On the morning of November 14, 2007, “federal” “officials” (look up the meaning of both words, read the constitution, and you’ll see sad irony in these words) raided a company that produced “private voluntary barter currency” known as the Liberty Dollar.
Now many people have already said something like “well, good; only our government should make money.”
Unfortunately, not only is that bad thinking, but also, our “government” (in any legitimate sense) doesn’t have anything to do with our money today.
Yes, I know. Everything our government does is for a Darned Good Reason. To think otherwise is unpatriotic and probably even terrorism.
So, I’ll just lay out what I know to be fact, and we’ll see if we can find the DGR.
Since 1913, USA money and our federal monetary policy has been created and directed by a quasi private, most-definitely-for-profit central bank; not by the US Congress.
If you’ve read The Constitution of the United States, you know that the U.S. Congress is authorized “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.”
Congress, via the Treasury, of course, still makes coins (though no longer of metal of intrinsic value). But all paper currency, and the value of both coins and paper, as well as the policies by which all money works in this country, has been unconstitutionally delegated to a “private business.”
It is in fact, the only private business I am aware of anywhere in the world, that operates completely free of regulation. Or audits. Or reporting requirements. And with secret shareholders. Oh, and they don’t have to answer questions if they don’t want to.
Now, anybody who knows anything about me knows that I’m 100% Free Market right down to the subatomic level. I know that whatever our government touches turns to blood, and I know very well that politicians:
b. Have guns and bombs
So the less politicians do, the better I like it. And my few quibbles with the Constitution for the United States are where the founders stuck their nose too far into free market domains.
But it is exceptionally dangerous to mix free market impulses with political force. Such hybrids end up amplifying the worst of both trade released from accountability to the market, and politicians freed of accountability for their lust of power.
And through all of recorded history there’s been a deeply spooky problem with the control of money, and how that can so quickly become a crony capitalist, politician/banker bastard; neither free market, nor under law, but a monster that lives outside all borders of law, nation, morality, or long-term economics. And THAT is what “The Fed” actually represents.
Let me explain.
Paper currency, at its best, has no intrinsic value. Even what we call “real money,” like gold and silver, no matter how historically stable have values that are agreed upon, not truly intrinsic. It is an instrument of value exchange. If everybody agrees to use it for the exchange of goods and services, then it doesn’t matter whether your money is a scrap of paper (backed by nothing), a seashell, a gold coin or even a carved stick. All the preceding things have been used effectively in trade.
Here’s where things get ugly, because it involves greed, ignorance, sloth and all those other failings we typically group into that curse, “human.”
If the money supply, whatever its form, is manipulated for the wrong reasons, severe oppression (like serfdom/slavery) can result. When people are granted a monopoly in determining what money is and who can make it…oy vey…there will be trouble. And our government granted such a monopoly, in violation of our state and federal constitutions, in 1913.
One result is that all our banks operate on the principle of “fractional reserve banking,” which means that they can act like they have far more money than they actually have. This allows them to loan out the same dollar many times, charging interest along the way, in order to make far more money in profit than could otherwise be the case. Our system is supposed to be that new money is abstractly “created” by loaning out more money than actually exists, but is then “destroyed” when debts are paid.
Obviously, a “run” on the bank would be bad, since the whole scheme is based upon an abstract fib…and immense trust in the people who’re both granted the power to create money, and the responsibility to destroy it. But theoretically, without serious runs on the banks, it could all work out; sort of. If the money supply is kept in reasonable correlation to our transactions, then the magic works to a degree.
Ahhhh, but the central bankers, who’re never audited by anybody and are in fact mostly unknown, make most of their money from government debts, not free-market trade!
Many people get things twisted up here, with the enemies and friends all wrong. The central bank devised in secret by Senator Nelson Aldrich, Frank Vanderlip, Henry Davison, and Paul Warburg at Jekyll Island was actually supposed to be an entirely, truly private consortium to handle only private, free-market banking screwups – just as J.P. Morgan, pretty much all by himself did, during the Panic of 1907.
Yes. I’m saying that J.P. Morgan was a good guy. So was the Creature from Jekyll Island we often think is the problem. It was politicians like Woodrow Wilson and FDR that wanted us to think they saved us from bankers by making central bankers clean up political messes! Politicians are the ones who created The Fed as a bastardized, political version of what Aldrich proposed.
Let me repeat this because it’s the pivot point. The Federal Reserve is NOT really a private banking system any more than it is “federal.” It does NOT serve the interests of legitimate banking so much as it serves the whims, unfulfillable promises and…endless wars…of politicians. The more our government spends, the more money the cronies (both political and transpolitical) make, the more promises politicians can make, the more accountability and reality and debt our politicians can punt to the next generation.
It’s a system of nearly endless political IOUs, and of course, profits from debt. It is, after all, a system that monetizes and markets debt! (I say nearly, because I suspect it’s about to crash in maybe a decade)
Wars are of course the biggest single money makers, since, as James Madison pointed out: “War is the parent of armies; from these proceed debts and taxes; and armies and debts and taxes are the known instruments for bringing the many under the domination of the few. No nation can preserve its freedom in the midst of continual warfare. …In war, the public treasuries are to be unlocked; and it is the executive hand which is to dispense them.”
As of now, the undeclared wars in Iraq and Afghanistan have racked up about $5500 in debt for every man, woman and child in the USA. Some generation is going to have to pay this in addition to all the other stuff (like the Ponzi schemes of Medicare/Medicaid and Social Security) ratcheting up the “national debt,” or find some way to nullify it all.
And I think it’s grimly ironic that now, with all the litigating, ballyhooing and campaigning against “big business,” “special interest” groups and “monopolistic business practices,” the most dangerous industry of all, the biggest of them all – banking (which Thomas Jefferson said was more dangerous than standing armies), is completely unregulated, monitored or even recognized as the root threat.
It’s like we’re crying about ants in our cupboard as wolves are crashing through the window.
War profiteering is a terrible thing, of course. But war profits are, for those who can get them, a Darned Good Reason to do something.
And war profiteers are the guys who run our money supply, and therefore our economy.
These are the guys who fund our government.
The good news is that for the first time in at least a half century, there’s an easy way to fix this: vote for Ron Paul. The bad news is that if he doesn’t win, then debts, and violence, and division and corruption, will get a lot worse…
Well, now you can’t say I didn’t warn you.