of Social Security, Medicare, etc.; see Table 1 on
page 30) so our 'leaders' prefer inflation so they have more (albeit of less value) money to pay debts. Deflation
(less money in circulation; more value per dollar) would help recovery from the coming 2010 depression, but that would eliminate
the easy payoff of debt by the US. It’s called being 'between a rock and a hard place', caused by the short-term
pleasure of fake money.
The US economic problems have been brewing since
extreme abuse of the US dollar started in 1971 with Nixon’s cutting of its last link to gold. Roberts and Miller showed
vision in their writings below.As
written by Paul Craig
Roberts Ph. D. on May
07, 2002 in #3 ‘Time Running Out for the
Dollar?’ of his prescient seven-part series
of articles ‘No -Think Nation ’ on
America’s imperiled future: “The U.S. current account deficit is running at an annual rate of 4% of Gross
Domestic Product. That’s about $1 billion per day. For a number of years the large U.S. current account deficit has
been accompanied by a strong dollar. Could the dollar’s strength be coming to an end? Since January the dollar has declined
almost 6% in value against the Euro, which has been a weak and uncertain currency since its introduction. Is this a harbinger
that a large dollar overhang is beginning to worry those who are holding our currency?” His concerns were correct, as shown by the crash of 2008 and the
plans in 2009 by other major nations to replace the US dollar as the world’s reserve currency. The Dec. 5, 2009 issue
of the Wall Street Journal had an article ‘Requiem for the Dollar’ by free-market oriented Investment Advisor
James Grant (‘Grant’s Interest Rate Observer’, www.grantspub.com) that confirmed the decline of the Dollar’s
strength, and recommended gold money as a solution to avoid further damage from government meddling.Donald
W. Miller, Jr., M.D. warned us in his prescient article ‘A Fourteen Point Plan for a Post-Wilsonian America’,
which he published on September 28, 2001 at www.LewRockwell.com :
“Likewise, if we do not wish to
be mired in the coming economic depression for a prolonged period of time, as happened with the last one in the 1930s, which
lasted twelve years, we must substantially reduce government spending, taxes, and regulatory compliance costs. Federal spending
has grown eight times faster than the economy since the last depression. Over the last forty years federal expenditures on
regulatory activity have increased 2.7 times faster than economy – a 14 per cent per year annual growth rate, compounded.
Government regulations currently consume $977 Billion annually, siphoning off 13 per cent of the economy, which is $3,300.00
per man, woman, and child. In order for our country to regain economic health we must make sure that the free-market private
sector once again becomes, as it was before our nation assumed the burdens of empire, the largest and fastest growing segment
of the economy.” (see web site www.DonaldMiller.com) The rush of home loan defaults and bank problems started in late 2007, and peaked in Sep-2008. The underlying cause
was Fed manipulation of interest rates, as described above.The excess supply of low-interest money, delivered to lenders by
the Fed and its pals at FreddieMac and FannieMae, was the ‘mother’s milk’ of market distortion. Of
course, our Wars for Empire (not defense) in Afghanistan and Iraq added to the domestic spending spree (which pours unproductive
money into the economy), that we can no longer afford. Kudos are due
for leaders who raised the warning flags early, despite opposition from both Bushes and Clinton, and lack of support from
’vote-for-me’ fellow Congress members. Since 1976, Rep. Ron Paul MD (R-TX-14, first elected in 1976
with 2 gaps totaling 14 years; born 1935) has always been the strongest fighter in Congress for more liberty and less government.
His Libertarian philosophy calls for sound money (gold and silver in coins, paper redeemable for precious metal), and he wants
to abolish the Federal Reserve Bank (HR-2755), and associated GSEs Fannie, Freddie, the World Bank, IMF, BIS, etc. He wants
to at least make the Fed subject to audit by his HR-1207, which had 317 cosponsors as of late 2009, and a similar bill S-604
in the Senate. Rep. Barney Frank did all he could to derail it, but it became an amendment on his “Financial Stability Improvement Act of 2009″, bill HR-3996. Rep. Paul became Chairman of the ’Domestic and International Monetary Policy’ committee in 2011, and
has grilled Chm. Bernanke more than once in his 2011 hearings. Rep. Paul has introduced many bills to restore sound money,
including HR 4248 on Dec. 9, 2009, the ‘Free
Competition in Currency Act’ that ends legal tender laws and allows competing currencies. He gained mainstream support
on January 19, 2010 when Pat Buchanan gave him credit for being the principled promoter of policies that are good for the
US. Passage would be a huge step forward, and crucial to the goals of this book! On Jan. 26, 2011, Rep. Paul introduced HR-459, the ‘Federal Reserve Transparency Act of 2011’, and as
of Nov. 4, 2011 it
191 cosponsors. On the same day, a similar bill, S-202, was introduced in the Senate by his son Sen. Rand Paul (elected Nov-2010),
and has 18 cosponsors. Both
as: ‘A bill to require a full audit of the
Board of Governors of the Federal Reserve System and the Federal Reserve banks by the Comptroller General of the United States
before the end of 2012, and for other purposes.’On April 11, 2011,
Rep. Paul introduced
‘to reform the manner in which the Board of Governors of the Federal Reserve System
is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other
purposes.’ These three bills launch a thorough, and long overdue, audit of the Fed! On June 28, 2011, Sen. Jim DeMint (R-S.C.), with cosponsors Mike Lee (R-Utah) and Rand Paul (R-Ky.), introduced legislation
that would exempt gold and silver coins declared by the federal or any state government as legal tender from taxation.The ‘Sound Money Promotion Act’,
S. 1287, is meant to build on what the sponsors see as a reaction to overspending by the federal government and the falling
value of the dollar. The senators said that in May, Utah became the first state to recognize these coins as legal tender within
the state, and said 12 other states, including South Carolina, are considering similar measures.As far back as 1993, legendary
House Banking Committee Chairman, the late Henry B. Gonzalez (D-Texas, CD-20, 1961-1999; lived 1916-2000), fought to make
the Federal Reserve and GSEs more accountable Then
in May, 2006, Sen. Chuck Hagel (R-NE, 1996-2009; born 1946) wrote a letter, co-signed by 19 other Senators, asking Majority
Leader Frisk for support of his 2005 bill S-190 ‘Federal Housing Enterprise Regulatory Reform Act’ that would
protect taxpayers from potential losses by the same GSEs. He got no support, and the bill died. Then disaster struck in 2008,
as predicted! A major facilitator to start this mess was the
Community Reinvestment Act (CRA), a 1977 federal law pushed by Pres. Carter that requires banks and thrifts to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their
services, a practice known as ‘redlining.’ The purpose of the CRA is to provide credit, including home ownership opportunities, to underserved
(unqualified?) populations and commercial loans to small businesses. The CRA was passed into law by the U.S. Congress in 1977 as a result of national
grassroots pressure for affordable housing, and despite considerable
opposition from the mainstream banking community. The CRA mandates that each banking institution be evaluated to determine
if it has met the credit needs of its entire community. In 1995, as a result of interest from President Clinton's administration,
the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions'
performance in helping to meet community credit needs (that is, forcing lenders to make more subprime loans!!). The Clinton Administration's regulatory revisions with
an effective starting date of January
31, 1995 were credited with substantially increasing the
number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers (i.e., 'subprime',
unqualified!) for home loans. Part of the increase in home loans was due to increased efficiency and the genesis of lenders,
like Countrywide Financial Corp. (set up as an ‘off brand’ by Bank of America, then purchased in Jan-2008 when
CWF got in trouble), which was aggressive and did not mitigate loan risk with savings deposits (ie, borrowers must have deposits)
as did traditional banks using the new subprime authorization. This is known as the secondary market for mortgage loans ('subprime',
high risk for banks). The revisions allowed the securitization of CRA loans containing subprime
mortgages (ie, packaging good and bad debt
together and calling the bunch 'AAA'. This is FRAUD by the rating firms; see below!!. The first public securitization of CRA loans started in 1997 by Bear Stearns, and it
helped break them in Sep-2008!. The number of CRA mortgage loans increased by 39 percent between
1993 and 1998, while other loans increased by only 17 percent (a flood of money into high risk). A major factor
was sloppy, incomplete, fraudulent, self-serving (to get and keep customers) work by credit rating firms such as Standard
and Poors, Fitch, and Moody’s, who were complicit in the chain of perpetrators who falsely labeled bad debt as AAA. In keeping
with ‘better late than never’, on August 5, 2011, S&P’s USA Long-Term Rating was lowered to 'AA+'
due to ‘political risks, rising debt burden; outlook negative.’ The change was ridiculed by many financial people
and firms. In 2003, the Bush Administration recommended what the NY Times called "the most significant regulatory overhaul
in the housing finance industry since the savings
and loan crisis a decade ago." This change was to move governmental
supervision of two of the primary agents guaranteeing subprime loans, Fannie
Mae and Freddie
Mac under a new agency created within the Department
of the Treasury. However, it did not alter the implicit guarantee
that Washington will bail the companies out if they run into financial difficulty. That perception enabled them to issue debt
at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed
to happen Among banks and the regulatory agencies, there
was a consensus that data collection, recordkeeping, and reporting requirements imposed a heavy burden on small community
institutions. As a result of a 2002 review of the CRA regulations, and revision of
an initial Federal
Deposit Insurance Corporation (FDIC) proposal following a public commenting
period that was largely negative, the FDIC, Office
of the Comptroller of the Currency (OCC) and the Federal
Reserve Board (FRB), made substantive changes to the implementation
of regulations for the CRA for banks (not Thrifts). Credit for portions of above two paragraphs to: (http://en.wikipedia.org/wiki/Community_Reinvestment_Act) . In the 1980s, groups such as the activists at ACORN (‘Association
of Community Organizations for Reform Now’, www.acorn.org) began pushing charges of "redlining" - claims that banks discriminated against minorities in mortgage lending. In 1989, sympathetic members of Congress
got the Home Mortgage Disclosure Act amended
to force banks to collect racial data on mortgage applicants. This allowed various studies to be ginned up that seemed to
validate the original accusation. In fact, minority mortgage applications were rejected more frequently than other applications - but the overwhelming
reason wasn't racial discrimination, but simply that minorities tend to have weaker finances. A study
in 1992 proved that bias was not the problem. Yet the harm was done and banks loosened their rules to avoid lawsuits. The 'Troubled Assets Relief Program' (TARP)
was a 3-page note introduced by Paulson and Bush in Oct-2008 in a panic mode based on predictions of a sudden crash in the
economy. They wanted $500 billion with no questions asked, and no liability. Congress converted it to a pork-laden 500+ page
tome that still had little oversight. They and the recipients have refused to account for how the first $385 bill. was spent!
The so-called 'panic' urgency is now being viewed by many as a lie used by Paulson and Bush to bail out firms run
by their friends and campaign donors, and the voters who own their stock. It is grossly unfair to well-managed firms who now
must continue to fight rescued competitors (run by greedy jerks or fools) who should have failed. A new book, ‘Financing Failure: A Century of Bailouts’, by Vern McKinley, was issued on Jan. 10, 2012
(just a few days ago). His research shows how the financial crisis starting in 2008 was caused by the government
and Fed due to their years of meddling with the money supply, interest rates, and subsidies, then made worse by bailouts for
political ‘friends’. More on page 117. The huge debts
incurred by the Treasury and Fed to pay for the bailouts have created a large risk of future reduction in value of the US
dollar (due to rapid and excess expansion of the money supply; i.e., Monetary Inflation). Stay tuned!
Causes of the Sep-2008 Wall Street Debacle
The Bad News
Here is the bad news
from leading analysts about possible collapse of the US Economy and Dollar. 1. Walter J. "John" Williams has been a private consulting
economist and a specialist in government economic reporting for more than 25 years. He started ‘Shadow Government Statistics’
(http://www.shadowstats.com/) in 2004 because
government reporting was so false and incomplete. In an Aug-2010 interview article ‘Economy Heading
for a Systemic Collapse into Hyperinflationary Great Depression’ (http://www.marketoracle.co.uk/Article21676.html) he discusses how the failing US economy and Dollar could soon descend into sudden hyperinflation (loss of over 90% of purchasing
power of dollar in a few days), and force people to barter for food and supplies. Unlike the 2007 start of hyperinflation
in Zimbabwe, where they used dollars as a ‘backup’ currency, the US has no such choice. He predicts barter and
chaos, with precious metal becoming the only useful ‘money’, valued by weight, until the government gets settled
(in some form; fascist, ultra-liberal, etc.??). He recommends having a month or two of food (canned, dried) and a means to
purify water as a means of survival until things (food delivery, banks) start working again. 2. Similar predictions have been made by Dr. Marc Faber, of Marc Faber Ltd. (http://www.gloomboomdoom.com/). 3. Dr. Paul Craig Roberts sees the possibility of neighborhood
self-defense clans emerging from the chaos in ‘The
Year America Dissolved’ (http://www.vdare.com/roberts/100726_dissolved.htm).
In his articles ‘The Collapsing US Economy
‘ (http://www.informationclearinghouse.info/article21714.htm, ‘The End of American Hegemony (http://www.creators.com/opinion/paul-craig-roberts/the-end-of-american-hegemony.html),
and ‘How the US Economy Was Lost’ http://informationclearinghouse.info/article22087.htm), he finds a major depression likely. 4. In 2002, Congress created the military ‘US
Northern Command’ (NorthCom) to ‘work with’ local police nationwide for homeland defense. Guess who ends-up
in charge ? (Clue: The Army with its bigger staff, equipment, and political power) See (http://www.northcom.mil/about/index.html). This is an unprecedented incursion of the military into domestic law enforcement! They expect ‘social
unrest’ as more people worry about the War on Terror, and now (2011) about lost jobs, homes, and maybe soon, hunger.
Arrests will be made simply for complaining loudly. Major detention camps (jails) have been built to hold ‘troublemakers’.
Martial law will be imposed whenever the Feds want it; they have the laws all set-up! Michael Edwards says it well in ‘The Ultimate
Betrayal: Police and Military Working Together to Oppress Americans’; see http://www.activistpost.com/2010/08/ultimate-betrayal-police-and-military.html . “The
concepts of military service and public police service are worlds apart, for good reason. Today in America, we are currently
witnessing the culmination of a decades-long trend that has introduced the language, weapons, and tactics of the overseas
battlefield onto the streets of America.” I suggest that
survival gear (with guns for self-defense and hunting), including storable food and water (with purification supplies), a
wood stove, matches, medical kit, and pre-1964 US silver coins (usable when paper money crashes), and a crank-powered radio
(with cell phone charger cable) will be needed. The above bad news fits the pattern of a declining empire, and thus applies to Empire-USA. See my empire analysis
at Part 5 in the left margin of my political site Forward-USA.org, and at http://theburningplatform.com/blog/tag/dave-redick/, and http://www.activistpost.com/2010/08/phases-of-empire.html#more .
discussed on page 29 (see ‘Key Point’), the crash of the US economy and dollar have been delayed by the fact that
the dollar is the world’s primary reserve currency (held by others as ‘good as gold’), and countries that
own a lot of dollars (China, Japan, S. Korea, etc.) don’t want it to crash. However they are also tired of our abuse
where we create dollars out of thin air to pay for imports and debts. Conversely,
other nations must buy dollars to pay for most imports, and face declining exchange rates if they have expanded their money
supply too much. As the bond and securities markets decline in value and dividends,
we will see serious problems in funding of life insurance and pensions that had ‘overly optimistic’ funding plans
based on returns of 8 to 10 percent. It all comes back to how distortions of the free-market by the government always do more harm than good, often to
the intended beneficiaries.
Very few people understand, or care about, the above economic and currency issues. They prefer bread and circuses,
as we crash!! SAD.
Politicians Use Fake Money to Keep Their Jobs
Politicians hate to have the government run out of money. They need it to fund projects as gifts to voters and campaign
donors that help them win elections, and continue their lush lifestyles of fun and power. Most are ushers at the trough; ‘Slip
me $5 and come to the front of the line and get $100 from the trough.’ A good return on investment ! This is why political
campaigns raise and spend so much money; the donors give it (a bribe) in expectation of a big payback ! This is true of any
country, but is worst when there is a central bank to provide fake money for paybacks (base-metal coins and paper have no
redeemability to a valuable commodity such as gold). As discussed above, our central bank, the unconstitutional,
privately owned, secretive, banking industry cartel called the ‘Federal Reserve System’ (Fed), was created secretly
by bankers for long-term control of the financial system and profits, and also to fund wars (the ‘1812’, 1845
‘Mexican-American’, 1861 ‘Civil’, and 1898 ‘Spanish-American’ wars all had funding problems).
The ‘war goods’ industry (Ike’s ‘military-industrial complex’) views wars as good business,
despite the death and destruction. This evil motive is justified by slogans like ‘stop killer dictators’, ‘spread
democracy’, ‘preemptive defense’, and other fake excuses. Some say they pressured ‘pacifist’
Wilson to enter WW1 to assure their customers England and France won and could pay their debts to them. In fact they help
start wars; was the sinking of the Lusitania by a German U-Boat a planned trigger? Did someone leak to the Germans that it
was carrying munitions to England? Having easy access to money makes it easier for
governments to start or enter wars, instead of negotiating a settlement or minding their own business! As shown in Appendix
2 on page 118, all of our wars since the 1776 Revolution have been started by lies from DC to serve economic and political
goals, not homeland defense. This is an abuse of our troops and economy, but is good for the power lust and re-election of
politicians! Governments almost ALWAYS abuse access to an
unlimited supply of money by creating too much, thereby reducing, or destroying, its purchasing power. Since the the Fed started
in 1913, the US dollar’s (US$) purchasing power has dropped by over 95% (20:1)! Those few people who warn of such abuse, and tout the gold standard as the solution,
are called kooks and dinosaurs by the elite in power, who also call gold a ’barbarous
relic’. This elite includes most ‘economists’
since they are dependent on government funds for their jobs and grants. To promote central banking, the Rockefeller’s started a plan in 1902 called ‘The General Education Board‘
to pay ‘grants’ to professors who would support the concept of central banking and our Fed. Note on page 20 that
Sen. Nelson Aldrich, who headed the commission that designed the Fed structure, was father-in-law of J. D. Rockefeller Jr.
Rockefeller's academic empire included the University of Chicago, which he cofounded in 1890, that is known as home of
the ‘Monetarist School’ which endorses management of monetary system by central banks (see Glossary page 125).
Since the 1930’s (when
Keynes arrived) the academic economics profession has been united on only one topic: the superiority of central banking
to the gold standard. That’s how they get published, tenure, and grants. The politicians like the associated
‘stimulus’ spending as a way to do favors to get votes and campaign donations. Follow the money and hubris! Support
of central banking is basic to the entire university curriculum in modern economics worldwide. Critics of the gold standard point out that its price varies widely.
In his Dec. 3, 2011 report, Gary North (garynorth.com) says: ‘ Excuse me? The gold market
today establishes the price of gold in terms of fiat money systems run by central banks. So, the price of gold as denominated
in fiat money varies. Why?; Mainly because the value of currencies fluctuates wildly.’
is a KEY POINT because this book recommends pricing in weight of gold, which produces stable pricing, and there is no ‘price
of gold’. Lewis Lehrman said it well on page 13 of his book ‘The True
Gold Standard’; ‘The test of what will endure as honest money can only be studied in the empirical laboratory
of human history; mathematical abstractions, drawn from the blackboards of academic economists, will not do.’ The
trouble with these ‘academics’ is that they live in an unaccountable world as to results of their meddling with
fiat money (inflation, bubbles, wars, corruption, etc.). They judge each other not on such results, but whether their analysis
was elegant! They pick-and-choose from results to help make their case. The ‘elegance’ and ‘picking’
applies to most Ph.D. dissertations. Robert Murphy, Ph.D. (http://www.consultingbyrpm.com/), a free-market oriented, honest, economist, offered the following comments in Dec-2009: “In the
past year, the government has seized control of more than half of the nation’s mortgages, it has taken over one of the
world’s biggest insurers, it literally controls major car companies, and it is now telling financial institutions how
much they can pay their top executives. On top of this, the feds are seeking vast new powers over the nation’s energy
markets. For anyone who thinks free markets are generally more effective at coordinating resources and workers, these
incredible assaults on the private sector from the central government surely must translate into a sputtering economy for
years.” Dr. Murphy also mentions the alleged “Texas Summit of March 2005”, that refers to the
“Security and Prosperity Partnership (SPP) of North America,” which many say came out of a meeting
in Waco, Texas between President George W. Bush, Canadian Prime Minister Paul Martin, and Mexican President Vicente Fox.Continuing this topic, on Nov.
13, 2011, Pres. Obama hosted a North American Leaders’ summit in Hawaii with Mexican President Felipe Calderon and Canadian
Prime Minister Stephen Harper. Informed observers
claim that these meetings are a prelude to a North American Union (NAU), comparable to the European Union, and issuance of
a replacement currency, called the ‘Amero’ (comparable to the Euro) for all three nations. If (when?) the US dollar
crashes, this bailout conversion could be falsely presented by our lying leaders as a positive step to strengthen our international
position. A far better plan would be to convert the Euro and USD to the Gold Standard!
It has been a fun party since the Bretton Woods
agreement in 1944 made the USD the official 'world's reserve currency', allowing us to print money to pay our
bills. But our era of financing wars, Empire-USA, foreign aid, imports, and homeland spending with fake money is about to
Below is the text of chapters
4 and 5, Fifth Edition (Feb-2012) of Dave's book 'Monetary Revolution-USA'. Order on Amazon.com (print or Kindle). All rights reserved; David Redick, Author.
Chapter 4: Use of Gold as Money
Why Gold? All
forms of money serve as a ‘medium of exchange’, and ‘unit of account’, which is convenient and flexible
compared to barter. Note that when a valuable commodity (such as gold) is used as money (‘monetization’), the
money is worth as much as the goods or services in the transaction. Two more benefits of using commodity money are to;
1. Limit excess expansion of the money supply (inflation; loss of value) by the government, and 2. Provide a market-based,
and stable, store of value. This system needs no government controls except inspections (which could be by a private org)
to verify mints indeed have the gold reserves they claim to for redeemability. The commodity could be (and has been) wheat,
iron, diamonds, notched sticks, or pearls, but the market (users of money) usually chooses gold because it works best for
the reasons shown in ‘Redick’s First Monetary Rule’ on page 85. Thus, it will be used as the ‘presumed
market choice’ in this book. Silver and copper supplies and costs are more volatile than gold (more new production, are
consumed for industrial use, etc.), so are less attractive, but useable. As
also discussed on page 85, paper ‘money certificates’ and token coins (base metal) can be used as a convenience
(cheap to make, light weight, avoid loss of gold due to wear, etc.) but users of this ‘representative money’ will
insist the money must be marked on its face as to how much gold it represents (weight and fineness) and be redeemable for
that amount on demand by any bearer at the issuing bank or mint. Further, users will insist the bank or
mint must disclose to the public (via lobby poster, mail to depositors, Internet web site, etc.) the weight
and purity of gold it has on hand (physically; no encumbering liens or leases) for redemption, and the amount of ‘representative
money’ currently issued. Without these conditions, and in the absence of legal tender laws, people (the ‘market’)
will not use such representative money, and will seek better money from another mint. Competition will produce good money!
When gold is used as money, it has no ‘price’
in dollars, yen, etc. Weight is the unit of account (such as milligrams). Sellers will set prices in weight of gold. There
will be prices IN gold, but not OF gold! This will take some getting used to as we evolve to pricing in weight of gold. History
shows us that when countries use sound money (such as gold coins, or paper and tokens as receipts for gold) they have
zero or low inflation, zero or minor 'cycles' of economic panic or depression, and more peace, liberty, and prosperity
(smaller governments). For example, the number of grams of gold needed to buy a barrel of oil has been very steady over the
years. Thus, we would expect all countries to use sound money, except the leaders want more money than they can get by just
taxing, especially for wars. They want a way to create money ‘out of thin air’. Fiat paper money (not redeemable
for gold; we call ours ‘Federal Reserve Notes’) serves this purpose. Even when some level of redeemability exists,
governments often 'suspend' it before, during, and after wars (the US did for the Revolutionary, 1812, and Civil wars),
and then must be pushed to restore it (often with less value). The US ended the right for other nations (FDR took
it from mere people in 1933) to redeem paper dollars for gold when Nixon abrogated the Bretton Woods Agreement on
August 15, 1971 due to our serious financial problems such as; a. We were running out of gold; France and others were redeeming
their 'Euro-Dollars' to gold (US$s accumulated in Europe due to our postwar spending and loans there); b. The
US was poor after spending on Vietnam and LBJ's 'Great Society'. Under this pressure, Nixon illegally 'floated'
the US$ (no fixed-price for gold; no fixed exchange rates with foreign currency), and ended redeemability to gold
by any person or government. This meant the US could make dollars out of thin air at will, and did we ever! Do to this
increase in the money supply, the dollar’s value has fallen by 82% since 1971 (5 to 1; per CPI by Bureaus of Labor Statistics),
and over 98% since the Fed started in 1913 (50 to 1); Thus prices are higher. This is a ripoff of most people because their
savings and incomes do not increase as fast as price inflation. As a result, more wives are working, spending and debt replace
saving, and speculative, leveraged, buying of homes and securities increases. Again, the
main purpose using gold as money (‘notes’ and base-metal tokens are not money, but just claim checks, or receipts,
for gold held by the mint who issued them) is to prevent excess expansion of the money supply ('monetary inflation') by
the government or private mints, and thus reduction in purchasing power. Without redeemability for gold, this 'fiat money'
is an unlimited 'piggy-bank' and credit card for the government or mints. History and logic shows the government
cannot be trusted to not abuse money creation.
The excess money has allowed damaging, unconstitutional, corrupting, massive increases in government spending for wars, welfare,
and pork. It has also created the growth in the number of lobbyists seeking favors. Prices started to rise
a few years after 1971 as the effect of excess money and spending trickled to the US economy, and most increased by a factor
of 5 to 8 by 2011. By 1975, all nations worldwide ceased redeemability, even the prudent Swiss floated the Swiss franc (SF)
in 2000, but have been less abusive than others. Hence while 1 US$ = about 4 SF in 1961, it is now about 1 US = 1 SF, so they
only inflated by 2.5 while by 2008 the US inflated by 10; four times more! The US has been the worst abuser among developed nations
(older countries remembered their lessons from past monetary failures). Again, the US has created so much new
'free, fake money' since 1971 that the US$ has lost 80% of its purchasing power since then (this excess
expansion of the money supply is called ‘monetary inflation', like a balloon) with its consequent price increases
(due to loss of the Dollars’ purchasing power) called ‘price inflation’. Check prices of common 'commodity'
items (that are not imported, subsidized, cheaper due to new technology, or under price control), such as a pizza,
a restaurant meal, or even a car. Good examples are: 1. A room at a 'Motel 6' cost $6 in the 1950s but is
now in the $50 range in 2010 (same type of room and service), and 2. A family car cost about $2,000 in the ’60s but
is now about $20,000 in 2010. There is your 8 to 10X loss of US$ value since the late 1940’s (when the post-war big-spending
started)! This goes along with a 98% loss since the Federal Reserve monopoly was created in 1913! The
only reason we can get away with this is because the US$ is the world's primary 'reserve currency' (any person,
firm, or bank will take and keep it as if 'good as gold'), because it is viewed as a share in 'USA, Inc.',
the world's strongest economy, which sadly is fading (faster since 2007) as we continue the long abuse of our economy
(by spending, taxing, and harmful intervention 'management' by the Fed and government) and money (by excess expansion
of the supply). The era of US world dominance is ending, as it does with all empires. History
shows us that the use of 'real money' (made of a commodity with market value such as gold, with its ‘representative’
paper ‘notes’ or base-metal tokens redeemable for gold by bearer, on demand) is fundamental to the long-term success
and survival of a nation. 'Fake Money', paper and base-metal coins created and 'managed' by a central bank
(ours is the Federal Reserve System; ‘the Fed’) is what allows the massive spending and debt for wars and
domestic pork and welfare. The pork and grants have corrupted the ethics of our federal government ('Here's some
pork, vote for me.'), and the citizens, business, universities, and academics, etc. who happily accept it. Congresspersons
brag on their web sites about how much pork they have obtained for their districts or states. This 2-way corruption is a fatal
sign of a failing Empire.
Four Monetary Rules
I offer below, ‘Redick’s Four Monetary Rules’
to describe the requirements for a monetary system using ‘real money’ (money made of a valuable commodity). The
market has historically chosen the commodity based on the 9 characteristics shown below (in Rule 1) which are best satisfied
by a valuable metallic commodity such as gold, silver, or copper. Hence, this book uses them for discussion and examples.
However, private mints could offer any commodity as money, and let the market (money users) decide what they want.
First Rule: Money can be in
any form, but this analysis will discuss coins and paper notes
Coins, which can be of two types; 1. ‘Commodity’, where they are partly or wholly made of a commodity
such as gold or silver. Various coin values would have different amounts. For example, a small, round, gold disc could be
forged into a hole in the center of a coin. This would allow testing to assure its purity and weight. The balance of the coin
would be hard base metal or alloy, with the weight of precious metal the coin contains marked on it, or 2.
‘Representative’ (or ‘Token’), where they are made of base metals such as copper, aluminum, zinc,
nickel, steel, and alloys thereof, and are marked as redeemable to a certain weight and purity of a commodity such as gold
or silver. These are useful for lower values. To achieve broad use, commodity coins must be made of, or contain,
a material that is: 1) Rare, with a low amount in existence now, and limited new supply, 2) Malleable, so can be made
into coins, 3) Stable physically and chemically; doesn't break, rust, or rot (can be stored; lasts through much handling),
4) Easy to identify, and determine purity and amount/weight, 5) Difficult or impossible to counterfeit, 6) Homogeneous
in content (a melted chunk is the same throughout), 7) Divisible into pieces (diamonds and pearls aren’t), 8) High value
per ounce (not bulky to handle or store), and 9) Acceptable to most Sellers (familiar and recognizable). The
‘market’ (users of money) has decided that gold fits these requirements best, but silver and copper can have a
role in parallel, with no fixed ratios set as to value per gram (i.e., no bi-metallic standard). The coins must be valued
and marked by weight of their precious metal content (such as ‘milligrams’), or the amount they can be redeemed
for. It is interesting to note that gold is not ‘consumed’ as other commodities, including silver and copper,
are. Thus except for wear, over 90% of all gold mined in history still exists (even if buried in a tomb).Approximately 160,000 metric tonnes
of gold have been mined in all history. The aggregate un-mined known reserves of all the world's gold mining companies
is approximately 45,000 tonnes. Gold is being mined at about 2,600 tonnes a year, so the above-ground supply is expanding
at 1.6% per annum. A ‘best estimate’ of gold ownership by major nations and consortiums
(all need audit) through Sep-2011 is; 13 nations in Table 3 below, plus the IMF 2,847 (they have sold some), China 1,054 ,
Russia 775, Japan 765, India 615 (up from 550, which included their 200 tonne purchase in Nov-2009), European Community Bank
10.8, and the Eurozone countries 10,793, plus 102 other nations for a total of 30,563 tonnes (data from www.marketoracleco.uk).
For more info, go to www.resourceinvestor.com . If the IMF is dissolved, one would assume its gold would be distributed to
its 186 shareholders, of which the US is by far the largest with 16.79 percent of the votes (Japan is #2 at only 6.02 %).
On this basis, the US could own another 478.3 tonnes.
is always ‘enough’ gold, because if a nation’s economy (GDP) grows faster than its gold supply, their gold
for domestic transactions will APPRECIATE in purchasing power. The same logic applies to the world economy. It is self-adjusting
and needs no government meddling or abuse!
B. Paper: A ‘representative’ note is just a
‘receipt’ or ‘claim check’ for precious metal, and must be; 1) Valued and marked by the weight or
amount of the commodity it represents. No ‘name’, such as ‘dollar’, is needed, and
2) Redeemable for such commodity by the Bearer upon a demand to the Issuer (mint or bank) of the paper at Issuer’s various
premises, with such locations publicized (via Internet web site, sales literature, etc.).
Second Rule: No government laws shall apply to control
the Issuers, foreign or domestic, of coins and paper currency, except to assure full disclosure of percent content of precious
and base metal (hard metals may be included to decrease wear) of issued coins, and ready access for inspection of the amount,
purity, and legal status (owned, not leased, or encumbered) of precious metal on deposit to redeem notes.
Third Rule: Money issued by the
government, if any, shall have no special status, or privilege, over money issued by persons, or privately owned firms. Such
money would be issued by the nation’s Treasury Department, and there would be no ‘central bank’.
Fourth Rule: There will be no
designated ‘world reserve currency’, set by agreement between nations, but such status might exist de facto due
to free market usage. Thus, buyers and sellers will decide which are the ‘preferred’ currencies,
and fake or debased money will be avoided. Examples of former primary world reserve currencies are the French franc, British
pound, and now the US dollar (which is approaching ‘former’ status).
In the US, the above rules would require abolition of the legal
tender laws (as a start), and curtailment or elimination of fractional-reserve banking to ensure adequate gold for redemption
of representative money, and refund of deposits. I recommend that ‘demand deposits’ (checking) have 100% reserves,
and ‘time deposits’ have reserve ratios (40 to 60%?) based on prudence of the bank managers and approval of their
customers (or they will withdraw their funds or sell the stock). Banks would be free of government control (including foreign
bank branches in the U.S., starting a new bank, and multi-state banking), but would be required to publicly disclose their
reserves, loan amounts, and other obligations that affect solvency. State-owned banks offer an interesting step away from
the Fed. North Dakota has had a successful one since 1919, and others states are considering having one (and using gold and
silver coins; check Utah). The goal is to engage in a transition to real money in the US, then promote the
same transition worldwide. This is likely to work, because fake money, or money from issuers with inadequate reserves of gold
for redeemability, will, 1. soon be refused as payment, 2. be discounted (or the Seller will ask a higher price to accept
it), or 3. not be held as savings or investments. This shows the error in Gresham’s Law which states ‘bad money
drives out good’. It does not consider 1, 2 and 3 above, because it only applies where the exchange rate between currencies
is fixed by law, and legal tender laws exist.
Results from the Rules
Some of the results of using these Rules are;
A. Stable Purchasing
Power: Purchasing Power will be stable, or increase, in the long-term (hundreds of years), with; 1) possible minor and gradual
decreases as new gold is mined, or 2) increases (appreciation) if some of the existing supply is taken out of circulation,
or as economic activity grows, causing an increase in demand for the existing supply of gold. The appreciation is a positive
incentive to save, and avoid debt. For example, gold is now (Nov-2011) worth near $1,700 per oz., so it would take about 10
oz. to buy a modest car (with current ‘dollar’ pricing). Maybe after 20 years on the gold standard, it will take
only 6 oz. to buy a car (we hope things are priced in ‘weight of gold’ by then, not ‘dollars’). This
subject is discussed in depth in Nobel Laureate F. A. Hayek's 'Denationalization of Money: The Argument Refined', 1976,
which puts forth the case to; 1) end the government monopoly on money creation, 2) let anyone create money,
and 3) let the free market determine which type of money is used (just as I suggest in ‘Monetary Rules’ above).
The point is to end government politicalization, abuse, and fraud in creation of money. Remember, the plan is to get rid of currency ‘names’, and just label
them as to the weight of gold. The sooner we change, the better.
B. Reduction of Excess Spending, and Its Damage: With real money, people, firms and governments will
not be able to engage in excessive spending very long because they will run out of money. This gives incentive for them to
engage in honest, rational, positive acts such as; spend carefully, save, and plan ahead. As a result there will be; 1) fewer
and smaller wars; 2) no major bubbles in housing, Silicon Valley, or Wall Street; 3) less welfare, pork, subsidies, etc. which
make people, schools and firms dependent on DC money, and attract lobbyist to ‘buy’ legislators so they can get
favors. A nice side-effect is that most lobbyists will go out of business because their will be little or no pork and subsidies
available from DC; also, when the ‘paybacks’ get low, campaign funding will be less, so campaigns will be cheaper,
and more ‘normal’ people will be able to run for office; and 4) no excess imports, and resultant ‘off-shoring’
of US jobs, factories, and professionals, because there will be no unlimited supply of fake money, injected into the economy
by the Fed, to fund these payments to foreign suppliers! Again, this can only be carried to extremes by the issuer of the
world’s primary reserve currency; for now the USA. These limits will be automatic. Some will say, this is a loss of
needed ‘liquidity’ and ‘flexibility’, but I say it is a good brake on unfettered (dare I use the Liberal’s
The result is a positive incentive to save, and avoid debt, due
to APPRECIATION of purchasing power of the money, a concept that people today have never seen because all nations use fiat
money. Econ 101 tells us that a commodity (such as gold) in limited supply, and with increasing demand
for it (growth of the economy), will APPRECIATE in value. This has huge importance because it kills the ‘not enough
gold’ argument!! Appreciation of value is
ignored by most economists and b. suppressed, or unknown to, all politicians (they love paying debts and avoiding taxation
by expanding the money supply with fake money -- monetary inflation – and paying debts with low value money). Notice
that part ‘B-4)’ above solves the problem of excess imports causing loss of jobs due to off-shoring of factories.
With the finite supply of real money, US importers will find themselves, and their banks, getting short of money, and import
less. Demand will increase for domestic producers, and the money will stay in the same country. Free trade is good, unless
importing is taken to extremes by the use of fake money. Note again, this can only happen if the fake money is also the world’s
reserve currency (until demoted!). Poor citizens in third-world countries who have little ‘real money’ to buy
imports, will have incentive to work hard, innovate, and earn gold from exports. Many articles have been written about causes and cures of the
current economic crash since it started in late 2007. Politicians want various versions of ‘stimulus’ (more spending)
to fix a problem caused by too much money in the economy. This will make things worse after a few months of fun spending.
What they should do is cut taxes, end wars and empire, end all subsidies, end the Dept. of Education, Homeland Security, Commerce,
Agriculture, and others, and take broad measures to reduce government spending. Free-market capitalism will rise from the
ashes, and produce honest, sustainable, jobs, peace, and prosperity. Pres. Obama, N. Klein, R. Reich, P. Krugman, and others
whine that ‘capitalism was tried and failed’. What a joke! The US economy has had a declining percent of capitalism
since fake money was started in 1913, and the above positive benefits of capitalism have fallen even faster since the end
of partial-gold backing of our money in 1971. It is Socialism that has harmed us most since 1913. I don’t underestimate the difficulty of, and opposition
to, a transition to gold as money. Some will say we should set less ambitious goals, but I say these lesser goals are just
steps along the way and we must never stop striving for the ultimate goal of eradicating the government from our monetary
system. Maybe if we hit bottom hard enough (2015, 2020?) in the current depression people
and the government will start to listen to us ‘real money’ folks, and go for the gold. Rep.
Ron Paul has been a leader for many years in the fight for ‘sound money’ and compliance with the Constitution
as to reduced spending and intervention at home and abroad. Former U.S. Sen. Chuck Hagel issued warnings in 2004 and 2005
about impending trouble at the GSEs, but was ignored. Bravo to these leaders, plus P. C. Roberts Ph. D., and others shown
on the list of recommended authors starting on page 111. Because the Fed gives it an unlimited supply of funding, the
U.S. Federal government has become an arrogant master that dominates and abuses its citizens, the U.S. States, and other countries
(by jerking the purse strings), while providing big incomes and privileges to those people and firms that have ready access
to it. Our national disease is that it is deemed ‘normal’ to have the government supply whatever is ‘nice’,
‘good’, ‘needed’, or ‘wanted’, and most people want/expect ‘somebody else’
to pay for it (‘the rich’). This parasitic mode of living is immoral and unsustainable, and
reveals the classic signs of decadence in a failing empire. Fighting
the system is hard, but I predict Ghandhi's aphorism will prevail: "First they ignore you, then they ridicule you,
then they fight you, then you win."
A Five-Step Plan to Convert to Gold Money
This plan, first published in Jan-2010, has my original ideas, but builds on the
work and concepts from Founder Charles H. Carroll (1794–1865,
U.S. Congressman for New York); F. A. Hayek (1899-1992);
Dr. Antal Fekete (1932-), www.professorfekete.com; Prof.
J.Salerno (1950-) in his Sep-1982 Policy Analysis No. 16 ‘The Gold Standard: An Analysis of Some Recent Proposals’
for Cato Institute (www.Cato.org); Murray Rothbard (1926-1995) in his 1991 book ‘The Case for a 100% Gold Dollar’;
U.S. Rep. Ron Paul M.D (1935- ), and his many House Resolutions, speeches, books, and essays; Lewis Lehrman’s work since
he co-chaired Reagan’s ‘Gold Commission’ with Rep. Paul in 1981, his Aug-2011 book ‘The True Gold
Standard’, and his site www.TheGoldStandardNow.org. Author Doug Casey has been a strong promoter of gold as money (caseyresearch.com; see page 116). There are many more supporters
of gold-as-money, so please forgive the omissions. My plan ends the government and Fed monopoly on control and issuance of
money, and makes ‘weight of gold’ the unit of account. Read on for more details on how to implement the transition
to gold, and the benefits to expect. There have been three ‘mainstream’ (recognized by
academics and the government) types of gold standards in the past; 1.
Gold Specie, 2. Gold Exchange, and 3. Gold Bullion. See the Glossary on page 129 for details. I
now re-introduce number 4. the ‘Private Gold Standard’. I say ‘re-introduce’ because the ‘mainstream’
academics and the government folks have ignored or ridiculed past essays on the topic. Maybe this is because the bureaucrats’
jobs and social life depend on being ‘mainstream’. Pathetic! Several versions are discussed in Salerno’s
1982 ‘Cato Analysis 16’ shown above, and a similar approach in the Paul-Lehrman report, ‘Case for Gold’,
1982. My version is based on ‘Redick’s Four Monetary Rules’ shown on page 85, and implemented by the Six-Step Plan shown below. While
other private gold standards include ‘parallel government
currency’ and other remnants of the monopoly and Fed system, my version has zero control by the government, the Fed,
and banks. Notice that under this plan money is produced by private firms in the free market where customers (users of money)
decide which source and type of money is best, and mints compete for customers by supplying a good product. There is no Fed,
and government mints (run by the Treasury), if any, are optional, and have no control or privilege over the private mints.
The free market is allowed to work!
The Five-Step Plan:
1. Repeal: a. All legal tender laws so private firms (mints) can issue new money, b. Laws that tax increase in market value
(then to be known as ‘purchasing power’) of precious-metal coins (formerly considered numismatic), and c. Any
other laws that prevent, inhibit, or tax the new money. The only government role would be to prevent fraud, and to verify
by physical inspection that reserves are as advertised (but with no reserve ‘requirements’). Again, I recommend
that ‘demand deposits’ (checking) have 100% reserves, and ‘time deposits’ have reserve ratios based
on prudence of bankers and approval of their customers (or they will withdraw their funds or sell the stock). The Federal
Reserve will be abolished five years after private money becomes legal (or if Congress refuses abolishment, let it atrophy
to death from lack of customers and income).
2. Private mints may be created, with government licensing optional. Banks could also provide mint services. The mints
would introduce new gold money labeled by law as to the weight of gold a coin contains, or that tokens or paper certificates
represent (thus ‘weight’ is the unit of account). Some might offer ‘Digital Gold Currency’ (see goldmoney.com).
All mints would be required by law to; 1. Publicize the weight and purity of gold they have as a reserve for redeeming paper
or digital money, and the value of money issued, 2. Allow unscheduled physical inspections to confirm that the gold is in
their possession, and free of encumbrances such as liens, leases, etc. The same would apply to base-metal coins. The ‘unscheduled’
requirement will prevent relocating the same gold to be put on display at different mints, or their branches, ‘just
in time’ for an inspection! The results of these inspections would be published by the mint’s Internet web site,
newspaper, poster in the mint, etc., and available from a government web site. The inspections would be justified as a routine
function of the government to prevent fraud, but could be done by a private org. Mints with strong reserves will advertise
their strength to attract customers. Customers will ‘wake up’ and pay attention to reserve status, etc., rather
than assuming the government is protecting them with regulations. The free market at work!
Step 3. Require
the Federal Reserve banks, the U.S. Treasury (Ft. Knox), the Exchange Stabilization Fund, and any other
part of the United States government that has gold, to promptly submit to a private audit of the amount and purity of gold
they own and its title status (leased?, loaned?), reveal the results to the public, and then give it all to a ‘Redeem
Trust’ owned by the U.S. Treasury, to be used to redeem existing coin or paper currency, ‘digital deposits’,
and bonds (such as M3, see page 41) on demand, based on a certain weight per Dollar, in accordance with the plan below. The
Fed would not be involved in such conversions. Some may argue that the Fed is a private firm and owns the
gold it has, but this ignores the fact that it got it from the US citizens illegally in the first place by issuing fake Fed
Notes, and perhaps some from FDR’s confiscation of gold in 1933 (see page 44). If the Fed manages to win a court fight
on this point, the Treasury could buy it with US bonds. The U.S. government claims to have 8,134 metric tonnes of gold
in its reserves (an audit is needed). At 32,150 troy oz. per metric tonne, the US has 260.415 million troy ounces. Others
say the US currently holds 261.5 mill. troy ounces, or 265 mill., but these figures are all close enough for this analysis. There is also a question
as to the purity (fineness) of the US gold (debased or fake bars in storage, or gone on lease or loaned?). Only a proper audit
will tell. Private sources put M3 (see definition on page 41) at about $14 trillion worldwide
in Oct-2011. If 100% of the M3 Fed Note dollars and bonds were made redeemable with our 260.415 million troy ounces of gold
there would be 0.0000186 oz. per dollar (about 2 ‘100 thousandths’). This means 53,763 ‘backed’ Fed
Note dollars would be redeemable for one troy ounce of gold. This implies a 97% drop in the dollar's current
value versus today's about $1,600 per oz.; a ‘gold value’ ratio of about 34:1. The dreaded day of reckoning!
But this issue fades as all nations convert to gold money (they must or no sellers will take their trash fiat 'money'
once the US dollar is redeemable) and there is no ‘price’ for gold, just its weight. It
remains to be learned just how many ‘Fed Note’ dollars there are, and how much gold we have. On Aug. 25, 2010,
Rep. Ron Paul (R-TX) explained why we need to audit and inspect U.S. gold reserves in the Ft. Knox and the New York Fed vaults, and whether some has been secretly removed, leased, loaned, or some
bars replaced by gold-plated base metal Once the legal tender laws are repealed;a. No additional units (physical or electronic, including new credit) of the old
‘Fed Note’ money will be issued. The free market will provide new money as needed; if the Fed isn’t required
to stop creating new money at first – due to politics, etc.- the new private money should proceed in parallel; let the
best money win!, b. Holders
of old ‘Fed Note’ physical money would be required to convert it to new private money within three years of private
money becoming legal, c. The
government must accept payments by ‘new private money’ if the issuing firm’s reserves are at least forty
percent, and have been verified to the public and government, and d.
The Federal Treasury Dept. and State governments can issue new gold money, but it would have no privileges over private issues.
Step 4. To implement the new monetary system, I propose that Congress
create the ‘Currency Act of 2012’ and: a)
Incorporate the ideas and requirements in ‘Redick’s Four Monetary Rules’ and this ‘Six Step Plan’,
b) Set the weight and fineness of gold that each
existing Fed Note (physical, bond, or digital) will represent. This will involve debate as to % reserves and how many USD
- M1, M3? - are covered, and the effective date. I suggest 100% of M3 and activation of the new system within 3 to 6 mo. after
the Act is passed. Reserves of 40% or 60% might be enough (to avoid redemption ‘runs’ that would destroy the new
system), but it is better to be on the safe side. c)
Require that new money issued by the U.S. Treasury (no Fed issues) be labeled only by weight and purity of gold (no ‘name’
or religious content) and made available on the day the new system is effective. All government transactions (fees, payments,
taxes, Soc. Sec., bond principal, etc.) would be denominated by weight of gold. This will encourage public use of gold weight
as the unit of account for pricing.d) Include lessons
from how other nations changed money,e) Publicize
the discussions leading to the definition of the Act so US citizens and firms, and other nations, are aware and can submit
their ideas and make their conversion plans. I oppose multi-nation planning conferences; they would just cause delays and
dilution of terms.f) The Act should include a requirement
to use a certain factor (about equal to the ratio of gold price between the new and old systems; ‘34’ per Step
3 above) to adjust values in existing agreements (bonds, wages, loans, mortgages, pensions, insurance, etc.), and set new
values by weight of gold. Using lower reserves would reduce this factor but increase risk of a ‘redemption run’.
Pricing for new transactions or agreements would be set in the free market, and using ‘weight of gold’ as pricing
would be encouraged.
5: Abolish Harmful or Useless Organizations
A. Domestic: Abolish the unconstitutional GSEs such as Fannie,
Freddie, Ginnie, and Sallie Mae, FHA, Pension Benefit Guaranty Corp (PBGC), FDIC, all TARP-Like projects, the Exchange Stabilization
Fund (ESF), the Export-Import Bank, etc., etc. All of these are part of the government’s counter-productive
intervention in, and manipulation of, money, private business, and banking. While at it, end all unconstitutional departments
International: Terminate US membership in the IMF (and get our gold back), World Bank, CBGA, BIS, G-20, G-8, NATO, United
Nations, and others. Free trade and embassies are adequate for contact with other nations.
Once launched, in my
above version of the Private Gold Standard, gold value is self-controlled by supply and demand, with no
‘parities’ to maintain. Gold and money ‘values’ are the same (gold IS money, and there is no ‘price’
for gold), and no ‘management’ is needed. Good!
A Review of Other
above ‘Five-Step Plan’ is unique because it cuts all mandatory ties to government (mint licenses are optional,
no legal tender laws), abolishes the central bank, converts all existing money and bonds (M3) to ‘gold backed’
as a transition, and uses ‘weight of gold’ as the unit of account for all ‘new’ money. It offers more
detail than any plan I am aware of. I hope somewhere Mises, Rothbard, and Hayek are smiling. Rep.
Ron Paul M.D. gives a general description of his free-market monetary system on pages 203 to 207 in his 2009 book ‘End
the Fed’. Key issues are; 1. End legal tender laws and allow private mints, 2. All money redeemable in gold, and 3.
Termination of the Fed (of course!). He discusses how purchasing power of the gold money (when in fixed supply) rises as GDP
grows (more demand for money). This is the Appreciation effect presented in this book on pages 87, 89, 90, 91, 100, and 108,
which shows there is always ‘enough’ gold! On November 9, 2010, Dr. Richard Ebeling, Professor of Economics
at Northwood University (Northwood.edu), posted the article ‘A Return to the Gold Standard?’ in the Daily Bell
(dailybell.com) which touts a free-market system. See more on the Ebeling plan on pages 26 and 115. In
an article on May 18, 2011, Robert Wenzel (economicpolicyjournal.com) wrote: ‘…The current supply of gold owned by the United Sates should be divided by the number of dollars (Some version of M1)
and made fully redeemable to those holders.’ Thanks Bob! Lewis Lehrman’s book ‘The True Gold Standard’
of Aug-2011 (TheGoldStandardNow.org, or LehrmanInstitute.org), proposes conversion of the USD to gold, then gold settlements
with all world currencies, so no formal reserve currency is needed. Unfortunately, he retains legal tender laws and the Fed
(or an equivalent). In his Nov-2011 speech at the ‘Cato Monetary Conference’ (Cato.org)
in D.C., Prof. L. White, Ph.D (economics.gmu.edu) proposed that since our banks are only required to have 20% (usually) reserves
to back deposits, we only need to have gold reserves to redeem 20 percent of M1. I support his plan to make gold weight the
‘unit of account’, but I prefer use of M3 (see Step 4-b above), and fear that such low reserves would Increase
the possibility of a ‘run’ by dollar and bond holders to redeem for gold before the U.S. Treasury gets low and
cancels redemption, as FDR in 1933, and Nixon in 1971.On
Jan. 17, 2012, presidential candidate Newt Gingrich said in a speech; “…We need
to get our house in order. …Part of our approach ought to be to reestablish something Ronald Reagan did in 1981 and
that is to have a Commission on Gold to look at the whole concept of how do we get back to hard money.” This puts the gold standard ‘on the table’ as a topic for mainstream
discussion!Nathan Lewis (see page 117) wants
use of gold, but spoils it with ‘a system to adjust the supply of base money’ to keep a parity with the currency
and gold ‘values’. This is doomed to abuse and error! He likes ‘modest’ gold reserves, which I fear
(again) could lead to ‘redemption runs’. Others suggest a parallel gold currency with a slow, market-based,
replacement of Fed Notes. In her book ‘Fixing the Dollar Now’, Judy Shelton Ph.D. (SoundMoneyProject.org)
suggests a ‘Treasury Trust Bond’, redeemable in Fed Notes or gold, to allow people to ‘get comfortable’
using gold. I fear these ‘open-ended’ parallel plans would give politicians too much time to ruin the process.
leave the above issues up to the debate during creation of the ‘Currency Act of 2012’.
How Gold Reserves Will Affect Conversion
The gold ‘per
currency unit’ shown in Table 2 below, and ‘per person’ in Table 3, will have an impact when a nation converts
to gold as money. Will the gold leaders ‘feel rich’, ‘live high’, and buy assets abroad from owners
that need gold? For sure, the low-end nations will have new incentive to be productive and get gold by exports, or sale of
2 below shows how nations rank in the amount of gold they have to ‘back’ their existing currencies during transition
to gold as money. Data in Table 2 are for Sep.1, 2011. The gold is central bank holdings. Credits
to marketoracle.co.uk and dollardaze.org with M1 data for each country converted to US Dollars (USD) to ease comparisons.
Russian M1 is an estimate.
Table 2: National Gold Reserves vs $M1
Gold|| M1|| Gold/M1|
| (tonnes)|| (bn USD)||(tonnes/bn)|
owners of gold will enjoy a one-time increase in value (purchasing power) when the conversion occurs. The situation will be
dynamic, with many unpredictable market and government variables, including: a) How much gold the US will own once an audit
is done, and b) What M3 and the price of gold will be by the time the Act is approved. Depending on how soon other countries convert to gold, there
may be a rush of foreign buyers using their ‘now more valuable’ gold to acquire bargains in the US. To avoid losses,
US sellers will increase prices as appropriate, per Step 4, item f), above. The free market will adjust as needed.
way to show the gold ownership of a nation is by ‘ounces per person’, as in Table 3, where ‘person’
equals citizens plus permanent residents (not ‘illegals’
Table 3: Gold Reserves per Person
|(metric tonnes)||($1,450 oz)||(troy ounce)|
The data in Table 3 are from a chart in the Apr-2011 issue of Economist magazine (Economist.com) which showed the dollar
value of gold reserves (at April’s average of $1,450 US$/ounce) that 13 leading nations owned per person. As a check,
the USA number of $1,200 $/person correlates with a population of 310 million. Fortunately,
the amount of gold per dollar or person is not crucial. When we start a new system of pricing by weight of gold, the market
will adjust, and we will grow from there. The same applies to all nations that also convert, and they all will, or Sellers
won’t accept their fake money! Central banks have acquired more gold in recent years. They
often scoff at the need for gold as a ‘barbarous relic’ but in fact fear it because a rising gold price means
the currency value is dropping.
Table 4 is a sample of five nations, and total world holdings for all central
Table 4: World
Central Bank Gold Reserves
Source: World Gold Council, Research Study 23
| || || || || || || |
Notes on Table 4:
1. USA had losses after 1944 when nations
converted Fed Notes to gold,
2. The UK sold about 395 tonnes from July 1999 to March 2002,
at an average price of about US$275 per ounce,
3. Canada went from 1,083 tonnes
in 1985 to 3.4 in 2011,
4. China and India, both persons and government, have been 52% of world buying
since 2010. China’s total for 3rd quarter 2011 was about 146 metric tonnes, compared
to 120 for all of 2010!,
Central Banks have been net buyers since Jan-2010.
central banks engage in buying and selling to ‘stabilize’ the gold price (see US ‘ESF’ on page 44)
to suit political goals. They scoff at gold, but show they believe it has fundamental market value since they keep it in their
reserves (if they can afford to).
Nations that have low amounts of gold in
their central bank reserves, usually hold USD cash or securities that they can use ‘as if gold’ after the US converts.
For example, China only holds only 1.7% of its FOREX reserves in gold (most are in USD securities and US cash), Japan 3%,
Russia 6.7%, Saudi Arabia 3%, India 8.1, Taiwan 4.6%, and Canada 0.2%, while the US has 74.7% in gold, Germany 71.7%, and
Switzerland 16.4%. The
new value of currencies and bonds in weight of gold, after the issuing nations convert and assure redeemability, will add
to a nation’s public and private gold assets.
Of the 160,000 tonnes of gold mined in
history, the world allocation is about 52% for jewelry (83.2 tonnes), 19% central banks (30,400 tonnes), 16% investment bars,
and coins (25.6 tonnes), 12% industry (19.2 tonnes), and 2% not accounted for. About 50,000 tonnes is estimated yet unmined. As
the world moves to gold-as-money, names like ‘Dollars’ can be eliminated and ‘weight’ will rule as
the unit of account! Since the U.S. has trillions of fiat 'dollars' in circulation worldwide, the market value of
a US$ for conversion (trade-in) purposes will be a small fraction of an ounce, as shown in ‘Step 3’ on page 95.
This implies that a minimum dollar amount may be required for an owner to redeem representative money for physical gold, since
the tiny physical size of gold per dollar would be a problem in handling and measuring. If it were not a secret as to how
much gold the government has at Fort Knox, The IMF, and in Federal Reserve facilities, a better estimate could be made. Conversion
of fiat money to gold money needs planning to avoid panic and uncertainty among current owners of fake money. Thus my Six-Step
plan allows the Federal Reserve Notes to be redeemable for gold right away (but no new ones created), and used for up to three
years before they must be ‘turned-in’ for new notes or coins from any mint. Since the existing Fed Notes will
immediately represent gold, there will be no panic among Fed Note owners to get rid of their Notes. Once
the new gold money is introduced, I predict all nations will soon follow in converting to their own gold money as their fake
money is refused as payment by Sellers and Lenders. In this case, good money drives out bad; the reverse of Gresham’s
Law. This would end the justification by governments for money-control schemes that central banks, the IMF, and
the BIS pursue worldwide.
Key changes to expect, all based on free market reality, not laws or G-20 agreements:
1. The concept of a 'reserve currency' would no longer
be needed because any gold-based money would be accepted in world trade, or for bank reserves,
2. When most nations convert to gold money, the concept of a ‘price’
for gold will vanish. The reverse will occur, as coins or notes are ‘valued’ in the weight of gold they contain
or represent, and Sellers advertise ‘prices’ in grams (milli, micro?) or ounces of gold,
3. The foreign exchange business (Forex) with banks will wither and die as it becomes
useless, as will government manipulation such as the U.S. ‘ESF’ (see page 44).
4. People like to give ‘names’ to money (Dollar, Franc, etc.), but these
would be social terms and would not need to appear on the money (but weight of gold would), unless the minter chooses to do
so. Weight of gold will be the unit of account.
Nations will convert to gold money on their own terms, as and when needed. There will be no need for grand conferences (G20,
G100?) to set rules, although some ‘Agreements’ may occur, and then whither when the ‘rules’ become
onerous and counterproductive.
6. There will
be no ‘weak’ or ‘strong’ currencies or ‘pegs’, all of which were part of the manipulations
in the past. Gold will be the great equalizer and honest broker. The games will be over (and most of the wars).
7. In the present system of constant inflation, borrowers have
the advantage of repaying loans with depreciated (less value) money, but with gold as money (by weight) its value may increase
during the term of the loan, thus giving the lender an advantage of being paid in a weight that is more valuable. I predict
that loan terms will be developed to adjust for this, because both borrowers and lenders will demand it. The likelihood of
appreciation will also be a positive incentive to save more, and borrow less.
Patrick Barron, an Adjunct Instructor in
Austrian Economics at the University of Iowa (patrickbarron.blogspot.com), said it well in his May 16, 2009 essay ‘The
World Does Not Need a Reserve Currency’:“Each
country should set its own ratio of local currency to gold and settle all trades in the actual commodity. Then no country—not
the U.S., not the European Community, not China, nor Japan—will be able to inflate its currency without destroying its
ability to import goods. It will run out of gold for settlement purposes and be forced to deflate. No special governmental
agreements are needed. Gold would settle just as checks settle today—by debiting and crediting each nation’s gold
accounts wherever they may be. Just as no business can operate with zero money—it is forced to economize—no nation
would be able to import continuously by papering the world with its currency, as the U.S. does today. As the profligate nation’s
gold reserves dwindled, its ability to import would dry up; prices would drop, making its goods a bargain for export; its
gold reserves would start to climb and all would be well.”This ties-in with my ‘5. Fewer Jobs
‘Off-Shored’ statement on page 113. As painful as the transition to ‘gold as money’
may be for some people and nations, it is better than the hyperinflation (with money values approaching zero) that is otherwise
99% likely to occur under our present worldwide fiat money, and central banking system.
Chapter 5: The New Gold Money
of Introducing Gold
Some will say that this plan for new money is too simplistic, and will not work
in today’s complex world. I say they are wrong, because most of the complexity is created by government manipulation
of their fake money, and those problems will end when fake money ends. Most (over 95%) of today’s politicians and economists
have bought the idea that; 1. the government must run the ‘economy’ and monetary system, 2. all financial activities
must be tightly regulated to avoid abuse, and 3. there must be a central bank. Of course they are biased, because they want
the jobs, grants, and perquisites that come with this approach, and have been so brainwashed in college and work that they
truly can’t imagine another way, and they are WRONG! The
new era will depend more on incentive than regulation Gold money in a free market is self-regulating. The heroin-upper effect
of loose money will be gone (see Heroin Analogy on page 38). People operate differently when using limited funds, and without
the perverse incentive of a bailout. A fake and excess supply of money creates a pot of honey that breeds irresponsibility
and bad ethics as people scramble to get more of it. Gold money puts a damper on this frenzy because governments can’t
create it out of thin-air, short of reducing reserves for paper ‘representative’ money, which has its limits too. What
will other nations do? The people, merchants, and governments will prefer the new gold money, and it will prompt conversions
to gold in other nations since their fake money will soon be rejected as payment by sellers and lenders worldwide. Thus,
I see no long-term ‘downside’ to the future with gold as money. Of course there will be hardships during the conversion,
but the alternative of a hyperinflation depression is worse. Gold money will bring a promising future, while propping-up the
old system just brings more losses and war.
Bullion Coins and Private
As a partial step toward using precious metal coins again, the 1933 law that prohibited
private ownership of gold coins and bullion (numismatic coins and jewelry were allowed) was repealed in 1975. Since then the
US Mint (http://www.usmint.gov/) has issued a variety of gold, silver, and platinum bullion coins. As shown below, their face
values are far below their market value, and thus, though they are legal tender, are not used in commerce (somewhere
a bureaucrat is laughing!). They are sold at ‘spot price’ for the metal content, plus fees for production and
profit. However, one businessman paid his employees with $5 gold Eagles (see Table 5 below) and they filed their income taxes
based on the low face value. The IRS sued but gave up due to a hung jury. The judge said; ‘You can’t have it both
ways!’ Many other nations offer bullion coins. Although some bullion coins are legal tender, due to low face values
they are all viewed as investments, and are not used as money. A bonus is that they posture the owners to use them promptly
if Congress ever repeals the legal tender laws (see Rep. Ron Paul’s HR-4248), and allows use of private mints and coins.
They could also come into use if we have a chaotic economic crash and people start using gold, and other commodities, as money.
Many US dealers sell the bullion, medallions, numismatic coins, and bars issued by various countries and private mints.
For your convenience (not as a recommendation), examples are: 1. Precious Metal Dealers; InvestmentRarities.com,
europacmetals.net, caminocompany.com, monex.com, JimsCoins.net, opencurrency.com,
and blanchardonline.com , and 2.
Private Mints; nwtmint.com, CoinsForAnything.com, and medalcraft.com. Use an Internet search engine (Google, etc.)
to find more. Many private ‘mints’ make precious metal medallions as commemorative pieces for private use (jewelry,
keepsakes, etc.). The mints have die-makers (craftsmen) and presses so can quickly design and produce new pieces with any
of the most popular government-issued gold coins are shown in Table 5. There are many silver and other metal bullion coins,
and bars, in various sizes; from 1 gram to 1 kilo. Most dealers still have paper ‘silver certificate’ US money,
made mostly in $1, $2, and $5 denominations (some to $1,000) from 1878 to 1964 (then Fed Notes), that sell as collectibles
for $2 to $50 depending on age and condition. The
certificates were redeemable in the same face value of silver dollar coins, and later in raw silver bullion, but this ended in 1968.
Table 5: Bullion Coins Country ; Name ; Metal; Sizes (troy oz.);
Face Values ($)
USA ; Eagle; 0.9167 Gold ; 1,1/2, 1/4, 1/10; $50, 25, 10,
5 USA ; Silver Eagle; 0.9999 Silver;
1 ; $1
Mapleleaf; 0.9999 Gold; 1,1/2, 1/4, 1/10; C$20,10,5,1
Africa; Krugerrand ; 0.9167 Gold; 1, 1/2, 1/4, 1/10; no FV
R. China ; Panda ; 0.9999 Gold ; 1, 1/2, 1/4, 1/10 ; no FV
carat = 0.9999 pure gold 22 carat = 0.9167 pure)
In addition to survival gear (fire starter, water purifier,
solar-powered radio, etc.), a prudent person will own an ample supply of small bullion coins (1/4 and 1/10 oz), or old legal
tender coins (pre-1965 US quarters and dimes, Morgan dollars, etc.) with 0.72 oz silver content, for use as money if it becomes
legal to trade at the bullion value. If gold soars to $10,000 or $50,000 per ounce after the crash, these will be useable
sizes with strong purchasing power, but even lower value coins will be needed.
Benefits of a Gold-Money World
In summary, we can expect the following
benefits when the new gold money becomes legal:
More Peace: Wars are very expensive. The absence of an unlimited supply of fake money will inhibit the starting of wars; Diplomacy
will be used instead. Imperialistic aggressors will have trouble getting funded.
2. More Prosperity: Gold money will increase in purchasing power if percent economic growth exceeds the percent
addition of newly mined gold. Savings will be rewarded, and more money (purchasing power) will be available for investments.
Managers can plan better with stable currency.
3. Less Government: Governments need money to grow.Taxation
has its limits, and in the absence of the unlimited supply of fake money, government programs, staffing, and spending will
be limited. There will be less intervention in, and control of, our lives and work. More Liberty, Peace, and Prosperity will
be the dividends.
and Smaller Business Cycles and Depressions: The ‘highs’ of major business cycles are caused by bad investments
due to excess availability of money (credit and currency); too many new dollars chasing a limited number of deals, many of
which are high risk. The incentive is to ‘do something’ with the excess money. When the pool of money is reduced
(Fed cutbacks) the frenzy drops like a rock. With a limited supply of real gold money, any frenzies would soon run out of
money to feed them, and the cycles would be small or none.
5. Fewer Jobs ‘Off-Shored’: Due major increase in US wage and benefit costs after WW2, starting
in the ‘80s, factories were built in other nations where costs are lower (first Mexico, then China, India, etc.) and
the jobs moved out of the US! The same applies to software since the ‘90s. In addition, there is no limit to how much
a country can import when it issues the world’s reserve currency and can make it out of thin air. That’s why our
imports have soared since 1971 (when Nixon ended the dollar’s tie to gold), and many of our factories have shut down.
With gold as money, the importers run out of money, and local producers get the business. This is one of the self-regulating
aspects of gold.
Sovereign Defaults and No Currency Devaluations: In the past, many nations have defaulted (stopped payments) on some or all
of their debt when they became overburdened, and then devalued (reduced face value) their currency to increase exports (lower
prices). This robs lenders, and holders of the currency, but lets the nation enjoy a ‘fresh-start’, hopefully
with reduced government spending and fewer anti-business laws. Argentina in 2002 is a recent example. When gold is money,
the devalue option ends, which should give politicians and citizens incentive to keep their laws and economy more competitive.
This new attitude will also reduce the excessive spending that leads to defaults.
We can enjoy these benefits,
and avoid a crash of our economy, currency and lifestyle if we implement this plan for gold money. If we crash, meaning severe
reduction in economic activity (depression), and 50% to 90% loss of purchasing power of the US dollar, we will need to rebuild
from the ‘ashes’. This can be viewed as an opportunity for the people to spontaneously start using gold as money.
They will see its benefits, and demand to keep it! The laws can follow. Politicians will be desperate to keep their jobs so
will cooperate to pass and repeal laws as needed; otherwise they will be fired and replaced. It will require something like the above ‘crash’
circumstances, and a people-led Monetary Revolution, to take back our government from the self-serving career politicians,
empire-building warmongers (neocons), and banksters. Will you help? A key purpose of this book
is to build support for the conversion to gold, and be ready to act when the right time comes to push changes through Congress.
In the meantime, we should be working to elect like-minded people to Congress, and educating those already there.
me at Dave@Forward-USA.org and see the text of this book at parts 1 and 2 in the left margin of my site www.Forward-USA.org, or on Amazon.com.
Thanks for your interest and support, Dave
*************** END ***************
Recommended Authors, Books, and Sources: Index: A. Authors, B. Books,
C. Organizations, D. Internet Sites
A. Info on Key Authors Noted in this Book. (alpha order) 1. Donlan.
Thomas G.: He joined Barron's
as a reporter 1979, and became its editorial page editor in 1992 (Barrons.com). His
books are; "Supertech," 1991,
"Don't Count On It," 1994,
and "A World of Wealth: How Capitalism Turns
Profit into Progress," in 2008. These books present his case on a range of topics. In his columns,
he writes about the power of capitalism and how free markets and free-enterprise offer the best solutions to create more liberty,
peace, prosperity, justice, and morality in a nation or society.
2. Ebeling, Richard, Ph.D., (1950- ): He received his B.A. degree in economics from California State University, Sacramento, his M.A. degree in economics from Rutgers University, and a Ph.D. in economics from Middlesex University in London, UK. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008, and has written and edited numerous books and articles, including the three-volume Selected
Writings of Ludwig von Mises (Liberty Fund), recovered from Russia. His most recent works are Political Economy,
Public Policy, and Monetary Economics: Ludwig von Mises and the Austrian Tradition, (2010), and Austrian Economics
and the Political Economy of Freedom, (2003).
3. Edwards, Michael:
After graduating from Rutgers University, Michael Edwards began his career as a technical writer and editor operating freelance
for trade magazines and books in a variety of areas. In early 2010, Michael founded Activist Post.com, a blog where his own
writings appear, along with co-founder, Eric Blair, as well as many contributors. They post new articles daily on a broad
range of issues which challenge the diluted, biased, and often false info the political ‘establishment’ and Main
Stream Media offer. 4.
Fekete, Antal, Ph.D.: He
is an esteemed author, mathematician, monetary scientist and educator. He is a proponent of the gold standard and a
critic of the current monetary system. Go to the Home page of www.professorfekete.com to see ‘Remobilize
Gold to Save the World Economy’, and other writings. Also see his ‘Proposed Parallel Gold-Coin Standard
to the Federal Reserve System’ at http://www.afr.org/antal.html .
5. Hagel, Chuck: A former US Senator (R-NE), he wrote 'America: The Next Chapter: Tough Questions
and Straight Answers', in
March-2008, which is a collection of practical-and nonpartisan-policy prescriptions on issues as diverse as healthcare and
the Middle East. He is now Chairman of the ‘Atlantic Council’ (acus.org), a college professor, and serves on several
6. Hayek, Frederick A., Ph.D.: Nobel Laureate. See; 'Denationalization
of Money: The Argument Refined', 1976, which puts forth the case to; 1) end the government monopoly on money
creation, 2) let anyone create money, and 3) let the free market determine which type of money is used.
7. Lehrman, Lewis: An ardent promoter of the benefits of the
gold standard for over thirty years, he co-chaired Reagan’s ‘U.S. Gold Commission’ with Dr. Ron Paul in 1981, and co-authored their
Minority Report, ‘The
Case for Gold’ in 1982. His new book ‘The True Gold Standard’ (Aug-2011, published by LehrmanInstitute.org)
is his latest effort.
8. McKinley, Vern: His book, ‘Financing Failure: A Century of Bailouts’, Jan-2012,
shows how government meddling and fraud caused the US financial crisis in 2008. He is a Research Fellow at www.Independent.org .
Miller, Donald W., Jr., M.D.: He is
a cardiac surgeon and Professor of Surgery at the University of Washington in Seattle, and writes
on politics, health and medicine. For a start, see his excellent ‘A Fourteen Point Plan for a Post-Wilsonian America‘
at http://www.lewrockwell.com/orig2/miller2.html, and his archives at www.lewrockwell.com. His web site is www.donaldmiller.com.
Mises S.J.D., Ludwig von: As the leading scholar of the ‘Austrian School’ of economics, Mises has written many
books, led by ‘Human Action’ (1949), ‘Socialism’ (1922), and ‘The Theory of Money and Credit’
(1912). See more at www.mises.org.
11. Paul, Rep. Ron, MD (R-TX): He
wrote 'The Revolution: A Manifesto' in Apr-2008, ‘End the Fed’ in Sep-2009, and ‘The Case
for Gold’, with L. Lehrman, in 1982. A Republican candidate for President in the 2008 and 2012 primaries.
Dr. Paul says we have been lied to, robbed and used by our own government.
12. Quinn, James: He is Senior Director of Strategic Planning for a major university, and author of a series of essays on
world financial affairs. For more, go to http://seekingalpha.com/author/james-quinn , and his main
Roberts Ph.D., Paul Craig; An Economist and author of eight books and many articles on economics and politics; all non-PC,
based on fact and logic, and seeking the truth. He holds a Ph.D. from the University of Virginia. He a Research Fellow at the
Independent Institute, a former associate editor of the Wall Street Journal, former contributing editor for National Review, a former assistant
secretary of the U.S. Treasury, and Senior Research Fellow at the Hoover Institution, Stanford University. See his full story
14. Rothbard, Murray, Ph.D., 1926-1995,
was a prominent economist of the Austrian school, Professor, and prolific author. See 'What has the Government Done
to our Money?’, 1962, ‘Origins of the Federal Reserve’, ‘The Mystery of Banking’, 1983, and
‘The Case for the 100% Gold Dollar’, 1991, at http://www.lewrockwell.com/rothbard/rothbard207.html,and more at http://www.mises.org/money.asp
15. Salerno Ph.D., Joseph, is a professor of economics at
Pace University and chair of the economics graduate program. He is also a senior faculty member of the Mises Institute, for which he frequently lectures and writes about monetary policy and banking.
16. Schiff, Peter, is President of Euro Pacific Capital, and author of ‘The Little Book of Bull Moves in Bear Markets’ and ‘Crash Proof: How to Profit from the Coming Economic
Collapse’. See his http://www.europac.net/, and archives at http://www.lewrockwell.com/schiff/schiff-arch.html
Ph.D., Judy, wrote ‘Money Meltdown’ in 1994, ‘A Guide to Sound Money, 27 pages, in 2010, and ‘Fixing
the Dollar Now’, 57 pages, in 2011. She is co-Director of SoundMoneyProject.org.
18. White Ph.D., Lawrence H. (economics.gmu.edu) is author of ‘The Theory of Monetary Institutions’ (1999), ‘Free Banking in Britain’
(2nd ed., 1995), ‘Competition and Currency’ (1989), and other volumes. He specializes in the theory and history
of banking and money.
19. Woods Jr., Ph.D., Thomas E.: He is a historian with focus on government, economics, and law. Of his eleven
books, those that apply most here are ‘Rollback’ (2011) and ‘Meltdown’ (2009).
1. ‘The Blowback Triology’, a trilogy by Chalmers Johnson, 1931-2010,
(Blowback-2000, Sorrows of Empire-2004, Nemesis-2007), plus Dismantling the Empire-2010. Johnson shows how our meddling, and
expensive, foreign policy does harm’
2. ‘The Coming Collapse of the Dollar and How to Profit from It’, 2004,
by James Turk and John Rubino. They describe how monetary systems have been abused by governments for centuries. See www.goldmoney.com ,www.dollarcollapse.com, and www.cmre.org
3. ‘The Creature from Jekyll Island: A Second Look at the Federal Reserve’,
Edition #1,1994; #5, 2010, by G. Edward Griffin (realityzone.com and freedomforceinternational.org). He reveals the sinister origins and self-serving goals of the bankers
who started the Fed, and publishes the FFI newsletter.4. 'Empire of Debt',
2006, by W. Bonner and A. Wiggins. It addresses how of excess national debt and spending can drastically reduce the value
of the U.S. dollar, and cause a major depression.
5. 'The Great Reckoning: How the world will
change in the depression of the 1990s', 1991, by J. Davidson and Lord R. Mogg. They warn of economic collapse of the US due to overspending and Empire-style
6. a) ‘Index of Economic
Freedom’, annual since 1994, The
Heritage Foundation, charts economic success vs. freedom; www.heritage.org/research/features/index/ and b) Economic Freedom of the World: Annual report by Cato Institute, http://www.cato.org/pubs/
7. 'A Nation of Sheep', 1961, by William Lederer (also 'The Ugly American'), is about how Americans accept abuse by the
government without complaint, as long as the 'good times roll'.
'A Nation of Sheep', 2007,
by Andrew Napolitano, (also 'Constitutional Chaos' and ‘Lies the Government Told You’), is about how Americans
accept abuse by the government without complaint or curiosity, as long as the 'good times roll'.
‘Gold, The Once and Future Money’, 2007. by Nathan Lewis. An economist by trade,
Lewis refers to ‘good money’ as the ‘cornerstone of good government’, and promotes the gold standard
as the best system. www.newworldeconomics.com
10. Older Books that Gave Warning and Good Advice
a. ‘The Law’, 1850, by F. Bastiat. With his perspective of the French Revolution,
he explains the fallacies of Socialism and how it must degenerate into Communism.
The Unknown Ideal’, 1967, by Ayn Rand. Discusses both the productive and moral aspects of Capitalism. Comments by Alan
Greenspan (before he joined the Fed banksters in DC)
c. ‘A Time for Truth’, 1979, by William
Simon. Bill warned us of the damage being caused by excess spending, taxes, and the debasement of our currency.
‘An American Renaissance’, 1979, by Rep. Jack Kemp. Jack sent an upbeat message on how less government spending
and lower taxes would produce more growth, all based on his support of Austrian economics.
Investing’, 1979, by Douglas R. Casey. Doug predicted a major depression due to government intervention. He supports
sound money. His work at www.CaseyResearch.com continues. He has written eleven other books about investing.
f. ‘Restoring the American Dream’,
1979, by Robert Ringer. Robert warned us of a trend in the US to expect a ‘free lunch’, and how we can reverse
g. ‘None Dare Call It Conspiracy’, 1972, Gary Allen with Larry Abraham. Probes the
secret dealings of bankers, industrialists, and politicians to distort US policy and money for their own gain.
‘The Supply-Side Revolution’, 1984, by Paul Craig Roberts. This is an account of how the Reagan administration
pursued tax cuts rather than increased spending to boost the economy.
i. 'The True Believer', 1951, by Eric Hoffer, a book which shows how
people join a group or mass to bring a sense ‘belonging’ or ‘superiority’.
C. Organizations: They do books, blog, meetings, and courses.
1. The Cato Institute: www.cato.org
2. The Independent
3. The Ludwig von
Mises Institute: Daily essays are at www.LewRockwell.com, plus books and articles at mises.org.
4. Reason Foundation: A magazine and www.reason.org
5. Foundation for Economic Education: www.Fee.org
D. Internet Sites:
1. For more on
money, visit: TheGoldStandardNow.org, SoundMoneyProject.org, AtlasNetwork.org, en.wikipedia.org/wiki/Money_supplymises.org/freemarket_detail.aspx?control=483, history.com/minisites/money/viewPage?pageId=52498, DollarCollapse.com, goldmoney.com, cmre.org,en.wikipedia.org/wiki/History_of_money,goldismoney.info, pgpf.org, measuringworth.com , shadowstats.com/, MoneyWatch.com,transaction.net/money/lets/,professorfekete.com, xat.org/xat/moneyhistory, http://tdvwealthmanagement.com/
2. General Web Sites about Government & Economics: See a flow of essays from; LewRockwell.com, Activistpost.com, Antiwar.com, FFF.org, Truthdig.com, Alternet.org, VDare.com, reason.org, pacificreasearch.org, freedomforceinternational.org, independent.org, pacificlegal.org, cato.org, online.barrons.com, garynorth.com, dailyreckoning.com, pgpf.org, mises.org, economicpolicyjournal.com, informationclearinghouse.info
The above chapters explain how money started and works today, the fraud and manipulations of money by politicians,
‘banksters’, and other ‘interest groups’, and the eventual failure of all fiat currencies. All of
these factors put the purchasing power (PP) of your assets at risk of decline as the value of the USD (US Dollar) declines.
Most investors judge values by the stock prices listed by the various stock exchanges (NYSE, NASDAQ,
NYSE MKT LLC –formerly AMEX-, and other ‘unlisted’ exchanges such as ‘over the
‘pink sheets’), and trends shown by the Dow Jones Industrial Average, an index of 30 US stocks published since
1896, and the ‘S&P 500’. Now we can consider some choices on how much of your portfolio should be protected
in Precious Metals (PM), non-USD denominated assets, and in what nation and type of account. The info below does
not attempt to be comprehensive as to investment ideas (there are many sources for that). It focuses on how to find and use
info sources and strategies you may not have considered before. For example,
of just ‘Price’ (from ‘Dow Jones’ etc.), the ’Value’, or ‘Purchasing Power’
(PP), of your investments is what you should want to increase. As mentioned on P. 88, you can test changes in PP by tracking
how much of a ‘standard product’ (ie, a common product with minimal exposure to politics, subsidies, tariffs,
offshoring, price controls, and new technology), such as a cement block, a loaf of normal bread, a room at Motel 6, etc. that
your investment will buy. Price increases in these items are caused primarily by loss of currency PP. Don’t use milk,
eggs, or gasoline. They are distorted higher because of corn subsidies (and high demand due to the government pushing corn-based
ethanol for gas), and wars in the middle-east. Radios and portable devices (pocket calculators, cell phones, iPads, etc.)
are lower because of cheap integrated circuits, mass production, and offshoring of manufacturing. For a more dramatic change,
go back 40 years before the 1971 ‘no gold’ floating US dollar (USD) inflation took effect. Notice that family
cars cost about $2,000 in the 1970s and are about $20,000 today!; same for Motel 6 going from $6 to $50. To look back further,
go to Figure 1 on P. 47 (monetary inflation since 1918) and Figure 2 on P. 50 (loss of US$ value since 1900) to see the 98%
loss of USD PP.
of your asset in currency ‘X’ may go up, but if the PP of the currency in which it is ‘priced’ falls
by a greater percent, you have lost value. Again, (see p. 47) foreign exchange markets are a good measure of ‘relative’
changes (one currency to another) in PP of currency, but they may all be falling! The ‘absolute’ PP is measured
by how much of ‘standard products’ a currency unit will buy, as shown above.
2. IRAs and 401(K)s have tax advantages, but; a. their contents can be confiscated
by the government (US or other) and replaced with a high-risk, or near worthless, bond, or b. drop in value if the USD keeps
falling, etc. A new choice is the ‘Self-Directed
Gold IRA’. In 1998, IRS rules changed to allow a variety of precious metals (physical, not certificates) in a 'Gold
IRA'. Now nine popular forms of Retirement Accounts (including existing IRA and 401Ks) can be converted to a Gold IRA. The
metal must be stored in an IRS-approved facility in Delaware
3. The interest rate on CDs and bonds is negative if the currency in which they are denominated
falls at a higher rate than the CD. (see #1 above)
4. The Dow Jones Industrial Averages (DJIA) may rise, but you need to consider how much of this
is due to falling currency value. When the Fed increases the money supply (monetary inflation), each existing USD becomes
worth less (2 words!) and this means more USD are needed to buy any good or service (price inflation). For example, if costs
of raw materials go up, and a company increases its product price to compensate (and maintain the same percent profit margin),
the ‘number of dollars’ in that percent will be greater and will appear as more earnings per share (same number
of shares but more dollars of profit). This makes investors happy if they are unaware of the false nature (no increase in
purchasing power) of these higher earnings. This ‘false happiness’ caused the stock boom of the 1990s. The value
(PP) of the USD today is only 10 or 15% of what it was in 1971 when Nixon took it off the gold standard, but prices and earnings
(but not PP) have soared as the government printed money, which causes the bubbles and busts. See more on pages 38 and 88.
5. Most important, all
fiat money (not redeemable for a valuable commodity, and forced to use at face value by legal tender laws) eventually falls
to little or nothing in value (purchasing power). As shown in Figure 1 on P. 50, the USD has lost 98% of its PP since the
Fed started in 1913.
The above five issues are ignored by most investors, so they become victims of falling currency values, and usually don’t
even know it. Most brokers ignore these issues because they only offer USD-denominated securities and it would reduce their
income if clients left them to buy PM from a commodities dealer or a broker who offers securities (equity and bonds) denominated
in foreign currencies. (see P. 120)
This book strives to inform you on the perils of falling currency values, and how to protect yourself. Thus you will
read below the advantages of currency diversification, and personal possession of bullion. Under duress, laws mean nothing
to the government. Remember when Obama put union pension funds ahead of bond owners when Chrysler Corp. was ‘restructured’
in 2009, and the Cyprus ‘bail-ins’ of 2013 (deposits were replaced by worthless bank shares)?
Please consider the ideas below as a supplement to all you know from strategy that most ‘traditional’
securities brokers promote. My goal is to add three new dimensions to your thinking; namely;
1. Trends in the purchasing power, based on the foreign exchange markets,
of the currency in which your ‘paper’ is denominated,
2. The possibility of taking ‘physical
possession’ of commodities you own (such as gold; handy for storage because it is small in size for a high value), and
3. The politics (corruption,
restrictions, etc.) of the nations whose securities, private business stocks, and currency you buy, or use for storage of
the above points, on May 7, 2013 Mark Hulbert of MarketWatch.com said; ‘Stock market bulls face an inconvenient
truth as they celebrate the stock market’s new all-time highs; Inflation. It turns out that, when you take inflation
into account, the stock market is not at an all-time high. It’s not even close. No wonder the bulls are in denial. In
inflation-adjusted terms, the S&P 500 (trading symbol ‘US:SPX’) hit its all-time high in early
2000, at the top of the internet bubble. If we were to denominate that index’s level in today’s dollars, the S&P
before the bubble burst would have been above 2,000 —24% higher than where it stands today.’
4 below shows the ranking of nations with ‘strong’ currencies and economies (stable and less likely to decline
in value than others). Note on P. 60 that in Sep-2011
the Swiss National Bank announced they would buy Euros ‘as needed’ to reduce the strength of the Swiss Franc which
had been making their exports expensive. Despite this action, the CHF remains strong.
Table 4: Ranking
of Nations with Strong Currencies
(10 yrs) %
SeekingAlpha.com/article/313342, Dec-2011 except Debt/GDP is Dec-2012)
trend is up (worse) for the Debt/GDP ratios of all countries except China, Australia, Switzerland, and Sweden (Sweden was
37.2% in Dec-2012, and is considered a strong currency). The Chilean economy has grown well since their conversion from a
military dictatorship (Pinochet) in 1990, to democracy and free market policies. Their peso (CLP) has strengthened against
the USD since 2004, and their Debt/GDP ratio is only 12%. Their stocks, currency and land are becoming attractive for purchase.
Countries with the best combination of numbers in Table 4 will be attractive to investors seeking currency diversification.
Note that negative trade balances and high debt-to-GDP are a warning of future decline.
I write in May, 2013, a US citizen can still buy Precious Metals (PM) without the government knowing (good, it’s
none of their business!), but as the USD falls, the government gets desperate for ways to protect it from; 1) falling faster,
or 2) use of other currencies and PM, both at home and abroad (see BRICS, P. 59).
For example, proposed Connecticut Senate Bill 928 will impose controls, record-keeping about
the buyer, and limits, on PM purchases. That will create artificial scarcity there, and could set a precedent for other US
For your convenience, some firms you can use are shown below. Most are ‘contrarion’, and not likely to
be mentioned by mainstream securities brokers. Search the Internet for others. Many offer newsletters and reports (free and
Metal Dealers; Europacmetals.com , InvestmentRarities.com, Caminocompany.com, Monex.com,
(click on choices at top of HardAssets home page; also go to caseyresearch.com/2013-gold-investors-guide), AmericanBullion.com (does Gold IRAs),
and LearCapital.com. The above are ‘established’ and there
are many others. When choosing a dealer, investigate to try and be sure they are reliable. (Disclosure: I get a commission for referral if you buy from EPM.
It does not affect your price. Call Matt Malleo at 212-481-0310, x107, or email firstname.lastname@example.org, and mention my name, Thanks).
Metal Storage: Once you own some PM, where do you keep it? It needs to be safe from burglars, and the government (‘lockouts’,
‘bank ‘holidays’, ‘Bail-ins’ like Cyprus, or ‘forced exchange’ for government bonds
or fiat cash, etc.; see FDR on P. 44 ,and Cyprus on P. 57). Most dealers work with domestic or foreign ‘vault’
firms you can use. Check the web sites in item 1 above, and the Internet. Most gun stores sell lockable cabinets. A somewhat
bizarre, but useful, choice is to bury your PM in a sealed container in a private place such as your backyard. A two foot
piece of 4 to 6 inch diameter PVC pipe from your local hardware, with end-caps glued on, will work. Plant a bush over it to
mark the location. Tell 1 or 2 trusted people where it is in case you die, or forget.
3. Precious Metal Mines: These are high risk/reward investments. Credible
sources for advice are:
1) Doug Casey CEO of Caseyresearch.com,
and his staff, are world experts on PM mining and offers info at his site Caseyresearch.com ; Kevin Brekke is editor of Casey’s Metals & Mining Division.
2) ‘Streetwise Reports’ publishes ‘The Gold Report’, that includes info on mines at; theaureport.com/pub/htdocs/38.
3) Mining.com offers ‘Global Mining News’ and issues free reports on mining minerals and precious metals.
4) The ‘World Mining Congress’ (http://www.wmc.org.pl/) has members worldwide and holds annual
‘World Gold Council’ (www.gold.org ) is a non-profit association of the world's leading gold mining companies, that promotes the use of gold.
It publishes production data and holdings (tonnes) by nations and banks.
4. Foreign Currencies and Equities:
a. Euro Pacific Capital,
Inc. (EuroPacificFunds.com, EuroPac.net) is a broker-dealer that offers a variety of services and products, including seven
mutual funds they created (for ‘nation diversity’), and precious metals. Look at all parts of the above sites
for details. They promote geographic and currency diversification. (Europacificbank.com cannot be used by US citizens)
offers 4 foreign currency funds (merkfunds.com), and reports. Also see vanguard.com
c. EverBank Financial
Corp. (EVER, Everbank.com) is a bank that offers savings accounts in foreign currencies.
d. For exchange rate info,
transfers, and brokerage, see Forex.com and usforex.com .
5. Consultants and Advisors
a. EuroPac.net, and EuroPacificFunds.com/about
(Asset Management), led by CEO Peter Schiff. (see P. 129 )
b. See Doug Casey’s (P. 125); hardassetsalliance.com, and Caseyresearch.com .
c. The Dollar Vigilante; They have a group of corporations to serve the needs of investors seeking to protect
their wealth from the falling value of the USD, and confiscation by the government. Contact them at: http://tdvwealthmanagement.com/
, call (646) 568-5518, or E-mail: email@example.com, or firstname.lastname@example.org
d. WindRock Wealth Management (windrockwealth.com) uses free-market thinking to advise clients
in today’s world of significant government intervention in our economy.
Ron Holland (bfi-consulting.com, bfi-capital.com) advises investors
for global choices outside the USD. (P. 126)
f. Sprott Asset Management LP (www.sprott.com) is an alternative asset manager that offers a variety of investment solutions for Canadian and
international investors, including their fully-allocated (your name is tied to certain coins or bars) gold and silver ‘Physical
Fisher Investments (www.fisherinvestments.com) is one of the largest independent investment advisers. Ken Fisher, CEO, says; ‘I hate annuities,
and so should you!’
h. Grant's Interest Rate Observer (GrantsPub.com), edited
by James Grant, is an independent, value-oriented and contrary-minded
journal of the financial markets.(see P. 72)
i. Weiss Research (weissinc.com, and weissresearchissues.com ) reports.
The Wall Street Journal reported they were #1 in the nation for accuracy and performance ...
outperforming J.P. Morgan, Goldman Sachs, Citigroup, Standard and Poor’s and every one of the 18 other ratings firms
There are a variety of ‘traditional’ sources at cnnmoney.com/expert. See ‘101 Ways to Build Wealth’
k. Look at marketwatch.com , newworldinvestor.com , and theprudentspeculator.com. Find more Advisors on the Internet.
Popular Bullion Coins : As a partial step toward using precious metal
coins again, the 1933 law that prohibited private ownership of gold coins and bullion (numismatic coins and jewelry were allowed)
was repealed in 1975. Since then the US Mint (http://www.usmint.gov/) has issued a variety of gold, silver, and platinum bullion
coins. As shown in Table 5 below, their face values are far below their market value, and thus, though they are legal
tender, are not used in commerce (somewhere a bureaucrat is laughing!). They are sold at ‘spot price’ for the
metal content, plus fees for production and profit (‘seniorage’). Many other nations offer bullion coins. Pre-1965
US silver coins (see P. 19, junk silver’) will be very useable because people will soon know their content. Buy a bag
or two while you can!
Although some bullion coins are legal tender, due to low face values they are all viewed as investments,
and are not used as money. A bonus is that they posture the owners to use them at bullion value if Congress ever repeals the
legal tender laws and allows use of private mints and coins. See former Rep. Ron Paul’s HR-4248. They could also come
into use if we have a chaotic economic crash and people start using gold, and other commodities, as money. Many US dealers
sell the bullion, medallions, numismatic coins, and bars issued by various countries and private mints. Table 5 shows some
of the more popular bullion coins (all made by government mints).
Popular Bullion Coins
Name ; Metal; Sizes (troy oz.); Face Values ($)
USA ; Eagle; 0.9167 Gold ; 1,1/2, 1/4,
1/10; $50, 25, 10, 5
USA ; Silver
Eagle; 0.9999 Silver; 1 ;
Canada; Mapleleaf; 0.9999
Gold; 1,1/2, 1/4, 1/10; C$20,10,5,1
Krugerrand ; 0.9167 Gold; 1, 1/2, 1/4, 1/10; no FV
P. R. China
; Panda ; 0.9999 Gold ; 1, 1/2, 1/4, 1/10 ; no FV
(24 carat = 0.9999 pure gold
22 carat = 0.9167 pure)
Diversification of Your Investment Portfolio: This book touts the benefits of owning PM,
and avoiding the USD, but of course prudence and history tells us that diversification to various types of assets (PM, securities,
CDs, real estate, annuities, etc.) is best, but in what currency? Some investors who accept as valid the info and warnings
in this book, may choose to allocate 20% to 50% of their holdings to; 1) PM, and 2) ‘non-USD denominated’ assets.
Others will go for 50% to 80%. But, there is a third variable; 3) Location! You can spread your PM storage, currency types,
and the firms and nations from whom you buy securities, over a broad world area, thus avoiding regional problems (corrupt
governments, failed currencies and economies, etc.). See this article: USDmining.com/web/doug-casey-on-internationalizing-your-cash.
In it, Doug says; ‘..from the viewpoint of FX controls, the
nice thing about real estate is that there is NO way they can make you repatriate it. Other than owning a business abroad,
real estate is the only sure way to legally keep your capital offshore.’ The
important thing is to do your homework and make an informed choice.
1. Remobilize Gold to Save the World Economy
2. Wars and the Lies That Start Them
3. Fake Money: Cause of Wars, Depressions 121
4. The Phases of Empire
Appendix 1: Go to the Home page of www.professorfekete.com to see ‘Remobilize Gold to Save the World Economy’, by Dr. Antal Fekete.
Here is an excerpt: ‘The debt crisis of 2008 was a dress rehearsal. It gave the world a foretaste. This crisis is a gold crisis. It is a crisis indicating the threat of a shortage of the ultimate extinguisher
of debt, without which our runaway debt tower is doomed. When it topples, it will bury the world economy under the rubble,
as the Twin Towers buried the people working inside in 2001.’ Dr. Fekete is an esteemed author,
mathematician, monetary scientist and educator. He is a proponent of the gold standard and a critic of the current monetary
system. Also see his ‘Proposed Parallel Gold-Coin Standard to the Federal Reserve System’ at http://www.afr.org/antal.html .
Appendix 2: (Note:
This Op-Ed is included because all of the wars shown below were financed by fake money, Dave)
Mon. Sep. 10, 2007 in the Wisconsin State Journal (www.madison.com), a regional
daily newspaper based in Madison, and ActivistPost.com.
‘Wars and the Lies That Start Them’
By David Redick Our presidents, and their complicit henchmen, have lied us into
every war since the revolution in 1776. Their real reasons have not been legal, constitutional, or politically acceptable, so they invent one or more false
reasons that they can "sell " to the people.Sadly, most people believe the lies, and proudly support them as "wars for defense. " They can't
imagine that our leaders would be so evil as to spend the lives of our troops to gain their hidden political and economic
goals for Empire-USA.The secret
plan of Bush and his gang was to: 1) Take over all oil in the Middle East so we don 't have to share it with China and
India, 2) Land for bases, 3) Evict
China from Eastern Europe and Africa, and 3) Defend Israel at any cost. Control of oil was the hidden reason for the Balkans, Afghan, and Iraq wars.Iran is their next target.The
war drums are beating in Washington to justify bombing Iran, so this is a good time to consider whether our leaders are lying
again. Here are the facts on how we got into a few major wars. Each one could be a book, so please forgive the brevity.War
of 1812 (Madison, 1812)Lies: In 1812, Congress
declared war on England based primarily on their kidnapping ("impressment ") of our sailors at sea. Truth: To drive
England out of North America and get southern land. The war started with our invasion of Canada, at Detroit. We burned their
Parliament buildings in York (now Toronto), so they burned DC ! The 'Star Spangled Banner' was written when British
boats shelled Baltimore Harbor.
Mexican-American War (Polk, 1845)Lies:
Fight to defend our Texas border with Mexico. Truth: We invaded to expand, and took the northern half of Mexico, now our entire
Southwest region.Civil War (Lincoln, 1865)Lies:
Fight to end slavery and preserve the union. Truth: The South seceded due to economic abuse by the North. Slavery was ended
later (but only in Southern states).Spanish-American
War (McKinley, 1898)Lies: Spain blew-up the U.S.
battleship Maine in Cuba 's Havana harbor. Truth: The accidental explosion was used to invade Cuba, and the Philippines
(for a Pacific port).World War I (Wilson,
1917)Lies: Join Europe to "Make the World
Safe for Democracy. " Truth: Wilson was convinced to join by U.S. and European industrialists.World War
II (FDR, 1941)Lies: Defend the United States from
unprovoked attacks by Japan. Truth: FDR wanted to help his pal Winston Churchill, and preserve our oil and industrial sources
and markets, so he poked Japan until he got his "incident."Korean War (Truman, 1950)Lies: Defend America. Truth: Truman and the generals wanted a reason to have troops
in the Far East area of our Empire.Vietnam War (Kennedy, 1955)Lies:
Johnson said Vietnam attacked our ships in the Gulf of Tonkin. Truth: The United States didn 't want to lose the southeast
Asia region, and its oil, to China. Gulf War (Bush-41, 1990)Lies: To defend Kuwait from Iraq. Truth: Saddam was a threat to Israel, and we wanted
his oil.Balkans (Clinton, 1998)Lies:
Prevent Serb killing of Bosnians. Truth: Get the Chinese out of Eastern Europe and Caspian Sea areas so they couldn't
get control of the oil.Afghanistan (Bush-43, 2001)Lies:
The Taliban were hiding Osama. Truth: To access the east of Caspian oil region by building a gas/oil pipeline from
Turkmenistan, thru Afghan, to a warm water port near Karachi.Iraq
(Bush-43, 2003)Lies: Stop use of WMDs, or bring
democracy. Truth: Oil, defense of Israel, land for permanent bases and restore oil sales in the U. S. dollar.Possible
Iran WarLies: They almost have an atom bomb. Truth:
Oil and defense of Israel. Fight the Bush gang
to stop their plans for war against Iran.
Redick, of Madison, WI,
is president of Forward-USA.org.
Appendix 3: Published as the ‘Guest Column’ on Jan. 29, 2008 by the
Wisconsin State Journal, a regional daily newspaper based in Madison, WI (www.madison.com), and at activistpost.com. By David Redick.
‘Fake Money: Cause of Wars, Depressions’
On Jan. 22, 2008, the Federal Reserve System issued an interest
rate cut to "rescue the economy. " This shows how counterproductive government "management " of the economy is. It creates problems with too much easy money (mortgages), and then tries to solve
them with more of the same (a "stimulus " package). The analogy is that easy money is like a heroin high, and recessions
are like withdrawal. In each case, it is better to avoid the fake highs and let the free market work.Our monetary system is very important because it affects government policy so much.
Our leaders in Congress want an unlimited supply
of that money so they can continue to give handouts to voters and fund wars for empire, such as Iraq.Since only the federal government can create money, we see an increase in the number
of state projects funded by Washington and more pork from the Capitol.You
won 't read the following analysis in the newspapers or in a college economics course. Most politicians, business leaders
and professors like the current system of fake money, because their jobs, grants, and social lives depend on it.Thus they ridicule the idea of real money (redeemable for gold,
by any person, on demand) as old-fashioned. However, history and logic show us that the use of real money, not subject to
manipulation by government, is fundamental to the long-term success and survival of a nation. Conversely, all failing nations in history have resorted to debasement of their
currency, using worthless paper and less-precious metal in coins, to fund their excess spending. Fake paper money, managed
by the Federal Reserve, is what allows the massive spending and debt for wars and domestic pork and welfare that have brought
the United States to the brink of economic collapse. The
Fed is a private bank created in 1913, which was granted authority to produce our currency and manage our monetary system.
Its mission to bring stability and maintain the dollar 's value has been a failure. The U.S. dollar has lost 95 percent
of its purchasing power since 1913, and 40 percent against the Euro since 2001.The
key reason to allow redeemability of paper ‘representative’ money to a commodity is to limit excess expansion of the money
supply. The commodity could be wheat, iron, diamonds, or pearls, but gold works best for many practical reasons. Politicians
hate real money because it limits their spending.The
United States is bankrupt due to excess debt, spending and future obligations, with no cure in sight. Those countries that
own a lot of U.S. dollars can 't afford to dump them as their value declines due to fear of starting worldwide panic selling.But history shows us that something always triggers panic selling
and a crash. This crash could reduce the value of the U.S. dollar by 50 percent or more, and start a worldwide depression.
Sadly, very few people understand or care about currency issues. Instead, they prefer our version of Roman bread and circuses
as we crash. Redick of Madison is President of www.Forward-USA.org.
Appendix 4: The
Phases of Empire
This analysis explains why all empires, and
'Imperial Style' governments, in history have failed, and why our 'Empire-USA' faces the same fate. See the full analysis at; 1. Part 5 in the left margin of www.Forward-USA.org and 2. www.activistpost.com.
1. Central Bank: Whether private or owned by the government, a central bank usually has certain government-bestowed
duties and privileges such as; a) The sole right to issue currency and market government securities, b) Allowed to operate
in almost total secrecy to supposedly avoid political influence, c) Set interest rates, d) Buy government securities to fund
government expenses, e) Stabilize the value of the currency and keep unemployment low (these may be fake duties, but sound
good!), f) Serves as the ‘Lender of Last Resort’ to banks short of cash (a sweet deal for casino bankers!), and
g) other acts. The CB typically works closely with the Treasury Department, and key managers may be appointed by the government.
In the U.S., it is the Federal Reserve System.
2. Deflation: The opposite of Monetary Inflation; a reduction in the money supply, and an increase in purchasing
power of each money unit, thus lower prices. Not to be confused with ‘depression’.
3. Depression: Any economic downturn where real GDP (Gross Domestic product) declines by more than
10 percent. Also; Two or more quarters of reduced GDP. A recession is an economic downturn that is less severe.
1) Capitalism - An ‘economic system' based on private ownership, free enterprise, and minimal regulation.
It offers more than economic results, it is a moral system that depends on willing buyers and sellers within the rule of law,
not coercion and control by others
2) Socialism: A ‘political system’ where
most of the means of production and trade (factories, railroads, etc) are owned by the government, which sets pricing, product
specs, etc. The government controls most wages, with an emphasis on ‘fairness’, need, and ‘hours worked’,
rather than value of the service performed.
3) Fascism: A ‘political system’
which allows private ownership of businesses, but there is extensive government control and preeminence. Similar to ‘Crony
Capitalism’, where firms seek favors from government.
4) Communism: A ‘political
system’ where the government owns all housing, agriculture, industry and transportation (almost everything but your
wagon and the clothes on your back). The government tells you where to live, go to college (if any), and where to work.
B. Academic Economics:
1) The ‘Austrian School’ of economic thought (led by Hayek, von Mises, Rothbard), emphasizes the spontaneous organizing power of free market pricing, decisions by
individuals, gold money, and little or no government management or stimulation of the economy.
‘Keynesian Theory’ was founded by John M. Keynes in the 1930s (now led by Krugman, and Stiglitz), and depends
on massive use of government fiscal (spending) and monetary (interest rates) policy, both using fake money, to try to create
prosperity or avoid and end depressions. History and logic show the Keynes approach is unsustainable and never works for more
than a year or two (unless supported by natural resources; oil, timber, ores, etc.).
‘The Chicago School’, or ‘Monetarism’ was founded by the late Milton Friedman,
and now has partial support from Volcker, Greenspan, and Bernanke. It focuses on controlling the money supply to manage the
economy, and otherwise supports the free-market.
5. Fiat Money: Fiat (by decree) money it is worth whatever the government says it is (face value), although
the material of which it is made may have more or less market value (examples; one ounce silver dollars and worthless paper,
both declared worth $1; one ounce American Eagle gold coin with face value of $50).
6. Fiscal Policy: Management of government spending to
fulfill obligations, and in some cases to ‘stimulate’, or ‘guide’, the economy.
7. Free Market: A market that is free from government intervention (i.e., regulation, subsidies, price controls, or governmental monopolies, etc.).
In a free market, property rights (ownership of goods and services) are voluntarily exchanged at a price and terms arranged
solely by the mutual consent of sellers and buyers/consumers,
with no government control of pricing, creation of new firms, pay and benefits, hiring and firing, etc.
8. Gang Theft: This occurs when one
group of people in some manner overpowers another group, and forcibly takes assets from them. Most people agree that it is
immoral, and should be illegal, but oddly, most people (Liberals and Conservatives alike) believe it is OK to employ gang-theft-by-vote
to tax, restrict, or control others (usually ‘the rich’), via government power as the larger group sees fit. They
justify it as making their victims pay their ‘fair share’, they got rich by luck, etc. This in fact describes
an immoral government.
Gross Domestic Product (GDP): The market value of all final goods and services made within the borders of a country in a year.
Gross National Product (GNP) is GDP plus income received from other countries (notably interest and dividends), less similar payments made to other countries.
10. Inflation: 1. Monetary Inflation: A rapid and excess
expansion of the money supply (such as over 5% per year; more than growth of GNP); purchasing power of a given monetary unit
(Dollar, etc.) is reduced, 2. Price Inflation: Increase in current prices due to reduced purchasing power, in turn due to
an increase in the money supply (or other factors such as reduced supply, increased demand, cartel pricing, etc.). ‘Nominal’
is the listed price. ‘Real’ is a past or future nominal price adjusted for price inflation.
11. Mercantilism: An economic system where
the ruling government seeks wealth, especially gold or silver bullion, by playing a protectionist role in the economy, and by encouraging exports and discouraging imports, notably through the use of tariffs, subsidies, and money valuation. The opposite is a policy of laissez-faire, which says that all trade is good and that such controls are counterproductive, and usually evolve to be used as political
12. Monetary Policy: Management of the monetary system including money supply, bank reserves, interest rates,
13. Money: (mostly
from wikipedia.org) Money is anything that is generally
accepted as payment for goods and services and repayment of debts. The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value, and occasionally, a standard of deferred payment. Money
originated as commodity money, then evolved to easier-to-transport representative money in which a paper certificate, or base-metal coin (a ‘token’,
made of copper, zinc, nickel, or alloys with precious metal, etc.), stands for, and is marked as (‘Face Value’),
the weight of a commodity (such as gold), which can be redeemed by the Bearer on demand to the Issuer (Mint).
However, nearly all contemporary money systems at the national level are fiat money systems. Fiat money is without value as a physical commodity, and derives its value by being declared by a government to
be legal tender; that is, it must be accepted at face value (dollar, etc.) for payments within the national boundaries of the country, for
"all debts, public and private". The
money supply of a country is usually held to consist of currency (paper money, and coins) and demand or time deposits or 'bank money' (the balance held in checking accounts and savings accounts). These deposits usually account for a much larger part of the money supply than currency. Bank money is intangible and exists only in the form of various bank records. ‘Currency’ is physical money in any form, coins or notes.In the new ‘gold-era’
of money recommended in this book, all ‘Face Values’ would be in the weight of the commodity they contain, or
An underlying guide to thinking and action. A
comprehensive and fundamental law, doctrine, or assumption. A rule or code of conduct. Dave’s core
political principle is: ‘'The government's proper role is to protect its citizens and legal residents, as individuals, from threat
to, or violation of, their personal and property rights by others”. Note that; a) ‘groups’ (by sex, ethnic, age,
etc.) have no special rights or privileges, and b) legal entities (corporations, etc.) only have property rights, but their
officers may represent the personal rights of shareholders.
15. Reserves: 1. Fractional Reserve Banking means the bank need only retain a certain percent of deposits on
hand (typically about ten percent) and can loan the rest. In fact, this means banks can loan ten times the amount of their
deposits, thereby creating new money! For example, a $1,000 deposit can back $10,000 of new loans. 2. ‘Reserve Currency’
is the money of a certain nation that by agreement or common usage; a. can be used by banks as their ‘reserve’
(‘good as gold’) which underpins their loans and obligations, and b. is acceptable for payments between other
16. Standards for Gold-Based Monetary Systems The
gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold.
1) The Gold Specie Standard is the system
in which the monetary unit is associated with a circulating gold coin. (issuer has 100% reserves for redeemability)
2) The Gold Exchange Standard may involve only the circulation
of silver coins, or coins made of other metals, but the authorities will have guaranteed a fixed exchange rate with another
country that is on the gold standard, hence creating a de facto gold standard in that the value of the silver coins has a fixed external value in terms of gold that is independent
of the inherent silver value
3) The Gold Bullion Standard is a system in which gold coins do not actually circulate as such, but in which the authorities have agreed to sell gold
bullion on demand at a fixed price.(#16-1,2,3 from
version introduced here is based on ‘Redick’s Four Money Rules’ (see page 85). Under this plan, money is produced by private firms in the free
market where customers (users of money) decide which type and source of money they prefer, and mints compete for customers
by supplying a good product. There is no central bank (our Fed), and government mints (run by the Treasury), if any, are optional,
and have no control or privilege over the private mints. The free market is allowed to work! The ‘unit of account’
may be weight of metal.
Table 6: Weight: Conversion: Common units for precious metals are:
1 Tonne (metric)
= 2,205 pounds (Lbs) = 1,000 Kilograms (Kg)
= 32,150 troy oz.
US Ton (Short) = 2,000 Lbs advp. = 907.2
UK Ton (Long) = 2,240 Lbs advp. = 1,016.5
= 15.43 grains = 5 metric carats = 0.643 pennyweight1
Troy Ounce = 31.10 grams = 480 grains (gr)= 120 engl. carats
1 Troy Pound = 12 Troy
Lb= 16 advp. ounces= 453.6 grams=7,000 grains
1 Advp. ounce = 28.35 grams (g), 437.5 grains
1 English carat
= 1.296 metric carats (for precious stones)
% Gold Europe System Carat System
Notes:1. The ‘Long Ton’ is the Imperial system used in the UK
2. The ‘Short Ton’ is used in the US and Canada.
3. The IMF and all nations measure
their gold in metric tonnes.
Gold weighs 19,320 kg per cubic meter. Tungsten is close at 19,600, so it is sometimes gold plated and used as fake gold bars
and ingots. Steel is 7,850, copper 8,930, lead 11,340, and water 1,000.
5, Grains, grams, and Tonne are metric units. The Troy system was started by King Henry II of England. The Advoirdupois system evolved through common usage in Europe.
6. Fineness: The purity of a precious metal measured in 1,000 parts of an alloy: a gold bar of 0.995
fineness contains 995 parts gold and 5 parts of another metal; 0.999 means a coin is 99.9% pure.
Biography of Dave Redick
grew up with his two brothers in a middle class family near Detroit, MI. When he was 14, the family moved to an 80-acre general
farm near Ann Arbor, Michigan. He has an honorable discharge from the U.S. Army Reserve. After 46 years in California, he moved
to Madison, WI in 2004 to be near his family.
and Business: Dave won a four-year tuition scholarship to the University of Michigan, based on grades, activities (Sr. Class
President, sports), and need, and started in the fall of 1953. He completed his BS Engineering in 1958.Upon graduation he
worked as an aerospace engineer for 5 years (rocket engines and satellites) in California, and then started his career in
telecom sales and management. In 1965 he earned an MBA in Economics from Santa Clara University in Santa Clara, CA, and
after management positions in several other firms, in 1995 became VP Sales, then President, of a wireless engineering
consulting firm www.hntelecom.com. He left in 2000 to be VP and cofounder of a Silicon Valley telecom startup ‘Fiberstreet’ (closed, see Google),
and helped raise $6 million of venture capital. He moved to WI in 2004, and started Sustainable Energy Earth, a renewable energy engineering
consulting firm. Since 2009 he has also worked as a Speaker, and Author of books, on the interaction of governments, business,
people, and economics.
Political: In 1978, Dave became concerned about economic and social damage caused by government corruption,
abuse, and counterproductive 'management'. He then read about and discussed this subject
widely and became an activist for more cost-effective, and less abusive, government. He ran for Congress as a Libertarian
in 1982 in District CA-1 (and got 3% of the vote), then returned to his Republican roots and ran again in 1984 with Reagan
in the same District as a ‘Ron Paul Republican’ (and got 38%). Rep. Paul’s Campaign Manager, the late Tony
Payton, was Dave’s paid Campaign Advisor. During the G. W. Bush administration, Dave became concerned about the Republican
Party's departure from its core principles. In 2006 he was the Chm. of LPWI.org, and in 2007 the Wisconsin contact
for The Republican Liberty Caucus (WI.RLC.org and RLC.org), which promote the principles of limited government and free enterprise. In May, 2008 Dave founded his political website
www.Forward-USA.org . In 2010, Dave ran as a ‘Ron Paul Republican’ in WI State Assembly District. 77, and got 19% in a very ‘Progressive’
district where no Republican had run for over twenty years.
Index: Pages in Glossary
are in bold type
Allen, Gary 121
27, 33, 34, 38, 45, 50, 53-55, 58, 60, 65, 74, 80, 109, 117
Banking; Central 10-12, 15, 19-22, 27, 39, 50-54, 77-80, 87,100-105,117,128
24, 25, 32, 41, 42, 57, 59, 60, 64, 71, 72, 88, 95,100, 132
Fractional Reserves 59, 88, 132
18, 20, 24, 26, 43, 56, 63
Reserve Currency 15, 29, 32, 45, 49, 50,56,
65, 67, 76, 84, 88, 90, 106,
Bastiat, F. 120
Bernanke, Ben 25,
26, 33-38, 46, 47, 53, 69, 129Bonner, Bill 119
Buchanan, Pat 69
Canada 56, 63, 80, 101, 104, 111, 123
Casey, Douglas R. 93, 120
Cato Institute 93, 99, 116, 119, 121
CBGA 51, 99
Central Banks (also see Banking)
Bank of US-1, BUS-2, BUS-3 19, 20
Bank for International Settlements (BIS) 39,
50, 51, 53, 69, 99, 105
Reserve System 19, 20, 23- 26, 33, 37, 41-47, 57, 62-65, 69, 70, 82, 95, 105, 116-118, 126, 123, 128
International Monetary Fund (IMF) 39, 44,
45, 53-56, 69, 87, 99,
World Bank 26, 39, 45, 69, 99
Continental Dollar 17
Currency 9, 10 15-18, 29, 41-44, 50-52, (Act of 2012; 97, 101),
Davidson, James Dale
8,10. 17-19, 30-33, 36-48, 50, 53-56, 72, 74, 76, 85, 89, 90, 115, 119, 122, 126, 127, 131, 132
Deflation 33, 42, 67, 107,
16, 33, 34, 40, 47, 51, 67, 68, 74, 75, 82, 119 , 128
Donlan, T. G. 4, 34, 115
Ebeling, Richard 4, 26, 27, 99, 115
Economic and Social Systems
128 , Communism 128, Fascism 128, Socialism
of Thought (Theories);
Austrian 129 Keynesian 129 Monetarist 129
Edwards, Michael 4, 75,
9, 12, 54, 68, 76, 84, 85, 91 93, 110, 114,118, 119, 122-124
Exchange Stabilization Fund (ESF) 44, 51, 98, 104, 106
Fekete, Dr. Antal 4, 93,116, 121, 122
27, 93, 94, 99, 105
Forex 105, 106
Free Market 35, 36, 40-43, 90, 94, 97, 102, 105, 122, 130
Gang-Theft 9,12, 130
Gold (see ‘Money’)
Grant, Jim 67
Greenback Dollar 42, 43
Greenspan, Allan 33, 38,
41, 47, 120, 129
Law 39, 89, 105
Griffin, G. Edward 119
Gross Domestic Product (GDP) 31, 87, 128, 130
Fannie (FNM) & Freddie (FRE) ; 30, 47, 54, 58, 59, 62, 72, 98
FHA 60, 63, 97; Ginnie Mae (GNMA) 63,
Sallie Mae (SLM) 61, 98
Heroin Analogy 7, 27, 37, 39, 41, 109, 126
Hagel, Sen. T.C 41, 70, 92, 116
Hayek, F.A. 89, 93, 116, 129
Heritage Foundation 101,
IMF (see Central
The 117, 121
Monetary 16, 36, 40, 47-49, 74, 83,
84, 91, 128
Price 10, 15, 19, 22, 31, 34, 37,40, 49, 53, 66, 126
31, 74, 107, 110
Kemp, Rep. Jack
Legal Tender 7, 11, 17-19, 39-44, 69, 70, 82, 98, 106, 108, 132
Lehrman, Lewis 4, 79, 93, 94, 100, 116, 117
Lewis, Nathan 100,
Miller, Don M.D. 4, 68,
Mises, Ludwig von Mises
Institute 115. 117, 121, 129
Mercantilism 66, 131
Monetary Policy 51, 69, 131
Appreciation of purchasing power 87, 89, 90, 91, 106
‘Coin Act of
1792’ 16; ‘Currency Act of 2012’ 98, 99
Commodity 16, 42, 50, 53, 57, 77, 81, 84, 86, 91, 127, 128, 132
11, 27, 29, 31, 40, 43, 45, 49, 53, 79, 82, 83, 99, 105, 130
Gold Standards 11,12, 15, 16, 18, 19, 26, 27, 45, 46,
50, 72, 78,
89, 93, 94, 99,116, 119, 122, 133
‘Redick’s Four Monetary Rules’ 12,
85, 94, 97
Representative 81-84, 86-88, 95, 97, 105, 123, 127, 131
(see Banking) 132
Silver 15 -19, 29, 43, 44, 69,76, 81, 85, 86, 89,110-112,130-133
Special Drawing Right (SDR) 44, 53, 55, 56
Supply; M0, M1, M2, M3; 41,
46, 81 ,97, 100, 101
Token 15, 37, 81-84, 91, 86, 131
53 ; G20 53, 101
Bretton Woods Agreement 19,
45, 46, 48, 82
34, 49, 59, 61, 65 (Perverse Incentive 54, 61, 65,105)
Murphy, Robert P. 4, 80
Napolitano. Judge Andrew 119
North, Gary 4, 38, 52, 79
Paul M.D., Rep. Ron 25, 41, 61, 92-94, 97, 101,110, 116, 117, 135
Principles; Core 10,13,132,
General; 6, 69, 115, 132
Four Money Rules (see Money)
Ringer, Robert 120
Roberts, P.C. 4, 67, 75, 92, 117, 120
Rockefeller 11, 20, 78
Rogers, Jim 4, 27, 38
Rothbard, Murray 93, 99, 117, 129
Rothschilds 6, 9, 11, 21
Rubino, John 119
Salerno, Joseph 93, 118
Schiff, Peter 4, 54, 118
Shelton, J. Ph.D. 100, 118
Simon, William 120
33, 34, 58, 73, 98
Weight Conversion (for precious metals) 134
Wenzel, Robert 4, 100
White Ph.D., Lawrence 100,
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