From: "Gary Jeffers" <CCGARY@MIZZOU1.missouri.edu>
Date: Sat, 30 Apr 94 18:08:03 PDT
To: cypherpunks@toad.com
Subject: The American money capture
Message-ID: <9405010107.AA23507@toad.com>
MIME-Version: 1.0
Content-Type: text/plain


"Authority serves authority." hey! I said that.

   This post was provoked by two previous posts. They follow:


Blanc Weber says
>Patrick Henry warned everyone that once they had surrendered to it
>the power of the purse & the power of the sword, there would be no
>power left to them with which to save themselves from it[the State]
>So who would be respecting those limits?

Black Unicorn says
>...the President can interfere when & where he likes in the private
>sector with relative ease. How did he get here? 50 years of accretion
>of power by the State.

   Black Unicorn was off by 31 years. The first great power grab by the
State occurred in 1913.

   Blanc Weber makes a good point & I'll add to it. The American economy
was captured in 1913.

   Following is text from the book THE COMING CURRENCY COLLAPSE
 (subtitled) and what you can do about it. The publisher is Bantam
Books & the author is Jerome F. Smith, among other things, a follower
of the Austrian school of economics.



   The following is a brief description of the banking fraud in America.

start of text for THE COMING CURRENCY COLLAPSE
-----------------------------------------------------------------------
                    AFTER  1913
   Beginning with 1913, in the United States in particular, two entirely
different concepts came to the fore & resulted subsequently in the de-
struction of the soundness of official paper money. The two different
concepts I am referring to are the Federal Reserve System & the Income
Tax. The Federal Reserve System came in, in the United States, through
legislation that was introduced on December 23 just as the Congressmen
were preparing to go home for the holiday. It was passed, not because
anyone understood what they were voting on or had examined it care-
fully, but simply because they wanted to go home for Christmas.
During that same year, the Constitutional Amendment to establish the
Income Tax was voted in, by default; mostly people accepted it & brought
it through Constitutional Amendment process on the basis of the
assurances of the promoters that the tax rate would never go
over one percent of most people's income, so why worry about it?
   Those two political changes laid the cornerstones for the rise of the
warfare/welfare state & for the destruction of the soundness of the
United States currency.
   In the present century, so far at least, population, technology,
production & government have grown at highly disparate rates.


---------------  BREAK ------------------------------------------

---------------- BREAK -------------------------------------------

---------------- BREAK  ------------------------------------------





               FRACTIONAL RESERVE BANKING TODAY
   In former times, profligate states (especially those lacking a
central bank) often simply printed additional currency notes to make
up the deficit between their current tax revenues & their current spend-
ing programs. In today's bookkeeping economy, with modern well-dev-
loped financial markets (and a central bank), however, the creation of
fiat money is done in a much subtler & simpler manner (from the stand-
point of the state). It simply borrows the money it needs. The deficit
between revenues & expenditures is "monetized."
   In the United states, this means that the Federal Reserve Bank buys
U.S. Treasury bonds for its own account & "pays" for them by simply
crediting the Treasury's account - a bookkeeping technique well known
to embezzlers
   When the Treasury writes a check on its account at one of the 12
Federal Reserve Banks & pays a supplier or welfare recipient, the
"money" enters the commercial banking system. Let's trace it through the
system; not one person in a thousand knows this technical process, & eve
fewer understand its significance.
   The recipient can do basically on of two things with the government
check: he can simply cash the check, take the cash & not spend it. In
this case, the money supply (narrowly defined, M1) is defined as curr-
ency in circulation outside banks plus demand deposits, it simply
increases by the amount of the government check. Or, he can cash the
check & spend the cash, or he can deposit the check in his deposit
account. Suppose he does the latter. A new deposit is created in the
commercial banking system & since demand deposits are part of M1, the
money supply increases by the amount of the check. BUT in this case it
doesn't stop there.
   The deposit now becomes part of the bank's reserves & because of the
fractional-reserve banking system, the bank only has to keep on hand a
small fraction of the deposit - currently(October, 1981) around 12 per-
cent for deposit accounts. What the bank does then is lend out the equi-
valent of 88 percent of the demand deposit to, say, another customer of
the bank whose deposit account is credited. Now we have the original
deposit addition to the money supply plus the new credit in the second
deposit account. When a check is written on one of these accounts &
deposited in another bank, it then becomes another addition to the
money supply & an addition to that bank's reserves & continues until,
after the process repeats five or six times, the money supply is in-
creased by a multiple of the original government check. Recently the
multiplier has been around 2.5 the initial injection.
   For example, assume the Federal Reserve Bank takes on $50 billion
of new federal deficit in a given year. The increase in money supply
(M1) should turn out to be around $125 billion (50 x 2.5). This
explanation only elaborates the effect on M1, the narrowly defined
money supply; M2, a broader definition including time deposits, through
a similar process more highly leveraged (because of lower reserve re-
quirements) has a multiplier of 6.
   Under the Monetary Control Act of 1980 the Fed is empowered to reduce
reserve requirements still further &, for the first time, is further
empowered to purchase & monetize debt securities issued by private cor-
porations, banks, municipalities, states, etc. In other words this act
authorizes the Fed to buy any IOUs it chooses in unlimited amounts, &
to create Federal-Reserve dollars & dollar credits in unlimited amounts
to "pay" for them!

PAPER MONEY BACKED BY PAPER
   There is only one cause of inflation; it is officially - but not
constitutionally - authorized counterfeiting of money, the official
issue of paper money substitutes that are not fully backed by &
redeemable in the real lawful money they purport to represent.
   Redeemable money substitutes backed by actual money (e.g., gold or
silver) are the only form of genuine official paper money. Such paper
money derives its ability to function as a money substitute from the
fact that it is backed by real money assets & is a valid claim on them.
This is the key characteristic that distinguishes genuine paper money
from counterfeit paper money.
   Genuine paper money is fully redeemable. Official counterfeit paper
money, originally at least, carries the promise of redeemability WHICH
THE ISSUER KNOWNS TO BE FRAUDULENT. Official paper money which is not
redeemable & which does not carry even the (false) promise of redeem-
ability is worse than common counterfeit paper money - it is fait money;
fake, worthless paper which your government orders you to accept as
 though it were genuine.
   Briefly defined, fiat money is simply fractional-reserve banking
carried to its logical extreme. It is money-substitute paper with no
money backing whatever. It is not even a promise to pay money; it is
only a paper promise to pay paper(which is patent nonsense). Fait money
is what is left when the redeemable fractional-reserve money becomes so
fractionalized that the central bank issuer defaults on its redemption
promise because, for actual or anticipated lack of specie(gold or
silver), it is no longer able or willing to make specie payments.
   Through the long series of perverse modifications to the rules &
practices of monetary institutions since 1913, the currencies of the
Western nations, once fully backed by gold, were rendered first partially
counterfeit &, since 1971, completely fraudulent fiat paper.
-------------------------------------------------------------------
end of text of THE COMING CURRENCY COLLAPSE

   The author & conspiracy buff Robert Anton Wilson also has something
of significance to say on banking conspiracies. According to Wilson, it
is exceedingly difficult to discuss or debate banking conspiracies due
to the myth of the Jewish banking conspiracy. To broach the subject
brings suspicion that you are anti-Semiitic. Wilson states that the
American banking industry seems to be controlled by old line New
England, Protestant families. This is a very useful myth in suppressing
dissent.

   For those of you who are still doubtful of the banking conspiracy,
consider this analogy: Pretend that the U.S. Constitution has granted
you & your family the exclusive right to coin money. You print it by
the billions, its fait money(meaning you back it with nothing), it is
"legal tender for all debts public & private", most Americans deal
exclusively in your currency, & the world enthusiastically accepts it.
It is also debt money & must be paid back with interest.
The question is: is there any way you can go bankrupt or go into deep
debt? Barring a huge fraud, there is no way that you & your family can
go into serious debt.

   So why is it that non-government hotshot economists are predict-
ing that there is no way for the U.S. government to pay off its debts
& that within a few years, the American economy goes into the toilet.
Why does the U.S. government have huge debt if it has its own popular
fiat money printing machine? BECAUSE IN 1913 THE TRAITORS GAVE IT AWAY
TO THE PRIVATE ORGANIZATION - THE FEDERAL RESERVE! The U.S. Congress wen
from a "money maker" to a "money renter"? The American economy was
surrendered to a private elite &, largely, so were the American people.
Every dollar that the Federal Reserve puts into the economy is a debt
dollar & must be paid back with interest - a mathematical impossi-
bility! Instead of debt free government, we get a giant yearly Federal
deficit.

   OTHER NOTABLE FACTS
   The Federal Reserve is a private entity that has never had an exter-
nal audit! For years there has been a determined political effort with
the backing of some Congressmen to force the Federal Reserve to submit
to an external audit. The Federal Reserve has so far fought it off. The
mass media has determinedly ignored this political fight. Who owns the
Federal debt? Who owns America? It is also notable & not coincidental
that the tax gestapo, the Internal Revenue Service, was established
in 1913. I understand that the other industrial & post industrial
nations are under similar arrangements with their central banks.

   Ok, what does all this have to do with Cypherpunks & its bandwith?
- flamers want to know. Much of Cypherpunks is made up of people who
like technological & scientific challenges. But that is not the only
reason they take an interest in electronic privacy. Much of the drive
is political; fueled by events such as the successful economic capture
of the American economy in 1913 & by what these events imply about the
nature of the ruling elites. I would guess that this is what largely
motivates Chaum & associates & other electronic privacy fighters.

                                           Yours Truly,
                                           Gary Jeffers
                                           Cypherpunk

                                      PUSH EM BACK! PUSH EM BACK!
                                      WWWAAAYYY  BBBAAACCCKKK!
                                      BBBEEEAAATTTT  STATE !

P.S. The national debt & the Federal Reserve were both created with the
stroke of a pen. They can both be eliminated with the stroke of a pen!
Our predicaments are largely the illusions we have of our lack of Power!
:-) :-)  :-)  :-)  :-)  :-)  :-)  :-)  :-)  :-)  :-)  :-)  :-)  :-)  :-)