PRESIDENT ANDREW JACKSON (1828 - 1836)
"The bold efforts that the present bank has made to CONTROL THE GOVERNMENT and the distress it has wantonly caused, are but premonitions of the fate which awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it...If the people only understood the rank injustice of our money and banking system there would be a revolution before morning." -Andrew Jackson's address to Congress, 1829
When Congress voted to renew the charter of The Second Bank of The United States 2 years early, Jackson responded with the greatest veto in history to prevent the renewal bill from passing. His response gives us an interesting insight.
“I am one of those who do not believe a national debt is a national blessing, but rather a curse to a republic. It is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country... It is not our own citizens only who are to receive the bounty of our government. More than eight millions of the stock of this bank are held by foreigners... is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?... Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence... would be more formidable and dangerous than a military power of the enemy. If government would confine itself to equal protection, and, as Heaven does its rains, shower its favor alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles."-Andrew Jackson 1 1. Andrew Jackson, Veto of the Bank Bill, to the Senate, (1832)
In 1832 Jackson ordered the withdrawal of government money from the Second bank and had it put into state banks. He fired his Treasury Secretary and his first replacement for refusing to do so. The Second Banks head, Nicholas Biddle displayed the power and intention of the bankers when he openly threatened to cause a depression if the bank was not re-chartered, we quote.
"Nothing but widespread suffering will produce any effect on Congress... Our only safety is in pursuing a steady course of firm restriction - and I have no doubt that such a course will ultimately lead to restoration of the currency and the re-charter of the bank." -Nicholas Biddle 1836
By calling in existing loans and refusing to issue new loans the bank did cause a massive depression. It was then Andrew Jackson made these two famous statements: "You are a den of vipers and thieves and I intend to rout you out, and by the eternal God, I will rout you out!” and "The Bank is trying to kill me - but I will kill it!" -Andrew Jackson
When asked what he felt was the greatest achievement of his volumous career, Andrew Jackson replied without hesitation "I killed the bank!" Even desiring to put those words on his headstone when he died.
Andrew Jackson is the only President in history to have paid off the National Debt. He did this soon after killing the bank, and even began a policy of returning tax money back to the states. Although we had no central bank for over 70 years, this was definately not the end of private financial influence over government, when we look at...
ABRAHAM LINCOLN AND THE CIVIL WAR (1861 - 1865)
Even with the Central Bank killed off, fractional reserve banking continued like a virus through numerous state chartered banks instead, causing the instability this form of economics thrives on. When people lose their homes someone else wins them for a fraction of their value.
“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy.” -Abraham Lincoln
On the 12th of April 1861 the Civil war began. Lincoln, needing money to finance his war effort, went with his secretary of the treasury to New York to apply for the necessary loans. The money changers, wishing or assuming the Union to fail, offered loans at 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." -Colonel Dick Taylor
When Lincoln asked if the people of America would accept the notes Taylor said. "The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution."- Colonel Dick Taylor
Lincoln agreed to this solution and Congress printed 450 million dollars worth of the new bills using green ink on the back to distinguish them from other notes. These were called “Greenbacks”
"The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers..... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power." -Abraham Lincoln
The solution worked so well Lincoln was seriously considering adopting this emergency measure as a permanent policy. This would have been great for everyone except the money changers who quickly realized how dangerous this policy would be for them. They wasted no time in expressing their view in the London Times. Oddly enough, while the article seems to have been designed to discourage this creative financial policy, its effect shows clearly its advantages.
"If this mischievous financial policy, which has its origin in North America, shall become endurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains, and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe." Hazard Circular - London Times 1865
From this extract it’s plain to see that it is the advantage provided by adopting of this policy which poses a threat to those not using it. But in 1863 Lincoln needed more money to win the war, and the President could not get the congressional authority to issue more greenbacks, the money changers proposed through their agents in Congress, the passing of the National Bank Act, that instituted Treasury bonds to replace the greenbacks, Lincoln needing war funds was forced to sign it. Thus restoring the exclusive power to inflate the money supply to a priveleged group of banks, and requiring the government to issue debt bonds against the new money created by the banks. Near the end of the war Lincoln said:
"Yes; we may all congratulate ourselves that this cruel war is nearing its close. It has cost a vast amount of treasure and blood. The best blood of the flower of American youth has been freely offered upon our country's altar that the Nation might live. It has been, indeed a trying hour for the Republic; but I see in the future a crisis approaching that unnerves me and causes me to tremble for the safety of my country.As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of the war." –Abraham Lincoln 1865
Since 1863 the entire US money supply would be created out of debt to bankers buying US government bonds and issuing money in the form of national bank notes. Even though some of the greenbacks continued to be in circulation up until 1994, their numbers were never increased but in fact continuously decreased. In spite of this, having the greenbacks in circulation in America created great wealth.
"In numerous years following the war, the Federal Government ran a heavy surplus. It could not [however] pay off its debt, or retire its securities, because to do so meant there would be no bonds to back the national bank notes. To pay off the debt was to destroy the money supply."- John Kenneth Galbraith
The American economy has been based on government debt since 1864 and it is locked into this system. Talk of paying off the debt without first reforming our banking system is a complete impossibility. That same year Lincoln had a pleasant surprise. Turns out the Tsar of Russia, Alexander II, was well aware of the money changers scam. The Tsar was refusing to allow them to set up a central bank in Russia. If Lincoln could limit the power of the money changers and win the war, the bankers would not be able to split America and hand it back to Britain and France. The Tsar declared that if France or Britain gave help to the South, Russia would consider this an act of war. Britain and France would instead wait in vain to have the wealth of the colonies returned to them, and while they waited Lincoln won the Civil War. With an election coming up the next year, Lincoln himself would wait for renewed public support before reversing the National Bank Act he had been pressured into approving during the war to continue it's funding. Lincoln's opposition to the central banks financial control is well documented. He would certainly have killed off the national banks monopoly had he not been killed himself only 41 days after being re-elected.
"Right after the Civil War there was considerable talk about reviving Lincoln's brief experiment with the Constitutional monetary system. Had not the European money-trust intervened, it would have no doubt become an established institution." - W. Cleon Skousen.
Even after his death, the idea that America might print its own debt free money set off warning bells throughout the entire European banking community. On April 12th 1866, the American congress passed the Contraction Act, requiring the treasury to call in and retire some of Lincoln's greenbacks. With only the money changers standing to gain from this, it's not hard to work out the source of this action.
Showing posts with label National Debt. Show all posts
Showing posts with label National Debt. Show all posts
Wednesday, January 16, 2008
Friday, January 4, 2008
History of Money Part Two: Bankers vs The Tally Stick
MEDIEVAL EUROPE (1000 - 1100 A.D.) Here we find goldsmith's offering to keep other people's gold and silver safe in their vaults, and in return people walking away with a receipt for what they have left there. These paper receipts soon became popular for trade as they were less heavy to carry around than gold and silver coins.
After a while, the goldsmith's must have noticed that only a small percentage of their depositor's ever came in to demand their gold at any one time. So cleverly the goldsmith's made out some receipts for gold which didn't even exist, and then they loaned it out to earn interest. A nod and a wink amongst themselves and the governments that borrowed the money, they incorporated this practice into the banking system. They even gave it a name to make it seem more acceptable, christening the practice a technical term: 'Fractional Reserve Banking' which translates to mean, lending out most of the money than you have on deposit, and keeping only a fraction in reserve while telling all your depositors they have their money safe with you. Inventing money based on the magic that it can exist in two places at once.
Today banks in America are allowed to loan out more than ten times the amount they actually hold on deposit. The reserve requirement is 10% for “demand” (checking account) deposits, and 0% for savings accounts. For every $10 deposited in a checking account, they lend $9 of it, while leading the depositor to believe they have all of it. The fact of the matter is that $9 likely becomes a new deposit when it is loaned out, and 90% of that is considered loan-able also. So while you wonder how they get rich charging you 10% interest, it's not 10% a year they make on that amount but likely 10% multiplied by 9.999...
THE TALLY STICKS (1100 - 1854)
King Henry the First produced an ingenious monetary system based on sticks of polished wood with notches cut along one edge to signify the amount. The stick was split in half lengthwise so each half still had a record of the notches. The King kept one half for proof against counterfeiting, and then spent the other half into the marketplace where it would continue to circulate as money. Because only Tally Sticks were accepted by Henry for payment of taxes, there was a built in demand for them, which, along with the counterfeit protection, gave people confidence to accept these fancy sticks as money. He could have used anything really, so long as the people agreed and perceived that it had value. His willingness to accept these sticks as legal tender made it easy for the people to agree.
Money is only as valuable as the faith people have in it, and without that faith even today's money is just paper. Even gold is valuable only because we believe it.The tally stick system worked well for 726 years! It was the most successful form of non metallic currency in known history, and the British Empire was actually built under the Tally Stick system, but how is it that most of us are not aware of its existence?
Perhaps the fact that in 1694 the Bank of England at its formation attacked the Tally Stick System gives us a clue as to why most of us have never heard of it. The gold holding elite realized it was money outside the power of the money changers (the very thing King Henry had intended), and their fortunes were shrinking because they could not manufacture wealth so easily.What better way to eliminate the vital faith people had in this rival currency than to pretend it simply never existed and not discuss it? That seems to be what happened after the shareholder's in the Bank of England bought their original shares with these notched pieces of wood and then began to berate the system.
The Bank of England was set up as a privately owned bank through wealthy investors buying shares, with tally sticks no less! Even the Bank of England’s nationalization is not what it at first may appear, as its independent resources unceasingly multiply and dividends continue to be produced for its shareholder's.
The original investors, whose names were kept secret, were meant to invest one and a quarter million pounds, but only three quarters of a million was received when it was chartered in 1694. It then began to lend out many times more than it had in reserve, collecting interest on the lot. This is not something you could just impose on people without preparation. The money changers needed to create the climate to make the formation of this private concern seem acceptable.
Here's how they did it. With King Henry VIII relaxing the Usury Laws in the 1500's, the money changers flooded the market with their gold and silver coins becoming richer by the minute through interest. The English Revolution of 1642 was financed by the money changers backing Oliver Cromwell's successful attempt to purge the parliament and kill King Charles. What followed was 50 years of costly wars; costly to those fighting them but very profitable to those financing them. So profitable that it allowed the money changers to take over a square mile of property still known as the City of London, which remains one of the three main financial centers in the world today.
The 50 years of war left England in financial ruin. The government officials went begging for loans from guess who, and the deal proposed resulted in a government sanctioned, privately owned central bank which could produce money from nothing, essentially legally counterfeiting a national currency for private gain. Now the politicians had a source from which to borrow all the money they wanted to borrow, and the debt created was secured against public taxes. This was much easier for politicians than publicly authorizing more tally sticks.
You would think people would have seen through this, and realized they could produce their own money and owe no interest, but instead the Bank of England has been used as a model and now nearly every nation has a Central Bank with fractional reserve banking at its core. These central banks have the power to dictate a nation’s economy and become that nation’s real governing force.
What we have here is a scam of mammoth proportions covering what is actually a hidden tax, being collected for private concerns. The country sells bonds and securities to the bank in return for money it cannot raise in taxes. The bonds are paid for with bank money produced from NOTHING. The government pays interest on the money it borrowed by borrowing more money in the same way. There is no way this debt can ever be paid, it has and will continue to increase. If the government did find a way to pay off the debt, the result would be that there would be no bonds to back the currency, so to pay the debt would be to kill the currency!
With its formation, the Bank of England soon flooded Britain with money. With no quality control and no insistence on value for money, prices doubled with money being thrown in every direction. One company was even offering to drain the Red Sea to find Egyptian gold lost when the sea closed in on their pursuit of Moses. By1698 the national debt expanded from £1,250,000 to £16,000,000 and up went the taxes the debt was secured on.
In times of economic upheaval, the deflation required to stop massive inflation, wealth is rarely destroyed but instead is merely transferred. Those who benefit the very most when money becomes scarce again are those who inflated in the first place and control the quantity of what everyone wants, the money changers. When the majority of people are suffering through economic depression, you can be sure that a minority of people are continuing to get rich.
Even today the Bank of England expresses its determination to prevent the ups and downs of booms and depressions, yet there have been nothing but ups and downs since its formation with the British pound rarely being stable. cont......(next the Rothschilds)
After a while, the goldsmith's must have noticed that only a small percentage of their depositor's ever came in to demand their gold at any one time. So cleverly the goldsmith's made out some receipts for gold which didn't even exist, and then they loaned it out to earn interest. A nod and a wink amongst themselves and the governments that borrowed the money, they incorporated this practice into the banking system. They even gave it a name to make it seem more acceptable, christening the practice a technical term: 'Fractional Reserve Banking' which translates to mean, lending out most of the money than you have on deposit, and keeping only a fraction in reserve while telling all your depositors they have their money safe with you. Inventing money based on the magic that it can exist in two places at once.
Today banks in America are allowed to loan out more than ten times the amount they actually hold on deposit. The reserve requirement is 10% for “demand” (checking account) deposits, and 0% for savings accounts. For every $10 deposited in a checking account, they lend $9 of it, while leading the depositor to believe they have all of it. The fact of the matter is that $9 likely becomes a new deposit when it is loaned out, and 90% of that is considered loan-able also. So while you wonder how they get rich charging you 10% interest, it's not 10% a year they make on that amount but likely 10% multiplied by 9.999...
THE TALLY STICKS (1100 - 1854)
King Henry the First produced an ingenious monetary system based on sticks of polished wood with notches cut along one edge to signify the amount. The stick was split in half lengthwise so each half still had a record of the notches. The King kept one half for proof against counterfeiting, and then spent the other half into the marketplace where it would continue to circulate as money. Because only Tally Sticks were accepted by Henry for payment of taxes, there was a built in demand for them, which, along with the counterfeit protection, gave people confidence to accept these fancy sticks as money. He could have used anything really, so long as the people agreed and perceived that it had value. His willingness to accept these sticks as legal tender made it easy for the people to agree.
Money is only as valuable as the faith people have in it, and without that faith even today's money is just paper. Even gold is valuable only because we believe it.The tally stick system worked well for 726 years! It was the most successful form of non metallic currency in known history, and the British Empire was actually built under the Tally Stick system, but how is it that most of us are not aware of its existence?
Perhaps the fact that in 1694 the Bank of England at its formation attacked the Tally Stick System gives us a clue as to why most of us have never heard of it. The gold holding elite realized it was money outside the power of the money changers (the very thing King Henry had intended), and their fortunes were shrinking because they could not manufacture wealth so easily.What better way to eliminate the vital faith people had in this rival currency than to pretend it simply never existed and not discuss it? That seems to be what happened after the shareholder's in the Bank of England bought their original shares with these notched pieces of wood and then began to berate the system.
The Bank of England was set up as a privately owned bank through wealthy investors buying shares, with tally sticks no less! Even the Bank of England’s nationalization is not what it at first may appear, as its independent resources unceasingly multiply and dividends continue to be produced for its shareholder's.
The original investors, whose names were kept secret, were meant to invest one and a quarter million pounds, but only three quarters of a million was received when it was chartered in 1694. It then began to lend out many times more than it had in reserve, collecting interest on the lot. This is not something you could just impose on people without preparation. The money changers needed to create the climate to make the formation of this private concern seem acceptable.
Here's how they did it. With King Henry VIII relaxing the Usury Laws in the 1500's, the money changers flooded the market with their gold and silver coins becoming richer by the minute through interest. The English Revolution of 1642 was financed by the money changers backing Oliver Cromwell's successful attempt to purge the parliament and kill King Charles. What followed was 50 years of costly wars; costly to those fighting them but very profitable to those financing them. So profitable that it allowed the money changers to take over a square mile of property still known as the City of London, which remains one of the three main financial centers in the world today.
The 50 years of war left England in financial ruin. The government officials went begging for loans from guess who, and the deal proposed resulted in a government sanctioned, privately owned central bank which could produce money from nothing, essentially legally counterfeiting a national currency for private gain. Now the politicians had a source from which to borrow all the money they wanted to borrow, and the debt created was secured against public taxes. This was much easier for politicians than publicly authorizing more tally sticks.
You would think people would have seen through this, and realized they could produce their own money and owe no interest, but instead the Bank of England has been used as a model and now nearly every nation has a Central Bank with fractional reserve banking at its core. These central banks have the power to dictate a nation’s economy and become that nation’s real governing force.
What we have here is a scam of mammoth proportions covering what is actually a hidden tax, being collected for private concerns. The country sells bonds and securities to the bank in return for money it cannot raise in taxes. The bonds are paid for with bank money produced from NOTHING. The government pays interest on the money it borrowed by borrowing more money in the same way. There is no way this debt can ever be paid, it has and will continue to increase. If the government did find a way to pay off the debt, the result would be that there would be no bonds to back the currency, so to pay the debt would be to kill the currency!
With its formation, the Bank of England soon flooded Britain with money. With no quality control and no insistence on value for money, prices doubled with money being thrown in every direction. One company was even offering to drain the Red Sea to find Egyptian gold lost when the sea closed in on their pursuit of Moses. By1698 the national debt expanded from £1,250,000 to £16,000,000 and up went the taxes the debt was secured on.
In times of economic upheaval, the deflation required to stop massive inflation, wealth is rarely destroyed but instead is merely transferred. Those who benefit the very most when money becomes scarce again are those who inflated in the first place and control the quantity of what everyone wants, the money changers. When the majority of people are suffering through economic depression, you can be sure that a minority of people are continuing to get rich.
Even today the Bank of England expresses its determination to prevent the ups and downs of booms and depressions, yet there have been nothing but ups and downs since its formation with the British pound rarely being stable. cont......(next the Rothschilds)
Friday, December 7, 2007
Ron Paul says stop allowing them to "Monetize the debt"
What does it mean to "monetize the debt"? The Banking system is not merely paper money, it is much worse. It is debt money. To illustrate:
OK, here is the simple version of what our banking system does and why it is so crappy. The system we have is less viable now than it was during the Great Depression, but because of the added peace of mind that the FDIC (Federal Depositor Insurance Corporation) gives us we milk it along expecting it to last forever. It won’t, it can’t.
We Poe folk who actually work for a living have been continuously robbed since 1913, actually long before if you look into it. The ability for banks to manufacture money by merely loaning it out has been around for over 300 years. Governments in Europe looked to bankers for money when they went to war, and the bankers loaned out more money than they had. This has happened time and time again. It is how the rich stay rich, and the poor stay poor. As soon as a poor man gets rich, he either gets involved in the scheme, or his heirs go poor again. What I am saying is if your last name is Rothschild, Rockefeller, Schiff, Roosevelt, Morgan, Kennedy, or Bush, or you probably don’t have to work if you don’t want to, no matter how much money you spend. Just buy a Central Bank
The best way to illustrate the scheme is to simplify the operation. So let’s say there are only two banks and then the Federal Reserve above them. Picture a triangle. OK, I am Bank1, and in competition is Bank2. I have $100 and he has $100. I get a thousand people to deposit $1 in my bank to store it for them totaling $1000 plus the $100 of my own. I send out a monthly statement telling all my customers they have their full amount in my bank, but I can loan out all $1000, as long as I keep my $100 in reserve for those who spend their $1 out of my bank. This is the 10% required “reserve” in our fractional reserve system. This works great if not too many come in at the same time and take their money out. Cool for me and the FDIC for you.
But that’s nothing.
I loan out $1000 at interest by writing a check to my loan customer, he deposits the $1000 into Bank2. Now Bank2 has $1000 + $100 investment. He can loan out $1000 now too. His customer gets a check for $1000 and deposits it into my Bank1. Now I can lend out $900 of that. Bank2 gets that new deposit and can loan out $810, I can loan out $729, he can loan out $656.10 and on and on and on until all the money is loaned out, and all of it is tied up in the 10% reserve. It doesn’t matter if my customers spend their money, because whomever they give it to will usually just deposit it anyway! Cool eh?
Is everybody happy? So far the loans I am making interest money on total $2629, and my customer statements show a total of $3466.10, while I only spent $100. Cool. Interest money comes in, people take their money out, spend it, and others put it back in. All is well. Until, rats, the fool I loaned the $1000 to disappears with the loot. All heck breaks loose until, thank goodness, the Fed rescues me and loans me whatever I need into my reserves to keep the ship afloat.
Guess where the Fed gets the money it loans to me? Well, it used to be monetized gold, but now, it is 100% monetized debt. The Fed loans money to me that is backed by Government debt or my debt to them. They storing the debt paper makes the money they spent buying it have value. As a result, the total money supply grows by no other means than by loaning it.
The ability to manufacture money from loans has put lots of money in supply, and made it easy to get loans for houses and cars. But it requires more loans to sustain itself. Stop borrowing, and all the money disappears to the banks long before the loans are paid off; keep borrowing and the money becomes worthless, and most of it goes to the banks in interest.
This system is corrupt, and it is a house of cards waiting to be knocked over. There are toothpicks and band aids continuously stuck into it to keep it up. Bank owners are making a killing on interest, but all that interest money is created by debt, which creates a need for more inflation to cover the interest. There is no way this can sustain itself forever. The national debt is VITAL to keeping this joke afloat. Pay it off, and we get the great depression once again. Keep borrowing and we get runaway inflation and the great depression German style.
The solution is simple. Eliminate dishonest fractional reserve banking, and inflate the currency through government action, not bank action. BOTH must happen; neither will work independently. This is the only solution, there is no other way. Money must also have intrinsic value; not credit value, but tangible asset value. This would make our economy the wealthiest in the world again. And everyone would be wealthy, not just tax exempt bankers.
OK, here is the simple version of what our banking system does and why it is so crappy. The system we have is less viable now than it was during the Great Depression, but because of the added peace of mind that the FDIC (Federal Depositor Insurance Corporation) gives us we milk it along expecting it to last forever. It won’t, it can’t.
We Poe folk who actually work for a living have been continuously robbed since 1913, actually long before if you look into it. The ability for banks to manufacture money by merely loaning it out has been around for over 300 years. Governments in Europe looked to bankers for money when they went to war, and the bankers loaned out more money than they had. This has happened time and time again. It is how the rich stay rich, and the poor stay poor. As soon as a poor man gets rich, he either gets involved in the scheme, or his heirs go poor again. What I am saying is if your last name is Rothschild, Rockefeller, Schiff, Roosevelt, Morgan, Kennedy, or Bush, or you probably don’t have to work if you don’t want to, no matter how much money you spend. Just buy a Central Bank
The best way to illustrate the scheme is to simplify the operation. So let’s say there are only two banks and then the Federal Reserve above them. Picture a triangle. OK, I am Bank1, and in competition is Bank2. I have $100 and he has $100. I get a thousand people to deposit $1 in my bank to store it for them totaling $1000 plus the $100 of my own. I send out a monthly statement telling all my customers they have their full amount in my bank, but I can loan out all $1000, as long as I keep my $100 in reserve for those who spend their $1 out of my bank. This is the 10% required “reserve” in our fractional reserve system. This works great if not too many come in at the same time and take their money out. Cool for me and the FDIC for you.
But that’s nothing.
I loan out $1000 at interest by writing a check to my loan customer, he deposits the $1000 into Bank2. Now Bank2 has $1000 + $100 investment. He can loan out $1000 now too. His customer gets a check for $1000 and deposits it into my Bank1. Now I can lend out $900 of that. Bank2 gets that new deposit and can loan out $810, I can loan out $729, he can loan out $656.10 and on and on and on until all the money is loaned out, and all of it is tied up in the 10% reserve. It doesn’t matter if my customers spend their money, because whomever they give it to will usually just deposit it anyway! Cool eh?
Is everybody happy? So far the loans I am making interest money on total $2629, and my customer statements show a total of $3466.10, while I only spent $100. Cool. Interest money comes in, people take their money out, spend it, and others put it back in. All is well. Until, rats, the fool I loaned the $1000 to disappears with the loot. All heck breaks loose until, thank goodness, the Fed rescues me and loans me whatever I need into my reserves to keep the ship afloat.
Guess where the Fed gets the money it loans to me? Well, it used to be monetized gold, but now, it is 100% monetized debt. The Fed loans money to me that is backed by Government debt or my debt to them. They storing the debt paper makes the money they spent buying it have value. As a result, the total money supply grows by no other means than by loaning it.
The ability to manufacture money from loans has put lots of money in supply, and made it easy to get loans for houses and cars. But it requires more loans to sustain itself. Stop borrowing, and all the money disappears to the banks long before the loans are paid off; keep borrowing and the money becomes worthless, and most of it goes to the banks in interest.
This system is corrupt, and it is a house of cards waiting to be knocked over. There are toothpicks and band aids continuously stuck into it to keep it up. Bank owners are making a killing on interest, but all that interest money is created by debt, which creates a need for more inflation to cover the interest. There is no way this can sustain itself forever. The national debt is VITAL to keeping this joke afloat. Pay it off, and we get the great depression once again. Keep borrowing and we get runaway inflation and the great depression German style.
The solution is simple. Eliminate dishonest fractional reserve banking, and inflate the currency through government action, not bank action. BOTH must happen; neither will work independently. This is the only solution, there is no other way. Money must also have intrinsic value; not credit value, but tangible asset value. This would make our economy the wealthiest in the world again. And everyone would be wealthy, not just tax exempt bankers.
Thursday, November 29, 2007
Tuesday, October 30, 2007
Money, Money, Money, Money
People really don't understand anything about how money is created, yet it is so very simple. I was amazed at the magic myself until I finally understood it. Fully one half of every transaction in almost everything we do involves money, and yet I had no idea where money originated or how it is worth anything. The most amazing thing is, we don't even care. Millions of people make their living dealing with money every day and most of them don't even know why money is money. It is truly amazing. Sigmund Freud suggested that there is a psychological connection between money and feces; he said we grew up thinking shit was valuable. (In fact they used to call outhouses "vaults") Maybe that is why we guard such smelly truth, and don't even want to discuss it.
Right now our money system is so benignly fraudulent that we call anyone who criticizes it a "conspiracy theorist". Amazing, for Ron Paul is right on, and he is considered crazy. If he could have his way, everyone would be better off. Even those who think he is “insane”, even the bankers. The only place that money gets into society is through a bank, and every time a bank issues money, they demand it back with interest. Why is it strange to think that it cannot work forever? Maybe it is because it has worked for so long, even though it really hasn’t. Why is it strange to think that whoever controls the bank, eventually owns whatever, and controls whatever else they want? Including bribery, donating to campaigns, buying off news editors, running the education system, and intimidating or even killing someone who threatens them? What a cash cow. What would you do if you had this power, would you rather be president of the United States?
There are two fundamental problems with our money system, and both have been around much longer than the Federal Reserve. But the Federal Reserve monopolized and multiplied it instead of fixing it. The fundamental problems are:
1- Fractional Reserve banking,
This allows a bank to loan out much more money than it has, and that money is backed mostly by the IOU documents written up at the time the loan is made. Only a small percentage of their own money is used to "back" the loan. Right now reserve requirements are between 8 and 16 percent. This, in any other business, is fraud; but in banking it is merely a regulated rule. The problem is when a loan defaults, it deletes the IOU but not the money, and as a result all money becomes worth less. This has been a practice of bankers for hundreds of years, but it is not common knowledge even today. Every single bank failure in history would not have happened if this practice was illegal.
2- Treasury Securities
This is the national debt chopped into little pieces and sold. There are different types of securities and they are a great investment to buy because they are guaranteed by the government to earn interest. The problem is, they are a burden to all taxpayers and give the rich a desire for the nation to stay in debt. Individuals are limited in how much they can buy, but banks are not. The Chinese central bank buys approximately $2 billion of these every day. This market, called the bond market, has caused (along with fractional reserve banking) all money in circulation to lose gold backing completely. Today all money is backed only by these government IOU's. The Federal Reserve has the very most "debt paper" as its assets. These "assets" are the backing to our Federal Reserve notes. (Yes, it is magic) When Alexander Hamilton first instituted this scheme within the first year of the constitution, Thomas Jefferson said:
“America is being transformed into a gaming table…Already the new national government is imperiled by the financial mania. Furthermore their gamester ethic will corrode the traditional frugality and industry that defines the American character”
The real problem with this type of government debt is the immorality of it. Those who are in government are less likely to curb government spending when they know that they can profit personally from the debt. As Hamilton said to the First National Bank president Robert Morris “A national debt, if not excessive, to us is a national blessing” For some reason, I am glad that Aaron Burr won that duel. I only wish it would have happened twelve years sooner. This system was eliminated by Andrew Jackson, but then restored during the Civil War, and has been with us ever since.
Wouldn’t it bee cool to see debtless money enter the economy through farming, manufacturing, and natural resources? Will it ever happen? I doubt it.
Right now our money system is so benignly fraudulent that we call anyone who criticizes it a "conspiracy theorist". Amazing, for Ron Paul is right on, and he is considered crazy. If he could have his way, everyone would be better off. Even those who think he is “insane”, even the bankers. The only place that money gets into society is through a bank, and every time a bank issues money, they demand it back with interest. Why is it strange to think that it cannot work forever? Maybe it is because it has worked for so long, even though it really hasn’t. Why is it strange to think that whoever controls the bank, eventually owns whatever, and controls whatever else they want? Including bribery, donating to campaigns, buying off news editors, running the education system, and intimidating or even killing someone who threatens them? What a cash cow. What would you do if you had this power, would you rather be president of the United States?
There are two fundamental problems with our money system, and both have been around much longer than the Federal Reserve. But the Federal Reserve monopolized and multiplied it instead of fixing it. The fundamental problems are:
1- Fractional Reserve banking,
This allows a bank to loan out much more money than it has, and that money is backed mostly by the IOU documents written up at the time the loan is made. Only a small percentage of their own money is used to "back" the loan. Right now reserve requirements are between 8 and 16 percent. This, in any other business, is fraud; but in banking it is merely a regulated rule. The problem is when a loan defaults, it deletes the IOU but not the money, and as a result all money becomes worth less. This has been a practice of bankers for hundreds of years, but it is not common knowledge even today. Every single bank failure in history would not have happened if this practice was illegal.
2- Treasury Securities
This is the national debt chopped into little pieces and sold. There are different types of securities and they are a great investment to buy because they are guaranteed by the government to earn interest. The problem is, they are a burden to all taxpayers and give the rich a desire for the nation to stay in debt. Individuals are limited in how much they can buy, but banks are not. The Chinese central bank buys approximately $2 billion of these every day. This market, called the bond market, has caused (along with fractional reserve banking) all money in circulation to lose gold backing completely. Today all money is backed only by these government IOU's. The Federal Reserve has the very most "debt paper" as its assets. These "assets" are the backing to our Federal Reserve notes. (Yes, it is magic) When Alexander Hamilton first instituted this scheme within the first year of the constitution, Thomas Jefferson said:
“America is being transformed into a gaming table…Already the new national government is imperiled by the financial mania. Furthermore their gamester ethic will corrode the traditional frugality and industry that defines the American character”
The real problem with this type of government debt is the immorality of it. Those who are in government are less likely to curb government spending when they know that they can profit personally from the debt. As Hamilton said to the First National Bank president Robert Morris “A national debt, if not excessive, to us is a national blessing” For some reason, I am glad that Aaron Burr won that duel. I only wish it would have happened twelve years sooner. This system was eliminated by Andrew Jackson, but then restored during the Civil War, and has been with us ever since.
Wouldn’t it bee cool to see debtless money enter the economy through farming, manufacturing, and natural resources? Will it ever happen? I doubt it.
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