“Every good tree bringeth forth good fruit,” says Matthew — “but a corrupt tree bringeth forth evil fruit.”
Today we lower our ax upon the root of America’s corrupt money tree… and expose its evil fruit… the fiat dollar.
You may be aware of the corruption. If you are a regular reader you are likely aware of the corruption.
Yet a man must occasionally recall himself to obvious truths. The nose upon his face is so obvious he scarcely notices the protuberance. It would do him well to remember at times.
Turn now to the $20 bill nesting within your wallet. It is an asset to you, its holder. It represents a legal claim upon goods and services.
But this $20 bill of yours lives a dual existence — one seen — one unseen. That is because your $20 asset is at once a $20 liability.
You see the asset. You do not see the liability.
Today All Money Is Debt
All money in present circulation — all bills, coins, all checking and savings deposits, the lot of it — was borrowed into existence.
That is, all money in existence represents a debt… taken sometime… somewhere… by someone.
That debt may not be your debt. But it is someone’s debt.
This is the inner secret of the lovely $20 bill within your wallet.
Poor Andrew Jackson
Imagine poor Andrew Jackson fuming in his bleak Tennessee grave. Imagine how he spins and spins and spins.
For this is the man who shuttered the Second Bank of the United States in 1836 — the central bank — and retired the national debt for the first and only occasion in history.
And here is Old Hickory with his hawkish visage fronting the debt-created $20 bill.
He has been dragooned posthumously into the very banking system he loathed.
Let us now ponder the staggering realities of today’s debt-based money…
$88 Trillion Into Thin Air
Recall, all money constitutes an expression of debt. The asset merely represents the reverse side of the liability.
We must therefore conclude:
If all dollar-based debt were retired — all $88 trillion, public and private — each dollar would vanish into the nonexistence whence it came.
Can you imagine it?
Now lift your jaw from the floor. Now rediscover your footing. Now recover your shaken wits.
Here we do not speculate. We read directly from the book…
The Fed’s Open Confession
Mr. Marriner Eccles bossed the Federal Reserve in May 1941. At that time he sat down in front of the House Committee on Banking and Currency.
A bewildered congressman — Patman, by name — asked Eccles how the Federal Reserve had acquired the funds to purchase $2 billion of Treasury bonds in 1933.
Our minions have fished up this exchange from the Congressional Record:
ECCLES: We created it.
PATMAN: Out of what?
ECCLES: Out of the right to issue credit money.
PATMAN: And there is nothing behind it, is there, except our government’s credit?
ECCLES: That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.
“The Tragic Absurdity of Our Hopeless Situation Is Almost Incredible”
Did Mr. Eccles botch the facts? He did not. Here is the credit manager of the Federal Reserve’s Atlanta outpost, Mr. Robert Hemphill:
If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible — but there it is.
There it is indeed.
“All Money Would Disappear”
Mr. G. Edward Griffin is the author of The Creature From Jekyll Island. That creature is of course the Federal Reserve.
Its Dr. Frankensteins assembled on Georgia’s Jekyll Island in 1910 to plot its birth.
Here Griffin gets in back of Messieurs Eccles and Hemphill:
It is difficult for Americans to come to grips with the fact that their total money supply is backed by nothing but debt, and it is even more mind-boggling to visualize that, if everyone paid back all that was borrowed, there would be no money left in existence. That’s right, there would be not one penny in circulation — all coins and all paper currency would be returned to bank vaults — and there would be not one dollar in anyone’s checking account. In short, all money would disappear…
Every dollar that exists today, either in the form of currency, checkbook money or even credit card money — in other words, our entire money supply — exists only because it was borrowed by someone; perhaps not you, but someone.
Let us now strike at the root of today’s corrupt money tree…
Don’t Forget About the Interest
A bank loans a man $10,000. He must repay the $10,000 at a future date — with a bit of interest into the bargain.
Assume the $10,000 comes tethered to a 5% rate of interest. Assume further the bankman thunders at his door five years hence, calling in his loan.
The debtor must hand the fellow $12,762.74 That is, the principal plus the $2,762.74 in accumulated interest.
Where will this sap secure the $2,762.74 to service the interest? The larger question:
Must the Federal Reserve issue increasing quantities of money to service all outstanding debt — $88 trillion in the case of the United States? Mr. Griffin:
One of the most perplexing questions associated with this process is “Where does the money come from to pay the interest?” If you borrow $10,000 from a bank at 9%, you owe $10,900. But the bank only manufactures $10,000 for the loan. It would seem, therefore, that there is no way that you — and all others with similar loans — can possibly pay off your indebtedness.
The amount of money put into circulation just isn’t enough to cover the total debt, including interest. This has led some to the conclusion that it is necessary for you to borrow the $900 for the interest, and that, in turn, leads to still more interest. The assumption is that the more we borrow, the more we have to borrow, and that debt based on fiat money is a never-ending spiral leading inexorably to more and more debt.
This is a partial truth. It is true that there is not enough money created to include the interest, but it is a fallacy that the only way to pay it back is to borrow still more.
A partial truth? What is the entire truth, sir?
The Exchange Value of Labor
“The assumption fails to take into account the exchange value of labor.” Please elaborate:
Let us assume that you pay back your $10,000 loan at the rate of approximately $900 per month and that about $80 of that represents interest. You realize you are hard-pressed to make your payments so you decide to take on a part-time job…
The decision then is made to have the bank’s floors waxed once a week. You respond to the ad in the paper and are hired at $80 per month to do the job. The result is that you earn the money to pay the interest on your loan, and — this is the point — the money you receive is the same money which you previously had paid. As long as you perform labor for the bank each month, the same dollars go into the bank as interest, then out the revolving door as your wages and then back into the bank as loan repayment.
Just so. You serve the interest by serving your master.
But what if you decline to wax the bank’s floors, if you fail to serve your master?
It is not necessary that you work directly for the bank. No matter where you earn the money, its origin was a bank and its ultimate destination is a bank. The loop through which it travels can be large or small, but the fact remains all interest is paid eventually by human effort.
What — then — are we to conclude from the foregoing?
The significance of that fact is even more startling than the assumption that not enough money is created to pay back the interest. It is that the total of this human effort ultimately is for the benefit of those who create fiat money. It is a form of modern serfdom in which the great mass of society works as indentured servants to a ruling class of financial nobility.
This conclusion appalls us.
Yet we hazard Mr. Griffin draws a fair overall sketch. And so this question: Shall we strike the chains of bondage from our wrists?
That is, should we all repay each dollar we owe — all $88 trillion? Should we call in all money from circulation?
The question is theoretical, of course. We can no more afford to break the chains of debt than we can afford to break our necks.
They will snap once they can no longer endure the relentless weight pressing upon them. Not because we choose to snap them.
On that bright and glorious day, however distant, we shall finally be free…
Free — without one penny to our name.
Managing Editor, The Daily Reckoning
Source: Daily Reckoning
Powered by WPeMatico