The Politics of our Fraudulent Monetary System
Are you Voting for it?
By Jason Hommel
In the U.S. republic (today working as a democracy) politics is all about money, because the people have discovered they can vote for government benefits. Republicans would have you believe we need a "fiscally responsible" government, with lower taxes, and lower spending, reduced government, and a balanced budget. It's a hard sell when people want more government handouts for themselves. However, Republicans have given us higher taxes, higher spending, bigger government, and a huge budged deficit of $700 million. During my lifetime, I saw that Republicans generally voted for fewer spending items than Democrats, and that the Democratic Congresses typically increased spending much more than Republicans. But by the time Republicans gained control of Congress under Bush, did spending stop, or go down? No, it went up more than ever before!
Democrats would have you believe we need a "fiscally responsible" government, with higher taxes (on the few rich) to be able to pay the bills, and increased spending for the poor who are "left behind" in this economy with the rich always getting richer, and they want reduced military spending. (It's an easier sell to the masses, it's called "buying votes".) But the Democrats, who at one time were the champions of silver over 100 years ago, are hopelessly naive when it comes to understanding free market forces that create real wealth for the people. They push for things like a minimum wage, which puts poor people out of work, and limits entry level jobs, and creates businesses that cannot afford to pay to service their customers, and that's uneconomic! Democrats tend to push for increased regulation on businesses, which strangles economic growth and wealth creation.
Neither political party seems to understand or care that our monetary system is broken because it is a debt based system. This debt-based system requires that ever more money is created so that everyone can continue to pay the interest on loans, otherwise, they go bankrupt. (And I'm not even saying that's bad!) Currently, although the Federal Government is going into debt at the rate of $700 billion to $1 trillion per year, bankruptcies are at a major high of about 1 in 70 per year. So, it's still not working! And the only way money is created in this system is to borrow more, or print it outright.
When the government borrows more, it borrows from the Federal Reserve (money that they create for a penny a bill, or create out of nothing if they do it electronically), and the Fed ends up owning a government bond, that, in theory, has "value". Where the value comes from, is odd. First, value comes from the supposed ability of the U.S. government to service the interest on the debt, by either borrowing more from the Fed, or tax from the people. Isn't that funny? That's like saying they can do it, as long as they can keep doing it! So, second, value comes from the fact that this is a deception, and they can continue to deceive people into thinking this process creates wealth.
Now, consider the two processes: to borrow from the Fed, or tax the people. The Fed, in turn, usually tries to sell the bonds to the public and to the banks. If the Fed sells a bond (that is ultimately worthless, but currently very overvalued), they sell it and receive money from the public, just as if they had taken money from the public through a tax! Money is taken from the people, either way, and that's the point!
Bonds are really insidious and heinous instruments, because they are so heavily marketed to old people, as being "the safest investment you can own." And this is so ridiculous! Bonds are not keeping up with inflation, and the value can go to zero in two different and entirely separate ways! Inflation to zero, or default to zero! One part of me is angry, because these old people are being deceived. Another part of me feels no pity for them, because I think these old bondholders are simply getting what they deserve. After all, they have had their entire lives to figure out the scam of paper money, and work to end it during their lifetimes, and they still just don't get it. The fraud of the creation of paper money happened on their watch, and as bondholders, they are helping to keep the fraud alive!
So, what happens when the Fed can't sell bonds anymore, and is actually propping up the bond market by buying bonds? Because that's what has been happening lately! Yes, that's right, the Fed is buying bonds to help keep people from selling them. Sounds crazy and counter-intuitive, but it works. See, if the Fed buys bonds, it keeps values high. As values are kept high or trending high, people will try and get ahead of the fed, and buy more, or at least, continue to hold. See, most everyone today is a trend investor. They will tend to sell bonds if bond values start dropping. Thus, the Fed is buying bonds, to help keep investors from panic selling, in mass.
So, what is this doing? Well, remember the $700 billion to $1 trillion the U.S. government is borrowing? That's coming from the Fed, and foreign nations who buy our bonds. In fact, the Fed is even pumping out more money, because it is creating money out of thin air to purchase bonds from the public, too! Normally, the Fed would be selling that $700 billion in bonds, but they can't. The bond market is not buying, and has not been buying for months now. This is what is driving interest rates up, and it's why market rates are so much higher than the Fed funds rate.
This is the force that is creating the massive commodity price increases. This money creation by the Fed. They may just as well have printed up $700 billion to $1 trillion outright. The increase in M3 certainly shows it. M3 increased by about $4.5 trillion in the last five years, about $1 trillion per year!
Under a debt based money system, there are two ways to help people repay their debts. First, "monetize the debt", or print money to pay it off, which is highly inflationary. The Fed's purchase of bonds, without selling bonds, in a situation of massive government deficits, is similar to this process, but in reality, it is shifting the debt burden from people, to the government.
See, one of four main entities must continue to borrow greater and greater amounts of money, or otherwise, the repayment of debt will take the money out of the system and send it back to the Fed, which is from where it came. And there is never enough money for everyone to pay back paper money, because although paper money is created when people borrow, the interest for the repayment of debt is not created.
Therefore, if government really did pay back debt, it would mean there is less money for everyone else, and others would end up going bankrupt at faster rates.
The four primary borrowers are the U.S. government, corporations, the general public, or foreign nations. Unless the average of these continue to borrow more money into existence than others are paying back, then there will be a major monetary collapse from increased bankruptcies. Therefore, if the government really did have a balanced budget (meeting the $700 billion deficit), and if, what's more, if it really did pay back the $7 trillion debt, what would happen?
Well, there is $9 trillion in the banks in M3. The only way for government to pay back the $7 trillion debt, is to tax all savings at a rate of about 7/9 or 78%.
But that's a bad example, of course, because there is not $9 trillion just sitting there in the banks, waiting to be taxed. That's the number of how much money the banks owe their depositors, and most of it, perhaps 98.5% is loaned out, gone into the wind!
And there is no tax on savings anyway, there is a tax only on incomes, which only brings in about $1.6 trillion per year. But why would the government need to take the people's money to pay back the debt, when the government created that money in the first place by borrowing from the Fed? It makes no sense!
The way the politicians frame the argument is that the people, somehow, need to help the government pay back its bills. Ridiculous! The government stole it all from people who hold dollars in the first place through the process of inflation, which is the printing up the money through the process of borrowing it from the Federal Reserve!
In reality, it's the banks, the Federal Reserve, who need to pay us back! The banks only keep 1% or less of deposits in the form of paper cash. The rest, 99%, is loaned out. The reserve requirement for smaller local banks, under $6 million, is zero! See my essay, Major Frauds of the U.S. Monetary System.
See, we did not borrow from them (when the government stole our money in the form of mandatory taxes, and then spent more on programs we did not want). They borrowed from us! The banks took our deposits, and loaned it out recklessly to the government, and then got together to create the "Federal Reserve" so they could borrow from an infinite supply of paper money in order to stave off their own bankruptcy to their depositors!
Literally, the government is already bankrupt to the Fed, to the banks and to bondholders. And the banks that run the U.S. government are also already bankrupt to us! They are both trying to prevent and delay their own bankruptcy, and prevent our bankruptcy to them, through massive inflation.
Give to Ceasar what is Ceasar's. Give the bonds back to the government. Give the cash back to the government. And buy silver instead. Gold and silver protect from bankruptcy.
Have you ever thought about bankruptcy? If a company goes bankrupt, the company's shareholders, who put up the money to get the company going, get nothing. But those who loan money to the company, the bondholders, get the company, and end up with newly issued stock.
But what happens when a bank goes bankrupt? Why don't the depositors, who are the lenders, get to own the bank afterwards? Why don't depositors end up owning a share in the bank? After all, the bank still has assets, the money that was loaned out! Very strange, isn't it?
Know what happens when a bank goes bankrupt? The lenders, the depositors, get zero. Literally, the same customer might have a $200,000 house that he owned outright. If he takes out a $100,000 loan, and puts $100,000 in the bank in cash, watch what will happen next. If the bank goes bankrupt, the cash goes to zero. (That was before the FDIC scam, which is not enough to insure all deposits, but that's another issue.) Then, the bank may be sold to another bank in an auction, and the other bank gets to try to collect on the loans. So, the customer who lost the $100,000 in cash, now can't pay his mortgage, and the bank then forecloses on the house, too! So, in the end, the customer, who had a house, now has nothing, but it's the bank who said they were bankrupt! Quite a scam, isn't it, and yes, that happened to banking customers in the Great Depression in the 1930's as perhaps 5000 banks declared bankruptcy!
And what, again, are U.S. bonds backed by? The full faith and credit of the almighty U.S. government. But government today has proven itself, over and over again to be a bankrupt liar that is inflating the money supply like crazy! How can anyone trust a known liar? Fools!
I don't know which way the money supply will go, whether it will grow through continued inflation, or shrink through bankruptcies, repayment of debt and a balanced budget. But to me, it does not matter. Either way, paper money is fraud, and silver money is real.
If you own silver, you know you own something that is both real and honest and true, and it's value is at historic lows. It's popularity among the general public is about zero, which proves it's a great investment.
The beauty of gold and silver is that they cannot be created endlessly to stave off bankruptcy. The reality of limited money (gold and silver) is reasserting itself. Today, the process of reality returning has begun, and it's been in process for about 3-5 years now, since the bottom of the gold market in 1999-2001. This process must continue, because you can't delay bankruptcy forever. See, depositors wise up. People always wise up. And frauds always collapse. And I'm betting on it.
This is an election year. Most who vote in the election are going to vote for either a Democrat or Republican. It's one person, one vote, every two to four years. There is another vote that goes on, and it is continual, and it is "one dollar, one vote". For every dollar that people keep in the banks, or in bonds, they help to prop up the entire banking and governmental system. For every dollar that people sell in preference for gold or silver, they are voting for a real change to the bankrupt system. We need not vote for an independent political party (although that would be better than voting for the same two teams), we simply need to buy gold and silver, and stop holding money in the banks, or bonds. Yes, it's that simple, and we can create major political change any time we like. By buying silver, I've already voted, and I didn't even need to register. Have you?
~ Afterwords ~
Join Jeffrey Bennett anytime Monday through Friday for a no-nonsense commentary at MIDNIGHT (eastern) for Protecting Your Wealth on Perspectives on America, as heard on WWCR, World Wide Christian Radio; 5.070 MhZ, short-wave. Also simulcast on the world-wide web on First Amendment Radio and on Satellite at Galaxy 13; Transponder 16; 7.70 audio. In addition; Join us on our LIVE "Chat Line" while we're on the air.
Don't buy the sizzle of that steak until you understand the cost! In other words, don't buy the bull being dispensed by the 'rare coin' pitchmen on the alternative media, until you understand the full story. Kettle Moraine, Ltd. (and it's principal) has been a purveyor of wealth protection gold, silver and coins (rare and otherwise) for nearly fifteen years, and has a personal experience with same for over 45 years. We offer the most private, non-confiscable gold and silver coinage in the world - at very competitive cost. To hear the whole story (not the cake and ice cream version), we suggest that you tune in each week to Perspectives on America for the updated truth about Protecting Your Wealth!