Fake Phony Fiat Fed. Reserve Currency

[Mech]

"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

Henry Ford


Modern American currency is a interesting example of how the "High Cabal" has brainwashed common citizens to believe dangerous lies. Most Americans have no idea of how their currency is produced, if it has any intrinsic value, and how it is used by those in power to steal from the people. For example, when I asked college students this question I received very interesting answers:

"Can United States currency be redeemed in gold only, or can it also be redeemed in silver?"

* 62% said that our currency is redeemable in both gold and silver.
* 35% said that is redeemable in neither gold nor silver.
* 19% said that it is redeemable only in gold.
* 8% admitted they didn't know.
* 0% said that it is redeemable in silver.

(the answers were not mutually exclusive, thus the total percentage is more than 100%)

Most Americans have been conditioned to believe unquestioningly in the infallibility of the American monetary system and in the financial stability and integrity of the American government. If we were awake to reality, we'd realize that we have our very survival staked on those beliefs.

As defined in a background article, money is any object used in the exchange of goods and services. However, we can distinguish between genuine money and money substitutes .

* Genuine money has several distinguishing characteristics:



# Real money is a durable, easily divisible commodity of a consistently high value in its own right.

# Real money is a commodity which enjoys universal acceptance. This means its value is accepted by all people everywhere. Such a commodity has withstood the test of time as money; its value has been recognized over time in a number of countries.

# To serve as real money, a commodity must be rare enough to be of great value yet available in adequate supply, or able to be produced in adequate amounts to serve as a medium of exchange or the basis of a medium of exchange.


* The only commodities which have consistently met these criteria in Western history are gold and silver.


# A money substitute is anything that is circulated in place of money, such as paper currency.

# A money substitute is illegitimate when it is merely the creation of a government for the purposes of swindling the people:

* paper currency not backed by gold or silver
* digital notations within a computer system that have no necessary connection to money or money substitutes


# A money substitute is legitimate when it is:

* a note or receipt for real money--gold or silver or some commodity of equal value
* redeemable at any time in real money
* issued in reasonable proportion to the amount of real money in storage


Until 1934, some of the currency of the United States was redeemable in gold or silver. Note the $20 bill above indicated that the certificate was "payable to the bearer on demand" "IN GOLD COIN."

Since the "High Cabal" took over the American monetary system in 1913, with the creation of the "Federal" Reserve System, illegitimate money substitutes--called Federal Reserve Notes--have replaced genuine money and genuine money substitutes. Note that the one dollar bill below does not include "payable to the bearer on demand."



The Gold Reserve Act of 1934 abolished gold as domestic money and made it illegal for American citizens to own gold. All gold and gold-backed currency was removed from circulation in the U.S. American gold-backed currency--that produced before 1913--was still redeemable in gold or silver for foreign currency holders. However, in 1971, President Nixon in effect declared world bankruptcy; American currency was no longer redeemable for anyone.

A booklet published by the Federal Reserve Bank of New York tells us:

"Currency cannot be redeemed, or exchanged, for Treasury gold or any other asset used as backing. The question of just what assets 'back' Federal Reserve notes has little but bookkeeping significance."

[Mech]

CONTINUED.......


The Fed isn't shy about telling us about this money scam they're pulling on us. In a booklet entitled Modern Money Mechanics, the Federal Reserve Bank of Chicago says:

"In the United States neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper. Deposits are merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face amount."

Why do Americans accept paper currency in place of real money--gold or silver? Because the government forces them to. Federal Reserve currency has been designated "legal tender" by the government -- that is, it must be accepted. This is what is meant by fiat money--currency or ledger entries that the government forces us to accept as money.

In the fine print of a footnote in a bulletin of the Federal Reserve Bank of St. Louis, we find this surprisingly candid explanation:

"Modern monetary systems have a fiat base -- literally money by decree -- with depository institutions, acting as fiduciaries, creating obligations against themselves with the fiat base acting in part as reserves. The decree appears on the currency notes: 'This note is legal tender for all debts, public and private.'"


***Wonder Why Dubya Has Increased the National Debt?***


Debt is the way the Bush junta, its corporate sponsors, and the Federal Reserve steal from American taxpayers. It's a neat con game that almost all Americans are unaware of:


The federal government prints a fancy piece of paper and calls it a bond or Treasury note. Bonds or Treasury notes are merely promises to pay a specified sum at a specified interest on a specified date.


* This is government debt, which will be paid for with taxpayer money.

* Unlike the Federal Reserve, which can create money out of thin air, tax revenues from working Americans come from their salaries which they earn through labor.

*
o

* The Fed then prints a Federal Reserve check and exchanges that with the government in return for the bonds or notes that are left unsold from periodic government sales. After this transaction, the government bonds and notes become "securities assets" for the Fed, which can be used to offset liabilities.

o Since it is required to have only 10% "reserve"--10% in some kind of reserve fund to "back" its notes, then it can create 9 Fed notes for every dollar it has in "securities assets."

o These additional Fed notes can be loaned to other banks at interest.

* The government sends the Fed check to the Fed for deposit. Relative to that deposit the government can now spend Fed notes (currency) for its expenses. Under the Bush junta, almost all of those Fed notes are paid out to the corporations that put Dubya into power: the defense and energy companies.

* What is actually happening is that huge amounts of currency created out of thin air (Fed notes without any backing whatsoever) now come into the American monetary system. This is inflation: increase in money substitutes.



Ever wonder why stamps have gone from 3 cents to 37 cents, why gasoline has gone from 20 cents to $2 a gallon, etc. Has your salary gone up 100% in the last twenty to thirty years? The "High Cabal" puppets--American presidents and their cohorts--try to make you believe that inflation is something other than an increase in the currency supply. It isn't.

We can create a hypothetical society with a total currency supply of $10, with stamps costing 3 cents. If the total currency supply increases to $20 (100% increase) then there are now more Fed notes around to bid for that stamp and the price of the stamp goes up--possibly 100 percent.

Only some sectors of the U.S. economy have experienced increases in prices. If you examine those that have, you'll see that they are all either state or federal governments or corporations which continually make huge donations to government election campaigns. During this same time period, the after-expense income of the average worker has steadily and dramatically declined.

The Banking Scam

It's difficult for average Americans to understand what a hoax American banking has become. Let's take a typical example, the purchase of a $100,000 home, with $30,000 paid for the cost of the land, architect's fee, sales commissions, building permits, etc., and $70,000 going for the cost of labor and building materials. The home buyer puts up $30,000 as a down payment and must then borrow $70,000. Let's say the loan is issued at 11% over a 30-year period; the amount of interest paid will be $167,806.

That means the amount paid to the bank is about 2 1/2 times greater than paid to those who provide all the labor and all the materials. Granted, this figure represents the value of the amount borrowed over thirty years and might conceivably be justified on the basis that a lender deserves to be compensated for surrendering the use of his capital for 30 years.

But that assumes the bank actually "surrendered" something real of value. It assumes that the bank had earned the money, saved it, and then loaned it for construction of someone's house. But the reality is that the bank did nothing to earn the money, had not saved it, and, in fact, simply created it out of thin air by putting numbers into a computer system.


So if you're a vindictive American pResident like Bush, and you want to attack Europe's economy, then you allow the dollar to fall precipitaley and Europe is suddenly selling a lot less Mercedes products and everything else to Americans and the rest of the world that deals in U.S. dollars. And you'll lie to the American people that this policy of letting the dollar slide against other currencies is in the long-term interest of the American economy.


The difficulty with this ploy is that the U.S. economy may go even further under than it is now--which will cause even more unemployment and less money for state and federal social support programs.

Of course, the "High Cabal's" puppet Bush administration doesn't really care what happens to working people. And even if the economy goes into the toilet the wealthy have sufficient funds to weather the storm and when the crisis reaches its worst point, they'll be able to buy bankrupt businesses and real estate for pennies on the dollar.



Meanwhile Dubya and his cronies are ignoring the warning signs of world recession (actually depression). The recent collapse of the world’s 31st largest bank, the Osaka-based Resona Holdings, became the subject of an emergency meeting of the Japanese cabinet and the subsequent announcement of a $17 billion bailout operation by the Japanese government.

America's Trade Deficit Shuffle

America's current accounts deficit (which includes goods and services) will hit about $500 billion this year. Which means Americans will receive $500 billion more in goods and services from other nations than we will provide to them. According to Bridgewater Associates, foreigners currently hold 48% of the US Treasury bond market. Foreigners also own 24% of our corporate bond market and 22% of all US corporations. In total, foreigners hold $8 trillion of US financial assets.


What this means is that Americans get goods, and foreigners get American dollars, which, as we've seen, the Fed creates out of thin air and are not redeemable in gold or silver. America's trade deficit means that foreigners are selling us more goods than they are buying from us; therefore, they have excess dollars, which are used to purchase Treasury bonds. By accepting and holding U.S. dollars, foreign nations finance our trade deficit and the Bush administration's wild deficit spending. Economists call this exporting inflation. The U.S. prints ever more paper currency and foreigners end up paying higher prices.

Economic analysts outside of America are fully aware of Bush's economic war against the other nations of the world. "America has launched its own weapon of mass destruction," said Nick Parsons, a currency strategist with Commerzbank. "The US solution to deflation [lower prices] is to export it to the rest of the world."

Europeans are clearly aware that one of the major reasons Bush created the Iraq war was to take Iraq oil interests off the Euro as the currency of exchange. Two other major reasons for Bush's fake war against Iraqi weapons of mass destruction was to reconfigure the entire Middle East and to create a massive oil cartel with which to replace OPEC.

The May 2003 terrorist strikes in Saudi Arabia raised speculation about possible CIA connection to the attack. Whoever carried out the attacks, and whoever was ultimately responsible for the operation, they give clear warning to the Arab world that regime change, Bush-style, may now be the inevitable future for them.

[Mech]

"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. I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, 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 the wealth is aggregated in a few hands and the Republic is destroyed."

President Abraham Lincoln after the
National Banking Act of 1863 was passed



www.hermes-press.com/econ2.htm