What is Money?
Federal Reserve Notes: As important as money is to most people, most of us take for granted this valuable resource without giving thought to what it really is, where it comes from, or how it works. We earn it, we spend it, we save it, and some may complain they don't have enough of it, but few really know much about it. For most people, money, finances, monetary policy, etc. are pretty confusing and as a result they figure leaving the subject to others.
Many assume the bills stuffed in their wallet is money. But, is it?
Throughout history, money has taken on many forms and there hasn't been much agreement on what "object" money is. It really is nothing more than a symbol that represents the value of something.
Whatever form it takes, it is used as an intermediary for trade - or medium of exchange, in order to avoid the inefficiencies of a barter system.
Money is generally considered to have the following four characteristics: (1) a medium, (2) a measure, (3) a standard, and (4) a store. That is, money functions as a medium of exchange, a unit of account, a standard of payment, and a store of value.
Hopefully, by the time you finish reading this article, you will have more knowledge about money and begin to experience more of the benefits it can bring. Particularly, this article is going to explore the devolution of money in America as established in the U.S. Constitution, how it has lost most of the above characteristics, how it is presently being used to destroy us as a people, and what we can do to restore it.
Types of Money
Money is a broad term that has come to refer to any financial instrument that can fulfill the above four functions of money. Money can further be described among different types of monetary aggregates, using a categorization system that focuses on the liquidity of the financial instrument used as money.
* A commodity money is a medium of exchange the units of which are fixed amounts of an actual commodity that has value other than as money alone. Many items have been used as commodity money such as conch shells, barley, beads etc., as well as many other things that are thought of as having value. Historically, silver and gold coins of known, standard weights and designs have emerged as the preferred commodity monies of the entire civilized world. Gold and silver have been used as money throughout most of recorded history, even as far back as Abraham [Genesis 23:12-16]. In the case of a commodity money, the actual commodity - silver or gold - is both the medium of exchange and the standard of value (that is, the unit in which prices are stated in the marketplace).
* A fiduciary money (or representative money) is a medium of exchange composed of some intrinsically valueless substance (such as paper) which the issuer promises to redeem on demand in a commodity money (such as silver or gold coin) or in a monetary commodity (such as silver or gold bullion). The paper promise to pay is the medium of day-to-day exchange, but the actual money and the ultimate standard of value remains the promised medium of payment, the silver or gold coin with which the note is to be redeemed.
* A fiat money is a medium of exchange composed of some intrinsically valueless substance which the issuer does not promise to redeem in a commodity or a fiduciary money. The money itself is given value by government fiat (Latin for "let it be done") or decree. Because a fiat money has no direct legal connection to a commodity money (in terms of redemption) and, therefore, no real economic cost to its production, the supply of a fiat money can never be self-limiting; and the value of a fiat money is always largely a matter of public confidence in the economic or political stability of the issuer. For these reasons, historically every major fiat money have self-destructed in what is popularly called "hyperinflation" (that is, extreme decreases in purchasing-power) caused by either unlimited increases in the supply of that fiat money by the issuer or accelerating loss of public confidence in the continued value of the money or the economic or political fortunes of its issuer, or both.
America was founded amidst one of the largest economic crises we've experienced. There was raging inflation along with a massive depression that had followed the emission of bills of credit and other forms of paper currency issued by the Continental Congress and many of the state legislatures. The founding fathers recognized their responsibility of putting these paper monies into circulation and took actions to prevent this from ever happening again.
The founders of American independence also intimately understood the tyranny imposed by those who control and manipulate the money and went to great lengths to ensure America would never again be enslaved to the moneyed vultures again who desire to set themselves above mankind in order to arrange, organize, and regulate it according to their fancy.
In writing the Constitution, they included the monetary powers of this new nation and outlawed what James Madison in the Federalist papers denounced as "the fallacious medium and improper and wicked project of paper money".
The Congress shall have power... To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures; - U.S. Constitution Article I, Section 8, Clause 5
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.- U.S. Constitution Article I, Section 10, Clause 1
The U.S. Constitution established commodity money as the only lawful medium of exchange in America and empowered Congress to coin silver and gold coins the values of which are to be "regulated" using a fixed standard of weights and measures. The value of the US dollar represented a certain equivalent weight in silver and could be redeemed in silver coins. The Constitution did not authorize printing paper money (Bills of Credit). Only gold and silver coins were considered legal tender as a standard of payment.
The Coinage Act enacted in Congress in 1792 fixed the monetary unit of the United States as the silver "dollar" and defined the dollar as a unit of measure of 371.25 grains of pure silver or 416 grains of standard silver. The U.S. had adopted the decimal system [dollars and cents] for measuring the weight of money rather than the Avoir du pois, [Troy or 'shekel'] used elsewhere. As a measurement, the U.S. dollar consisted of 100 equal cents, or ten dimes to a dollar, or 4 quarters to a dollar. All of the minor coins were defined in terms of percentages of the primary coin the dollar such that a half dollar contained 1/2 as much silver as a dollar, quarter dollars, 1/4th etc.
Dollar Quarter Dime
416 grains Half Dollar
208 grains Quarter
104 grains Dime
41 3/5 grains
Most people today consider the dollar a tangible thing, rather than a 'dollar' unit of WEIGHT MEASURE. Just as concrete is denominated [or expressed] in cubic yards and milk is measured in quarts, so too silver and gold were expressed/weighed in dollars. There is, therefore, no such 'thing' as a concrete cubic yard, a milk quart, or a silver [gold] 'dollar'. There is, on the other hand, a cubic yard of concrete, a quart of milk, and a dollar of silver or gold.
Ever since establishing a sound monetary system in the Constitution and further guaranteeing American citizens life, liberty, and property in the Fifth, Ninth, Tenth, and Fourteenth Amendments, there has been a struggle between the ungodly power of the elitist bankers and those who choose liberty. That struggle can be characterized as the debauchery - or corruption - of the monetary system in America and throughout the world from commodity money, to fiduciary money, and to ultimately fiat money.
U.S. Central Bank
In 1791, Alexander Hamilton, the Secretary of the Treasury, made a deal to support the transfer of the capital from Philadelphia to the banks of the Potomac in exchange for southern support for his Bank project. As a result, the First Bank of the United States was chartered by Congress in that same year. The First Bank of the United States was modeled after the Bank of England, partly owned by foreigners, who would share from its profits. The Bank was bitterly opposed by several founding fathers, including Thomas Jefferson and James Madison, who saw it as an engine for speculation, financial manipulation, and corruption.
Thomas Jefferson"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." - Thomas Jefferson
Public outrage over the abuses of the First Bank of the United States, including its practice of fractional lending at a 10:1 rate (ten dollars of loans for each dollar they had on deposit) was such that its charter was not renewed and the bank ceased to exist in 1811.
The war of 1812 again left the country in economic chaos, putting the United States in significant debt. This debt led to an increase in banknotes among new private banks, and as a result, inflation increased greatly. Seeing another opportunity for easy profits for bankers, the Second Bank of the United States, chartered in 1816 was founded out of desperation to stabilize the currency by President James Madison.
The Bank aided a real estate boom through its 10:1 fractional lending, which encouraged speculation in land. This lending allowed almost anyone to borrow money and speculate in land, sometimes doubling or even tripling the prices of land. With such a boom, hardly anyone noticed the widespread fraud occurring at the Bank as well as the economic bubble that had been created. In the summer of 1818, the national bank managers realized the bank's massive over-extension, and instituted a policy of contraction and the calling in of loans. This recalling of loans simultaneously curtailed land sales and slowed the U.S. production boom resulting in the Panic of 1819.
The Second Bank of the United States had thrived from the tax revenue that the federal government regularly deposited and served as the depository for Federal funds until 1833, when President Andrew Jackson instructed his Secretaries of the Treasury to cease depositing the funds. Jackson saw the bank as an instrument of political corruption and a threat to American liberties. In Jackson's veto message, the bank needed to be abolished because:
* It concentrated the nation's financial strength in a single institution.
* It exposed the government to control by foreign interests.
* It served mainly to make the rich richer.
* It exercised too much control over members of Congress.
* It favored northeastern states over southern and western states.
The Central Bank's money-lending functions were taken over by the legions of local and state banks that sprang up, leading to an expansion of credit and speculation. At first, as Jackson withdrew money from the Bank to invest it in other banks, land sales, canal construction, cotton production, and manufacturing boomed. However, due to the practice of banks issuing paper banknotes that were not backed by gold or silver reserves, there was soon rapid inflation and mounting state debts.
At one time in the 19th Century, there were more than 5000 different types of bank notes issued by various commercial banks in America. Only the notes issued by the largest, most creditworthy banks were widely accepted. The script of smaller, lesser known institutions circulated locally. Farther from home it was only accepted at a discounted rate, if it was accepted at all. These banknotes could be converted into gold or silver by application at the bank. Since banks issued notes far in excess of the gold and silver they kept on deposit, sudden loss of public confidence in a bank could precipitate mass redemption of banknotes and result in ‘’bankruptcy’’.
On January 8, 1835 withdrew all government funds from the Second Bank of the United States using it to pay off the national debt. Then, in 1836, Jackson issued the Specie Circular, which required buyers of government lands to pay in gold or silver coins. The result was a great demand for gold and silver, which many banks did not have enough of to exchange for their notes. These banks collapsed, and was a direct cause of the Panic of 1837, which threw the national economy into a deep depression.
Debasing the Currency
Debasement is the practice of lowering the value of currency. A coin is said to be debased if the quantity of gold, silver, copper or nickel is reduced. Debasement occurred when unscrupulous users shaved off small amounts from the edges of the coins, thereby reducing the actual silver content of the coin. In order to prevent this, silver and gold coins began to be produced with milled edges. The main reason a government will debase its currency is financial gain. By reducing the silver or gold content of a coin, a government can make more coins out of a given amount of specie.
The consequence of debasing the currency will inevitably be ever-increasing prices (inflation), which is simply the market’s way of saying that the currency is falling in value in comparison with everything else. The advantage to public officials of debasing its currency is that the masses usually have no idea that government is behind the rising prices and so join the government’s chorus blaming the rising prices on rapacious businessmen, profiteers, and speculators.
"Lenin was right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." - John Maynard Keynes
Seated Liberty dollarIn less than 50 years of establishing the dollar as the currency of the United States, the debasement began. In an act passed on January 18, 1837 the alloy was changed to 90% pure and 10% alloy thus having the effect of containing the same amount of silver but being reduced in weight from 416 grains to 412.25 grains of standard silver. Seated Liberty Dollars were introduced in 1840 and contained 90% silver, 10% copper with its silver content of 0.77344 troy oz.
Sixteen years later, on February 21, 1853 the Constitutional mandate of fixing the standard of weights and measures (U.S. Constitution Article I, Section 8, Clause 5) was abandoned when the amount of silver in the fractional coins was reduced so that it was no longer possible to combine the fractional coins to come up with the same amount of silver that was in the dollar.
The system of gold and silver backed money evolved into a system of fiduciary money - or representative money - as banks would issue a paper receipt to their depositors, indicating that the receipt was redeemable for whatever precious goods were being stored. This system was much more convenient than lugging around gold and silver and was widely accepted because everyone knew the paper receipts were "as good as gold". Ther paper was not the dollar, instead, it is 'worth', not 'is', 1 dollar (as in the U.S Silver certificate.)
Abraham Lincoln battled for the right of Congress and the Treasury to hold the awesome power of coining money. He knew that to surrender this power to private banks was ultimately to surrender the sovereignty of America. The use of bank notes issued by private commercial banks as legal tender was gradually replaced by the issuance of bank notes authorized and controlled by the national government.
Legal tender or forced tender is payment that, by law, cannot be refused in settlement of a debt.
During the American Civil War, the federal government was unable to pay its debts with gold or silver coin, so began to issue paper notes to pay its debts. Legal Tender NoteIn 1862, Lincoln issued fiat paper money known as Greenbacks, without the backing of precious metals. When people refused to accept them in payment, Congress adopted the Legal Tender Act of 1862, compelling them to do so, and thus began circulating the first national United States currency. These bills of credit were known as Legal Tender Notes because of the inscription on each obverse face stating "This Note is a Legal Tender."
Remember, the U.S. Constitution prohibits any government from issuing what the Founding Fathers called "Bills of Credit" (and what we today would understand as paper currency redeemable in silver or gold), and outlaws any form of "legal tender" except silver and gold coins.
Art. I Sec. 10 Cl. 1, states, in part: "No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; ..."
This departure from the Constitution resulted in just as Frederic Bastiat predicted...
"When plunder has become a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it." - Frederic Bastiat in "The Law"
In 1868 the Supreme Court unanimously said that nothing other than coined money had been recognized by the legislation of the national government as lawful money. (Bank vs. Supervisors, 7 Wallace, p. 30.) In Hepburn v. Griswold (1870), the Supreme Court found the acts creating the greenbacks to be unconstitutional, ruling that forcing a creditor to accept payment in inflated currency was a violation of the 5th Amendment, protection of property under due process. That decision was later reversed following the appointment of two new judges by President Ulysses S Grant.
The Gold Standard
Following the Civil War, Congress recalled the Greenbacks from circulation and re-authorized the minting of silver and gold Dollars. The "Coinage Act of 1873" placed the United States on the gold standard, which replaced the bimetallic (silver and gold) standard that had been created by Alexander Hamilton. Many saw this as a "crime," and on February 28, 1878 the Bland-Allison Act was passed by Congress requiring the United States Treasury to purchase between $2 million and $4 million of silver bullion from mining companies in the West, to be minted into coins that would be legal tender for all debts, like gold.
Morgan DollarLike the earlier Seated Liberty Dollars, the Morgan Dollar also contained 90% silver, 10% copper with its silver content of 0.77344 troy oz. The dollar was continuously minted from 1878 until 1904 when the supply of dollars in circulation was high and there was an shortage of silver bullion. Then in 1918, the Pittman Act called for over 270 million coins to be melted for silver content. In 1921, the coinage of the Morgan Dollar resumed for that year and was replaced by the Peace Dollar commemorative that would become standard issue.
Silver CertificateThese coins, however, were quite heavy, so the government applied their gold certificate strategy to the silver. Suppose that there were five silver dollars in the treasury. The government would print a $5 Silver Certificate against the dollars, providing a somewhat easier medium of exchange.
The classic gold standard prevailed during the period 1880 and 1913 when a core of leading trading nations agreed to adhere to a fixed gold price and continuous convertibility for their currencies. The gold standard was only a system for exchange of value between national currencies, never an agreement to redeem all paper notes for gold. Gold was used to settle accounts between nations.
The Federal Reserve System
Early in 1907, New York Times Annual Financial Review published Paul Warburg's (a partner of Kuhn, Loeb and Co.) first official reform plan, entitled "A Plan for a Modified Central Bank," in which he outlined remedies that he thought might avert panics. Early in 1907, Jacob Schiff, the chief executive officer of Kuhn, Loeb and Co., in a speech to the New York Chamber of Commerce, warned that "unless we have a central bank with adequate control of credit resources, this country is going to undergo the most severe and far reaching money panic in its history." "The Panic of 1907" hit full stride in October.
In classic Hegelian dialectic style, JP Morgan engineered the Panic of 1907 where the stock market fell nearly 50% from its peak in 1906, the economy was in recession, and there were numerous runs on banks and trust companies. Complete ruin of the national economy was averted when J.P. Morgan saved the day by stepping in to organize a team of bank and trust executives who redirected money between banks, secured further international lines of credit, and bought plummeting stocks of healthy corporations. Morgan gained numerous holdings, as well as his bid to be the Rothschild's number-one American agent. J.P. Morgan's real feat and service to Rothschild in the Panic of 1907 was that he created a mood in America to believe that a central bank would prevent such a panic from occurring again and thus became receptive to a central bank.
Following the manufactured scare of 1907 the same bankers who created the crisis demanded reform from Congress who established a commission of experts to come up with a nonpartisan solution. Rhode Island Senator Nelson Aldrich, the Republican leader in the Senate, ran the Commission personally, with the aid of his team of economists.
In 1910, Aldrich and executives representing the banks of J.P. Morgan, Rockefeller, and Kuhn, Loeb, & Co., secluded themselves for 10 days at Jekyll Island, Georgia where they wrote the primary features of the Federal Reserve Act or Glass-Owen Act, as it was sometimes called at the time. The executives included Frank Vanderlip, president of the National City Bank of New York, associated with the Rockefellers; Henry Davison, senior partner of J.P. Morgan Company; Charles D. Norton, president of the First National Bank of New York; and Col. Edward House, who would later become President Woodrow Wilson's closest adviser and founder of the Council on Foreign Relations.
In violation of Article I, Section 8 of the U.S. Constitution, the Federal Reserve Act, signed into law on December 23, 1913 by President Wilson allowed a cartel of private bankers to create, buy the shares, and own the Federal Reserve System.
The new owners of America's treasury include the Rothschilds of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman, Sachs and the Rockefeller families of New York.
Federal Reserve-The privately owned Federal Reserve Bank was granted a monoploy for the issuance of banknotes in the USA - the Federal Reserve Note. Some people think the Federal reserve banks are United States Government institutions. They are not Government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders. As the Fed creates new money, it is then loaned back to the government charging interest. The government in turn levies income taxes to pay the interest on the debt.
Coincidentally, both the Federal Reserve Act and the sixteenth amendment, which gave congress the power to collect income taxes, were both passed in 1913. Further, the FED is the only for-profit corporation in America that is exempt from both federal and state taxes. The FED takes in about one trillion dollars per year tax free for the benefit of the banking families listed above. The money you pay in taxes does not go to the US Treasury to pay for the expenses of the government. It goes to those private banking families, commonly known as the FED, tax free.
Wilson, on his deathbed, admitted his error, saying that allowing the Federal Reserve to be founded was a betrayal of his country.
"A great industrial nation is controlled by it's system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world-- no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men." -- President Woodrow Wilson
With the outbreak of World War I, Britain was forced to abandon the gold standard and other nations quickly followed suit. The Fed quickly issued money to help pay the costs of WWI, as they were better positioned than the Treasury to issue war bonds, and so became the primary retailer for war bonds under the direction of the Treasury. After the war, the Fed, led by Paul Warburg and New York Governor Bank President Benjamin Strong, convinced Congress to modify its powers, giving it the ability to both create and destroy money.
Peace DollarThe Peace Dollar was the last silver dollar minted for circulation in the United States from 1921 to 1928. Like the earlier Morgan Dollar, it contained 90% silver, 10% copper with its silver content of 0.77344 troy oz. By 1928, the US Mint had struck enough silver dollars to satisfy the requirements of the Pittman Act, and since public demand for silver dollars did not materialize, the mint halted production of the Peace Dollar that year (with fewer than two million struck).
By this time the Federal Reserve had taken over much of the currency market, and throughout the 1920s, they experimented with a number of approaches, alternatively creating and destroying money and, in the eyes of many scholars (notably Milton Friedman), helping to create the late-1920s stock market bubble. After a brief attempt to revive the gold standard during the 1920s and the stock market crash in 1929, it was finally abandoned by Britain and other leading nations during the Great Depression.
After Franklin D. Roosevelt took office in 1933, the Fed became subordinated to the Executive Branch, where it remained until 1951, when the Fed and the Treasury department signed an unconstitutional accord granting the Fed full independence over monetary matters while leaving fiscal matters to the Treasury.
In 1933, Roosevelt persuaded Congress to declare Article I, Section 10, Clause 1 of the Constitution dead and made Federal Reserve Notes, alongside Silver Certicates, legal tender for all debts, public and private and rescinded the requirement that those notes be redeemable in gold coin, quiety placing the U.S. on a silver standard. Now our currency was backed with actual wealth in the form of silver, which is more plentiful than gold. Gold was re-valued from $20/oz up to $35/oz and FDR made it illegal to own gold within the U.S. but allowed foreigners to redeem paper dollars for gold, thus putting the U.S. in default on domestic gold redemption.
On May 12, 1933, the Agricultural Adjustment Act was passed, which included a clause allowing for the pumping of silver into the market to replace the gold. In 1934, a law was passed in Congress that changed the obligation on Silver Certificates so as to denote the current location of the silver. This law also allowed the government to exchange silver bullion for the certificates, not just silver dollars.
The Peace Dollar returned briefly in 1934 and 1935, as the government needed additional backing for Silver Certificates. That wealth was also to be short lived.
In 1945 Congress debased the currency even further, reducing the backing to only 25 percent. The amount of Silver Certificates in circulation depended directly upon the amount of silver bullion in the Treasury vaults, and unless more silver could be produced, they were quickly losing their backing and could not be recirculated. Silver Certificates began to disappear from circulation during the 1940s and 1950s.
John KennedyOn June 4, 1963, President John Kennedy signed Executive Order 11110 in defiance of the Federal Reserve (Central Bank) which held a monopoly on American currency, returning to the federal government, specifically the Treasury Department, the Constitutional power to create and issue currency without going through the privately owned Federal Reserve Bank. The order gave the Treasury Department the explicit authority: "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury." As a result, more than $4 billion in United States Notes were brought into circulation in $2 and $5 denominations. On November 22, 1963, Kennedy was assassinated and the United States Notes he had issued were immediately taken out of circulation. It seems obvious to some that President Kennedy challenged the "powers that exist behind U.S. and world finance," and his assassination was likely a warning to all future presidents not to interfere with the private Federal Reserve's control over the creation of money.
Within days of Kennedy's assassination, the Federal Reserve issued its new notes with the obligation clause, "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank," replaced with only, "This note is legal tender for all debts, public and private."
Lawful money is any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds.
"The terms 'lawful money' or 'lawful money of the United States' shall be construed to mean gold and silver coin of the United States. - Title 12, U.S. Code, Section 152.
Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves. Fiat money includes legal tender such as paper money, checks, drafts and bank notes.
Death of the Dollar
On March 25, 1964, the Secretary of the Treasury announced that Silver Certificates would no longer be redeemable for silver dollars. Subsequently, another act of Congress dated June 24, 1967, provided that Silver Certificates could be exchanged for silver bullion for a period of one year, until June 24,1968. This left only fiat Federal Reserve Notes in circulation with the government no longer obligated to give the holder of a note gold, silver, or any specific tangible commodity in exchange for the note.
Our pre-1934 gold coins, were weighed using the decimal [dollar/cents] system. The pre-1965 silver coins [and pre 1935 'dollar'coin] illustrates a similar harmony - except for using a different decimal system than for measuring gold. When the government allowed the Federal Reserve to violate the Constitutional basis of the dollar and finally divorce it from gold and silver, the dollar ceased to exist. We still had an object we called 'dollars,' but now the unit of measurement changed to an intangible CREDIT - no lawful money remaing in general circulation. And, intangible credit needs no system of weights and measures. Since noTHING is used as money - you'll notice tax, bank and sales statements often display raw numbers [quantity symbols] only!
Silver dollars almost made a return in 1964, when Congress approved the mintage of 45 million new silver dollars to fulfill the needs of the booming casino industry in Nevada. However, because of a critical silver shortage in 1965, Congress passed the Coinage Act of 1965, which authorized the removal of silver content from circulating coinage (except for the Kennedy half dollar) minted after December 31, 1964. President Lyndon B. Johnson issued an order on May 15, 1965 to resume production of the Peace Dollar to include silver. 316,076 Peace Dollars were struck at the Denver mint that month, before Congress overrode the Presidential order and demanded that production cease. All the coins produced to that point were ordered to be melted.
From 1965 to 1969, fifty cent piece coins were debased and adulterated by reducing the silver content to 40% silver, while in 1968 Congress repudiates redemption of all forms of "lawful money" in silver, thus turning Federal Reserve Notes into a fiat currency domestically for the first time.
Eisenhower DollarProduction of dollar coinage did resume in 1971 with the Eisenhower Dollar. That coin, however, has no silver content. The Eisenhower Dollar was struck with a copper-nickel composition for circulation and was the first United States dollar coin to not be struck in a precious metal, although special collectors' issues were struck at the San Francisco Mint in a silver-copper composition (40% silver clad). Likewise, the Susan B. Anthony, Sacagawea dollars, and Presidential dollars that have been minted since the Eisenhower dollar contain no silver, making the Peace Dollar the last true silver dollar struck for circulation.
When the U.S. was on a gold standard, every dollar was backed by actual wealth in the form of gold bullion. The paper dollar was a paper promise, a contract, to pay in gold. The law originally required that 40 percent of all federal reserve notes be backed by gold. Until 1934 the promise on our paper currency to pay "dollars" in "lawful money" meant exactly what it said. Today we continue to use the words dollars and lawful money out of habit and custom, and overlook that we no longer have either dollars or lawful money.
Severing it's last tie to the U.S. Constitution, the Treasury Department, on January 21, 1971 stopped issuing United States notes and none have been placed into circulation since that time because United States notes serve no function that is not already adequately served by Federal Reserve notes. According to the U.S. Treasury, Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933. The notes have no value for themselves, but for what they will buy.
"All the paper money issued today is Federal Reserve notes.The real backing for the nation's money is faith in the strength, soundness and stability of the American economy." - The Hats the Federal Reserve Wears, FRB of Philidelphia, pg. 4
The ONLY value the American dollar has is our confidence and belief that it does have value!
Now, our fiat paper money is totally worthless. There is nothing of real value backing it up. The money is given value by government fiat (Latin for "let it be done") or decree, enforced by legal tender laws forcing people to accept the fraud, in place of real money, gold and silver. By law the refusal of "legal tender" money in favor of some other form of payment is illegal.
Circumventing the basic law of just weights/measures allowed centralized ecomonic activity in a state/banking 'combine' to solely determines how much money [credit] to create, for whom, and at what cost. Natural resources [gold or silver], augmented by our own labor, no longer determines the money supply. Banks now 'create' money [credit] out of nothing.
The very profitable venture of counterfeiting wealth has been around for a long time. The practice of using debt as the basis for currency started in Babylon.
Simultaneous with a credit system was a need to conceal the fraud perperated by those engaged in [theft by] principal creation. Their solution was a fee [interest] for the loan of nothing. This solution created a mathematical dilemma, however. How does one return to a sole source [the banks] more than they loaned into circulation? [For simplification, imagine one bank and a total money stock of 3 eggs.] Let's say you borrow 3 eggs. When you repay the loan, you are required to repay the principal plus interest [1 egg]. How do you repay 4 eggs on a 3 egg loan - when the banks own all the chickens? To resolve this problem [yours - not the banks] more debtors are required to bring new 'dollars' into circulation for repayment of interest on outstanding debts. Thus, an endless cycle of debtors and creditors is necessary to postpone the inevitable foreclosure. Does Ponzi scheme sound appropriate?
Those banksters who issued U.S. paper money (Federal Reserve Notes) perpetrated a fraud with the creation of paper money used to steal away gold and silver from the hands of the people and to loot the treasury of the United States. It was, as Frederick Bastiat called in his 1850 book "The Law", legal plunder.
Another problem was created with this credit based creation of money out of nothing. The increased 'supply' of credit depreciates as a natural consequence, creating an insidious new tax - called inflation.
Since 1913, when the Federal Reserve was created by Congress, your money has lost 96% of its purchasing power due to inflation.
"Remember when gas was only 25-cents a gallon? You could take a dollar down to the gas station and buy four gallons for a buck! At that time our dollar was backed by silver - real money. Guess what? That same amount of silver still buys four gallons of gas today! That just proves that real money like gold and silver holds its value and it is the US dollar that buys less and less. As a matter of fact, when you think about it, you realize that gas, food, and almost everything else has NOT gotten more expensive. It only seems that way because the value of the US dollar is worth less and less so it takes more and more of them to buy the same goods and services. Most people think prices have gone up, but actually: it is the value of the US dollar that has gone down." [Bernard von NotHaus, The Liberty Dollar]
The irony of inflation is that its victims become increasingly dependent upon the very government/banking system which confiscates their production and created the inflation. To offset the effects of the plunder, the plunderees [public] need more assistance from the plunderers - which further enslaves the public. As we stand on the brink of total economic collapse, the government and Federal Reserve justifies its continued legal plunder with scare tactics and claims that the banks "are too big to fail."
The transition from bank notes to government-guaranteed currency marks the evolution from trust in a financial institution to trust in the economic capacity and future prosperity of the nation. The greater a countries production and productivity, the more the goods and services it offers in exchange for legal tender, and therefore the greater the confidence and trust in that currency.
"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens." - 1980 Annual Report Federal Reserve Bank of Richmond, pg 6
The United States Government is Broke
By 1971, Nixon closed the gold window, and stopped redeeming paper money for gold, thus turning Federal Reserve Notes into a fiat currency internationally for the first time. Gold quickly rose in price over the next decade by an average of 34% per year, up to $850/oz.
The vaults of Fort Knox, once brimming with gold, have been looted and are now reported to be empty. The gold has been given to the International banksters. Because of American debt, the international money masters demanded and got our gold. It was drained through what is called the "London Gold Pool," an agency of the world's most powerful bank, and is now lodged deeply in the underground vaults of the Bank for International Settlements in Basil, Switzerland.
Only a small number of U.S. congressmen are aware of the great gold scandal. Recently, this handful of congressmen began to demand that the Federal Reserve be audited so it could be determined what has been done with this gold and how the Federal Reserve is manipulating our currency. The Federal Reserve has stonewalled at every turn, and the White House has shunned all attempts to put pressure on the Federal Reserve. It is clear that the influential men who run our money supply do not want the truth to get out.
In 1975, Americans were permitted to own real gold again. In 1980, bonds were used to lure people away from gold. Bonds were paying a high interest rate, and a nation-wide ad campaign was designed to get people to buy bonds instead of gold. And if you wanted gold, you were supposed to buy the paper gold of "gold futures contracts" for the increased rate of return. The nation was deceived and rushed back into paper money.
Make no mistake about it… our current economic crisis was engineered by the same International bankers that have been active throughout our history and that brought about a central bank and unconstitutional taxes in the U.S.
The history of the economic crises we've experienced in America can only be understood within a framework of the Hegelian dialectic process. Every major financial crisis America has experienced in her history has followed this same Hegelian dialectic pattern with the outcome being another incremental step toward world financial domination by an elite few.
The International bankers create the Problem in the first place... the Reaction is the economic crisis... and the Solution is provided by the same people that created the problem.
Consider, for example, the global financial crisis of the early 21st century. The international bankers of the Federal Reserve in America and abroad created the problem by making huge amounts of money easily available to anyone with very little oversight and pushing the perceived value of the investments made to unrepresentative highs. Federal Reserve Board Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and SEC Chairman Arthur Levitt vehemently opposed any regulation of financial instruments known as derivatives, and in particular the specific kind of derivative, the mortgage-backed security, that triggered the economic crises of 2008. While Greenspan's role as Chairman of the Federal Reserve has been widely discussed (the main point of controversy remains the lowering of Federal funds rate at only 1% for more than a year which, according to the Austrian School of economics, allowed huge amounts of "easy" credit-based money to be injected into the financial system and thus create an unsustainable economic boom.
Many libertarians, including Congressman and former 2008 Presidential candidate Ron Paul and Peter Schiff in his book Crash Proof, predicted the crisis prior to its occurrence. They are critical of theories that the free market caused the crisis and instead argue that the Federal Reserve's printing of money out of thin air and the Community Reinvestment Act are the primary causes of the crisis.
As the true values of investments became apparent, investors rushed to cover their loses causing what was for all practical purposes a run on the bank resulting in home foreclosures and bank failures. In February 2008, Reuters reported that global inflation was at historic levels, and that domestic inflation was at 10-20 year highs for many nations. Next came the reaction of the marketplace contracting with stock market declines, massive job layoffs and impending business failures. This led to the rising sentiment that something needed to be done to prevent a total economic collapse and to save institutions too big to fail. Coming to the rescue was the same international bankers of the Federal Reserve that caused the problem in the first place with their solution. Economic stimulus plans were announced and bailouts of failing or threatened businesses were carried out. Taxpayers were called upon to pony up with their wealth to "bailout" or "rescue" those same banks, allowing the bigger banks to consolidate their power even further buying up the smaller banks.
The crisis continues even after transferring trillions of dollars into the hands of the international bankers of the worlds central banks. The response of those who created and perpetrate the problem is more economic stimulus, what Texas Congressman Ron Paul said would be akin to pouring kerosene on an already raging fire. He warns that such measures will cause a recession to turn into a full scale depression possibly worse than that of the 1930s.
You can't overlook the possibility another reason the crisis continues is because there might be an ever larger agenda here. Perhaps we haven't yet identified an even more sinister problem-reaction-soluction scenario.
Should an oil embargo ensue, product scarcities will cause frenzy buying of food and fuel, gold prices will spike, the dollar will crash and global panic will most likely break out.
Given the growing influence of collectivist politicians here and abroad, a likely scenario is the globalization of world financial markets and the merging of soverign nations into larger global entities. In the final quarter of 2008, the financial crisis saw the G-20 group of major economies assume a new significance, suggesting a new economic order including a global currency.
Steven Watson, writing for Infowars, said: The decline of the economy in the US is being caused by the very predatory globalist policies that are still presented to us as the solution for economic turmoil. Globalist vampires such as the IMFand the World bank, but two of the elite central banks and private interests, have drained the third world dry, and are now focusing their attention on enslaving the developed world.
The single currency and a ‘new economic order’ is a major step on the road to global governance. Europe already has its own strong single currency, while the dollar’s days seem to be numbered. When money is being printed and distributed by private corporations is it any surprise to see a push for a merger with other countries’ currencies?
There is yet one remaining consistent piece of the puzzle yet to emerge in our current crisis. In all previous financial crises, a state of war was always associated with the process. Besides the ongoing war in Iraq and Afganistan, could there be an impending war to bring us out of the current economic mess? According to forcaster, author, and CEO of The Trends Research Institute, Gerald Celente, an attack on Iran by either Israel or the US will spark the onset of World War III.
The Boom - Bust Cycle
Are you beginning to understand the game banksters play to consolidate the wealth into their pockets?
"When plunder has become a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it." - Frederic Bastiat in "The Law"
The central bank causes inflation by creating debt/money for loans and credit and making these funds readily available... setting up the booming economy. They next use the inflation which they created as an excuse to shut off the loans/credit/money. The resulting shortage of cash causes the economy to falter or slow dramatically - or bust - and large numbers of business and personal bankruptcies result. The central bank then seizes the assets used as security for the loans and the wealth created by the borrowers during the boom is then transferred to the central bank during the bust. That's how the rich get richer, and the poor get poorer.
In 2008, America was faced once again with another financial crisis. And, like in previous crises, it was engineered by the same International bankster elites that have sought to set themselves above mankind in order to arrange, organize, and regulate it according to their fancy. Easy and low cost credit created by artificially manipulated interest rates by the Fed encouraged a real estate boom (the problem). Once unsustainable levels of investments were reached, the values of those investments were debased leading to a contraction of credit, widespread foreclosures, and runs on the banks (the reaction). And, like in previous crises, the International banksters provided the solution... government bailouts of trillions of dollars of taxpayer money into the coffers of financial institutions "too big to fail."
“There’s no doubt now, that Fed chairman Alan Greenspan’s plan to pump zillions of dollars into the system via ‘low interest rates’ has created the biggest monster-bubble of all time and set the stage for a deep economic retrenchment,” writes Mike Whitney. “ Greenspan’s inflationary policies were designed to expand the ‘wealth gap’ and create greater economic polarization between the classes. By the time the housing bubble deflates, millions of working class Americans will be left to pay off loans that are considerably higher than the current value of their home. This will inevitably create deeper societal divisions and, very likely, a permanent underclass of mortgage-slaves.”
Greenspan has successfully piloted the nation into virtual insolvency. In fact, the parallels between our present situation and the period preceding the Great Depression are striking. Just as massive debt was accumulating in the market from the purchase of stocks “on margin”, so too, mortgage debt between 2000 and 2006 soared from $4.8 trillion to $9.5 trillion. In both cases the “wealth effect” spawned a spending spree which looked like growth but was really the steady, insidious expansion of debt which generated economic activity. In both periods wages were either flat or declining and the gap between rich and working class was growing more extreme by the year.
"...The borrower is servant to the lender." -
As a result of allowing International bankers to dismantle our Constitution and devolve our monetary system from commodity money, to fiduciary money, and now to fiat money... Americans have once again become slave to the lenders and absent massive transfers of wealth from working Americans, their ponzi scheme is on the brink of collapse.
* The government operates a scheme of oppressive, hidden taxation through increases in the supply of money that generate systematic increases in the prices of goods and services (what the public calls "inflation").
* Through this system of hidden taxation, modern political money licenses the dominant financial and political oligarchy of this country to "Redistribute" the nation's wealth from one group to another - more than $6 trillion since World War II, according to the American Institute for Economic Research.
* The banking system now own the trust companies, investment dealers, stock brokers, and bond brokers and more, as the little people are bankrupted, put under power of sale, and rot unemployed while the stores are packed with goods.
* By functioning as a mechanism for "redistributing" wealth, modern political money systematically corrupts the electoral process, enabling politicians to buy votes with promises of new or expanded governmental spending-programs made possible only by the banking system's ability to "monetize" the public debt.
* By linking the corrupt banking system to the public debt, modern political money licenses the banksters to loot the public treasury, initially by guaranteeing Federal Reserve Notes as "obligations of the United States" and specially privileging those notes as "legal tender", and ultimately by providing taxpayer-funded "bail outs" of the bankers when the scheme of inherently fraudulent fractional-reserve banking collapses.
* Modern political money and political banking function as key mechanisms in the New World Order scheme of fascistic central economic planning that misdirects and wastes resources and thereby lowers the standard of living of the vast mass of Americans for the benefit of a privileged few.
"Whenever a government assumes the power of discriminating between the different classes of the community, it becomes, in effect, the arbiter of their prosperity and exercises a power not contemplated by any intelligent people in delegating their sovereignty to their rulers. It then becomes the great regulator of the profits of every species of industry and reduces men from a dependence on their own exertions to a dependence of the caprices of their government." [Ron Paul, "The Revolution: A Manifesto"]
How long can this CONfidence-game last?
How is the fraud sustained and public CONfindence maintained?
"Should government refrain from regulation (taxation), the worthlessness of the money (credits) becomes apparent and the fraud can no longer be concealed." -- John Maynard Keynes, "Consequences of Peace."
* Banks charge interest on their loans to give the Federal Reserve Notes the perception of value.
* They count on the short residual memory of the older generation to remember the days when gold and silver certificates circulated at par with precious metals.
* They dumb-down the public with government sponsored public schools where students never learn the truth about money and where students learn to exchange labor and production [assets] for checks and banknotes [liabilities] created out of nothing in a government protected bank.
* The corporate owned mainstream media keeps the public distracted with an endless stream of nonsensical entertainment and news presented by well trained propagandists. When was the last time you heard a newscaster or pundit report anything that made sense?
* Confidence in 'credit' is also produced by taxation. Governments go to great lengths collecting far less of 'it' than they spend - to sustain an aura of value. In fact, government does not NEED to collect taxes to pay for services as it can simply print all the bank notes it needs.
"If, on the one hand, the banks overly expand credit, hyperinflation occurs. If, on the other hand, the banks overly restrict the expansion of credit in order to avoid hyperinflation, recession and then depression occurs. The bankers' "trick" is to continue to expand credit within an expanding, and therefore essentially noninflationary, economy. The insoluble problem inherent in credit-expansion through fractional-reserve banking, however, is that expansion of a fiat money supply inevitably misdirects and wastes real economic resources, resulting in an increasingly nonrational economy - that is an economy that does not expand in real terms. In short, credit-expansion by fractional-reserve banking in the long run guarantees economic collapse, with resultant social chaos and political crisis.
The burden of governmental debt - much of it made possible only by central-bank "monetization" - has approached levels unsustainable in real terms even with drastically increased confiscation of Americans' earnings through explicit taxation. But Americans seem reluctant to accept more taxation to fund the never-ending follies of a spendthrift welfare state. Thus, repudiation of the debt (in whole or in part) through extreme depreciation of Federal Reserve Notes and bank-deposits denominated therein appears likely, if not certain." [Dr. Edwin Vieira, Jr., "The Federal Reserve System: A Fatal Parasite on the American body Politic."]
Return to Constitutional "Real" Money
We do have a choice, and ultimately, it's a moral choice. Choose bondage or choose liberty.
If we as a nation are to avoid economic collapse and begin to enjoy the vision of our founders, we must...
* Restore America's original constitutional monetary system of silver and gold coinage. The US Constitution has never been amended to allow anyone other than Congress to coin and regulate currency.
* Insist we return to an honest system of weights and measures.
* Demand that all the paper currencies of private banks be true fiduciary monies - that is, be redeemable in silver or gold, or some other commodity with intrinsic value.
* Repeal the unconstitutional legal tender laws forcing citizens to accept worthless paper money as payment and resume the practice of using lawful money (gold and silver) as the only legal tender currency.
* Dismantle the incestuous and corrupt relationship between the national government and the banking industry through the Federal Reserve System, the Federal Deposit Insurance Corporation, and so on.
* Abolish inherently fraudulent fractional-reserve banking.
* End the government's use of the monetary and banking systems to "regulate" the economy and to impose pervasive police-state surveillance on individuals.
Individually, we can begin to take more responsibility for our own economic future.
* Stop immediately incurring new debt. If you're now in debt, get out.
* While we still can... we should be buying physical gold and silver as the storehouse of our wealth. While not being real Constitutional money, owning gold & silver bullion represents the most universally trusted form of savings because gold & silver continue to be the most widely recognized form of money. Unlike fiat currency and some stock market investments, gold and silver will never lose ALL its value.
Silver Eagle coin-The American Silver Eagle is the official silver bullion coin of the United States, first released by the United States Mint on November 24, 1986. American Eagle Silver bullion coins are affordable investments and legal tender with a nominal face value of one dollar. Above all, they're the only silver bullion coins whose 1 troy oz. weight and 99.9% pure silver purity are guaranteed by the United States Government. They're also the only silver coins allowed in an IRA.
Gold Eagle coin-The American Gold Eagle is an official gold bullion coin of the United States, authorized under the Gold Bullion Coin Act of 1985, and first released by the United States Mint in 1986. Offered in 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz denominations, these coins are guaranteed by the U.S. government to contain the stated amount of actual gold weight in troy ounces. These coins are made with gold from sources in America, with an additional alloy of silver and copper to produce a more wear-resistant coin of .9167 (22 karat, which had long been the crown gold English standard for gold coins).
American Buffalo coin-The American Buffalo, also known as a Gold Buffalo, is a 24-karat gold bullion coin first offered for sale by the United States Mint on June 22, 2006. This was the first time ever that the United States Government has minted pure (.9999) 24-karat gold coins for the public. On September 26, 2008 the U.S. Mint announced it is temporarily halting sales of the American Buffalo coins because it can't keep up with soaring demand as investors seek the safety of gold amid the current economic turbulence.
Canadian Silver Maple coin-First minted in 1988, the silver Maple Leaf is now one of the more popular members of the Canadian Maple Leaf family of bullion coins...besides silver, one-ounce Maple Leaf coins are also produced by the Royal Canadian Mint in gold, platinum and palladium. The silver Maple Leaf coin contains one troy ounce of pure .9999 fine (or "four-nines") silver, making it the purest one-ounce silver coin produced by any government mint anywhere in the world, and is a legal tender coin with a face value of five Canadian dollars.
Austrian Silver Philharmonic coin
The 800-year old Austrian Mint first minted the Silver Vienna Philharmonics in 2008, and are pure .999 fine silver bullion coins each containing one troy ounce of pure silver.
The market value of the coins is generally about equal to the market value of their gold or silver content, not their face value.
The day may not be far off where the fiat currency we now use as a medium of exchange will become so devalued through hyperinflation, it will take cartloads of it to purchase basic necessities. History tells us that since the Roman Empire every currency has been inflated into non-existence, a valuation of zero. All world currencies will suffer the same fate eventually.
Chart of U.S. Money Supply Growth
Right now, the U.S. government is printing away your wealth through inflation. As they continue to increase the money supply and hand it over to banks and failed investment schemes, the value of each of your paper dollars decreases. The last M3 reports showed that 18% more dollars were being printed yearly by the Federal Reserve. They have since stopped publishing M3 figures so we have no idea how bad it's gotten in the last few years