You that trample on the needy, and bring ruin to the poor
of the land, saying... We will make the ephah small and the shekel great, and
practice deceit with false balances.
Amos 8, verses 4-5
"It is apparent from the whole context of the Constitution as well as the
history of the times which gave birth to it, that it was the purpose of the
Convention to establish a currency consisting of the precious metals. These were
adopted by a permanent rule excluding the use of a perishable medium of
exchange, such as of certain agricultural commodities recognized by the statutes
of some States as tender for debts, or the still more pernicious expedient of
paper currency."
-- Andrew Jackson, 1836
"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, 1920
It is the continuous loss of value that constitutes the destruction of the dollar. Because it happens gradually most of us are not alarmed by it. It is like the frog in hot water. If you throw a live frog into boiling water, it jumps out immediately. But if you put in a pot of cold water on the stove, it just sits. If you gradually heat the water, the frog just sits. By the time the frog realizes the water is too hot, it doesn't have the strength to jump and it burns to death. In relation to the sinking value of the dollar most of us are "sitting frogs!"
This chapter is largely based on The Biggest Con: How the Government is Fleecing You by Irwin A. Schiff. According to Schiff, "U.S. politicians, contrary to the Constitution and the U.S. criminal code, have conned all citizens out of their money savings. This monetary swindle was perpetuated despite a reasonably literate electorate, despite our well-developed financial and banking institutions, and despite our many institutions of higher learning and the nation's extensive network of information media." Let us now examine the "mechanics" of the swindle.
THE GREAT MONEY SWINDLE
Look at Figure 1 below, which depicts a Certificate of Deposit for ten silver dollars issued in 1880. Banking originated in the middle ages. Because of the inconvenience of carrying a lot of silver or gold, some of it was deposited with a blacksmith, jeweler, or goldsmith. A certificate of deposit was issued. The certificate could be used as payment. The holder could present the certificate to the "banker" and receive the silver or gold it represents, guaranteed by the terms, "payable to the bearer on demand." Note that the certificate says, "This certifies that there have been deposited with the Treasurer U.S. ten silver dollars." This Certificate of Deposit is in the tradition of how banking originated.
Figure 1:
CERTIFICATE OF DEPOSIT
THIS CERTIFIES THAT
there have
been deposited with
THE TREASURER U.S.
TEN
SILVER DOLLARS
payable to the bearer on demand
UNITED STATES CERTIFICATE OF DEPOSIT 1880
(REDEEMABLE IN
SILVER)
Now examine Figure 2. This is a Silver Certificate which states, "This certifies that there is on deposit in the Treasury of The United States of America ten dollars in silver payable to the bearer on demand." For all intents and purposes this Silver Certificate is equivalent to the Certificate of Deposit in Figure 1. But there is a very important difference: the Silver Certificate also states, "This certificate is legal tender for all debts, public and private." This is a reflection of a "legal tender law." It in effect says, "Citizens are not qualified to choose their money; government dictates what shall be used as money." This sets the stage for the swindle. Government can debase the currency and force citizens to use it.
Figure 2:
SILVER CERTIFICATE
THIS CERTIFIES THAT THERE
IS ON DEPOSIT IN THE TREASURY OF
THE UNITED STATES OF AMERICA
THIS CERTIFICATE IS LEGAL TENDER
FOR ALL
DEBTS, PUBLIC AND PRIVATE
TEN DOLLARS
IN SILVER PAYABLE TO THE
BEARER ON DEMAND
UNITED STATES SILVER CERTIFICATE 1934
(REDEEMABLE IN SILVER)
In Figures 3 and 4 below we see the same difference between the gold certificates of 1907 and 1928. As soon as citizens grant their government the power to dictate what shall be used as money, they open the door to being swindled. Regrettably, that is precisely what has happened to the American public. And it happened gradually - like it happened to the frog who burnt to death.
Figure 3:
THIS CERTIFIES THAT THERE IS ON DEPOSIT IN THE
TREASURY OF THE
UNITED STATES OF AMERICA
TEN DOLLARS IN GOLD COIN
PAYABLE TO
THE BEARER ON DEMAND
UNITED STATES GOLD CERTIFICATE 1907
(REDEEMABLE IN GOLD)
Figure 4:
THIS CERTIFIES THAT THERE HAVE
BEEN DEPOSITED
IN THE TREASURY OF
THE UNITED STATES OF AMERICA
THIS CERTIFICATE IS A LEGAL TENDER
IN THE AMOUNT THEREOF IN PAYMENT OF ALL
DEBTS AND DUES PUBLIC AND
PRIVATE
TEN DOLLARS
IN GOLD COIN PAYABLE TO THE BEARER
ON DEMAND
UNITED STATES GOLD CERTIFICATE 1928
(REDEEMABLE IN GOLD)
Look at Figure 5 below. Here we have a Federal Reserve Note, dated 1928, "Redeemable in gold on demand at the United States Treasury or in gold or lawful money at any Federal Reserve Bank." This means the holder of the note could exchange it for $10 worth of gold at the U.S. Treasury. However, at a Federal Reserve Bank they could, instead of gold, give the holder "lawful money." In Chapter One we saw that "lawful money" is defined by law as gold and silver. No doubt, the term "lawful money" is introduced as part of the plot to gradually debase the currency. The water is gradually getting warm!
Figure 5:
REDEEMABLE IN GOLD ON DEMAND
AT THE UNITED
STATES TREASURY
OR IN GOLD OR LAWFUL MONEY
AT ANY FEDERAL RESERVE BANK
WILL PAY TO THE BEARER ON DEMAND
TEN DOLLARS
FEDERAL RESERVE NOTE 1928
(REDEEMABLE IN GOLD OR "LAWFUL
MONEY")
Now look at Figure 6. This is a National Currency Note, dated 1929, "Redeemable in lawful money of the United States Treasury or at the Bank of Issue." The "gold" is gone. Another step of the swindle has been taken. The water is getting hot!
Observe that neither the Figure 5 Federal Reserve Note, nor the Figure 6 National Currency Note say anything about "legal tender."
Figure 6:
NATIONAL CURRENCY
SECURED BY UNITED STATES
BONDS DEPOSITED WITH THE TREASURY OF
THE UNITED STATES OF AMERICA
WILL PAY TO THE BEARER ON DEMAND
TEN DOLLARS
REDEEMABLE IN LAWFUL MONEY OF
THE UNITED
STATES AT UNITED STATES
TREASURY OR AT THE BANK OF ISSUE
NATIONAL CURRENCY 1929
(REDEEMABLE IN "LAWFUL MONEY")
Now look at Figure 7 below, a Federal Reserve Note, dated 1934. "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." Compare this to the Figure 5 Federal Reserve Note. One difference is that the "gold" has been dropped. Another difference is that the 1934 Federal Reserve Note has become "legal tender." Maybe, when a swindle is pulled on a grand scale, the cruder it is, the more likely it succeeds!
Figure 7:
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
WILL PAY TO THE BEARER ON DEMAND
TEN DOLLARS
FEDERAL RESERVE NOTE 1934
(REDEEMABLE IN "LAWFUL MONEY")
Figure 8 shows a recent Federal Reserve Note. It cannot be redeemed for anything. It is a note to pay nothing. The swindle is complete. The water is near boiling. The frog is almost dead. Its awareness is far too low for it to realize what happened…
"Counterfeit" means "to copy or imitate in order to deceive" or "something likely to be mistaken for something else of higher value."
Figure 8:
THIS NOTE IS LEGAL TENDER
FOR ALL DEBTS,
PUBLIC AND PRIVATE
TEN DOLLARS
FEDERAL RESERVE NOTE 1988
(NOT REDEEMABLE; A NOTE TO PAY
WHAT?
"WILL PAY TO THE BEARER ON DEMAND" HAS DISAPPEARED)
IS THIS
COUNTERFEIT MONEY?
Now examine Figure 9 below. Here we have a 1953 $2 United States Note. It is "legal tender at its face value" and it says, "Will pay to the bearer on demand." But what is its "face value" and how will the "two dollars" be paid? Compare this to the 1976 $2 Federal Reserve Note in Figure 10. Here there is nothing about "face value" or "will pay to the bearer on demand." Can we conclude that by 1976 the bankers and politicians were so secure in their belief that the American public had become too brainwashed to notice the swindle, and that there was no longer any need for pretensions like "face value" and "will pay to the bearer on demand?"
Figure 9:
THIS NOTE IS LEGAL TENDER
AT ITS FACE VALUE
FOR ALL DEBTS
PUBLIC AND PRIVATE
THE
UNITED STATES OF AMERICA
WILL PAY TO THE BEARER ON DEMAND
TWO DOLLARS
UNITED STATES NOTE 1953
(NOT REDEEMABLE; A NOTE TO PAY
WHAT?)
IS THIS COUNTERFEIT MONEY?
Figure 10:
THIS NOTE IS LEGAL TENDER
FOR ALL DEBTS,
PUBLIC AND PRIVATE
THE
UNITED STATES OF AMERICA
TWO DOLLARS
FEDERAL RESERVE NOTE 1976
(NOT REDEEMABLE; A NOTE TO PAY
WHAT?
"WILL PAY TO THE BEARER ON DEMAND" HAS DISAPPEARED)
IS THIS
COUNTERFEIT MONEY?
OTHER ASPECTS OF THE SWINDLE
The stage for the swindle was set by the U.S. Constitution, Article I, Section 8, "Congress shall have power to coin money, regulate the value thereof" - see Chapter Five. This opened the door to a government monopoly being established. The second step was passage of the National Bank Act of 1863, which effectively outlawed private currency. The monopoly was now complete. In 1913 the Federal Reserve System was created, when Congress (unconstitutionally) delegated its monopoly currency power to the Federal Reserve Corporation, a private company.
Our Founding Fathers thoroughly understood currency debasement and how it usually leads to the destruction of civilization. The Coinage Act of 1792 provided the death sentence for anyone convicted of debasing U.S. coins.
In 1933 President Franklin D. Roosevelt arbitrarily reduced the amount of gold the dollar represented from one twentieth of an ounce to one thirty-fifth of an ounce. This amounted to a 43% devaluation (or debasement) of the dollar - a declaration of bankruptcy stating that the U.S. Treasury would "settle" its debts by paying 57 cents in the dollar. It also meant, in terms of gold, that overnight the government had robbed the American people of 43% of their savings. By the standards of our Founding Fathers this was a crime punishable by death.
In 1934 Roosevelt's "New Deal" took away the American citizen's right to own gold, a right Americans had enjoyed since the first pilgrims arrived. This also meant the discontinuation of gold certificates.
In 1963 silver certificates were discontinued. On November 26, 1963, the day of John F. Kennedy's funeral, the first 50 million "no-promise" Federal Reserve Notes were released into circulation. We shall return to this topic.
In 1913 when the Federal Reserve System was established, Federal Reserve District banks were required to maintain a 40% gold backing for Federal Reserve Notes, and a 35% gold backing for deposits. In 1945 the gold backing for both notes and deposits was dropped to 25%. In 1965 the gold backing requirement for deposits was eliminated completely. And in 1968 the gold backing requirement for Federal Reserve Notes was eliminated.
Up to 1965, U.S. coins (dollar, half-dollar, quarter, and dime) contained 90% silver and 10% copper. "Coins" of the same denominations minted since 1965 have a copper core covered with a thin layer of nickel. Are these tokens counterfeit coins? According to Irwin Schiff:
"Correctly understood, the U.S. government's coinage operation violates Article 1, Section 8, of the U.S. Constitution. The Constitution empowered Congress to "coin money," not to produce worthless tokens. The government's coinage operation also violates Title 18, Section 1001, of the U.S. criminal code which reads as follows: "Whoever, in any manner within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact or makes any false, fictitious, or fraudulent statement or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry shall be fined not more than $10,000 or imprisoned not more than five years or both. June 25, 1948, c. 645, 62 Stat. 749." Since the design, composition and structure of U.S. cupro-nickel coins is nothing more than "a trick, scheme, or device" to conceal their true value, character, and composition, all persons who have been and are now involved in their authorization should be prosecuted under this statute."
"Bankruptcy" means settling with your creditors for less than you owe them. It is a repudiation of your debts and financial obligations. On August 15, 1971 the U.S. government announced that it was "ending the dollar's convertibility, closing the gold window, cutting the dollar's tie to gold, and allowing the dollar to float." This was a declaration of bankruptcy, a repudiation of the obligation of the U.S. government to redeem its paper IOUs for gold.
On December 18, 1971 the U.S. government raised the "official gold price" from $35 to $38. This was a devaluation of 8.57%. Again, this was a declaration of bankruptcy. On February 12, 1973 the "official gold price" was increased to $42.22 - a devaluation of 10%. However, both of these devaluations were somewhat strange. Because dollar convertibility into gold had been canceled on August 15, 1971, the new "official prices" of gold were "prices" at which the U.S. government refused to sell gold!
Around 1976 Americans' right to own gold was restored, with the gold price at about $180 an ounce. Currently the gold price is around $350 per ounce. This means that during the past 60 years the U.S. dollar, in terms of gold, has been devalued by 82.5%. Put in another way, only 17.5% of the dollar's value remains.
THE EFFECTS OF THE SWINDLE
To make sense of the effects of the great money swindle we can use AIDS (acquired immune deficiency syndrome) as an analogy. [See #TL09A: AIDS: Bad Science or Hoax? for an alternative view of the nature of AIDS.] Money is to the economy as blood is to the individual. The AIDS virus gets into the blood, but for many years nobody realizes that anything is wrong. The politicians and Federal Reserve bankers get into the money, but hardly anyone recognizes what has happened. In both cases, for a long time there are no observable symptoms. In the case of AIDS this is called stage one.
Then symptoms start to appear. The victim is afflicted with unusual infections. Because the immune system has been considerably weakened, the body struggles with an infection that a healthy body would handle with ease. The illness can be severe, but eventually the victim recovers - in a fashion. This is analogous to the Great Depression of the thirties. It is AIDS stage two.
Eventually the immune system becomes so weak that the patient cannot recover after being struck by an infection. AIDS stage three. The U.S. economy may not yet be in stage three. The current depression started around 1987. For every sign of recovery there seems to be another sign of regression. And the government "cooks the books" (like not counting as unemployed people who have given up looking for work) to make it look better than it really is.
The economy, and particularly the U.S. dollar, has been raped by AIDS-infected Federal Reserve bankers and politicians. To "rape" means "to seize or take away by force; to despoil." "Rape" the noun means "an outrageous violation."
In 1791 Thomas Jefferson said:
"If the American people ever allow the
banks to control issuance of their currency, first by inflation and then by
deflation, the banks and corporations that grow up around them will deprive the
people of all property until their children will wake up homeless on the
continent their fathers occupied."
To really cure the economy we need to get the Federal Reserve bankers and the politicians out of our money. And that may be more difficult than getting the AIDS virus out of the blood of its victims…
PRESIDENTIAL ASSASSINATIONS
President Abraham Lincoln was assassinated after issuing the Greenback, which was a non-interest-bearing note. President James A. Garfield expressed his concern about currency problems just before his assassination.
On June 4, 1963 President John F. Kennedy signed Executive Order 11110 providing him with the authority "to issue silver certificates against all silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption…" This seems like an attempt to bypass the Federal Reserve System by issuing real, silver-backed money to replace counterfeit Federal Reserve Notes. Kennedy was assassinated on November 22, 1963.
There is a rumor that the "Kennedy silver certificates" were actually printed and that one of the first things President Lyndon B. Johnson did after assuming power was to have the "Kennedy silver certificates" destroyed. In 1964 Johnson, serving as the voice of the Federal Reserve bankers, said, "Silver has become too valuable to be used as money." This amounted to a brazen boast that the bankers would eliminate any money with intrinsic value. On November 22, 1963, the day of Kennedy's funeral, the first 50 million "no-promise" Federal Reserve Notes were released into circulation. The symbolic celebration of the Federal Reserve bankers?
