Authors note: To some this article may be long and boring, especially for those who have little interest in politics. However, second to the Bible, it is my belief that it may be the most important thing you will ever read. Hopefully you will the time to read through it as it is of the utmost importance that you grasp the material that follows.

“All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.” – John Adams

“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.” – Thomas Jefferson

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

This evening, as I was preparing supper, NBC Nightly News came on and at the very beginning of the broadcast I heard Brian Williams say, “Good evening and we’re here in Washington tonight where every day is a little bit like the movie Ground Hog Day. You can hear the alarm going off in this case, the debt ceiling, which rational people agree needs to be raised.” [I guess Mr. Williams is implying that anyone who doesn’t is irrational]

A few moments later they played a clip of Barack Obama, in which he stated, “So I’m asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your member of Congress know.”

Normally I don’t place a quote at the beginning of my commentaries, let alone three of them. However, in this instance I felt that it was appropriate in order to set the tone for the subject matter to follow.

I would venture to guess that very few people watching NBC News this evening found anything peculiar about the two quotes from NBC News. However, that only goes to show that John Adams was right, people truly are ignorant when it comes to the nature of coin, credit, and circulation. Hopefully, by the time I am done here, that won’t be the case.

Let me start off by presenting you with a fictional scenario. Pretend that an imaginary country with a population of 100. Not a big country to say the least, but for my purposes it will suffice.

The people of my fictional country decide they need a government to manage the affairs of their tiny nation. As it should be, this government is a non-profit organization whose purpose is outlined in a document which lists the powers granted it by the people of this nation. One of those powers is to coin money so that the people will have a currency with which they can use to purchase goods, and pay for services.

Before continuing, let’s take a moment to discuss the nature of money. What exactly is it? When you pull a dollar bill out of your wallet to pay for something, what is it that gives that piece of paper its value? Something has to give it its value, or you could just as easily tear off a piece of toilet paper and pay for your groceries with it instead of the piece of paper that is commonly accepted as ‘money.’

What gives that paper its value is a decree by the government that the paper you hold in your hands has value. That piece of paper is fiat money. Fiat money is: any money declared by a government to be legal tender; state-issued money which is neither legally convertible to any other thing, nor fixed in value in terms of any objective standard; or money without intrinsic value. Therefore that piece of paper you call a dollar bill actually has no value; it is only money because our government says it is. Now let’s continue with the scenario about my fictional country.

To provide a currency for their people, their government establishes a mint and begins printing money. For the sake of originality I will call this currency the bloy. Each citizen of this country is given 10 bloy to spend as they see fit. So, with 100 people, each having 10 bloy, there is a total of 1,000 bloy in circulation in my imaginary country.

Say one of my imaginary citizens goes to the grocery store and wants to buy an orange and the cost of that orange is one bloy. So mathematically 1 orange=1 bloy. For years, the economy in this fictitious nation runs smoothly. Then one day the government decides to hand over the authority to print bloy to a privately run bank. Remember, the government is a non-profit organization. However, banks are privately owned and exist to make a profit. When a person borrows money from a bank, not only do they have to pay back the money they borrowed, but they pay interest as well. Interest is one of the means by which a bank makes its profit.

Continuing on with my scenario, imagine that for some reason the country needs more money. Maybe they go to war with a neighboring country, or the economy begins to suffer. Whatever the case may be, the government suddenly needs money. Since they no longer print their own money, they now have to borrow it from the bank. The government decides that it needs another 1,000 bloy, and the bank is more than willing to lend it to them because that’s what banks do, loan money and make interest off the debt.

Now two things have just happened. First, the amount of money in circulation has just now doubled. So with 2,000 bloy in circulation, the value of the currency has been reduced by 50% and it now takes 2 bloy to buy that same orange at the grocery store. This is inflation. Inflation is NOT the increase in cost of goods and services as most people believe it to be. Instead inflation is the loss of buying power of money due to an increase in the amount of currency in circulation.

I said that two things had happened, and this is the second. Since the government had BORROWED this bloy from the bank, they are required to pay interest upon the loan until it is paid off. Those bloy are now notes of debt to the bank, whoever is in possession of them is holding a note of debt of one bloy to the bank. Since these bloy were put into circulation in the economy, it is the people who hold these notes of debt, and it is the people who are responsible for paying off the debt that their government created.

Remember, this currency is fiat currency, in that it really has no value of its own. The banks are not backing it by anything of value, such as gold or silver. In other words, they are producing this money out of thin air. Yet they are charging interest for this money that they produced by simply turning on the printing press and printing out 1,000 new bloy.

Now what do you think would happen should the bank decide that it wants its loan paid in full and the people do not have the money to pay it back? Well, what normally happens if someone defaults on a loan, the bank takes possession of items of value, or repossesses the item of actual value that this fiat money was used to purchase.

Now, how does this apply to the good old US of A? Well, Article 1, Section 8 of our Constitution grants Congress the authority to coin money, to regulate its value, and also to borrow money on the credit of the United States.

Early in our nation’s history Congress passed the Coinage Act of 1792, of which Section 1 states, “Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, and it is hereby enacted and declared, That a mint for the purpose of a national coinage be, and the same is established, to be situate and carried on at the seat of the government of the United States…”

Even earlier than that, prior to the revolutionary war, the colonies printed their own money, called colonial scrip. While Franklin was in England, the people he met were astounded at the stories of abundance that Franklin told them. They asked how come the colonies so financially successful. Franklin replied, “In the Colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods and pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one.”

Word of this made its way to the bankers in England, and they pressured Parliament to deny the colonists the right to print their own money. So Parliament passed laws requiring they use gold and silver issued by the Bank of England. Within a year the streets of the colonies were filled with the unemployed and beggars.

So, when money, even fiat money, is issued in proper proportion, it can provide the means for goods and services to be paid for while keeping inflation at a minimum. However, when too much money enters into an economy, prices will go up and economic suffering is inevitable.

Since our country was founded there has been a struggle over who is to control our nation’s currency. Jefferson and Hamilton were bitter enemies over this issue, with Jefferson being in favor of sound financial practices, and Hamilton saying we need a central bank to issue and control our nation’s currency.

President Andrew Jackson is another who fought against the control over our nation’s currency held by centralized banking. Jackson called the central bank a den of vipers and thieves and swore to rout them out. In fact, Jackson was the only president who was successful in paying off our nation’s national debt in its entirety…only after he had broken the stranglehold the banks held on our nation’s currency.

Even Abraham Lincoln, who was responsible for more crimes against the Constitution than any of his predecessors, had this to say about banks, “The money power preys on the nation in times of peace, and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes”

However, with the passage of the Federal Reserve Act in 1913, Congress once again surrendered their constitutional authority to produce our nation’s currency to a central bank.

After signing the Federal Reserve Act President Woodrow Wilson is claimed to have said, “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world.”

If all this is known by our elected representatives, why would they perpetrate such a heinous crime? Well, for one thing, having a bank upon which they can borrow from in an almost unlimited manner, allows them to enact programs that they could never had afforded had they relied simply upon taxes and tariffs. Having an enormous credit limit allows government to expand its power, and control over our lives.

You think you pay taxes in April to fund the operation of your government. That simply is not the case, and hasn’t been in a long time. During the Reagan administration a commission was established to investigate waste and fraud in the government. They found, that in the instance of taxes, “100% of what is collected is absorbed solely by interest on the Federal Debt … all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from government.”

At the time that this was written our debt ceiling, the very thing that Barack Obama and Brian Williams are telling us must be raised, stood at a meager $1 trillion. Our national debt now stands at a monstrous $14.5 trillion, and President Obama wants to raise our government’s credit limit even more!

Statistics show that each citizen in this country is now responsible for roughly $46,000 of the national debt. However, not all citizens are working and paying taxes. Some are children, and some are unemployed. Therefore, if you ONLY include those who are working and paying taxes, that number jumps to $130,000 per taxpaying American. That is YOUR portion of the national debt that YOUR government has created.

One other thing, the Gross Domestic Product is the market value of all goods and services produced within a country during a specific time frame. Our current GDP is $14.8 trillion. Our national debt is $14.5 trillion. We are rapidly approaching the point to where the banks, and foreign investors will hold liens against everything in this country.

Think of it like this; say you buy a home and your salary is enough to pay the bills. But you are not satisfied with just making ends meet, you want to get a new car. So what you do is take out a cash advance on your credit card. Your card is now maxed out so you ask for an increase in your credit limit. They give it to you and then you go out and buy a new boat. Once again your card is maxed out so you ask for another increase in your credit limit. You continue on until the credit you have amassed is equal to, or greater than, the value of your home. Finally, the bank demands that you pay off your card. You can’t, and they take possession of everything you own. This is what our federal government is doing to us by virtue of their continually raising the debt ceiling and by virtue of their out of control spending.

So, whenever you think that the government needs to implement new programs, create new agencies, bail out more institutions, or spend more money overseas upon wars or foreign aid, think about how much money your government is borrowing to do these things, and about how much of the money YOU personally are responsible for paying back. Then maybe you will not be so supportive of their decision to grant themselves an expansion of their credit limit.

Hopefully you now understand the nature of currency and of credit, and the dire consequences of our governments continued rising of the debt ceiling. Hopefully by now, the three quotes I provided at the very beginning will make a bit more sense to you. If not, then all hope is lost and you are going to allow people who are supposed to represent you, to saddle you with a debt so monstrous that you will, as Jefferson said, “…wake up homeless on the continent their fathers conquered.”

July 27, 2011

~ The Author ~
Neal Ross can be reached for comments at bonsai@syix.com.

If you wish to comment, please go to Neal’s blog so that others may partake of your wit and your wisdom as well… http://www.zombie-slayer.com/neal