The Real Truth About Money
By Jack Spirko
Beta Version
1.1
Dear Concerned Citizen,
This is an uncompleted beta version of this book. Over the next few weeks there will be a few refinements made and
most importantly I am asking for your help with the final section titled, Resources for Independence.
After reading this book if you have educational resources you think would be valuable for future readers please email
them to [email protected] with “resource for trtam” in the subject. While I can’t guarantee I will use all
suggested resources the more quality resources we can add to the end of the book the better.
The final version of this book should be available by January 10th, 2011 and hard copies will be available soon thereafter.
To be notified of the final version of the book and hard copy availability please visit www.trtam.com and sign up for
either RSS or eMail updates. I released the Beta version of this book because I firmly believe asking early readers for
additional resources will make the final version much better for all that will eventually learn the truth about our
monetary supply.
Again PLEAS NOTE, this is a true beta version of this book, the formatting is not final and the final electronic version
will be better suited for eReaders such as the kindle. We do not require feedback on final edits or formatting at this
time, only suggested resources for the final chapter.
Thank you for being one of the first readers and contributors to this book,
~ Jack Spirko
Table of Contents
Introduction
Chapter One - The Birth of Dollars
Chapter Two - The New Dollars Have Children and Grand Children
Chapter Three - Pat, I Would Like To Buy My Own Debt
Chapter Four - Where Does the “Worth” Come From?
Chapter Five - So Where Did Our Money Go?
Chapter Six - The Inescapable Interest Trap
Chapter Seven - Where Your Income Tax Actually Goes
Chapter Eight - The Real Issue is Private Control of Public Money
Chapter Nine - What Is Money
Chapter Ten - Metals as a Store of Value
Chapter Eleven - A Gold Standard Alone Won’t Fix the Problem
Chapter Eleven - Returning To a True Public Currency
Chapter Twelve - Learning How to Think From a Thought Experiment
Chapter Thirteen - Building a Private Barter Currency
Chapter Fourteen - A Final Lesson from Our Barter Economy
Chapter Fifteen - Declaring Individual Sovereignty
Chapter Sixteen - Resources for Independence
Introduction
If you are reading this book odds are, one way or another, you came into possession of a piece of AOCS Currency,
perhaps an ounce of copper or an ounce of silver. If someone gave you that coin, thank them if you ever get the
chance, because in this book you will learn some shocking facts about the U.S. dollar.
A few things I want to tell you right up front before you proceed…
First – There is nothing to buy here: I am not going to try to sell you anything, not even really an idea.
Second – This is not a “gloom and doom” publication. It is simply factual and explains exactly where our money comes
from and how we end up paying for it.
Third – I will make no attempt to convince you of anything. I will simply provide you the real story. Everything I will
tell you is easy to verify with public documents. Once informed, I leave it to you to make up your own mind as to what,
if anything, you decide to do differently in your life going forward.
So Is Your Money Really Worthless?
The answer is both yes and no. It isn’t worthless because after all, you can buy stuff with it. It pays for your housing,
food, entertainment and many other things. However, it is, in a way, worthless because it has absolutely nothing backing
it other than debt. The truth is, that every United States dollar is honestly, “loaned into existence.” In fact, if we paid off
the National Debt, the result would be that there wouldn’t be any money left in existence.
Did you get that? When the people of the United States start to pay off debts on a meaningful level, money actually
vanishes back into thin air! Does that sound insane? Unfortunately it is 100% true, and if you go to the website of the
Federal Reserve and look this up, you will find that they themselves state this.
But how can this be?
Hold on, I am about to take you on a trip where we will see how dollars are born and how they give birth to children,
grandchildren and many generations of great grandchildren. Each birth will be the result of another debt and, of
course, interest to go along with it.
Chapter One - The Birth of Dollars
It is a typical day, which of course means the U.S. Government wants to spend money it doesn’t have. So, the
Congress asks the U.S. Treasury for some money, say 1 million dollars. Now most people think the Treasury will
create the new 1 million dollars, but they don’t. What they actually create are U.S. Treasury Bonds. These bonds are
nothing but pieces of paper that state that if you buy them, the government will pay you your money back plus interest
at some point in the future.
Now what the Treasury does next is sell these bonds to anyone who wants to buy them, China, England or even you;
anyone can buy a bond like this. So far though, no money has been created; the bond is simply traded for money that
you, the Chinese or, say, the English already have. So, since there isn’t any new money, the money supply has not yet
increased; no money has been “printed” yet.
Now when it is decided that we need more dollars, in comes an organization you have likely heard a lot about on
television, the Federal Reserve. Now, “The Federal Reserve” sounds quite governmental doesn’t it? The thing is the
Federal Reserve is NOT part of the government. It is a private corporation made up of both U.S. and International
Banks. Did you know that? To be blunt, the Federal Reserve is about as “federal” as Federal Express!
So now the Federal Reserve decides it wants to create 1 million new dollars and then get them into the economy to
stimulate spending (this is called inflation at the most basic level). So the Federal Reserve goes to a big bank that has 1
million dollars worth of those U.S. Treasury Bonds and buys them and with that, abracadabra, 1 Million new dollars are
created.
But wait! The Fed bought the bonds, right? Where did the new money come from? Well, get this: the Federal Reserve
doesn’t actually give money to the bank that it buys the bonds from. Instead, the Fed at that moment creates one
million new dollars simply by typing some numbers into a computer and entering it as a “deposit” into the bank that
sells the bonds.
Are you now thinking, what? Wait? Huh? How can they do this? Well, that’s how most people feel, so don’t feel bad.
The process is so simple as to appear complicated.
It works like this: the Federal Reserve simply buys the bonds with nothing but a computer entry, the bank gets 1 million
dollars and the Fed gets 1 million dollars value in treasury bonds. The new money is “real”, the bank can spend it or
more likely, loan it to people and businesses at interest. Now here is the scam! The United States now owes the Federal
Reserve 1 million dollars, plus interest of course. In return the Federal Reserve didn’t really do anything except make an
electronic entry into a computer, a task the average 8th grader could accomplish.
Happy birthday, dollars! One million new dollars were just created via one million dollars in new debt plus interest all
payable to whom? That is right, a group of private banks called the Federal Reserve. But we are just getting started.
Now those new dollars are ready to start reproducing and have a bunch of kids and grandkids.
Chapter Two – The New Dollars Have Children and Grandchildren
Remember to create the new money in the last chapter the Fed purchased bonds from a bank with a computer entry.
That bank now has 1 million brand new dollars to work with. Assuming the bank is all caught up on paying bonuses to
its executives, it will want to use that new money to make more money. We all know how banks do that, right? Of
course, by loaning the money to someone; in this case let’s say to buy a really big house.
The bank, of course, got 1 million dollars in new money and now can loan up to 90% of that money in a system called
“fractional reserve banking”, which will let our new dollars create 900,000 children of their very own. When someone
shows up and borrows 900,000 dollars from the bank to buy that awesome house in the city, the bank doesn’t actually
give the person the 900,000 dollars they got from the Fed. I mean, come on, the creating money thing is a good scam.
Why should only the Fed get to do it? Remember, the Fed is made up of private banks; in fact the bank giving the 900K
loan may be part of the Fed!
So, just like the Fed did in the first example, the bank simply creates an entry in their books and gives the buyer 900,000
new dollars. Of course the buyer signs the check over to the seller in exchange for the house. The seller, though,
doesn’t shove $900,000 into their mattress; they deposit it in the bank and perhaps use much of it to pay off money they
owed on the house prior to selling it. Either way that $900,000 ends up as a new deposit in a new bank or may be even
the bank that made the loan. Yep you got it, that $900,000 is brand new money! Created out of thin air!
So the original 1 Million has now become 1.9 Million. But we are not done yet! The bank that gets the 900K wants in
on this too, right? So they can loan 90% of it out or $900,000 x 90% or another 810,000 dollars. So now we have
810,000 grandchildren! Look at all that new money!
$1,000,000 + $900,000 + $810,000 = 2,710,000 dollars created and 100% of it is debt, due back plus interest!
And it keeps going; the next banker in the stream can loan 90% of the 810,000, or another 729,000 dollars making our
new total 3,439,000 dollars, again, all of which is loaned into existence. Eventually this can go on and on, and that
original 1,000,000 dollars of debt can become over 9,000,000 dollars, all debt, all due back with interest and 100% of it
created out of thin air.
This might sound totally impossible or at least hard to believe. Well, the Federal Reserve says this is exactly how it
works. The following is a quote from one of their publications, called Putting it Simply1:
1
Federal Reserve of Boston, Putting it Simply, 1984.
“When you or I write a check, there must be sufficient funds in our account to cover the check, but when the Federal
Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a
check, it is creating money.”
Well, okay, so the Federal Reserve creates money out of thin air, but you sort of knew that already, right? I mean, that is
their job to “print” our money, so this isn’t a huge shock; someone must create new money. Yet what about the banks,
can banks really do the same thing? When you borrow 100,000 dollars from a bank, are they really just making a journal
entry and creating new money? Absolutely! And, again, the Federal Reserve itself says so.
One of the most quoted references regarding money creation is the Federal Reserve publication called Modern Money
Mechanics.2 If you simply search Google for “Modern Money Mechanics” you will find many places you can actually
download a copy to read. If you turn to page 6, it says in rather clear language,
“Of course, they (banks) do not really pay out loans from the money they receive as deposits. If they did this no
additional money would be created.” 3
So there you go, according to the Federal Reserve itself, all money is nothing other than a certificate for debt.
2
Dorothy M. Nichols, Modern Money Mechanics,revised by Anne Marie L. Gonczy (Federal Reserve of Chicago, (1961) 1992).
http://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf
3
Nichols, Modern Money Mechanics, p. 6.
Chapter Three - Pat, I Would Like To Buy My Own Debt
At this point you may really feel we have a big problem in our money supply. Take a dollar bill, or a twenty, or a five
out of your pocket right now, look at it. It isn’t money, Nope, just a promise of money backed by a debt.
Well, as bad as this may seem it can actually get worse! You see, the one saving grace to what we have discussed so far is
there is a control on how much debt/money can be created. Remember, first the Treasury issues a bond and auctions
it; then the Fed can buy it with a bookkeeping entry. That creates more money.
With this system flawed though it
may be, there is a lid on the money supply because, unless you or I or someone is willing to first buy a bond and show
“faith” in the currency, the Fed can’t go to a bank and “buy” the bond.
Have you ever heard the term, “monetizing the debt”? It gets bounced around the news at times, but most people have
no idea what it means. It really amounts to buying NOTHING with more NOTHING and creating SOMETHING.
To understand this let’s look at a popular game show that has been on T.V. for decades, “Wheel of Fortune”.
On the show, of course, people spin a wheel and when it lands on, say, 500 dollars; they pick a letter in an attempt to
solve a word puzzle. Say they pick a “T” and there are 4 “Ts”, well they get 4 x 500 or 2,000 dollars into their “bank”.
When a player misses, the next player gets a turn. When someone solves the puzzle they get the money in their bank.
But what happens to the money in the other players’ banks? Well, it simply vanishes; only the winner gets the money!
Now along the way, a player can select any letter they want as long as it is a consonant. They have to “buy vowels”; they
can only buy a vowel if they have money in the “bank” to do so. Of course, in reality they are not “buying” anything,
they simply reduce their potential winnings in hopes of solving the puzzle. In effect, they buy a vowel with nothing. If
they lose, they don’t get a bill for, say, 500 dollars for the vowels they purchased.
Now you might wonder what this has to do with the Federal Reserve and money. As I explain, the parallel will become
evident and help you understand just how ridiculous what I am about to tell you really is.
See, sometimes the government wants money to spend that they don’t have; we call those weekdays. Yet even with the
system you know about now, they can only tax us so much and only sell so many bonds. When the money supply starts
to get out of control and interest rates drop, sometimes they can’t sell those bonds anymore or can’t sell enough to meet
their spending requirements. Now what you and I do in this situation is cut expenses. But not the government; they
simply buy a vowel with nothing!
Here is how it works: the Federal Reserve simply buys the bonds directly from the U.S. Treasury instead of from a bank
that is holding them. That is it, and the debt is “directly monetized”.
Many people wouldn’t see that as a big deal. I
mean, hey, they “bought the bonds”, right? Yet many people don’t know what you now know, that is, how the Federal
Reserve “buys U.S. Treasury Bonds”. Do they do it with money? Nope. They do it with a journal entry in a computer
and that actually creates money.
What this means is, even when businesses, nations, private individuals and banks start to say no to loaning the
government more money, they just buy more of nothing, using nothing and create new money backed by nothing. And
with that, on any day they can add a million, a billion or, God forbid, a trillion dollars in money to the economy. This is
the point where they are truly printing money out of thin air.
The key is, this money isn’t “free”. We, as a nation, now owe 100% of it back to the Federal Reserve, plus interest.
Are you starting to put two and two together and ask, “Well if all the money is debt, and it all has interest due, where
does the money to pay the interest come from?” If so, good, you’re starting to really get it. If not, don’t worry; we will
get to that soon enough.
Additionally the Fed knows this looks bad, so sometimes they run a double scam. Frequently this is referred to as
“quantitative easing”. To hide the fact that they are buying their own debt they simply announce that they will buy a
certain amount of bonds, the date they will do so and worse, how much they will pay for the bonds. The price will
inevitably be higher than what you can buy them from the treasury for. Why? So they can buy the bonds from a bank
to hide the fact that they are buying their own debt. Of course they also do this to pass free money on to the bankers
and investment firms.
See, the thing is, you (the individual) can’t go sell bonds to the Fed during a quantitative easing (fancy word for stuffing
money into the economy). You have to be really big to get in on this scam, big like, well, Goldman Sachs. So what
happens is the Fed basically tells companies like Goldman to go buy 100 billion dollars in bonds and we will buy them
from you a month from now for 105 billion, or whatever they decide is necessary to get the deal done.
So Goldman gets 5 billion in profit with zero risk, the Fed gets 100 billion in new bonds that we owe interest on and the
American people get the bill. The big scam is that the Fed gets to claim they didn’t buy their own debt and yet the
entire thing benefits their buddies at Goldman and costs the American people an extra 5 billion plus interest.
The final scam is they only do this when otherwise they couldn’t sell enough bonds to raise the funds. In other words
when the rest of the world says hell no “we won’t loan you more money” the Fed just sets up a back door deal and
creates the illusion of outside investment. They will also claim that they are buying the bonds with “their own
reserves”. But remember, all that amounts to is a computer entry.
How much could you buy, “with your own reserves”, if you could deposit money at will into your bank account by
typing a few numbers into your computer?
Chapter Four - Where Does the “Worth” Come From?
I have stated that on some levels that your money is worthless and I think you should be starting to understand what
that means now. The other side, though, is that our money (at least for right now) isn’t actually “worthless”. Hell, it
buys stuff, right? So, due to the fact that our money is nothing but debt, the logical question is how does our money
derive its value?
The answer is simply that it does so because our nation has intrinsic value. We produce goods and services, we have
resources, we trade with other nations, etc. This is what they mean when they say our money is “backed by the full faith
and credit of the American people”. This, in some ways, works. Our functioning economy, despite its problems, proves
this. You work, you get paid; you use that money and you buy stuff, pay bills, etc.
The key is that the “worth” of our money fluctuates in two ways: one is deflation (prices go down) and the other is
inflation (prices go up). There is more to it than that but at this point a simple definition is sufficient. You experience
this when the item you had been buying for 500 dollars (say the rent for an apartment) goes up to 525 dollars. You now
do the same work to earn 500 dollars, but those dollars buy less for you, that is basic inflation.
They key is this is many times related directly to the money supply and all those new dollars being created out of thin air.
To make things easy to understand let’s pretend that today there are only one billion US dollars in existence. And the
nation is smaller, less people, etc. - so those one billion dollars makes the money “worth” just about what it is right now.
In this imaginary economy, you can buy anything from a cheeseburger to a car for about what you would pay right now.
Now let’s imagine that the Fed makes some new money, gives it to banks and they do their thing. Presto! A year later
there are 2 billion dollars in the economy. More money must be a good thing right? Wrong unless the economy grew at
the same rate as the money supply! Say, during that year, the nation’s population, economic output, etc. stays pretty flat
with zero to no growth.
Remember that the existing one billion was getting all of its “worth” from the nation itself. The value comes from our
resources, production, trade and people, so any new money added in must get its worth the exact same way. In this case,
the nation stayed the same and the money doubled, this would make each dollar effectively worth 50 cents. The new
money can only get value by sucking value from the existing money.
You have been conditioned to believe that rising prices are normal, a constant fact that you must accept. The truth is,
the laws of supply and demand do cause ups and downs in pricing, but long term cost of living increases are not really
prices going up. They are, in fact, the value of money going down!
So what is deflation? In deflation, money gets more powerful because the total amount of money contracts. Now say
that we have that same imaginary one billion dollar economy and over the next year it becomes a 500 million dollar
economy. If the growth of the nation is flat, in theory anyway, each dollar should now buy what 2 dollars used to buy.
Now that sounds like a good thing doesn’t it? Well, if you are sitting on lots of cash it is, but if you are trying to work
for a living, it is crippling. Wages drop and people use the more powerful money to pay off debt. Eventually money
becomes scarce and the economy begins to slow down, more jobs are lost and even if stuff is “cheap”, it doesn’t matter
because very few people have any sizable amounts of money.
Now here is the exact trap we are in. If our currency were created by the government and based on nothing but the
“value” of the nation we wouldn’t have huge excesses or shortages of money. We would have homeostasis, or as close
as something like a massive economy can get to it. But remember, our currency is created with debt. Of course, all
politicians say they want to reduce the national debt by cutting this or that. Paying off debt is great, right? Yet if your
money is created with debt what happens to money when you pay the debt off?
That’s right! When you pay off debt, the money the original loan created VANISHES into thin air, exactly the reverse
of how it was created.
Chapter Five - So Where Did Our Money Go?
I guess you can answer the question of where our money went by now. Simply put it vanished but the issue is bigger
than that. From the beginning of the economic crisis until late 2010, the Federal Reserve created about four Trillion
dollars of new money. This money was set loose on the nation economy and global economies; of course, banks can
lend it out and make children, grandchildren and great grandchildren with it. Worse, four trillion is a guess, because the
Fed doesn’t disclose everything it does. So it might be more. Four trillion, to make a point, is four thousand billion
dollars of new base money added to the monopoly game called fractional reserve banking.
Another term you may or may not have heard of is the M3 money supply. Without getting too technical, M3 is a
statistic of all the money that exists, every cent of it. Every dollar in your pocket, the trust funds of Bill Gates’ children,
the money in every bank, every store, every mattress, you get the point, total dollars in existence.
Now you might expect that with what you know now, that the M3 must have gotten a lot bigger in the past few years.
Further, with all that monetary growth, inflation should be exploding. Yet inflation appears in check, at least for now.
In fact, M3 has dropped significantly despite this 4 Trillion in new money. So where did it go? We know it vanished,
but exactly how and why is the real question.
First and foremost, it was defaulted on. Every mortgage that people walked away from, every failed small business loan,
all the debt defaulted on by banks and investment firms, etc. You see when a person is in a debt they can’t pay and the
loan goes bad; the money the debt created literally implodes. So, say I lend you 100,000 dollars to buy a house. I now
hold the account on my books and say that mortgage is worth 100,000 dollars plus interest over 30 years. This
mortgage may be seen as an asset worth 300,000 dollars or more. As a banker I put this asset on my books. Everything
is great until you default because you can’t pay the debt, leave the keys in the mail box and move out.
Now, I might try to sue you, but if you have no money, well, you know the saying about “blood from a stone”, right?
So instead I take your house and sell it to balance the books. In normal times odds are, I can auction the house for at
least close to what you owe on it and things sort of stay in balance. Once I sell your house for $95,000, for example, I
only have a true loss of 5,000 dollars. Additionally, I had cash flow from you while you were paying on your debt. I
can now take the money I get from selling your house and play my little banker game all over again. I can loan it back
out and create new money to replace what was lost.
But what happens when your house is now worth only 50,000 dollars? Now I take your house and sell it and lose 50,000
dollars. Just as the loan created $100,000, the default has now permanently destroyed 50,000 dollars of that new money.
For a bank with billions in reserve, this isn’t really a big deal. But what happens when a few million people default all at
once?
That’s right. Money just starts to vanish into thin air! Worse yet, now there is a glut of houses for sale and that pushes
the losses further down. And, of course, you can’t go loaning money to those people who just defaulted, so there are
even less home buyers. This is a big part of what caused our recent economic collapse.
The other way money is contracted is far more subtle and it appears positive on the surface. Remember what I said,
when debt is paid off, money vanishes. So, in a downturn, many people are still doing okay. They don’t lose a job, etc.,
but the economy concerns them. The first reaction is that they cut back on spending. Since they spend less, they
borrow less and hence less new money is created. In time, living within your means creates surplus cash. Many people,
at that point, go to the next step and pay off their debts.
While simplified, this is the other half of how our money supply decreased in spite of all the new money. The average
Jane or Joe, of course, didn’t pay off that much of their debt, but businesses did. They went into survival mode, cut
non-critical employees, eliminated debt and stockpiled cash. Hence, many businesses are making record profits in the
middle of the recession. Additionally, the banks have literally been stuffed full of money with low interest loans from
the Fed to stimulate lending. Yet, in the middle of the recession and mortgage meltdown, who are they going to loan
money to? So banks are instead buying U.S. Treasury bonds with money they borrow from the fed and earning a few
points of interest on it, saving up for the day of reckoning they know is coming.
Right now, the only thing keeping a lid on inflation is the fact that businesses and people are borrowing less and
spending less. This is called “the velocity of money” or how rapidly money moves and multiplies in an economy.
See, most people that begin to awaken to these issues end up thinking that inflation is simply the growth of the money
supply and deflation is when the money supply shrinks. This is true, to a degree, but even when the Federal Reserve
creates four trillion new dollars, if money isn’t spent and borrowed, we get flat inflation or even deflation. Yet the
minute we enter “recovery”, that beautiful utopia the T.V. keeps promising us, inflation will begin a rapid rise.
Chapter Six - The Inescapable Interest Trap
When I talk to people about being prepared (economically or otherwise), I often use the story of the grasshopper and
the ant to drive home being wise and putting up stores for the winter. I think most people know the basics of the story
so I won’t rehash it here. The key is the ant is the one that stays warm and fed and the grasshopper freezes his ass off
and starves to death.
Yet ants have a real enemy! That creature is called an “ant lion” and it is a true predator. The ant lion digs a pit in loose
sandy soil and hides the bottom in silent ambush. Along comes an ant who foolishly enters the pit; the walls cave in and
the ant starts to struggle. The harder she struggles, the more tired she becomes. The ant lion also spits dirt at her as she
fights, and eventually she falls to the bottom and is taken underground. A dismal end for an ant! Very few ants that
enter the pit ever get out.
I tell you this story so that you can understand the interest trap that exists for the American people. I want you to
understand the true horror that a debt based monetary system really is. Remember, the Federal Reserve is NOT part of
the government. It is a corporation made of the largest banks in the world, and we owe them 100% of the money they
created for us back, plus interest.
Numbers like thirteen trillion boggle the mind, so let’s shrink down to a simple one billion dollar economy again to see
the trap for what it is. Say we owed only one billion dollars in debt. In theory, we could just take our money, pay off
the debt and begin anew. Forget that we would need to go back into debt to get money again. I mean at least the two
sides of the balance sheet match and the debt could be repaid if so desired. There is one billion in existence and we owe
one billion to the Federal Reserve. Now add interest!
Say we have borrowed the billion at an interest rate of 2% and have owed the money back for several years. We now
still have a one billion dollar monetary base because remember the money created by the banks is tied to its own debt
and carries its own interest. So now if we take all the money and go to the Federal Reserve and say “Here, we want to
pay off the debt”, what happens? Well they ask us for, say, 1.4 billion dollars.
That .4 is actually 400 million dollars. Where do we get it from?
We can’t get it from anywhere; it doesn’t exist! Worse yet, the interest will compound over time, so we have to borrow
more money simply so we can pay the interest on the existing debt. So where do we get that money? We borrow it by
selling bonds and the Fed steps in to monetize them so we can have more money in circulation so the current debt’s
interest can be paid. Of course, that increases the total debt yet again and that increases the interest due so we have to
borrow more money. Just like the ant in the ant lion pit! No matter what we, as a nation do, paying off the debt or
even really reducing it by any meaningful amount is impossible.
So what is the horrible truth?
Unless the nation separates from the Federal Reserve and takes back the ability to control our own money, the Federal
Reserve OWNS THE UNITED STATES. They own us every bit as much as your bank owns your house when you
have a big mortgage due against it.
However, at least you can work hard, earn money and pay off the mortgage someday. The Federal Reserve isn’t just the
lender; they actually create the money and when they add interest to it the DEBT PLUS INTEREST MUST ALWAYS
EXCEED THE TOTAL MONEY SUPPLY. In essence, without a forced removal of the Federal Reserve, by the
people the United States, we will forever have our “good faith and credit” mortgaged to a group of private banks.
Chapter Seven - Where Your Income Tax Actually Goes
I am going to tell you something you may have been happy to agree with before reading this book but should now have
a completely new understanding of.
Politicians are full of shit, regardless of political party, promises, issues they support and oppose and the goals they claim to have.
Think about it. There are some clear party lines on issues, but doesn’t every politician say pretty much the same thing
when campaigning about spending and the economy. The drivel goes like this…
“We have to cut wasteful spending and reduce the debt so our children don’t have to pay the cost tomorrow for our mistakes
today.”
From there, the partisan stuff gets interjected with each side pointing to examples of wasteful spending by the other
side…
One will say, “My opponent supported a huge increase in welfare, giving the money of hard-working Americans to the
lazy people who sit around and collect government checks”.
Not to be outdone, the other one lashes back with, “My opponent supported bailing out wealthy banks, shifting
more of the burden to the poor.”
I am going to ask you to do something most Americans have a very hard time doing at this point. LET GO of any
political allegiance based on your personal beliefs for just a little while. I am the last person who is going to stick up for
either Democrats or Republicans and the true wasteful spending they both do. The key is, as bad as those abuses are,
they are not why you pay such high income taxes; in fact, they are not even why we have income tax in the first place.
Politicians want you to believe that the income tax is indeed necessary. How would we build roads, run schools, help
the needy, save the whales, give flowers to children and do all the other things necessary to run our nation without an
income tax? I mean, we all want to pay less, and the politicians do a great job of convincing each of us that we are in the
one group paying too much. They also convince us we could, if only the other groups were pulling their weight. Yet
have you ever wondered where your income tax dollars actually go?
Our income tax payments don’t build roads; gas taxes and motor vehicle fees do. They don’t build schools; mostly that
is done with property tax. They don’t help the poor. Nope, social security and Medicaid taxes do that. They don’t do
much of anything productive. In fact, almost 100% of personal income tax receipts go to pay for one and only one
expense. By now, have you guessed what it is?
The real purpose of the income tax amounts to funding the pyramid scheme that is the Federal Reserve! Yep, your
income tax isn’t helping a starving kid or an old lady; it is going to the Federal Reserve to pay interest and buy more
debt. This is sort of like making the minimum credit card payment, except Congress holds the credit card and the
American people get the bill. Like I said they are all full of shit, all of them, except for a very few, like Ron Paul, who
have the courage to tell you exactly what I have so far. Every single claim to cut spending is utter nonsense, if we ignore
the way we are controlled by the Fed.
Some easy to understand numbers
Total personal income tax paid by Americans in 2009 = 1.21 Trillion Dollars
Total interest paid on the existing debt in 2009 = 383 Billion Dollars
That means over 20% of all income taxes went to pay just the interest on the debt. Not buy new stuff, not feed
starving children, simply to pay interest on debt we accrued in the past.
Now the next number and this one is really important: our deficit in 2009 was about 1.1 Trillion Dollars. That was how
much “new money” we had to get from the Federal Reserve to be spent by the Congress. All of that new money is, of
course, new debt and new interest to go along with it as well.
It is important to understand at this point that we don’t need the Federal Reserve, because the Congress was given
power over the currency with the ratification of our Constitution. Our government has the constitutional power to
create currency that is 100% free of debt. More on that in a bit., just think about that as you examine the math I am
about to show you for the year of 2009.
In 2009, according to our government, taxing and spending consisted of…
Total Income Tax Collected - 1.21 Trillion
Total Cost in Interest on our debt - 383 Billion
Total New Debt 1.1 Billon
New Debt Plus Interest Payments = 1.48 Trillion!
That means that over 100% of the money paid in personal income taxes went to the Federal Reserve in the form of new
debt plus interest.
Now some would point out (somewhat correctly), that we borrowed that 1.1 Trillion to cover spending and how that
spending fed the poor, paid welfare checks, etc. The key though, is we don’t have to borrow the money; the
government was given the power to create it when our nation was founded.
We are also reaching a point now where that interest payment is beginning to run away on us. Did 383 billion in interest
make you sick when you realized it was going just to pay interest on money that is nothing but certificates for debt?
Well hold on because it is about to get truly nauseating!
The total interest we will pay on our national debt in 2010 is 414 Billion dollars!
Let me put this in perspective for you; here are some government agencies and what we will spend to fund them in
2010…
•
The Department of Justice will cost 23 Billion Dollars.
•
The Department of Homeland Security will cost 46 Billion Dollars.
•
The Department of Education will cost 46 Billion Dollars.
•
The Department of Health and Human Services will cost 76 Billion Dollars.
•
The Department of Energy will cost 26 Billion Dollars.
So when I add up the cost of those 5 huge government agencies, we get a total cost of 217 Billon Dollars, a lot of money
for sure. We can also be sure that there is plenty of waste in there, but do you see the real irony?
The cost of those 5 monstrosities of government COMBINED is 197 BILLION DOLLARS. That number is far less
than the interest on our debt! I will close this chapter with a few thoughts for you to ponder.
1.
We are NOT reducing the debt; in fact it is projected to grow by 10 Trillion dollars in the next 10-12 years.
2.
If we double the debt, we, at a minimum, double the interest payments on it.
3.
If we double 414 billion we get 828 Billion in interest per year.
Now the real shocker, 828 Billion is more than we spend on the entire Department of Defense, Social Security,
Medicare, Medicaid or any other single department of our government. In other words, as we move forward, we are
heading soon to a place where the single largest expense we will have as a nation will be interest payments on our debt!
Worse, the only source we have to pay the interest is borrowing more money which accrues yet more interest and debt.
So how can we listen to politicians that want to “save social security” (or any pet program) while they grow a debt whose
interest alone exceeds it?
One final fact to really drive this point home, in 1912 there was no Federal Reserve and no Federal Income tax. In
1913 Americans paid income tax for the very first time at the exact same point the Federal Reserve was established.
Simply put the income tax exists to fund the Federal Reserve, an organization we don’t need and did fine without for
more than 100 years of our nation’s history.
Chapter Eight - The Real Issue Is Private Control of Public Money
Up to this point, I have stated many times that the Federal Reserve doesn’t need to exist. The reason the Fed isn’t
necessary is that Congress has the power to create and control our currency as granted to it in our Constitution. There
is no way to debate that, because Article 1, Section 8 of the U.S. Constitution states clearly that Congress shall have the
power…
“To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”
Now, no one anywhere has ever claimed that statement means anything other than quite simply the U.S. Congress is
given constitutional power to create and control the monetary supply. Now before we discuss more on this a brief bit of
constitutional education about the form of our democratically elected republic is required.
Today, we all go to the polls (if we choose to exercise our right to vote) and cast direct votes for both our Senators and
our Congressional Representatives. We also vote for the president but we are actually electing “electors”, who cast the
actual votes for president. So the president is not directly elected by the people. Well until the seventeenth amendment
was ratified in the now, all too familiar year of, you guessed it, 1913, senators were NOT elected by the people. Until
that date, the Constitution gave the power to elect the senators to the state legislatures.
So until 1913 we had no Federal Reserve, no federal income tax and elected our senators by a different process. One
must ask why so many things changed in that one year, changes that fundamentally altered our republic for all time.
Now I personally feel the American people were sold a lie in making this change. I mean, it sounds empowering does it
not? “Your vote should choose your senators, not the votes of your state’s legislature.” With that, popular support was
gathered and the amendment passed.
Realize that, prior to 1913, the House was the only branch of government directly accountable to the people and the
Senate was directly accountable to the States. The founders did this specifically to keep control of the government in the
hands of the people with a check on federal power by the states. Put simply the U.S. Congress is the single most
powerful branch of Government in the United States.
This power was granted via three main means.
1.
No law could be passed without the Congress (as it is today).
2.
Congress could defund any program and effectively nullify it with a simple majority (as it is today but is seldom
utilized).
3.
All money was to be created and fully controlled by the Congress (this power was given away to private banks
in 1913).
If you think about it this means even today our Congress can shut down any program they wish to. I mean any! The
president wants a war, he controls the troops, but Congress controls the money. Defund the war and it ends. The
preceding Congress passes a law that people don’t want. The people get the opportunity to vote out the House two
years later. New congressmen come in and they can’t repeal the law, because that takes both the president and senate to
do so. However, for a law to have any teeth it must be enforced. To enforce a law, run a program, prosecute a war, etc.
all require money. This means with a simple majority the House can defund and effectively kill any initiative dead. Of
course, the senate has the same power, more on that in a bit.
Simply put, no matter what the outward appearance of a family may be, the member who controls the checkbook is the
one in charge! Well, Congress holds the nation’s checkbook and can stop any program they choose via that alone. The
founders gave this supreme power to our Congress. Most congressmen act as if they aren’t even aware of it.
So when your congressman claims to want to repeal something but can’t because it takes a veto override or senatorial
approval they are, as I said before, full of shit. Yes, we need a veto proof majority or Presidential buy-in to get new laws
passed in America, but either branch of Congress can effectively repeal anything by defunding it. Take away funding
and there is no law or program that can continue. Additionally, if Congress were to reclaim their ability to control the
currency and eliminate interest from the equation they would have even greater ability to prevent abuses of spending and
power.
Yet one-third of this power was given to a group of private banks, and the other two-thirds aren’t used for
anything but a few tidbits of partisan saber rattling or growing our debt.
Now Congress was made the most powerful check on spending, and therefore governmental growth, for a reason. First
let’s start with the House of Representatives. The congressional district is the smallest geographic area represented in
the federal government. The house must also stand for elections every two years. This makes them the most beholden
to the people they represent; at least it would if we as citizens used that power. In most congressional districts a few
thousand citizens voting in the primaries is sufficient to fire a representative. Congressman should live in fear of being
fired at all times; instead, many stay in government for decades. The power to change this requires no acts of
government, just an education of our people, the education you just received, so please pass it on.
You might also wonder at this point why I brought up the change in senate elections and what this has to do with our
authority over our government as citizens. Remember I stated that directly electing senators created the illusion of more
control. I mean, it sure seems like we have more power now, but do we? Consider that, as easy as it is to change a U.S.
Representative (even with a member of his own party during the primaries if allegiances won’t allow otherwise), it is
even easier to change a state representative or state senator. In many cases, a few hundred votes or more will do it in
the primaries and a few thousand in a general election.
I think many Americans who vote do understand that they have one representative and two senators at the national
level. I however, think many don’t understand that they also have a state senator and a state representative that
represent them at the state level. It is this state legislature that is supposed to appoint the senators for the state. What
that used to provide was far more power to both the citizen and the individual states.
You see, our founders knew there would be abuses in government and some stupid decisions would be made, some
maliciously and some by honest error. But to protect the citizens from this, the majority of powers were left to the
states and the people. This was done via the 9th and 10th amendments, congressional control of the money and state
appointment of the senators. This would allow a state to recall its senators if they put aside the will of the state’s
people. Notice how all of this power is prominently “negative power” at the national level. In other words it is a power
to prevent government from acting vs. powers for government to take an action.
This allowed “mistakes” or “abuses” to be made by states. The catch though was, if a state did enough wrong, a citizen
could move to another state. This effectively made states a check against themselves. If half your population leaves,
there goes your revenue base, your production, etc. The results are a true capitalist republic where states compete with
each other for business and citizens. The beauty is that in such a system, stupidity is corrected quickly because the
alternative is losing your best citizens to a competing state.
The place our currency comes into this is simple. For such a system to work there must be a common currency that is
taken in all states. A citizen must be able to go to another state or set up a business and conduct commerce between the
states. So the ultimate check on this system was granted equally to the people and the states, via election of the one
body of government; with full constitutional authority over the creation, management and spending of the republic’s
currency. In 1913 Congress gave up one-third of this authority and continues to ignore the other two-thirds so they can
make excuses about why the other side is at fault for the issues of the day.
I am not saying any particular law or program should be dissolved or any international action ceased. That is for the
American people to decide via the ballot box. What I am saying is we have that power, and only by informing our
Congressman that we are aware of it can we change what we don’t like. Further, only by requiring them to reclaim the
one-third of the power they gave away can we ever hope to control the nation’s spending and debt.
As you now know, under the current system it is mathematically impossible to make any real significant reduction in our
national debt. If no change is made, all that happens is we have more debt and become more beholden to the private
banking system that masquerades as a “federal” institution.
Chapter Nine -What Is Money?
At this point, we are going to turn a corner and discuss solutions to our current dilemma. To do so, we need to pause
briefly and answer a question most people never even ask: “What is money?” Some will say all “real money” is gold or
silver. They are wrong. Some will say money is whatever a government says is money. They are wrong. The reality is
money, all money, is nothing more than a collective agreement.
If any unit of any currency will buy something as simple as a pound of grain, it is only the agreement of those
exchanging it that gives the currency value. We express this as, “confidence in the currency”. The people making the
exchange are agreeing that this unit of currency represents the value of the energy used to provide that pound of grain.
Hence, any other items in the economy that require similar production and carry similar desire will cost about the same
unit of currency. Supply and demand along with fads cause fluctuations, of course. But in general, a five dollar bill has
value because you can buy something we all agree is worth about five dollars with it.
The key is, it doesn’t really matter one bit what the unit of currency represents. Some small societies used rocks as
currency, others beads and some sea shells. All worked, and worked just fine so long as the societal agreement of value
remained in place. In spite of every deep and complicated economic theory, it all comes down to one reality. Every
time a currency fails, it is simply the fact that the society ceases to agree that it has value that causes it to fail.
The truth is, it doesn’t matter if the currency is based on gold, gold fish or golden promises, if society ceases to agree it
has value, it goes into hyperinflation and eventually total failure. Conversely, a currency can be absolutely nothing but a
statement by government. So long as you and I agree that “5 dollars” is sufficient to buy a value meal or a basket of
apples, those 5 dollars are “real money” and for the time a “stable currency”.
I will soon discuss the intrinsic value of metals with you, and why they have commonly been used as currency or to back
currencies. Yet before I do, I have to be sure you understand that this rule applies to metals as well. Gold, for instance,
is touted as the ultimate store of value. But if we compare it to silver, which is seen as less valuable, it is hard to make
any case for it. There is less silver in the world than gold today. There is nothing gold can do (industrial-wise) that silver
cannot.
Only societies’ agreement that gold has value, gives it said value. You can’t eat gold (it is a toxin and will kill you); it is
too soft for many industrial uses, too scarce for use in many electronics, etc. Now scarcity gives gold some value, but
honestly, since silver is scarcer we have to ask why silver trades at about 24 dollars an ounce and gold at over 1320
dollars an ounce (As of Oct. 2010). One could say that a gold ring is more desired by society than a silver ring, but why?
Only because we “agree” that gold is more “desired” at the current moment. Then we turn around and buy a platinum
ring for even more than the gold one. Funny thing is that the platinum ring and the silver ring feel and look almost
identical to each other.
I am not putting gold ownership, silver ownership or owning any metal down here. I am not stating that they can’t
provide a valuable role in a currency standard. I am just pointing out that, in the end, a currency is only “valuable”
because we agree that it is so. One big reason to see silver and gold as stores of value though, is they have stood the test
of time. They have been agreed upon by society as having value for longer as a currency than anything else that has
been tried.
Another is they have intrinsic qualities that make them useful to society. Copper is a great example. Make money out
of copper and even if the currency falls totally flat, it still has a value. Copper is still useful for wiring in a house,
building a beautiful sculpture or for the construction of water pipes. So, should the currency fail and be replaced by a
new system, if nothing else, the copper itself can be sold and converted to the new currency. This is the same with gold
and silver. I personally see the primary use for metals as a way to help insure currency vs. the full solution to fixing the
currency problems we have discussed so far.
Just remember, any currency is nothing but an agreement, and the minute the agreement in the currency fails, the
currency itself fails.
Chapter Ten - Metals as a Store of Value
I truly hope that nothing I said in the previous chapter led you to believe that I don’t see extreme value in using metals
as part of your investing or a nation using them as some basis in a currency system. I honestly feel that a currency can
work backed in some method by gold or even without gold or silver; the real problem we currently have is private
control of public currency. Yet we will save that for the next chapter. For now, let’s just come to an understanding of
why metals (both precious and base) are stores of value.
There are certain qualities that make any metal (specifically in a refined state) valuable.
1.
The total quantity available at any point in time is limited.
2.
Refining it to a specific content requires energy and limits production.
3.
It is divisible (able to be broken into smaller parts).
4.
It has specific uses (electronics, weapons, construction materials, jewelry, etc.) that make it desired.
5.
It has a history of retaining value.
6.
It can currently be converted into the currency of almost any economy.
When we examine private barter currencies later we will see that the sixth value element of metals is why they are
currently one of the best choices for the basis of a barter currency. For now though, understand that it is those six
elements in their entirety that make me feel that every American that understands the weaknesses in our currency should
hold some quantity of metals as part of their wealth.
I am not about to say something stupid like many in the metals industry do, such as, “buy as much metal as you can, as
fast as you can before your dollars become fancy toilet paper”.
myth that “only gold is real money”.
I am certainly not going to perpetrate the nonsensical
The truth is, before we got to this point in this book, I made sure that you knew
more about money in general, and the U.S. dollar in particular, than most Americans ever will. With what you now
know, you should understand the full absurdity of such statements. You should see easily how the people making them
simply wish to sell you gold, silver or whatever it is they are selling. Isn’t it funny how these people want you to give
them your “soon to be worthless dollars”?
Our economy is complex and tomorrow we could be in deep inflation, deep deflation or relatively stable. No one has a
working time machine that I know of. No one knows when our monetary system will be changed, how long it will last,
what exact changes will be made, etc. My view is we can say that long term, inflation and eventually a rebasing is
unavoidable. It is hard to doubt that when you know what you have learned thus far, isn’t it? Yet, we may have a lot of
living to do before either major inflation or a rebasing occurs.
Consider what happens to the person that cashes in all investments, buys gold at an all-time high and then ends up in the
midst of a deflationary economy. Their gold will see a dramatic drop in value; it won’t pay a dividend and the only way
to get anything with it will be to trade with it at a major loss. If you are saving money for 20 years or more, buying gold
with it is of very little risk, in my opinion. Yet, if you might need that money in a few weeks, months or even next year
there is inherent risk of loss, possibly major loss.
The solution is, of course, balance! I recommend that people keep 5-10% of their total wealth in metals or metal-backed
assets. If you want to be more aggressive and increase your position to, say, 20%, I wouldn’t have a problem with that.
It isn’t what I would personally do, but I can see why, based on individual circumstances such as age, total net worth,
etc. others may choose to be more aggressive. Once you cross into the 25% range in any asset class, though, I feel you
are becoming overexposed. If my number of 5-10% seems low, remember total wealth includes all wealth, such as paid
for real estate and other assets, not just “retirement savings”.
In the end, the choices are yours to make. The key for this chapter is simply to understand the historical track record of
metals as a store of value. In that vein, let me leave you with a final thought.
In 1964 when quarters were 90% silver, a quarter would buy you right about one gallon of gasoline. Of course, the days
of buying gas for a quarter a gallon are long gone, but currently (as of Oct. 2010) a single 1964 quarter has a silver value
of about $4.20, which will still buy you more than a gallon of gasoline. That alone should really say something about the
intrinsic value of metals and how well they hedge against inflation.
Chapter Eleven - A Gold Standard Alone Won’t Fix the Problem
By now you have a good understanding of what the problem with our money supply really is. In summary, our money
is nothing but debt. Worse, it is debt that carries interest and can never be repaid. The results are a system where
money can be created at will by a private organization. This private group of banks we call the Federal Reserve,
therefore, can manipulate our economy, and we have no way to ever pay off the debt we owe them. What this of
course, means, is that our nation’s entire value is mortgaged to the Federal Reserve in a manner which makes getting it
“out of hock” mathematically impossible.
Many people believe the way to solve the issues of the continued devaluation of our money and lack of control is to
return to the gold standard. In the gold standard, the government would be required to hold one dollar in gold for
every one dollar in currency we issue. While in theory this sounds good, it is not without problems. One problem is
that it ignores the intrinsic worth of the nation itself, our reserves in oil, copper, natural gas, agricultural land, timberland,
etc. It also ignores the value of our land itself, our people, what the people produce, our place in the global economy
and many other factors that make the United States truly “wealthy” in every sense of the word.
It would also currently require the United States to vastly increase its gold reserves to keep enough currency in
circulation to keep our economy running. Where would all this gold come from? Further, if gold were to be the only
commodity backing our currency, it leaves the nation wide open to market manipulation by other nations. Gold, like
any commodity, can be manipulated with speculation, hoarding, dumping large amounts into the market, etc. In other
words, it is too limited by itself to currently back an economy as large as that of the United States.
The bigger issue, though, is that gold, silver or anything else backing the money will not fix our issues as long as we have
to borrow our public money from the private banks and pay interest against it. In fact, in the future, as currencies fail, a
new gold-backed (by some percentage) currency may be the next way the banks rebase our currency. Yet, as long as we
have fractional reserve banking and are required to borrow the monetary base, nothing really changes.
Worse yet, if you don’t own some gold and silver as insurance, a move to return to a gold standard by the banking cartel
could literally wipe out the wealth of millions. Imagine one wonderful day all the gold bugs get what they want and the
Federal Reserve states we are going back to a gold standard. Everyone cheers the return of honest money. Well, right
up until the new money is issued. At that point, you learn that all your current dollars will be converted to new gold
backed dollars. Of course, instead of Congress setting the “weights and measures” as the Constitution states they
should, the bankers set them.
So you go to the bank, and the account that had 50,000 dollars in it, all of a sudden, has 30,000 dollars or maybe less!
They are now backed by gold but you have a lot less and only time is going to tell what “value” a new dollar will have in
the new economy. Odds are, the Fed (as the one making the rules) will come out the winner which would of course,
make the American people the losers. Don’t think this hasn’t happened before.
After the civil war, the banks had been thrown back out of the business of controlling that nation’s money. President
Lincoln had created the “greenback”. Contrary to what many a gold bug might believe, the greenback was not tied to
gold at all. The U.S. government created them as needed and the monetary base expanded (free of debt) and the nation
did very well. The bankers wanted to reestablish the Central Bank and to take over again as they had done prior to the
days of Andrew Jackson, who first threw them out.
The issue for the bankers was that it wasn’t going to be easy, because the public had learned the evils of a central bank.
To regain control, a crisis would have to be manufactured. So the bankers took an interim step and convinced the
nation to return to a gold standard. The next step they took was to begin buying up and removing all the gold they
could from the economy. This created a currency crisis as the money supply shrank to a point where there simply wasn’t
enough money to go around. The banks got gold on the cheap; the people suffered, and a new path to control by the
bankers was created via crisis. Isn’t it funny how we think that times are really different today, but find that history
indeed does repeat itself?
So, going from a government-created fiat currency to a gold standard stripped the nation’s people of their wealth. Fast
forward to the 1930s when President Franklin Roosevelt, in cooperation with the then relatively new, Federal Reserve,
took the nation off of the traditional gold standard. In the 1930s owning gold by the public was outlawed; the public
was required to turn in all gold they had in their possession. This was part of the initial step of coming off of the gold
standard, which wasn’t fully realized until almost four decades later under President Nixon. A one ounce US gold coin
at the time was worth 20 US dollars. That made the dollar strong in the global market system.
So, when you turned in your gold you got about 20 dollars of the new money per ounce. If you refused to turn it in and
got caught, you quickly went to jail. But the issue was, an ounce of gold was really worth about 35 dollars an ounce at
the time. So if you had, say, 500 dollars of value in gold before the seizure you came out on the other side with only
about 285 dollars of value in “new money”. In both changes the banks won, and the public lost. The only commonality
was that the banks were the ones in control.
The two events described above were both highly simplified; entire books have been written about both periods of time.
But the point is that moving to or away from gold both harmed the American people and increased the wealth and
power of the bankers. Gold in and of itself is not the cure-all many believe it to be. The key is, in fact, taking control
away from the bankers and restoring power over our currency to the Congress and thus placing the power of currency
creation under the control of the people. Above all, our currency must be free of debt and interest, or nothing changes.
Chapter Twelve - Returning to a True Public Currency
So if going back to a gold standard won’t fix the issue, what will? Simply put, a public debt-free currency and gold
reserves may play a role in that currency. The key we need to understand is that it matters less what backs a currency
and more how many units of the currency exist. It is the cap that is most important, not the backing. Remember that
whoever controls the cap on a currency completely controls the value of the currency itself.
Hence, the only reason we ever used gold to back the currency was to effectively cap its volume. With a nation like the
fledgling United States, this was feasible on a one for one exchange. Had the government never flirted with Central
Banking, the gold standard would have worked quite well for a long period of the nation’s history. Today though, is not
like 1825. The U.S. is now the largest economy in the world. If we used gold as a “cap” we would either have to set the
relationship at a very high ratio, say 10,000 dollars per ounce or buy up the majority of all gold on the planet.
So what role would gold play in this new currency? I am not here to tell you that. My hope is that enough Americans
will wake up and learn what you now know, so we as a people can debate that and decide it via debate and discussion.
My personal view is gold should play a part in a formula that would cap the currency. This formula would include things
like our total population, our natural resources, our land, etc. The key though, is no matter what sets the cap, as long as
the Fed requires us to borrow money into existence nothing really changes.
The solution is one way or another, the Fed has to go! They need to be disbanded and sent packing, dissolved. And the
power of the currency must return to the people. We can debate on gold standards, monetary caps, etc. as we establish
the new system. Many different people will have many different views and no side will get 100% of what they think the
answer should be. That is how a republic works. But I personally believe we as a nation, can do better than borrowing
money as a method of creating it.
There are a few things I want to make clear about making this change. The first is that it will not create a utopia; there
will still be hard times on occasion. Congress will still at times ignore the will of the people. People will still end up
unemployed at times. Money will not just appear in your hands; you will still have to work for it. The big difference is
that you would keep more of what you earned, and what we would pay in taxes would 100% pay for services. None of
our taxes would go to fund new debt or pay interest. Again, we can debate how money gets spent based on our political
leanings. Yet I think all of us can agree that we would be better off without all our money equaling debt plus interest.
Next is the big misconception used as the silver bullet objection to getting rid of the Fed, it always goes something like
this….
If we let the congress control the creation of money they will spend like drunken sailors, they will just print money at will and
make the problem even worse.
Well, this objection was one I myself, could not overcome, for many years. It was why I at one time believed in only the
gold standard as a way to control things. Until I realized what has been right in front of us all along. The Congress
already causes creation of money and they already spend like drunken sailors. They currently are the primary cause of
printing money at will and they make our problems even worse all the time. See, for the objection to work, you would
have to be able to prove it wasn’t already true.
The reality is, you can’t point to one time in the 98 year history of the Federal Reserve where they prevented the
Congress from spending. Not a single one. Never has the Congress approved a bill, the president signed the bill and
the treasury been asked for funding and in the end were told no by the Federal Reserve.
In other words, our Congress already can spend as much money as they wish; the only thing that caps it now is the debt
ceiling. The debt ceiling is the maximum amount of debt we can have at any one time. So, does the Fed set the ceiling?
No, the Congress sets the debt ceiling. So the reality is, getting rid of the Fed and putting money creation in the hands
of Congress won’t change anything about the ability of Congress to spend. What would change is the spending would
no longer create debt and interest; remember in 2009 new debt plus interest totaled over 1.4 trillion dollars alone. If
Congress controlled monetary creation they may have still spent that 1.4 trillion but we wouldn’t owe the Fed interest on
it.
I also ask you to consider the fact that in our nation congressmen, senators, presidents and many other policy makers are
quite honestly “for sale”. Corporations and banks have more sway with your elected officials than voters do.
Regardless of your political party, you probably know this to be true. What does this tell us? For Congress, money is
power; they are therefore beholden to those who control the money. In the current system the banks, investment firms,
the Fed and corporations quite literally “control the money”. So of course, Congress is beholden to them. If we put
the power of monetary creation into the hands of the Congress, it immediately becomes the people that control the
money. Let me say that again to drive it home….
If we put the power of monetary creation into the hands of the Congress it immediately becomes the people that control the money.
Please think deeply about that. If you want Congress to listen to you then you must be in control of the money. The
only way we can control the money is to make them control it. If congressional control of monetary policy exists the
voters can swing things in a single election. Congress is supposed to see the people as its boss vs. sheep to be led and
serfs to be ruled over. The truth is we are seen as sheep because we have behaved like sheep. We are seen as serfs
because we don’t control the money and money is the staff of power in government.
It is simple. If you want Congress to listen to us, we must first stop behaving like sheep. The other thing we must do is
wrest control of our currency away from private intuitions.
I think perhaps, though, the greatest advantage of taking public control of the currency back would be transparency. We
all know about the public bailout that occurred under President Bush that totaled over 700 billion dollars. Most, though,
don’t know about the 2.2 trillion dollar back door bail out the Fed did at the same time. Yes, while the American people
were fuming angry over 700 billion the Fed was loaning out another 2.2 trillion at practically zero interest and at the
expense of the American people.
Eventually Senator Bernie Sanders had the following dialog with Fed Chairman Ben Bernanke on the senate floor.
Please read this and understand its implications.
Senator Sanders – “My question is to you, will you tell the American people, to whom you lent 2.2 trillion of their
dollars? Will you tell us who got that money and what the terms were of those agreements?”
Chairman Bernanke – “…all the information is on our website…” (This is the upshot of a series of attempts to
avoid the real question, basically stating that the way the Fed operates is public knowledge, not that they would
tell us who they gave the money to and the terms of the agreements.)
Senator Sanders – “And who got the money?”
Chairman Bernanke – “Hundreds and hundreds of banks, any bank that has access to the U.S. Federal Reserve
system”.
Senator Sanders – “Can you tell us who they are?”
Chairman Bernanke – “No, because, the reason, that it’s counterproductive is and will destroy the value of the
program is that banks will not come to the Fed.”
Senator Sanders – …“Isn’t that too bad, they took the money but don’t want to be public about it.”
The entire dialog is available on Youtube at this link http://www.youtube.com/watch?v=kUJIG3JNPk0
Watching it will really drive the point home more than reading it here. Yet please think about what happened in this
dialog. I have said over and over in this book that the Federal Reserve is a private corporation and acts without any
meaningful oversight. What you see here is complete proof of the truth of that statement. A United States Senator asks
the Chairman of the Federal Reserve what they did with 2.2 trillion dollars of the American people’s money on the
senate floor and is simply told; “no” we are not going to tell you that.
Keep in mind, this is while the American people were picketing the homes of executives of AIG over 85 billion dollars,
ready to kill Bernie Madoff over 18 billion dollars and damn near stormed the capital over 700 billion in the TARP bail
out. All while, the Fed was quietly doling out over 2 trillion dollars and simply told the American people no less than,
“go screw”, when asked where it went and under what terms it was handed out.
So I will ask you simply, do we not as a people have a right to know exactly how our money is spent, loaned, borrowed
against and doled out? There is plenty of corruption in Congress, but at least the majority of what goes on in Congress
is part of the public record. This allows watch dog groups, the media and individual citizens the ability to audit books,
research actions, etc. Right now when the Fed takes actions with our money that they don’t want to reveal they just act
in secret. When we get wind of those actions and question them, they simply answer with, “screw off”, when we ask
questions.
Could Congress possibly do the same thing? On some levels, of course, they could, but those congressmen have to
reapply for their jobs every two or six years. The Federal Reserve chairman is appointed, and is more a mouthpiece then
a decision maker anyway. The real decisions are made by the board, which meets in private and only releases the
information they choose to make public. They never stand for public elections and are beholden to their banks, not the
people. I wonder what the shelf life would be of a Congressman who told his constituents “no” if they asked if he
would tell them where their money went? I would imagine, right up to about November of the next election year.
So the key is we can debate about a gold standard, a fiat currency, a valuation formula for capping the currency, etc. Yet
how can we effectively make these decisions if we don’t have control over the money? How can we control debt if
money is debt? How can we know what the nation’s balance sheet really looks like if trillions can be spent with no
accountability at all?
The answer to all of those questions is simply, we can’t. So, regardless of exactly how we run our monetary system, one
thing is clear. It must be in our hands. It can’t remain in the hands of bankers, inside the shadow quasi-government of
the Federal Reserve. Nor can it continue to remain the hostage of investment firms like Goldman Sachs.
Chapter Thirteen - Learning How to Think From a Thought Experiment
I hope by now it is clear that my intent in this book is not to tell you exactly what the U.S. currency standard should look
like, in a stem to stern fashion. My only real goal is for the American people to be in charge of that decision. The
problem is that most of our nation doesn’t have the knowledge necessary to really understand a currency system today.
In our schools today, when it comes to money, we teach people bookkeeping and economic theory. We, however, teach
them very little about what makes money work, from a policy standpoint. In short, they don’t know how an actual
monetary system works. Most of the books about the subject are also written in very complicated language and are not
very practical. In fact, I feel most authors use complex language simply to fill out more pages of a book rather than to
actually encourage thought in the mind of the reader.
So my belief is, the best way to learn is to do, or in this case more accurately, perform a thought experiment. What we
will do in the next chapter is create a currency. We will do so with regard to the qualities we previously stated make any
metal (specifically in a refined state) valuable. These qualities are:
1.
The total quantity available at any point in time is limited.
2.
Refining it to a specific content requires energy and limits production.
3.
It is divisible (able to be broken into smaller parts).
4.
It has specific uses (electronics, jewelry, etc) that make it desired.
5.
It has a history of retaining value.
6.
It can be converted into the currency of almost any economy.
Yet to make this experiment really effective, we won’t use a metal; we will use a commodity that also does fairly well on
these six points. The commodity we use will be ammunition, yep bullets! Why? Well, that will become clear as we
subject the new currency to a series of questions, tear it apart and rebuild it.
Before we do, though, I want to state there are many reasons using ammunition as a barter currency are impractical on a
large scale. Chief among them is that it is highly regulated and has definite points of illegality in some states and at the
federal level. I am not presenting ammunition here as a solution, only as a commodity, and how said commodity could
be used as a currency.
In fact, odds are, you will see flaws with my thought experiment. Understand I don’t just expect you to see flaws, I want
you to. In fact, I will leave some glaring flaws unmentioned for you to find. What I want you to do though, is attempt
to fix the flaws and come up with a better idea. Then, subject your solution to the same critical analysis. I won’t do
what your government and education system have been doing for most of your life and tell you what to think. I expect
much more from you because I believe you have the ability to think for yourself.
This approach may be a rather new experience for you in today’s world. It may be uncomfortable for many people to be
prodded into independent thought. As Americans we need to learn to once again think for ourselves. In the
introduction I stated I wasn’t selling you anything, not even an idea. I stated that I would simply reveal to you the truth
about money and leave it to you to decide on the best solution from your viewpoint. Real educators do not focus on the
“what” component of thinking; instead they empower people by focusing on how to think critically, analyze facts and
draw conclusions. Real educators trust that students should eventually become their own teachers.
Today, it seems to me that every newspaper article, every blog post, every political speech, every newscast and TV show
seems to be telling us what to think. I will ask more of you. I want to help you learn how to think, and leave what you
decide to think up to you. I want you to think critically. I want you to tear apart my hypothetical currency, then make
your own version and tear it apart. I want you to do it again and again until you come up with the best solution you can.
I want you to share that solution with others, let them tear it down, rebuild it and realize where they have a point. Then
work with them to come up with an even better solution.
In short, don’t believe the bullshit the establishment tells you about America. The rest of the world is not better or
smarter than we are; we are all humans and this nation has plenty of very smart people. You are probably among them if
you care enough to still be reading this book. My goal here is not to sway opinion, but to get you to actually have one of
your own vs. the one your “side” has told you to have. In short, I want you to know why you believe what you believe.
I also want you to be the first person to challenge your own beliefs and ask yourself if you can do better.
Chapter Fourteen - Building a Barter Currency
As I said in the last chapter, I am going to lay out a barter currency here based on ammunition. But remember, I want
you to tear apart this currency, rip it to shreds, rebuild it, replace it with something else and do it again. So I am going to
give you intellectual ammunition first, in the form of questions to ask.
First on the functional aspects of the currency
1.
How well would this currency work in a very small group, say 20-30 friends that all know and trust each other?
2.
How well would it work in a slightly larger, but “closed” network where there may be thousands of people, but
each must be approved by some process before being allowed into the economy?
3.
How well would this work as a currency for adjunctive purposes in competition with a primary currency? Say, a
very large weekly flea market or swap meet where vendors take both ammo and dollars? Where some vendors
accept both and some only accept one or the other?
4.
How well would it work on a national level? (For the purposes of this exercise, ignore the regulations on ammo
and against competing currencies as this is, again, a thought experiment.)
Now let’s examine the vulnerabilities vs. the stability of the currency
1.
Can the currency be “exchanged” and converted into other currencies to work outside of its own internal
economy? How does this change as we move from small groups to swap meets to international trade?
2.
What potential is there for a member of a competing economy to influence the currency’s value within the
barter economy? This can be done by flooding the economy with surplus currency or by going in and buying
up the currency and taking it out of the economy and therefore out of circulation. Third party-induced
inflation or deflation.
3.
Is the currency divisible? Can you make change? Is it practical for exchange?
4.
How would it work with large transactions, buying a boat, a car, a house or 1000 acres of land?
5.
Is the currency physically stable? Can you save it in a mattress or in a vault for long term and will it still be
viable after a year, three years or fifty years?
6.
What effect would counterfeiting have on this barter currency? Would it matter much? How easy would it be
to detect counterfeiting for the average person?
Now let’s examine the control of this currency.
1.
Who will control the currency, set a cap on its production?
2.
What metrics will be used to set the currencies cap?
So with that out of the way I present to you a fictional barter economy based on common calibers of ammunition. For
simplicity’s sake we will not use “cents”, “nickels” or “quarters” and round pricing based on increments of 10.
•
Our “dime” is one 9MM cartridge.
•
Our “50 cent piece” is based on one 45ACP cartridge.
•
Our “dollar” is based on one .223 cartridge.
•
Our “five dollar” is based on one 30-06 cartridge.
•
Our “ten dollar” is based on one 45-70 cartridge.
•
Our “twenty dollar” is based on one 300 Weatherby cartridge.
•
Our “fifty dollar” is based on one 50 BMG round.
I realize many of the readers may not be firearms enthusiasts, so I will provide you some additional information on the
value of each piece of barter currency vs. the current value of the U.S. dollar. These are average prices, and costs go up
and down as you look at standard vs. premium brands, etc. These are rounded off numbers based on middle market
products.
•
You could expect to pay about 10-15 USD for 50 rounds of 9MM, making a unit price of about 25-30 cents
per cartridge.
•
You could expect to pay about 20-30 USD for 50 rounds of 45ACP, making a unit price of about 50-60 cents
per cartridge.
•
You could expect to pay about 10-15 USD for 20 rounds of 223, making a unit price of about 50-75 cents per
cartridge. Note – this could be much lower with military surplus ammunition.
•
You could expect to pay about 15-20 USD for 20 rounds of 30-06, making a unit price of about $1.00 to $1.50
per cartridge.
•
You could expect to pay about 30 USD for 20 rounds of 45-70, making a unit price of about $1.50 per
cartridge
•
You could expect to pay about 50 USD for 20 rounds of 300 Weatherby, making a unit price of about $2.50
per cartridge.
•
You could expect to pay about 40-50 USD for 10 rounds of 300 Weatherby, making a unit price of about
$4.00 - $5.00 per cartridge.
•
You could expect to pay about $35-55 for 10 rounds of 50 BMG, making a unit price of about $3.50 - $5.50
per round.
One of the first inclinations you will have is to attack our exchange rate as being quite weak; and in fact it gets weaker as
we go up in denomination. Resist this as your primary critique. Go through all the questions, or you will miss too
many opportunities to learn. Also understand, every exchange rate has weakness or strength. Convert British pounds to
US dollars and you get close to two dollars for each pound. Convert Mexican pesos to US dollars and you only get
about 1 dollar for each 12-13 pesos.
If you are a firearms enthusiast, you may be wondering why I didn’t use more of the very common military ammunitions
like 7.62x39 and say 308 (7.62x51). Well, that is because those rounds are so common in surplus that pricing is highly
variable. The same is true of the 9MM and .223, both of which I used. Is that a mistake? Could we use rounds that are
even far less common then what I did here, say 460 Weatherby or some older round from days gone by for higher
denominations? Of course, you can insert anything you want!
Yet, let’s tear down our “ammo dollars” using my questions. Then, go back; change the ammo to beads, seeds, metal,
paper script, promissory notes or pieces of wood. Change it to gemstones, batteries, private bank notes, fiat dollars or
anything you think might work.
What follows is my analysis of our “ammo dollars”. Please do be encouraged to disagree. Again, this is not my proposal
for an actual currency; it is designed to be flawed. I will point out both flaws and strengths and ways to improve things
as we go.
Let me ask you one thing as you follow along. Whenever you think “He’s wrong”, go deeper. Find a way or try to find
a way to fix the flaw. I promise you, every time you put any commodity though this process, your understanding of
money will grow. Lastly, make sure you put our own US Dollar though this same test. So here we go…
How well would this currency work in a very small group, say 20-30 friends that all know and trust
each other?
Personally, I feel it would work almost perfectly. So long as values were agreed upon, it wouldn’t even need to be
something as valuable as ammo, it could honestly be bottle caps. As long as trade is only inside a trusted group,
everything is pretty easy to handle.
How well would this work in a larger but “closed” network where there may be thousands of people
but each must be approved by some process before being allowed into the economy?
This would probably still work quite well; some tweaking may be necessary to strengthen the exchange rate. The larger
the network, the more likely one seller will eventually need to convert the currency to buy from another economy, in this
case, anyone not in the network.
How well would this work as a currency for adjunctive purposes in competition with a primary
currency at something like a swap meet?
Likely, this would be almost ideal for a currency of this type. Anyone could easily walk a few tables and get a great idea
of the exchange rate based on other items available. So long as vendors priced items and stated publicly what currencies
they did or did not take, this will work wonderfully.
For people that visit the swap meet only a few times a year, they can stick to using dollars. For others, the more often
they do business at the swap meet and the more stuff they buy from it, the more attractive the competing currency of
ammo dollars becomes. The more of what you NEED that you can get, like food, fuel, etc. at this swap meet, the better
it gets.
How well would it work on a national level?
I think it would be far less effective. Many people would fear the ammo as an “explosive”, even though it is definitely
more stable than the gas tanks in their cars. On a national level, the exchange rate is more critical as international
commerce comes into play.
Can the currency be “exchanged” and converted into other currencies to work outside of its own
internal economy? How does this change as we move from small groups to swap meets to
international trade?
Yes it can, ammunition is easy to sell anywhere where doing so between private parties is allowed. It definitely has a
“market value” and a large market where that value is defined. The larger the economy we operate in, though, the more
issues there will be moving currency in and out of the economy.
One way we could strengthen the exchange rate would be by controlling the “mints”. We could say for example, only
factory ammunition from Winchester, Remington, Federal or Weatherby is acceptable as currencies. This will balance
values and avoid “cheap” reloads from devaluing our currency.
What potential is there for a member of a competing economy to influence the currency’s value with
in the barter economy?
The threat is significant. Ammo is easy to buy, and a very wealthy competing economy could easily come into a weaker
one and buy up most of the ammo by selling consumable goods, for instance then sitting on the currency. This could be
in the form of agricultural products, leaving our swap meet vulnerable to being flooded with “cheap produce”. This
creates a short term boom, but as the money dries up, the economy must use dollars to buy more ammo bucks and bring
it back into the economy.
The key is the selling of a consumable in this example. You buy food and eat it, and it is gone. Now the seller sits on
the currency, or exchanges if for dollars and takes it out of your economy. There are many other ways this can be done.
What are some other manipulation methods you can come up with? If you were running this economy, what steps
could you use to protect it?
Is the currency divisible? Can you make change? Is it practical for exchange?
Extremely so! A box of ammo is usable for bigger purchases and can be quickly opened and verified to be full.
Additionally if you need to buy something cheap you can easily spend a 30-06 and be granted two 9mms and one 45ACP
in “change”.
How would it work with large transactions, buying a boat, a car, a house or 1000 acres of land?
Poorly, to the point of not being useful at all! There would have to be a banking system creating something like “ammo
notes” or there is no way it would ever work. Say I sold you something like a 100,000 dollar house. You would need
2,000 rounds of 50 BMG. Each weighs about 2 ounces; the weight alone of 2,000 rounds would be over 250 lbs., not to
mention the bulk. Further, the exchange ratio weakness really begins to show at this point.
Now what if this is a 500,000 dollar house or a 1.5 million dollar piece of land? To put it in perspective, you would need
only about 71 ounces of gold (4.4 pounds) to buy the same 100,000 dollar house. It is ironic, though, that our 250 lbs.
of 50 BMG would buy the house and it would take right about 200 lbs. of silver to do the same thing. Is that a case for
more than one commodity in any economy backing the currency? What do you think?
Is the currency physically stable? Can you save it in a mattress or in a vault for long term and will it
still be viable after a year, three years or fifty years?
Mostly, I own some 8mm ammunition that has been stored in at best an abused fashion since the 1930s. It was
originally produced by the Turkish Government prior to WWII and it still fires perfectly in 2010. Today manufacturing
is much more stringent. In any event, 30-06 ammo will wear out less than US Federal Reserve Notes (you call them
dollars) over years of being passed around.
What effect would counterfeiting have on this barter currency? Would it matter much? How easy
would it be to detect counterfeiting for the average person?
In some ways it would be much harder to counterfeit ammo bucks then any paper currency due to cost. If you set the
requirement for never fired brass this is easy to detect. Most bullets are made of lead; it is heavy and cheap. What
would you put in its place as a counterfeiter? A random sample can be fired (permanently spent) to verify it is valid.
You could also pull a slug and verify powder. Simply put, counterfeiting is done for profit. Making your own ammo
may be cost effective for shooting, but in the end, even if a counterfeiter pulls it off, a 9mm round is a 9mm round.
Even successful counterfeiting would retain some intrinsic underlying value. Again, by choosing your approved “mints”,
say Winchester, Remington, Federal and Weatherby much of this can be contained and controlled.
Who will control the currency, set a cap on its production, etc?
In the small economies that this currency would work well for, the market itself would control total volume to a large
degree. Further, as a costly to produce commodity that requires a variety of individual resources, there is much inherent
control. In fact, it takes more processes to make ammo then a gold or silver coin.
You have to make brass, and then shape into proper dimensions. You have to make primers and prime them with a
compound; you also of course, have to make the priming compound. You must make the powder and measure a proper
quantity. You also have to make the bullet (projectile portion), and then the entire product must be assembled.
Sure, you can make your own, to a degree, but all components must be acquired and in the end, if it works, it is still
ammo and it still goes into a gun and fires.
What metrics will be used to set the currencies cap?
If this was my little economy, I would use much of the above market force to control the cap but we could also simply
take stock of the value of trade in the economy at any time. A simple formula based on the value of goods and total
number (population) of economy members would control when new money needed to be “sold into” the economy. In
simple terms, the quantity of currency would be increased when the value of the economy itself increases.
Chapter Fifteen - One Final Lesson from Our Barter Currency
I want you to think forward to an imaginary world where, God forbid, the government and the people look at my ammo
bucks plan and go, “hell this makes more sense than debt based money let’s put the US on Ammo Bucks”. Imagine a
nation that loses its collective mind and uses the 223 Remington as the nation’s new “dollar”. On some levels the
ammo dollar makes a hell of a lot more sense than a debt based currency, but it has oh so many flaws. Let me show you
the biggest one.
So we close down the U.S. Mint and the factories at Remington, Winchester, Federal and Weatherby become our new
Mints Facilities. Now the nation literally goes to war with the people! How? If you knew that Remington 30-06
cartridges were going to become the new five dollar bill, how many would you wish to buy? Especially at first when you
can get them for a dollar to a dollar and fifty cents a unit. More how long would it take until a box of 20 stopped
trading for 20-30 dollars and began trading for the new “face value” of 100 dollars?
So in the beginning, what happens to the once affordable and plentiful supply of ammunition? The people and the
nation and, make no mistake, other nations all go on a buying spree! The “prices” go up and equalize the face value.
Next the old “paper dollar” becomes worthless as soon as it stops being used.
The other side of the coin though is much more damaging long term to the intrinsic value of this new commodity that
now backs the nation’s currency. Any company will serve its largest customers first, so, overnight; Remington,
Winchester, Federal and Weatherby would become honest to God real money minting facilities. Of course they will sell
90% or more to the government; in fact, they will be at once coopted into the government because they will literally be
“making money”.
The reality is the government would not use them at all. They would go into business making ammo on their own. The
ammo would be stamped with “In God We Trust” and end up having a cool eagle and some other symbols and fancy
words printed on them.
Next we go into the vaults at Ft. Knox and put the gold somewhere else (what’s left of it anyway) because real national
wealth is now based on ammo. We have a crisis with space so we make new vaults, huge ones. Ammo is stored at a
level that makes even the military go, wow! Billions of rounds are stored. May be even trillions!
Brass, copper and lead are the new precious metals. Gun powder and priming compound are now considered as good
as silver. Everything starts to equalize; banks move “electronic ammo” around, exchange rates are established, etc.
Now here is the thing, ammo was chosen because it has real value. If you doubt it, go to a gun show with a few boxes
and ask to sell it at a few tables, you will find many takers. Go to a store and ask for free ammo, after they laugh at you
and maybe call the cops, you will get the point. Ammo has real intrinsic worth. Yet why does ammo have value? Like
anything, because society agrees that it is so.
Now even if only specially marked ammo is money in this pretend economy, what happens to the cost of all ammo in
the market? What happens to ammo if the nation buys up trillions of rounds and reserves them as currency? It goes
through the roof! Demand for each component goes up, supply goes down and prices rise. In the end, though, the
governments of the world end up with a disproportionate volume of the commodity and no one really seems to have
thought about that when we dream that gold alone can fix the problem.
Don’t think gold or silver are immune to this new dynamic of disproportionate reserves. Both gold and silver currently
have real value, a value set by our market. Some want them for coins, some for collectables, some for jewelry and some
for investment. Natural forces of the market set the price while supply and demand work out the short term fads and
bubbles over the long term. Yet what happens the day the largest nation on the planet says, “We are going back to the
gold standard” and starts buying up gold? More to the point, what will they buy the gold with? Will we buy the gold
with debt or Federal Reserve notes backed by debt? How is anyone, including the government, going to trade gold for
dollars when the end of the dollar is announced?
There is only one way this could be pulled off; the nation would have to begin buying gold hand over fist in secret,
putting it into reserve well in advance of the currency conversion. In the end, everyone holding dollars is holding the
hot potato and has to take whatever “exchange rate” the government decides upon. Who loses in this game? Everyone
but the Fed and the government will lose. Those of us that hold gold now may mitigate some of the damage, but we are
more likely to, at best, “break even”.
In the end, most modern nations must play ball with the big nations like the U.S. so everyone goes back to gold. Every
nation puts in more vaults, stores more gold than ever before. The world’s gold reserves are reduced and quantity of
available gold goes down. So what happens to gold prices? Of course they continue to go up; the “value” of gold
skyrockets. Yet do you see the real problem with this?
The value isn’t real! It is completely and totally artificially inflated. The gold is dug out of holes all over the world,
collected up by governments and once again buried in holes all over the world. The only thing that changes is the gold
is now shaped into bars with some fancy stamps on it. When you think about it this way, it would be absurd to base an
economy on one commodity, no matter what commodity we are talking about.
Let me ask you, does this really solve our problems? Would our money suddenly become “honest” in this arrangement?
How vulnerable would we be to a nation that is already stockpiling the hell out of gold like China?
Let me put it another way, have you ever met any wealthy individual that put 100% of his wealth into any one thing?
Why not? For those that say, well, we could use a gold and silver system, I ask, have you ever met any wealthy individual
that put 100% of his wealth only two items? Why not? So, simply put, if no individual, no matter how wealthy, puts all
his eggs in one or two baskets, why should our nation?
Again I invite you to go over the previous chapter many times, change whatever you want but think like a chess player,
15 moves ahead. Americans have been conditioned to think below the level of a checkers player in a world where your
rulers are playing 3 dimensional chess. The reality is, your brain is every bit as good as theirs; you can’t blame them for
our failure to think. So think, break everything down, come up with solutions, see problems and get started sharing
what you know with others.
In our nation, a revolution doesn’t come in the streets, it doesn’t come in the ballot box; it comes in the form of ideas
backed by knowledge. Now you have knowledge, I encourage you to amass more of it. Keep learning; learn from
people who totally disagree with me and those that agree as well.
If you want the system to change, people must become aware of it for what it really is, an inescapable debt trap. Once
people know they are captive, they will naturally seek freedom. We can all work together to shape the exact form that
freedom will take, but just as in any revolution, the process begins by taking power away from the oppressors.
Chapter Sixteen - Declaring Individual Sovereignty
At this point, you have learned a lot about what is wrong with our current system. You probably have some places
where you agree with me about how to fix the problem and perhaps many others where you disagree. Again, that is the
entire point of The Real Truth About Money, to reveal how the system works and get people informed. From that point, it
is up to all of us to work on a new system via public debate. My belief is, whatever an INFORMED public comes up
with will be better than the current system. It is not for me to tell America how to run the nation’s currency; instead it is
up to the American people to tell the government how to manage our currency.
Yet any real change will be a long drawn-out battle, one our children or grandchildren may have to eventually win. For
now, we can only begin to tear down the veil of lies and get the ball rolling. Yet in the meantime we must accept a few
facts…
•
If we live blindly in this system, we are enslaved by it.
•
If we live in debt, we are enslaved by it.
•
If we use “money” as our only store of value, we are enslaved by it.
•
If we simply live in the system as it is designed, we live as slaves.
•
If we depend on government, we are the slaves of government.
•
When the master fails, the first people to suffer are his slaves.
In the last chapter, I ended by telling you that any revolution must begin by taking power away from the oppressors. If
we take power from the oppressors, it can only go to one place, the oppressed. So my solution is and will always be
individual sovereignty. This is not some legal loophole that you use to avoid taxation; such things usually result in
incarceration. The key to becoming a true sovereign lies in your thought process and your resulting actions. This lies in
the five components of survival, these are:
•
Food
•
Shelter
•
Fire (Energy)
•
Water
•
Security
If you think about it, the reason you feel a “need” for money all revolves around those five needs, along with some
luxuries you want as well. Yet the need is why you work for people you hate and give away half of what you earn to the
government. In return, you are permitted to keep some portion of your wages and use them to provide for your five
needs and perhaps some fancy trinkets. This makes you a virtual slave, perhaps one with a decent quality of life, but a
slave nonetheless.
In conventional slavery, the slave is property and must be fed, looked after, housed, etc. In modern slavery, we have the
corporate model. Today, wealthy people never own businesses, they own corporations. The corporation owns the
business so the wealthy person controls the corporation but the company must fend for itself. Modern slavery takes on
the corporate model perfectly.
In our system, the higher in the power structure you are, the cheaper money is. The mega bank pays .5% interest to
borrow money and creates new money with it. You borrow it at 4-29% (based on the type of debt) and have to buy
your needs with it. Even when you live “debt free”, something very few Americans do today, you now know that our
money itself is debt. In short, treasury bonds are effectively a mortgage on the future productivity of our people. You, I
and every other American is effectively owned by the banking system, yet we must provide for ourselves.
This again is
the corporate slavery model; the master controls the slave but is not responsible for his needs. For a population such as
ours, conditioned from birth to believe we live in the “land of the free”, this is very hard to accept. Yet I ask you, given
what you now know, what other conclusion could you draw?
Your government, the mega banks and the mega corporations are all aware of this. This group has combined resources
to create a fascist economy that we live in today.
Fascism, we are told by history books, is about concentration camps and the Germany of the 1930s-1940s. Fascism, in
reality, is actually an economic system. The Italy of WWII was also fascist, but they didn’t have concentration camps or
attempt to exterminate a race of people. In a fascist system, governments and corporations work together to further the
nation’s economy and utilize the divisions between the classes to their advantage in advancing the goals of the state
(power) and the goals of business (profits). Read that again, and ask yourself if it accurately describes the political and
economic dynamic in America today.
In such a system, it is imperative, if you are one of those in power, that the worker continue to slave away for his daily
bread and that he see both the state and the business elite as his source for all primary needs. Now, taking the rules of
survival into account let me ask you, how much do you currently depend on the state or the bank or major corporations
for the following…
•
Food
•
Shelter
•
Fire (Energy)
•
Water
•
Security
Note, I am a true capitalist, I am not saying business ownership is evil, I am saying socialized business is evil. I find a
system where a company can influence government more than the people evil. So if you buy your produce from
“Frank’s Farmer’s Market” this is a lot different than buying it from Mega Mart. In one system Frank is the capitalist
and sells you his goods, in the other he is at the bottom of a multi-tiered distribution system. Frank does the most work
and gets the lowest return. One system uses the divisions between the classes to keep Frank (a peasant farmer) away
from the middle class (the barrel maker). The feudal system isn’t gone, as they teach you in school; only its form has
changed.
The component to understand here, though, is how we have been psychologically conditioned as it pertains to the five
components of our very survival. Notice how all three parties are involved in control of each of our primary survival
needs.
Food – We buy almost all of our food as Americans today. Most comes from a massive production system. This
system is financed by banks, regulated by government and managed by the largest corporations in the world. Regulation
is being written at breakneck speed that forces more and more small local producers out of business.
We are now forced by the supply limitations alone to eat genetically modified foods, hormone and antibiotic injected
meat and worse. The big issue is our farmers and producers are at the bottom when it comes to access to money, they
are enslaved by debt even worse than most of Middle America. A farmer or rancher that produces enough to feed say
30 families for a year should be very well off, yet today such a farmer is lucky to survive at all.
Shelter – Most Americans spend the majority of their adult lives paying for their shelter. We buy a house, then a bigger
one, then an even bigger one. We mortgage it for 30 years each time. If you are 45 today and buy a home with a 30 year
mortgage, that means you will pay it off at the age of 75. The average age of death for males in America today is 75.6, so
you do the math on that one.
Government regulates our mortgages. Mega corporations sell us the majority of construction materials, appliances and
doo dads inside our homes. Of course banks collect about 335,000 dollars for a 100,000 dollar house. Now you know
that, when they loan you this money, they don’t even actually loan it to you; they create it out of thin air. When we build
a home or even modify it we must pay Caesar his due in the form of taxes and fees for permits and inspections, all of
course, in the name of safety.
Many new home designs exist that save tremendous amounts on energy and maintenance, yet they are suppressed by
government regulation. One, in particular, is called an earthship. Earthships make their own energy, collect and treat
their own water and are built mostly from used tires, bottles, cans and dirt. They are almost indestructible but
government regulation prevents them from being built in many areas. The earthship is only one example of many,
where shelter could be more affordable, more durable and more efficient, yet government stands in the way.
Energy – Our gas, electricity and any energy product is either purchased via the government or a megacorporation.
Any privatization of energy is also highly regulated and therefore taxed. The processes of production and delivery of all
energy sources are taxed at almost every step of the process. We must provide a deposit or credit card just to get our
lights turned on. Of course now the government wants to tax all energy in the form of a carbon tax.
Utility and energy rates are largely controlled by an agreement between the corporations and the state. Banks take a fee
for processing every payment at every step of the energy system. The key is, if the system fails, we do without, no
matter how much money we have. If the power is out, the power is out for the majority of the unprepared.
Water – Today the mega corporations are buying up public water and public water infrastructure at an alarming rate. In
the end, the state and the corporations have joint control of the nation’s water reserves (the very definition of fascism).
They put chemicals in our water, such as fluoride, despite mountains of evidence that it does more harm than good. If
you don’t pay the bill, they shut you off. Water, which is the most essential need we have, is now being transformed
from a public utility into a fascist for-profit industry.
Water is now controlled by government, profited from by giant corporations. This is of course funded by banks that
create money in the form of debt that the people must pay for with taxes. After paying for the water with taxes we have
to then pay for the water a second time to buy it from the new private owners. If any business should be publically
owned and run at a breakeven level, it is the water business. Water should be as close to free as it can be made for all.
Instead, the new term investors are using to describe water is, and I kid you not, “blue gold”.
Security – Today the state provides an abundance of security, to the point where liberty is taken in the name of safety.
There are more people per capita in US prisons than any other nation on the planet. Private corporations now run our
prisons for a profit. Anytime we say that we want less spending, our government uses security to convince us it can’t be
done.
Instead of security being used to protect private property, the apparatus is turned against us. Security has become an
industry in America with hundreds of billions trading hands. When money flows, banks profit and the nation’s debt
grows. As you now know, that is how the system works.
The issues with the above are not so much that these systems exist; the real issues are the ways we choose to deal with
their existence. The basic formula we are trained to follow is…
•
Go to school and get good grades by completing the indoctrination process like good little drones. An
education that largely teaches us to not question authority, show up on time, worship a few days of vacation a
year and above all, conform to what society calls normal.
•
Get the best job we can, work hard and trade time for money. The job is considered an absolute necessity and
the bigger the company the better. For the ultimate in security, work for the government.
•
Pay Caesar his tribute in the form of dozens of taxes while pledging allegiance to a constitution most members
of our government ignore completely.
•
Save the majority of our money in tightly regulated forms (401ks and IRAs), where our government has
complete visibility, control and access to it. Where they can change the rules at any time and we must pay a
fine to access our own money if we need it before the age they set, an age they can also choose to change at any
time.
•
Place most of our savings in stocks and bet the farm on inflation to keep upward pressure on the market.
Effectively, this means we put everything we have at risk at all times. We are trained with the mantra; stocks
always perform well over a ten year period, even though most have lost money in the last ten year period.
•
We are conditioned to view the government, the banks and the mega corps as masters because they control
access to money, power and everything that comes with it. We are trained to borrow money to create the
ultimate badge of honor in today’s society, the credit score.
•
Contribute billions into pensions, social security and programs for “social justice” which we are told creates a
safety net. This safety net we are told is for us if we fall. Yet the real message is that there are people who
can’t succeed and only by providing for their needs with welfare programs can we be safe in our comfortable
suburbs.
•
Purchase the five survival needs during our working years only as we consume them. We buy food, energy,
water, shelter and security al la carte, rather than invest in systems that provide them long term. We are trained
to believe that this behavior is “normal”.
•
When we can no longer work, we are left to pray that our social security and savings will continue to be
sufficient to provide our five needs on an as-needed basis.
•
Finally we end up retired and doing some basic math to calculate how long our savings will last. At that point,
we try to throttle our spending so that we can accomplish our final goal; die before our savings expire.
In the end, most of us die along the way or enter our retirement years and live with extreme sacrifice during what we are
promised are supposed to be our “golden years”. Is this an inescapable grim ending? Only if you accept it!
So, if living as a serf and dying as a complete dependent isn’t our only choice, what’s the other option? Throughout your
life, work for small percentages of independence and invest your earnings in assets that provide your needs, vs. hoping
your savings grow enough to continue buying them. This requires a radical change in thought, yet the actual act of
taking the actions is much easier.
The complete actions of individual sovereignty could fill a book larger than this one. For the purpose of this chapter
though let me give you a few ideas for each of the five needs. These are just ideas, you can do some of them, none of
them or all of them. There are many other ways to create individual sovereignty; the entire point of freedom is that the
choices are yours to make.
Food – Kill some grass and plant a garden. Grass does nothing for you. You can’t eat it, it uses lots of water and you
have to spend money just to keep it green and short. Kill some useless bushes and trees that are only ornamental and
replace them with fruit and nut producing plants. These bushes and trees come back year after year with no real work.
Keep bees or chickens for sugar or eggs. Barter with local providers instead of spending Federal Reserve notes with a
supermarket. Learn about a system called permaculture that can create an abundance of food in any climate on a
sustainable level.
Shelter – Buy less than the bank says you can afford. Pay off your house in ten years or even five; it can be done.
People scoff at paying off a home early, call it impossible. These same people then buy two 50,000 dollar SUVs
financed for five years each. A hundred thousand dollars buys a decent house. Certainly one that can be expanded on a
pay as you go basis the way our grandparents did. Buy more land than house and make the land produce for you with
the ideas mentioned for food above. Use the savings to improve your home. Consider alternative housing, doing some
or all of your own construction. There are many options. Just don’t plan on spending thirty or more years of your life
“renting” your own home from a bank.
Energy – Invest in solar and wind for electricity. Invest in solar for heating water, this is the best return of investment
there in alternative energy. Install more insulation, reduce your use of fossil fuels, not to save the polar bears, but save
yourself from a life of being a well-paid slave. A massive solar and wind system providing everything most people want
from electricity for an average human life can be built for 30-60 thousand dollars. A very productive system that
provides most of the essentials can be installed for 8-14 thousand dollars. Both can be done for less if you do a lot of
the work yourself. How many people have 200-500 thousand dollars in a 401K and yet are still paying an electric bill
every month that just keeps going up?
Water – If you have the option, install a well, install rain catch systems and use drip irrigation for your food production
systems. Right now, water is cheap but it is the most critical of all of our needs. Water is now seen by the mega
corporations as the “new oil”. Reserves are being bought up and sold and controlled by the highest bidder. Get a good
water filtration system like the ones made by Berkey. Give yourself the ability to produce clean, clear water; it isn’t hard,
complicated or even expensive.
Security – To be blunt, you should get a gun and get training. Develop an operational security plan for yourself and
your household. Put in security measures, real security measures, not just an alarm system that will summon the cops to
come after the crime is over. Motion detectors are inexpensive and can be run by your new solar system. Knowing a
threat is there before it becomes acute is more than half the battle of preventing it altogether. Understand there are
some risks in life; but you are more likely to die in a car wreck or from cancer then from a robber. You are more likely
to be eaten by a shark than to be killed by a terrorist. So don’t sell out your freedom as quickly as you are asked to by
your government.
This, again, only begins to scratch the surface of individual sovereignty. I just want you to think about it this way. If,
over the next ten years, you invested some of your savings (not all) into systems that provided for your needs long-term
and set things up so you could provide the following…
•
30% of your food
•
50% of your water
•
50% of your energy
•
90% of your shelter (we still have to pay insurance and taxes)
•
100% of your personal security
If you were to invest in that instead of putting 100% of your efforts into what society tells you to, let me ask you the
following ten questions…
1.
How much less would you have to work?
2.
How much less money would you need?
3.
How much risk could you avoid in your investments?
4.
How much earlier could you “retire” in the conventional sense?
5.
How much more freedom would you have?
6.
How much harder would it be for government to scare you into compliance?
7.
How much less likely would you be to buy into the “need” to spend a billion dollars on any particular
government program?
8.
How much more time could you spend with your family?
9.
How much easier would it be to take a job you love vs. the one that pays the best?
10. In short how much less fear would exist in your life?
For more on Individual Sovereignty use this link to get a 60 minute audio presentation I gave on the subject.
http://bit.ly/individual-sovereignty
Chapter Sixteen - Resources for Independence
It is my belief that a free and independent people are necessary for the proper functioning of a democratic republic.
Such people must have honor, courage, strength and knowledge. Honor, courage and strength are to a degree
something we are born with and something we develop to a higher level over time. I feel that knowledge is the main
way we improve our inborn senses of honor, courage and strength (strength is not about muscle). Of the four
components, knowledge is the one that not only fuels the others; it is also the one we can most influence.
The book you just completed was never meant to be the final part of your financial education. My hope was only that it
is your first step in an awakening that will lead you to take personal responsibility for increasing your own knowledge. I
am an optimist, I believe that the average person is strong; the human spirit has proven so in tragedy after tragedy and
remains undefeated. I believe the average person has honor; honor is allegiance to your own moral code. I believe the
average person has courage; try to take a baby forcefully from her mother and see if you doubt human courage after
doing so.
So, if our society is largely composed of people with honor, courage and strength, why are we a nation of financial
slaves? Because those in power use something called patriotism combined with a false education to channel that
patriotism into the preservation of said slavery. Knowledge has power, regardless of how true or untrue that knowledge
is. If most of the people believe we are free, the slave will fight for “freedom” while actually insuring his captivity.
So I present to you the following resources, a list that is by no means complete, as perhaps your next steps in gaining
more factual knowledge. Remember, all knowledge has power, but truth is true power and, in the end, the truth will
always outshine a lie.
Again this is a Beta Version of this book. I am looking for resources for the final version that fit one of the following
categories.
•
Websites
•
Free Online Videos
•
Conventional Books
•
eBooks and eReports
If you have suggestions for the resources section of this book, please email them to [email protected] with
“resource for trtam” in the subject. While I can’t guarantee I will use all suggested resources the more quality resources
we can add to the end of the book the better.
References
Federal Reserve of Boston. 1984. Putting it Simply.
Nichols, Dorothy M. (1961) 1992. Modern Money Mechanics, 2nd ed., revised by Anne Marie L. Gonczy. Federal Reserve
Bank of Chicago. http://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf.