Credit Is Debt Is Slavery
By Bruce G. McCarthy
eg BEETS ST SSS, CEERI ST Rae ea wees en eae ac a | ea ore el at eee, pa ei P Chep eaaa Disputes Stall |" o,f pen p gt Bank Ex Oe EN Deregulation F 509 Trae: re on VI ası enced to Prig, FORSY »,| fe V iry Ch; ris i d a } P : P, hi aan ES aS Of Banking seas, "dict, Deci; à ~ a 8: f Sater AaS As poe TS <3 tno an , O aT ne si Roy ‘eet @ a Sa irea ani” R oe? a? n EE p rasne os a hr = ms Ri Rat, tye Sen oa AY ie i 7 Bd m “L oal a WY reporna | ae “Saget A ea N ` ! r e Le on Tota ss! $3!
n PDA nee wee Recht yy, bank, | Treasury ‘Sachi se Oude get Watchers | Totaling $s 85 Bilion ee
ote Bond Sales|, "z Totag $5 Billion |:
Sanit ts
son tiA le fa p
Fes eee By UŞ, Cone Bought
aram Treasury Plans to Raise PF es $1.23 Billion New Cash j 355, » = h in Auction on Monday
This booklet is presented on behalf of the many Americans who sincerely want to be free ... and the many more who think they are.
Many thanks to those dedicated individuals who have ceaselessly given of themselves to arouse an unsuspecting public as to the grave social and economic consequences we face, with
special thanks to the Monetary Realists who have preserved the essence of the late Merrill Jenkins.
It is my sincere and fervent hope the reader will sense the
magnitude of our plight and the urgency required to effect its
resolution. May God grant you the wisdom to see and the
strength to endure, for the time draws near when you must
choose the path you will follow and let your ways be established.
In tendering the necessary Federal Reserve Notes to make this
booklet possible, I hereby acknowledge the following:
it
Federal Reserve Notes are “liabilities” of the Federal Reserve
Bank ... a private corporation.
. Federal Reserve Notes are non-redeemable ... our monetary
authority thereby acknowledging bankruptcy.
. These FED Notes are evidence of “monetized debt,” being
IOU/UOMe negotiable instruments.
. Liabilities cannot pay off a debt ... thereby leaving this
transaction incomplete; the publisher having not been paid for this publication. I have merely transferred evidence of
debt that cannot be paid.
. [therefore disclaim all responsibility for my part in this
monetary hoax, despite my awareness.
Money is a subject we all take a superficial interest in, but seldom
do we seek an understanding of its nature or the consequences of
leaving such matters to our “experts.” If we were to think
diligently about such terms as “money, dollar, credit, bonds,” etc. we might just realize we have let familiarity breed contempt, just as many of us have come to take for granted such things as telephones, televisions, airplanes and the internal combustion engine. But how many of us fully understand how these things work, despite their everyday use? Keeping this in mind, let us examine more closely this thing called “money” and perhaps lay bare the reason for our distressed economy.
“All the perplexities, confusions and distresses in America arise not from defects in the Constitution or confederation, not from want of honor or virtue, as much as from downright ignorance of the nature of coin, credit and circulation!”
John Adams
Webster’s Collegiate Dictionary defines money as:
1. Metal, as gold, silver or copper, coined or stamped, and issued as a medium of exchange. Also ... Anything customarily used as a medium of exchange and measure of value, as sheep, wampum, gold dust, etc.
6. Written or stamped promises or certificates, which pass current as a means of payment.
Funk & Wagnalls Standard Desk Dictionary adds a further definition of “money”:
4. Money of account.
Most people would agree that money means: a medium of exchange. But the same line of reasoning would have us call an
airplane a medium of transportation. Likewise with a bus, train, bicycle, roller skates ... even a pair of legs night be called a medium of transportation, but our definition is apparently vague. So “money” must be more concretely defined ... unless of course there is no such tangible thing as money.
Aha! Suddenly we realize SOMETHING must be used AS money, and that “money” in and of itself does NOT exist. The Coinage Act of 1792 and the United States Statute Codes BOTH declare thus:
“The money of account of the United States shall be expressed
in dollars ...”
31 U.S.C. 371 and Coinage Act of April 2, 1792, Section 20.
“Dollars” are NOT the money ... but the expression of the money. Similarly, concrete is expressed in cubic yards, but there are no foundations built out of cubic yards of cubic yards. Concrete (the entity) is EXPRESSED in cu. yds. (unit of measure) and nobody would expect to pay a concrete company for cubic yards WITHOUT getting the concrete.
So what is the MONEY of account of the United States?
“No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts ...”
Article 1, Section 10 United States Constitution.
“... the proportional value of gold to silver in all coins which shall by law be current as money within the United States.”
Coinage Act (1792), Section 11.
The terms ‘lawful money’ and ‘lawful money of the United States’ shall be construed to mean gold or silver coin of the United States:
12 U.S.C. 152
What then is a “dollar”? It is a UNIT OF MEASURE, with all of the substance of “an inch” or “a foot” or “a pound.” “Dollars” do not exist as a tangible thing. There are no inches of inches, feet of feet, pounds of pounds or dollars of dollars. A “dollar” is not a piece of paper, nor is it a coin. It is not a THING, only a unit of measure.
Likewise “money” is an abstract, an idea, not an entity. Something can be used AS money (e.g. silver, gold, corn, etc.) but there is no such thing (in and of itself) that is money.
Federal law declares gold and silver to be used AS money and to be EXPRESSED in “dollars,” with a “dollar” of gold being [1/42 troy oz.] fine gold (31 USC 449, 314, 821) and a “dollar” quantity of silver 371.25 grains pure (Coinage Act 1792).
Since the term “dollar” was a unit of measure expressing still another unit of measure (troy oz. and grain), most Americans came to regard the “dollar” as the THING for which it was only the unit of measure. Mysterious forces “crept in unawares” managed to remove the “thing” and substitute the unit of measure (no-“thing”) thereby destroying our economic foundation. We are pouring foundations measured in “cubic yards” ... but somebody stole the concrete!
Over the years we have been “blessed” with a variety of “dollars”; one of gold (the smallest coin minted in the U.S.), one of 90% silver, one of 40% silver (some Eisenhower “$”s), one of
standard dimension with NO silver (Eisenhower), the NO NOTHING “super quarter” called the Susan B. “Agony” and the real cheapskate “PAPER dollar.” As the “dollar” was fashioned from cheaper materials, the “prices” mysteriously began to rise ... some calling the phenomena ... inflation.
A more realistic way of looking at this might be to say that the “money of account” (gold and silver) was progressively removed from circulation, being substituted by cheaper substances, yet retaining the asserted value by fiat or declaration. Since the public still THOUGHT the “money” was the same, the “money of account” became an IMAGINARY nonentity as a result of progressively greater seigniorage (difference between face value and free market value). Our “money of account” is now 100% seigniorage as we will see more closely later in this text. At any rate, the 90% silver coins have been debased to tokens of copper/nickel with no silver. Shouldn’t products cost more in copper/nickel “dollars” than in silver “dollars”?
“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency.”
John Maynard Keynes — Economist
Throughout history, man has used many different things as money (e.g. cows, salt, cowry shells, tea, opium, tobacco, rice, stone wheels, iron, gold, etc.) but despite their dissimilarity, they all possessed a unifying characteristic; they were all wealth. And wealth is TANGIBLE.
Now if “dollars” measure silver and gold, and States are required to settle debts in these precious metals ... WHERE IS the silver and gold? It was stolen by some very clever folks in a
most subtle manner, but we'll cover that later. First we must understand some very basic economics.
Trade (commerce) has been the motivating force behind the establishment of “money,” and as the volume of trade increased, there was a change in the substance that was used as money, especially as man developed the talents of processing ores and fashioning coins. Let's consider a simple illustration to demonstrate the need for an exchange medium. Joe would like to buy 2 goats from Bill and is willing to “pay” 1 sheep. But Bill doesn’t want any sheep but would like to have a cow. Dilemma! Joe has no cows ... but! Harry has oodles of “em. New Deal (not to be confused with FDR)! Joe is able to trade 2 sheep for 1 cow. New dilemma! If 1 cow = 2 sheep and 1 sheep 2 goats, 1 cow must = 4 goats. Therefore: 2 goats (what Joe wanted in the first place) must be 1⁄2 cow. But without a freezer Bill will have little use of 14 cow. Idea! Joe offers Bill an intermediate substance called salt, and Bill accepts since he recognizes the “swap-ability” of salt. Bill could then offer this salt (plus a little more) to Harry in exchange for a cow. Salt was used as money since it was the medium of exchange.
Salt money gave way (thank heavens!) to silver and gold which have been acceptable worldwide as money for over 3,000 years.
Gold and silver (wealth) were slowly replaced by “money” (imaginary demand) in such a way the public was either unaware or even an accessory to the fraud. In ancient times, a goldsmith (forerunner of the modern banker) would store peoples' gold for safekeeping (and a fee). He soon discovered that few people reclaimed their gold (relative to his stock) since it represented surplus (savings), and being shrewd (euphemism for
crooked) the goldsmith began to “lend” out a considerable portion of the gold for a fee or “interest,” keeping just enough (sometimes) to cover his hind end (depositors). Banking (lending) soon replaced saving (banking). Something else was discovered. The receipts (issued by the goldsmith to the depositors) soon began to circulate as “currency” since they provided “convenience” but could still claim the gold through redemption, provided the crook in the middle still had some in his vault. Similarly, in the U.S., proxy certificates began to circulate in lieu of the gold and silver coin, but they could always (so we thought) claim the precious metal they represented ... that is until somebody decided to close the gold “window” in 1933 and the silver “window” in 1968.
At one time, bankers were merely middlemen. They made a profit by accepting gold and coins brought to them for safekeeping and lending them to borrowers. But they soon found that the receipts they issued to depositors were being used as a means of payment. These receipts were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.
Then bankers discovered that they could make loans merely by giving borrowers their PROMISES TO PAY (bank notes). In this way, banks began to CREATE money. More notes, could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time.
Demand deposits are the modern counterpart of bank notes. It was a small step from printing notes to making BOOK
ENTRIES to the credit of borrowers which the borrowers, in turn, could ‘spend’ by writing checks.
Modern Money Mechanics, pub. by Federal Reserve Bank of Chicago, p 3,4 (emph. mine)
And until 1963, all paper currency in circulation NEVER claimed to be the “money,” nor did it claim to be DOLLARS. The paper was REDEEMABLE in SILVER or GOLD EXPRESSED IN DOLLARS. The following examples will illustrate this point.
Below, are four specimens of paper currency, the top three of which are lawful negotiable instruments (or notes) in that they identify WHO is paying, WHAT is being paid, to WHOM, and WHEN (see Black’s Law Dictionary). The bottom note does NOT conform to the lawful definition of a note!
Looking for a moment at the bottom two notes, we will reason this out. If the upper (of the two) note claimed “The United States of America ... will pay to the bearer on demand ... FIVE TOMATOES,” it would still be a lawful note (even a lawful contract). If, however, the words “will pay to the bearer on demand” are removed (as in the bottom specimen), would that convert the piece of paper into FIVE TOMATOES?!
Paper currency issued & printed by U.S. Government
P
IO aO
VUIAE
GOLD CEM:
EN 4,0) E03) @ OIN. D AEE Mz’ ana PHE: a eee eae IpI ALAS NED
Gold comics wae redeemable for gold caii: Notice! These ernie did not claim to BE dollars, but would PAY in dollars (of gold)
St Ñi iis 0 Aree Tua
SA ace
Cette int States
Ske certificate (was T for silver). has, these were NOT the
dollars but were redeemable FOR (in this case) a 5 dollar QUANTITY of SILVER
AN T = te seniks oF iozeir bee / SS LS E ;
WiLL PAY CO CME BEARER ON DEMAND roses pa ey 2
© FVE DOLLARS S7 e
A U.S. NOTE (a liability, or evidence of a debt, to the bearer or holder). If this note will PAY the bearer, on demand, 5 DOLLARS, can this piece of paper possibly BE 5 dollars?
-A51298086 A
WASHINGTON, D.C.
451298086 A Spy ong Quatis
Tovwcrasrret te Wnileet Nate
U.S. Note (acknowledgment of debt), that claims to BE a quantity of the entity to SETTLE THE DEBT. Impossible!
Paper Currency Issued by the Federal Reserve Banks (Private Corporations) but still printed by the U.S. Government
‘TRIS ROTCIS: LEGALTERIER FOR ALLOESTS, PUSLICAND PAIVATEAD DIS HEDEE MANETS LAWFUL MOREVAT THEUMITED STATES TRE. OR ATANY FEDERALRESERVE BANK.
i ey g F 4
A
& ka
Sick
TN
> "Bi 208 8 VEN” EDOL ERS O
To instill CONFIDENCE in FED NOTES they a them to be redeemable in gold (held in reserve for U.S. gov’t gold certificates)
f WASHINGTON.D.C.
FOR ALL DEBTS, PUBLIC ANO PRIVATE
THIS NOTE IS LEGAL TENDER | Mf J 4 i? i \ ` L 5 7 5 1 7 2 1 3 A
hicecaemnane
a | 12 Saponi
Freres ol the Basted Nito
-© A
Phase notes are the “currency,” the aot or “awful money” is the “money. After gold was “outlawed” in 1933/34, FED notes would only redeem “lawful money” (12 USC 152 says lawful money is ... “gold or silver coin.”)
PF tae mb x > 3| j raman
THIS MOTE IS LEGAL TEN FOR ALL DEBTS, PUBLIC AND PRIVATE
11203040508 8 iy thio?
Now, FED notes say they ARE “dollars,” PRETTY CLEVER, Huh?
Through guarantees that ‘paper money' could be exchanged for something of intrinsic value, gold served to inspire a measure of CONFIDENCE in the system.
Gold, pub, by Fed. Res. Bank of Philadelphia, p10 (emph. mine)
What gives? These six different (they are different aren’t they?) specimens ALL claim to BE dollars. But a “dollar” is a UNIT of our money of account. Could we possibly have six different kinds of inches? Or gallons? Or ounces? Or minutes?
90% pure gold
(one “dollar” quantity).
90% pure silver (one “dollar” quantity).
40% pure silver (can it bea “dollar”
quantity?)
No silver, only copper/nickel
No silver and only 50% more copper/ nickel than a QUARTER, yet it has 400% of the “purchasing power” of a
quarter!
Paper & Ink “dollar” that cannot BE a
“dollar,” and does not represent a “dollar” quantity of anything!
'SThou shalt not have in thy bag different weights, a great and a small. *Thou shalt not have in thine house different measures, a great and a small. ‘But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have, That thy days may be lengthened in the land which the Lord thy God giveth thee.
Deuteronomy 25
Having removed the phrase “will pay to the bearer on demand” on their most recent Federal Reserve Notes (after 1963) has saddled the American people with a dilemma. Debts have become perpetual as there is nothing with which to settle them. Notes are evidence of debt, and changing the wording to make the note APPEAR to be the settlement does not alter that fact. Let's see if we can clarify this situation.
Most of us are familiar with the adage “A man is no better than his word.” But Christ said “By their fruits ye shall know them.” Since the deed frequently conflicts with the word, we must recognize Christ's statement as the more accurate. For example, an I.0.U. is a man's admission of debt, but his I.O.U.s are worthless if he refuses to make them good by fulfilling his obligation. A bank or treasury note (paper “money”) is also an admission of debt, but unless the issuer (Federal Reserve Banks and U.S. Treasury AND commercial banks that create deposits) redeems his I.0.U.s (notes), they too are frauds and represent’ COUNTERFEIT. Likewise, a check is received as a promise of payment, but if there is nothing in the account on which the check is drawn, they represent bogus claims.
Prior to 1968, when silver redemption was repudiated by the issuers of these notes, we could demand payment of the silver for which the notes were issued. By that time there were far too many notes against the silver, but the “rubber check” writers knew our faith was firmly established in the “paper promises.” Now we labor to produce wealth, give up our wealth to get the paper, and the “money creators” refuse to give up anything if we give the paper back.
Before 1933, the holder of a $20 gold certificate could swap it even for a $20 gold piece (approximately 1 troy oz fine gold). Now the banking system will swap a $20 gold certificate for a $20 FED NOTE, but will not issue any gold in redemption. But if we would like to “buy” some gold from another citizen (a non- banker), we would currently need at least twenty-five more $20 FED NOTES to obtain just 1 gold coin carrying a face value of $20. Redemption is made possible when the CREATOR (issuer) regains possession by REPURCHASE. Christians recognize the fact that THEY do not redeem one another, but that the CREATOR must be the redeemer. Likewise, a check writer redeems his OWN checks. We don’t try to palm the checks off onto another sucker like we do with Federal Reserve Notes.
By refusing to redeem their notes, the Federal Reserve and Treasury both acknowledge bankruptcy. They know it. The European finance ministers know it. The Arabs know it. The only people who do not yet comprehend are the American victims whose silver and gold was stolen by the few people granted the power to print paper “money” at no cost to themselves and then use these “instruments” to steal our wealth. Yet the American people still REFUSE to believe they were robbed, and that the robbery continues!
“Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society ... The process engages all the hidden forces of economic law on the Ode of destruction, and does it in a manner which not one man in a million can diagnose ...”
John Maynard Keynes
Fortunately, that one man in a million emerged, known by Monetary Realists as Merrill M.E. Jenkins, Sr., who cleared the air of economic smog and double talk, devoting the last 14 yens of his life to the exposure of “MONEY”... the Greatest Hoax on Earth.”
But since the nature of coin, credit and circulation is still unknown to the vast majority of people, we continue to grind on towards oblivion, amassing fantastic debts amidst “prosperity.”
“Long before we wake up from our dreams of prosperity through an inflated currency, our gold which could have kept us from catastrophe will have vanished, and no rate of interest will tempt it to return.”
former Senator Elihu Root
Our federal, state, municipal, corporate and individual debts now total some $13 Trillion and CANNOT be “paid off” EVEN IF WE NEVER BORROWED ANOTHER CENT. Debts (monetized) cannot pay off debts. All “money” is created by the banking system, is then LOANED into circulation at INTEREST ... and we CANNOT return to a sole source MORE than we received from it. They only loan the principal. There is not the total “money” in circulation to pay off all the cumulative principal and interests. We must “borrow” more and more of this imaginary “money” to service existing debts, thereby creating new principal on which to pay interest, yet those people “manning the shovels” fail to understand why the hole keeps getting deeper.
Our rampant materialism has spawned a new slavery in America. The average individual is so far in debt he fears the loss
of his paycheck, without which he would be unable to continue the payments on his home, automobile, camper trailer, boat, airplane, motorcycle, snowmobile, etc, etc. Having been tempted by “easy payments, nothing down, buy now, pay later” slogans, the average American has succumbed to the bankers’ “fiscal heroine.”
In 1945 non-farm families owed $5.7 billion, consisting primarily of installment debt. By 1974 the debts had risen to $190.1 billion — a leap of 3,235 percent.
William E. Simon (A Time for Truth)
Ever increasing taxes take a further toll on us as we “service” the debts being amassed by our governments, while debt service makes up a large portion of consumer “prices,” in some industries as much as 77%. We have already lost our independence, the banks already own our country and we have lost OURSELVES, mortgaging our very souls to the creators of paper tokens we erroneously call “dollars.”
“For what shall it profit a man if he shall gain the whole world, and lose his own soul?”
Mk. 8:36
Debt is SLAVERY! Make no mistake about it. Many a debt ridden man tries to hide his misery by feigning success or tries to escape with alcohol or drugs ... even suicide. King Solomon, a man who had everything (he had 700 wives and 300 concubines, he must have had everything else!) and was noted for his wisdom, wrote in Proverbs 22:7
“The rich ruleth the poor, and the borrower is the slave to the lender.” Wow! The Bible even serves us as a financial newsletter!
To obtain a clearer understanding of debt/interest as it applies to our “monetary system,” we must intrude upon the sacred eround of the Federal Reserve System and shed some light on this enigmatic obfuscation.
“And ye shall know the truth, and the truth shall set you free.”
John 8:32
The FED, as this institution is called in financial circles, was chartered by an Act of Congress (December 23, 1913), the same year we were “saddled” with the 16th Amendment (income tax). Few are aware that the FED is a PRIVATE CORPORATION, granted tax exemptions (government need not be exempted as it pays no taxes anyway), “pays” postage (the government uses a Federal frank) and has their telephone listings under “F,” NOT under U.S. GOVERNMENT. The twelve FED Banks are “governed” by the Board of Governors, which office DOES use a Federal frank for postage. The Federal Government does not own any stock in the FED System and has NEVER been able to audit the FED despite numerous “attempts.” The FED is operated for profit ... man is it ever! And that the FED is illegal seems to matter little to our esteemed representatives who swear to uphold the document that declares the FED unlawful.
Congress shall have power ... To coin Money, regulate the Value thereof.
Article 1, Section 8 United States Constitution
CONGRESS!, not a PRIVATE CORPORATION, shall have the power to COIN money, not PRINT paper tokens representing NOTHING! And Article 1, Section 10 of the Constitution declares the MONEY shall be GOLD AND SILVER COIN.
Congress, in delegating a power IT did not have, has given the “money” creators the POWER TO TAX! It costs absolutely NOTHING to print paper “money”! All overhead is “paid for” with pieces of paper rolling off those machines. We must give up someTHING to get these “certificates of confiscation,” thereby paying a TAX to a private corporation. Figure it out. Paper “money” is the tool used to expropriate the wealth from the people who PRODUCE the wealth, BY the people who CREATE the paper for NOTHING!
Most economists resist the suggestion of 100% redeemable currency and no fractional reserves, since such a suggestion severely restrains credit (debt) expansion. Simply stated, banks would be unable to lend what they DO NOT HAVE, which unfortunately (for US!) is exactly what banks are doing!
“Thus our national circulating medium is now at the mercy of loan transactions of banks ... which lend, not money, but promises to supply money they do not possess.”
Prof. Irving Fisher (100% Money — 1935)
Back in Mr. Fisher's day, there was still some “money of account” in circulation (and in reserve); however, since 1968 there has
been no lawful “money” available to the citizens whose property it once was. While it is true that gold and silver coin does exist, it
has been made available by the non-bank public, some of it reportedly sold to the Treasury which resold it at auction to keep up the image of “reserves.” “Money” does not exist as a tangible THING, but is only an IDEA applied to a THING (such as silver, or gold, cows or salt).
“The actual process of money creation takes place in commercial banks.”
Modern Money Mechanics published by Federal Reserve Bank of Chicago. page 3
The FED is technically correct in this statement, since the word “create” means: to bring into being; to cause to exist. (see Webster) Man cannot create anything. We can only transform things (e.g. a tree becomes lumber ... but as Joyce Kilmer said in the poem Trees, “only God can make [create] a tree.”). However, we can create ILLUSIONS, such being intangibles having the substance of “mermaids.”
“Neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper. Deposits are merely book entries.”
Modern Money Mechanics, page 3
Get that? Deposits (checking accounts, savings accounts, etc.) are MERELY BOOK ENTRIES! How tangible is a book entry? How much do they weigh? These numbers (entries) do not measure any THING. There is no wealth deposited in a bank. There are no “dollars” of anything there!
“What then, makes these instruments — checks, paper money, and coins — acceptable at face value ... ? Mainly, it is
the confidence people have that they will be able to exchange such money for real goods and services whenever they choose to do so.”
Modern Money Mechanics page 3
WOW! A CONfidence game of the highest magnitude. I'll bet you thought there was someTHING somewhere to impart “value” to the tokens (paper and metal) we carry around with us.
“Confidence in these forms of money also seems to be tied in some way to the fact that assets exist on the books of the government and the banks equal to the amount of money outstanding, even though most of these assets themselves are NO MORE THAN PIECES OF PAPER (emph. mine) ... and it is well understood that money is not redeemable in them.”
Modern Money Mechanics page 3
Are you beginning to comprehend this madness yet?
“Banks lend by creating credit. They create the means of payment out of nothing.”
Ralph M. Hawtrey (former Secretary of British Treasury)
Here is how banks (commercial) “create” that non-substance called “money.” Operating on a “fractional reserve” (currently about 15% on demand deposits or checking accounts), the banks “multiply deposits,” receiving our currency (e.g. $1,000) and “loaning” us $6000 they do not have (in the form of a deposit CREDIT). The $1,000 in the vault covers the depositor, the $6000 they “loaned” was invented. Banks do not loan any THING! They
rent ILLUSIONS! Neat huh? You know a fella could get rich doing that! And to think the “borrower” has to “pay back” the loan he never got ... PLUS INTEREST! And then comes the frosting on the cake. The bank wants a lean against wealth owned by the “borrower.” Now isn’t that a sweet swindle! The borrower pledges WEALTH to get “dollars,” but the banks will not issue WEALTH to redeem those “dollars.” Some call that a one way street.
Reserves on time deposits (savings, etc) range from 3% to 7% (non-personal time deposits of 4 years or more require 0%), but using 5% for easy figuring we can deposit $1,000, the bank can create 19,000 new, “dollars” which we may then “borrow” if we meet the bank's impeccable standards. Man! What a deal! But wait!
What are the reserves? Why, the reserves are PAPER ... what would we expect in a modern, highly sophisticated, technological society such as ours? Gold is “old fashioned.” It requires effort to obtain while paper can be printed at astronomical rates ... and it is SO EASY.
And these FED Notes we all carry around are printed by the Treasury (at no cost) and created out of the razzle-dazzle of bond issues (more paper), FED Notes (more paper I.O.U.s) and a dose of “mystery.”
First, the Treasury creates a bond (fancy word for I.O.U) and “sells” it to the FED which in turn creates a checking account for the Treasury and credits the account whatever the amount of the bond. The Treasury then prints the $ notes, gives them to the FED (to cover the checking account) and begins to “spend” these IL.O.U.s to buy up our production. The Treasury must then pay
back the principal, plus interest, and derives the money from the taxpayers, or they may “sell” MORE bonds to the public in higher denominations and use these to redeem existing bonds reaching maturity. The FED gets the principal plus the interest at a cost of nothing. In other words, the government gives I.O.U.s to the FED which opens up a phony checking account for the government to write phony checks against the phony account the FED created when it bought the I.0.U.s with the phony money the FED asked the government to print! Very creative fellas!
“Government is the only agency which can take a useful commodity like paper, slap some ink on it and make it totally worthless.”
Ludwig von Mises — “economist”
What about the gold in Fort Knox? Don’t the notes get their value from that gold stockpile? Well, not exactly. The Treasury doesn’t own any gold, having “sold” it to the FED which “bought” it with the paper. When the FED was established, the gold reserve requirements were set at 40%, allowing the “system” to issue a receipt (certificate) for the gold being deposited by the public, and 1 % newly “created” phony claim checks against the same gold for which there was already a claim check outstanding. These new phony receipts were loaned out at interest and could later be swapped for the certificates, which were a direct claim on the gold. After all, one “dollar” ($) looked like any other “dollar” ($) once it was entered on the ledgers of the banking system (of plunder). For instance, a “one dollar” gold coin placed in a savings account would produce an entry of — $1.00. It and a “one dollar” silver coin deposited in the
account would produce an entry of — $1.00, and a “one dollar” piece of paper (which THEY created for NOTHING) when deposited in the same account would produce an entry (on their books and the savings account book) of — $1.00. Funny, on paper they all looked the same ... and in just 20 years, the FED had created enough of their own phony claim checks against depositors’ gold that they were able to “convince” our “President” to outlaw public ownership of THEIR OWN GOLD! And it was “called in” (1933) to “stabilize the dollar.” But the “dollar” was (is) a unit of measure. Could FDR have stabilized the “mile”? Or the “ounce”? Why did the American people allow the government to seize their gold (and then transfer custody of it to the private FED Banks)?
Could it have been the “scientifically created depressions” referred to by Congressman Charles A. Lindbergh (Sr.) as a result of the Federal Reserve Act? Could it be possible that
the FED CREATED the “Great Depression” of ‘29 to condition the public for subsequent events?
The reserve requirement (specie reserves) was later lowered to 25%, and this accelerated the “close-out” of silver by creating a certificate (receipt) for silver deposited ... and 3 new phony claim checks issued against the same silver. In 1963 the FED began issuing the first of its NO PROMISE notes (the day after JFK was assassinated) since there was not nearly enough silver to redeem the circulating paper “dollars.” In 1965, the Treasury began coining NO SILVER tokens to replace our “lawful money,” and by mid-1968, the FED and Treasury
repudiated REDEMPTION of silver certificates. The gold was stolen in ‘33 and the silver was stolen in ‘68. What is now the
“money of account” of the United States currently expressed in “dollars”?
Fractional reserves have netted us another “bonus” that is frequently overlooked. All the new phony “dollars” the banks created (and are still creating) has increased the number of purchasing “units” resulting in higher “prices.” Oh swell! We put our loot in the bank and they inflate it to create loans. We've been digging our own graves!
Doesn’t the output of the nation (expressed as gross national product) “back” these notes? No way. Gross National Product (GNP) is nothing more than the sum of “dollar” transactions. For instance, if Joe gets a haircut for $5 and the barber spends the $5 for supplies, the GNP is $10. If the supplier uses the $5 to buy some ball point pens, the GNP becomes $15. The annual GNP exceeds $1 Trillion, but about one-third of the GNP is interest on collective debt! We cannot expect to impart value to I.O.U.s by listing more I.0.U.s as “backing.” Further, a large portion of
the GNP is LABOR, but after the labor has been performed ... it's gone! But the I.O.U.s are still “floating” around in the economy. So that backing is gone too! Another portion of
the GNP represents PRODUCTION ... but once a product has been produced, it either depreciates, rots, decays or is consumed, yet the notes continue to pile up ... unless the FED decides to restrict “loans” and contract the supply of “credit” ... whatever that is. The only thing that gives this paper “money” value is
the CONFIDENCE people have in it.
Paper money is MADNESS. It costs ABSOLUTELYNOTHING to print it! All overhead of the “money creators” is “paid” with little pieces of paper. It
is OUR labor and OUR production that gives these pieces of paper their ability to CONFISCATE wealth. The only real effort expended by the issuers of these bogus checks is in keeping us from finding out we are being robbed! They heap us with platitudes arising from out of the depths of the science
of PLUNDER ... known as economics.
One reason why economists are in such disrepute is that they have pretended to understand inflation and how to control it, when obviously we do not.
Wassily Leontieff, Nobel Prize winning economist — N.Y. Times 1/30/77
The rules of economics don’t seem to work like they are supposed to.
Arthur Burns, Chairman of the Federal Reserve Board — N.Y. Times 1/30/77
In the booklet Story of Money (Federal Reserve of N.Y.), there are three different forms of U.S. “money” identified as being in use, those being: COIN, “worth about $11 billion.” PAPER CURRENCY, worth about $105 billion and “consisting almost entirely of Federal Reserve Notes,” and CHECKBOOK MONEY, “about $270 billion in 1979,” giving us a 1979 total of $386 billion of token money. With banking “assets” in America totaling some $1 TRILLION, one might ponder for a moment where the “dollars” are that represent the approximately $614 billion balance that are listed in bank ledgers. But then we might also ponder the question of “cashing” the CHECKBOOK
MONEY ($270 billion) with the remaining COIN and PAPER CURRENCY (a combined total of $116 billion) which leaves us a little short! 154 billion “dollars” short! But when we study the
function of a check, we must realize that it serves as
an ORDER to a bank to pay someone some “dollars.” Since there are far more “checkbook dollars” than FED notes to cash them, we must conclude that many checks are never really “cashed.” If, for example, a housewife writes a check to a supermarket for eroceries purchased, the supermarket will generally deposit that check with their bank, which in turn will credit the supermarket's account. The supermarket will issue checks to their suppliers against the credit, and the suppliers likewise. The bank's merely enter credits and debits of NUMBERS of nothing. They certainly don’t transfer LAWFUL “dollars” of gold or silver!
The “cashing” of a check leaves us with FED NOTES ... which are declared to be "LIABILITIES" of the FED banks, and all notes are now NON-redeemable for coin containing silver, or gold, or any THING.
Wow! Who wouldn't like to write LO.U.s and have them declared MONEY! The FED lists their notes as liabilities in their financial statements (asset liabilities) and then declares in their publications that demand liabilities of commercial banks are money too! But most people think money is an ASSET! But the removal of specie redemption transformed “money” into LIABILITIES ... and we must borrow these liabilities into circulation!
“As noted earlier, demand liabilities of commercial banks are money.”
Modern Money Mechanics page 3
And what of the $11 billion in COIN said to be in circulation? Are they really “worth” $11 billion as the FED says?
“Coins do have some intrinsic value as metal, but far less than their face amount.”
Modern Money Mechanics, Federal Reserve of Chicago page 3
Can a Susan B. “Agony” coin claiming to be 100 cents be “worth” that amount when the Fed/Treasury says they cost but 3 cents to produce. Who gets the other 97 cents? And if the FED/Treasury team — can create all the notes they want for free, then do the coins end up costing them anything at all? With what do they purchase the metals? DOLLARS?
“This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve.”
Robert H. Hemphill (Credit Mgr., Federal Reserve Bank of Atlanta)
Since all “dollars” are borrowed into circulation, we should consider the meaning of the word BORROW.
borrow: to receive with the implied or expressed intention of returning the same or giving an equivalent.
Webster What do we borrow from a bank? The money of account (by law)
is silver and gold. Do we borrow silver and gold? Nope! We do not receive any [THING from a bank, other than a piece of paper
with numbers representing a “CREDIT.” What does credit look like? How can a borrower “borrow” anything unless he receives it?
Could a lawn and garden center loan out a roto-tiller without giving up the tiller? Can a piece of ground be tilled with a rental agreement? Could a rental car company loan (rent) an automobile without the renter receiving the car? Ever try to drive a rental agreement? In all instances, when we rent or borrow something, we EXPECT to GET THE THING! But somehow, banks are regarded as “different.” They have managed to con us into believing a piece of paper with numbers printed on it is the THING we borrow! Any dummy with a TYPEWRITER can print numbers just as nice (and meaningless) as theirs! Banks don’t loan MONEY (of account). They loan CREDIT!