TIme to Use Cash

CBDCs: Trojan Horse For Total Control?

This is a balanced policy view of Central Bank Digital Currencies. There is no doubt that CBDCs are coming, but how they manifest will be full of twists and turns. Even though central banks are generally shepherded by the Bank for International Settlements, each bank is heavily flavored by national interests of individual states.It should be duly noted that gold is not dead, not will it ever be dead, to the global banking system. All Central Banks hold some amount of physical gold but it is not coupled to their national currencies. If it inevitable that gold will eventually be forced into some coupling with new CBDCs.

For instance, it was reported in November, 2022 that Central banks’ gold demand hits record level:

Central banks’ gold purchases rose dramatically in the third quarter of 2022, according to data from the World Gold Council. Total gold acquisitions reached almost 400 tonnes in the last quarter, the WGC said. This takes total gold purchases to 673 tonnes so far in 2022, which already is the highest level of any full year since 1967. “This is the largest single quarter of demand from this sector in our records back to 2000, and almost double the previous record of 241 tonnes in Q3 2018.”

The date 1967 takes us back to the time period of decoupling gold from the U.S. dollar. This is a seismic tell that gold is not dead, nor is it an outdated store of value. ⁃ TN Editor

People like to remark that governments foster innovation, especially during wartime. They also like to ignore the slaughter of millions which is usually part of this process. That is not to mention the innovators we missed out on as a result.

The latest government “innovation,” which follows in a long tradition of stealing ideas from the private sector designed to improve our lives and using them for other means instead, is central bank digital currencies (CBDCs).

Designed not to exist in any physical form whatsoever, CBDCs would give their central bank issuers entirely new powers. Indeed, much of the manoeuvring that was required in 2008-9 to rescue the financial system with taxpayer-funded bailouts would have been so much easier had CBDCs been in existence. But if easier, is that necessarily a good thing for the economy as a whole?

Nigel Farage doesn’t seem to think so. And he has come up with a plan to counter the government’s efforts.

To answer the question, it is important to differentiate between CBDCs and the concept of private, distributed digital currencies, including those such as bitcoin, that are built using distributed-ledger technology (DLT). In some ways they are opposites.

Rather than offer an alternative currency, CBDCs are mostly aimed at making monetary policy easier to implement and, potentially, more powerful.

As monetary officials have repeatedly made clear, they have no interest in replacing their policy discretion with algorithms, blockchains or any other form of private-sector solution. Recently, Pablo Hernández de Cos, the chairman of the Basel Committee on Banking Supervision, the regulatory branch of the Bank for International Settlements (BIS, the “central bank of central banks” which is based in that Swiss city), made the following comments with respect to DLT:

DLT could, in principle, allow for cheaper, faster and more customised financial intermediation. But, here again, such benefits must be weighed against the risks if not properly regulated and managed. These include potential threats to banks’ operational resilience, a lack of legal clarity with regard to assets transacted on DLTs, and concerns with regard to anti-money laundering and the financing of terrorism.

Financial system regulators have a bad habit of associating everything that is unregulated with money laundering and terrorism, when in fact the vast bulk of such activity takes place within the incumbent banking and payments system. Such invidious associations should be seen as primarily self-serving rather than anything necessarily in the public interest.

The Bank of England appears to share these sentiments. Earlier this month, the Bank published the following note:

In the traditional financial system, critical financial infrastructure is regulated to deliver an appropriate level of responsibility, accountability, and control. In the future, critical third parties providing material services to the UK financial sector (eg cloud service providers) may also be subject to regulatory requirements. So, there is a question as to what appropriate regulatory oversight of a blockchain could entail, were it to become a more critical piece of infrastructure in the financial system.

Blockchains do not constitute critical financial infrastructure (yet). But they could conceivably become so in the future if cryptoasset activity and its interconnectedness with the wider financial system continue to develop. So, it is important that relevant authorities find legal mechanisms and means of co-ordinated action to ensure that an equivalent regulatory outcome is delivered.

Hence CBDCs, once introduced, are not intended to displace, but to migrate existing, centralised, regulated monetary systems from paper based to wholly digital. There will still be legal tender laws requiring their acceptance for payment, and penalties for counterfeiting or other forms of fraud. Money laundering will still be a crime. And central banks will still control monetary policy. Indeed, their control of monetary power will grow.

As it stands today, while central banks set interest rates and conduct open-market operations (e.g. quantitative easing) these actions only have a direct impact on the reserves of the banking system which, for many years now, have been essentially digital.

Yes, banks do hold some physical cash in reserve, but it is such a tiny portion of their overall balance sheet as to be practically irrelevant.

The broader money supply, including the amount of physical cash in circulation, various types and amounts of bank deposits and credit, fluctuates along with economic activity and liquidity preferences. Thus, when the global financial crisis arrived in 2008, central bankers slashed interest rates and created huge amounts of reserves, but this did not prevent a general contraction in credit. Liquidity preferences spiked, including a desire to hold larger amounts of physical cash.

Given that multiple banks failed or had to be rescued, and that interest rates had declined to essentially zero, holding physical cash seemed an entirely reasonable thing to do. But it did have the effect of limiting central banks’ ability to add further monetary stimulus to their economies.

As one central bank after another began to consider lowering interest rates to outright negative levels, one immediate and obvious complication was that savers would seek to avoid negative rates by reducing their bank deposits in favour of physical cash hoards. Such a run on deposits would not only negate the proposed further stimulus, but would have the counterproductive effect of reducing banks’ normally stable depositor base.

CBDCs expand central bank power, for better or worse

CBDCs provide economic officials with a solution to this perceived problem: once introduced, a purely digital currency cannot be physically withdrawn. No matter if central banks cut interest rates to below zero, even dramatically so, in an effort to get savers to spend more. The digital currency must remain in the banking system. It may circulate more as households and businesses seek to pass the depreciating “hot potato” around, but there is no other option. A bank run on the system as a whole becomes impossible.

CBDCs also give central bankers the de facto power to “tax” deposits, or to supplement them with stimulus cash, as they did during the pandemic. But they would also give them the ability to easily track and trace every transaction, no matter how tiny, and perhaps embed some sort of sales, VAT or transactions tax, depending on the type of transaction involved.

To what extent these new powers would be used or abused is unclear, and a merging of monetary and fiscal policy in this way would no doubt be political, but CBDCs would enable a complete fusion of monetary and fiscal policy, if desired, and would make any form of avoidance or evasion on the part of households or businesses all but impossible outside of direct barter.

The end of financial privacy?

Financial privacy, something that has been eroding for many years, would vanish entirely. That is not to say that there could not be safeguards. And there are ways to help protect yourself. But here, too, the extent that individuals’ transaction histories would be visible to the authorities would need to be decided as a political matter.

This latter point helps to explain why there is much public disagreement amongst economic officials about how best to regulate private digital currencies and prevent their use for money laundering, tax evasion or other illicit economic activities. Whether public or private, purely digital currencies leave the ultimate “paper trail” that can be followed back to inception. Yes, individuals can use cryptography to protect their privacy on a public blockchain, hence why bitcoin is frequently referred to as a “cryptocurrency”.

In a 2021 article, the former acting director of the CIA, Mike Morell, made precisely this point, calling bitcoin a “boon for surveillance,” and noting that “concern over bitcoin’s use for illicit finance is significantly overstated.”

He should know. The CIA is known to monitor international financial transactions as it seeks to discover the source of all manner of activity, illicit or otherwise, that is considered a threat – real or potential, distant or immediate – to the national security of the United States, and to draw connections between both state and non-state actors whenever possible.

CBDCs as international reserves

The international arena is an interesting one for CBDCs, not only in that they would facilitate the ability of authorities to monitor cross-border transactions, but also because they could potentially disrupt the existing international monetary order.

The global financial system remains centred around the US dollar: it is worth considering whether another country’s CBDC, once successfully implemented domestically, could displace the dollar and provide the new global reserve.

Given that international reserve balances are already, in effect, digital in nature, the introduction of CBDCs doesn’t fundamentally change the game in this respect. Reserves remain within the banking system and are not “spent” in the way that domestic physical currencies are. Rather, as they are accumulated, they are sometimes sold to purchase securities of some sort, such as government bonds, or they are exchanged for other currencies, or sometimes gold.

Whether or not the dollar eventually loses its exclusive international reserve status will be down to other factors. It could be that China, Russia, Japan, Germany or the big oil exporters eventually tire of accumulating dollars that seem destined to lose value to inflation over time.

The war in Ukraine and associated economic sanctions might also catalyse some changes in international monetary behaviour. Dollar-dependent trade is a relatively easy target for sanctions, but if other currencies are used instead, sanctions become far harder to enforce. It should surprise no one that political leaders from Russia, China, India, Turkey and others have all made recent public statements to the effect that they have been actively seeking alternatives to the dollar even since Washington imposed war-related sanctions.

Were the above and other countries to indeed find a means to avoid the dollar in trade entirely, this would imply a severe reduction in the dollar’s global monetary role. Could the weaponisation of the dollar have, in fact, been counterproductive? Imagine Messrs Putin, Xi, Modi and Erdoğan channelling Napoleon (as discussed in yesterday’s edition of Fortune & Freedom): “Never interrupt the Americans when they are making a mistake!”

Dollar dominance on the wane, but NOT due to CBDCs

Having written extensively on the topic of global monetary regime change, in my opinion there is currently no national currency alternative to the dollar. All of them have problems of their own. Should the primary candidates migrate to CBDCs in future, with the US government opting for whatever reason to be left behind, doesn’t necessarily imply that the dollar would not remain the dominant reserve.

Of course, the US government might opt not to be left behind at all, but rather to place itself in the vanguard of the thrust to introduce a universal CBDC serving all modern monetary roles, including that of provide for the bulk of the international monetary reserve base. In a project of Napoleonic ambition, the US government could simply explain that all existing dollar balances be converted into a purely digital dollar and that, over some period of months, all physical currency would need to be redeemed for digital dollar balances in an account or would simply expire worthless.

However, what if, subsequent to such a move, multiple major countries in the world pushed back? For example, what if they shared some of the concerns mentioned above, including, perhaps, that the US government would abuse its dominant reserve position by not providing for a fair market interest rate or, perhaps, implementing an outright negative dollar interest rate as a de facto tax on foreign-held dollar balances?

In a way not dissimilar to Napoleon’s sense of near invulnerability when he set about invading Russia, the US government might find the rest of the world pursuing a form of defence in depth, finding ways to reduce reliance on the dollar. Perhaps some countries would even engage in a form of “scorched-earth” policy in which they required domestic economic agents to transact internationally in non-dollar currencies only.

Certainly such policies would be disruptive, but perhaps some actors would perceive their cost of their implementation to be less than to remain dependent not only on the dollar, but on a newfangled dollar CBDC which, paradoxically, gave the US Federal Reserve more power over global monetary conditions than it had ever had: nevertheless, this would be at a time when relative US global economic power had slipped to its lowest ebb since the 19th century.

What about digital gold?

If the dollar’s role continues to decline, there is a candidate that is more likely than any particular CBDC to replace it: gold. Gold is the only truly international money, accepted everywhere as a reliable store of value, and one with the strongest possible historical track record providing the de facto global monetary base and, under the classical gold standard, the de jure one. As I argue in my book, The Golden Revolution, Revisited, gold provides the game-theoretic monetary solution to a globalised, multipolar world.

So, while I don’t see CBDCs changing the international monetary regime on their own, it would be a real game-changer indeed if one or more CBDCs were to be linked to gold in some way. That would introduce real, tangible, perhaps irresistible competition for the dollar as the dominant global reserve.

As it stands now, however, it seems a more immediate concern that CBDCs will not only make it easier for central banks to implement negative interest rates, if desired, but that they will acquire a range of new, implied powers. Thus they bring with them broad implications for tax and fiscal policy, financial privacy and the ability for households to preserve their wealth in what has already become a highly challenging economic environment.

Read full story here…

Digital $$$ – Get Physical Assets

Via Greg Hunter’s USAWatchdog.com,

Investment advisor and former Assistant Secretary of Housing Catherine Austin Fitts says big change is ahead of the world, and “nothing will ever be the same.”

Fitts lays out the so-called “reset” you’ve been hearing about for the past few years and says,

We are in the process that I would recall is a global reset. The entire financial system is being reset. There are two aspects of this: One is extending the old system, and the other is bringing in the new system. It’s very much being done on the fly by trial and error, but the new system is 100% digital.

The new system, according to Fitts, will be a top down control system where “tyranny” will be the key feature. Fitts predicts,

“If you look at the tyranny they are working on delivering, I don’t think most people realize how hideous some of their plans are. So, the tyranny that’s coming and the printing that’s coming is greater than anything we have seen so far

The Fed started a new round of QE in March, and if you look at the extent of that, it is extraordinarily inflationary. That’s because this time around, the Fed is not just doing $3 trillion in QE. What the Fed did in three or four months, what it took them to do in three to five years during the so-called financial crisis, that is an extraordinary amount. Then you combine it with fiscal stimulus because the Fed is now buying the Treasuries… and the Treasury is sending checks out to Main Street. We are seeing that money going into the economy that is extraordinarily inflationary.”

Fitts describes the overall situation, “We are basically entering into a war period, and it’s dangerous…”

“There are many different layers, but this is what World War III looks like.

The people running things and centralizing economic power and control are saying we don’t want to share the subsidy anymore with the general population…

This is a spiritual war between good and evil. Part of that war spreads out to invisible technology like mind control.”

Fitts says gold and silver will be assets to have in the future. Fitts explains,

“If you look at where they want to go, their vision is so dark that I think the more people recognize and see it, the more they are going to want simple assets they can control that are not digital and try to keep them outside the system. Globally . . . I think the pressure is going to be on to have precious metals.”

Fitts is basically predicting higher highs and higher lows for gold and silver prices for some time to come.

*  *  *

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Catherine Austin Fitts, publisher of The Solari Report.

from:     https://www.zerohedge.com/geopolitical/we-are-entering-war-period-austin-fitts-warns-nothing-will-ever-be-same?utm_campaign=&utm_content=ZeroHedge%3A+The+Durden+Dispatch&utm_medium=email&utm_source=zh_newsletter

Gold & Silver as Money

Signed as Law: Kansas Removes Barrier to the Use of Gold and Silver as Money

By Michael Maharrey

TOPEKA, Kan. (May 22, 2019) – Last week, Kansas Gov. Laura Kelly signed a bill exempting gold and silver bullion, and other precious metals, from the state sales tax. Passage of this legislation eliminates one barrier to using gold and silver in everyday transactions, a foundational step for people to undermine the Federal Reserve’s monopoly on money.

Rep. Jim Kelly (R-Independence) introduced House Bill 2140 (HB2140) on Feb. 5. The new law exempts the sale of gold or silver coins and gold, silver, platinum, or palladium bullion from the state sales tax. Under the law, “bullion” means bars, ingots or commemorative medallions of gold, silver, platinum, palladium, or a combination thereof, for which the value of the metal depends on its content and not the form.

The sales tax exemption on gold and silver was amended into a bill authorizing various county sales tax increases. It was the one positive provision in a bill otherwise unfriendly to Kansas taxpayers. With Gov. Kelly’s signature, the law will go into effect July 1.

IN PRACTICE

With the passage of HB2140, Kansas takes a step toward treating gold, silver, platinum and palladium as money instead of commodities. As Sound Money Defense League Policy Director Jp Cortez testified during a committee hearing on a similar bill in Wyoming last year, charging taxes on money itself is beyond the pale.

In effect, states that collect taxes on purchases of precious metals are inherently saying gold and silver are not money at all.

Imagine if you asked a grocery clerk to break a $5 bill and he charged you a 35 cent tax. Silly, right? After all, you were only exchanging one form of money for another. But that’s essentially what Kansas’ sales tax on gold and silver bullion did. By removing the sales tax on the exchange of gold and silver, Kansas will treat specie as money instead of a commodity. This represents a small step toward reestablishing gold and silver as legal tender and breaking down the Fed’s monopoly on money.

“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former U.S. Rep. Ron Paul said during testimony in support an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.

The new law’s impact would go beyond mere tax policy. During an event after his Senate committee testimony, Paul pointed out that it’s really about the size and scope of government.

If you’re for less government, you want sound money. The people who want big government, they don’t want sound money. They want to deceive you and commit fraud. They want to print the money. They want a monopoly. They want to get you conditioned, as our schools have conditioned us, to the point where deficits don’t matter.

Practically speaking, eliminating taxes on the sale of gold and silver cracks open the door for people to begin using specie in regular business transactions. This marks an important small step toward currency competition. If sound money gains a foothold in the marketplace against Federal Reserve notes, the people will be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency.

BACKGROUND INFORMATION

The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” States have simply ignored this constitutional provision for years. It’s impossible for a state to return to a constitutional sound money system when it taxes gold and silver as a commodity.

HB2140 takes a step toward establishing gold and silver as legal tender in the state and that constitutional requirement, ignored for decades in every state. This sets the stage to undermine the monopoly of the Federal Reserve by introducing competition into the monetary system.

Constitutional tender expert Professor William Greene said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it could create a “reverse Gresham’s effect,” drive out bad money, effectively nullify the Federal Reserve, and end the federal government’s monopoly on money.

Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.

Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there.

Michael Maharrey [send him email] is the Communications Director for the Tenth Amendment Center, where this article first appeared. He proudly resides in the original home of the Principles of ’98 – Kentucky. See his blog archive here and his article archive here. He is the author of the book, Our Last Hope: Rediscovering the Lost Path to Liberty. You can visit his personal website at MichaelMaharrey.com

from:    https://www.activistpost.com/2019/05/signed-as-law-kansas-removes-barrier-to-the-use-of-gold-and-silver-as-money.html

Gold is on the Move

ZERO HEDGE

Bonds & Bullion are manically bid overnight as the last 5 days of complacent risk-on exuberance has collapsed into a worst-case-scenario “Brexit” raising doubts about the EU’s sustability and dragging central bank experimental ideas into farce…

This is the biggest spike in gold in 7 years back to 27-month highs…

 

and bonds are screaming to record highs…

 

As 30Y yields near record lows…

from:

About the Illusion of Money

Modern Alchemy: The Money Illusion

MARCH 4, 2012

 

Post image for Modern Alchemy: The Money Illusion 

“While boasting of our noble deeds, we are careful to control the ugly fact that by an iniquitous money system, we havenationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery.”

– Horace Greeley

Have you ever wondered why the vast majority of hard working people on this planet does not make enough earnings to have a reasonable standard of living without being in debt? Our personal debt is modern version of slavery*.

* Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation. Historically, slavery was institutionally recognized by many societies; in more recent times slavery has been outlawed in most societies but continues through the practices of debt bondage, indentured servitude, serfdom, domestic servants kept in captivity, certain adoptions in which children are forced to work as slaves, child soldiers, and forced marriage. [ Wikipedia ]

  • For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
  • In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one. 
Some famous quotes regarding money and central banking:

Banking establishments are more dangerous than standing armies.”  — Thomas Jefferson

“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.”  – James Madison

“The modern banking system manufactures money out of nothing. The process is, perhaps, the most, astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint, and un-mint the modern ledger-entry currency.”  — Major L.L.B. Angus

“Banking was conceived in iniquity, and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen, they will create enough deposits, to buy it back again. However, take it away from them, and the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain slaves of Bankers, and pay the cost of your own slavery, let them continue to create deposits.”  — Sir Josiah Stamp, (President of the Bank of England in the 1920′s, the second richest man in Britain)

“Whoever controls the volume of money in any country is absolute master of all industry and commerce.”   — President James A. Garfield

“Those who create and issue money and credit direct the policies of government and hold in the hollow of their hands the destiny of the people.”   — Sir. Reginald McKenna, former President of the Midland Bank of England

“Paper money eventually returns to its intrinsic value— zero.”   — Voltair (1694 – 1778)

“Give me the power to issue a nation’s money, then I do not care who makes the law.”  –  Anselm Rothschild

“Money confers social and political power, naturally.   Those who have more of it than others use their wealth to dominate or control other human beings who have little or none.  But money also gives power to a secret self, enabling it to pursue its own self-gratification in a singular fashion…
“Money, therefore, contains a continuous illusion of immortal power – the psychic vehicle for defeating time itself by controlling the future.  It is only an illusion; no mortal ever conquers time…
“Thus, on a psychic plane, the Wall Street investor accomplishes what the alchemist could not – creating gold from dross, real wealth from mere paper, a living organism from raw numbers…
To demystify the Federal Reserve, one first had to understand that money did not require religious faith or buried fantasies or impenetrable technicalities.  Money was, above all, a political question – a matter of deliberate choices made by the state.”  — William Greider,Secrets of the Temple, pp. 235, 236, 238, 242

The Money is an Illusion

By Dene McGriff

Over the centuries man has used many things for money – cattle, seashells, camels, coffee, jewels and precious metals.  Before money, there was Barter – two people trading something the other wanted.  Commodities and finally metals in the form of coins were introduced.  Paper money originated with the goldsmith who gave receipts to wealthy citizens for storage and safekeeping.  The goldsmiths realized that the receipt could be used in commerce since it could be redeemed in gold from the goldsmith.  Thus, modern banking was born.  Then they realized that the demands for redemption were relatively small so long as they kept a minimum in reserve.  Thus fractional-reserve banking was born.  If they kept ten or fifteen percent on hand, they would have enough to redeem any demands on the bank.  For centuries, European privately owned banks would issue paper bank notes backed by gold reserves.  The system was transferred to America.  Gradually, the value was transferred to the demand deposits which were redeemable by personal drafts or checks and gold was all but forgotten.

During the 18th, 19th and early 20thCenturies, periodic failures plagued the banking industry.  Experiments with fiat (paper) money always ended in inflation and devaluation of the currency.   After the Civil War, the National Bank Act tried to regulate bank notes issued by state banks but the public at large had little confidence in this chaotic banking system.  Then along comes the Federal Reserve Act in 1912 to restore order and public confidence in the monetary system.

Now when the Federal Reserve began, the paper money was backed by gold or silver up to a small portion of the face amount.  The problem is that the fractional reserve tends to become smaller and smaller until it is reduced to nothing.  And even to this day, fiat money is the way governments create money without taxation.  It has nothing of tangible value to offset it so let the printing presses roll

The Alchemy of the Federal Reserve

Money is created out of absolutely nothing.   Most texts teach that money is created first by someone making a deposit and then the bank waits for someone to come along and borrow it.  That is not true.  Money is created the instant it is borrowed.  In other words, debt creates money.  The government creates bonds (debt), gives them to the Fed which uses that debt to create money.  There is no other value attached to it.  It is the act of borrowing which causes it to spring into existence.  “Banks are creating money based on a borrower’s promise to pay (the IOU)….Banks create money by ‘monetizing’ the private debts of businesses and individuals.” (I Bet You Thought, Federal Reserve Bank of New York, p. 19).  Now I am going to quote from Griffin’s book to explain how the process works.  Money creation is a circular concept and hard to grasp so please stay with me.  Once you get it, it is absolutely shocking!

“The entire function of this machine is to convert debt into money.  It’s just that simple.  First, the Fed takes all the government bonds which the public does not buy and writes a check to Congress in exchange for them.  (It acquires other debt obligations as well, but government bonds comprise most of its inventory.)  There is no money to back up this check.  These fiat dollars are created on the spot for that purpose.  By calling those bonds “reserves,” the Fed then uses them as the base for creating 9 additional dollars for every dollar created for the bonds themselves.  The money created for the bonds is spent by the government, whereas the money created on top of those bonds is the source of all the bank loans made to the nation’s businesses and individuals.  The result of this process is the same as creating money on a printing press, but the illusion is based on an accounting trick rather than a printing trick.  The bottom line is that Congress and the banking cartel have entered into a partnership in which the cartel has the privilege of collecting interest on money which it creates out of nothing, a perpetual override on money which it creates out of nothing, a perpetual override on every American dollar that exists in the world.  Congress, on the other hand, has access to unlimited funding without having to tell the voters their taxes are being raised through the process of inflation.  If you understand this paragraph, you understand the Federal Reserve System.  (Griffin, The Creature from Jekyll Island, p. 193)

 “The federal government adds ink to a piece of paper, creates impressive designs around the edges, and calls it a bond or Treasury note.  It is merely a promise to pay a specified sum at a specified interest on a specific date…this debt eventually becomes the foundation for almost the entire nation’s money supply.  In reality, the government has created cash, but it doesn’t yet look like cash.  To convert these IOUs into paper bills and checkbook money is the function of the Federal Reserve System.

An instrument of government debt is considered an asset because it is assumed the government will keep its promise to pay…so the Federal Reserve now has an ‘asset’ which can be used to offset a liability.  It then creates liability by adding ink to yet another piece of paper…the “Federal Reserve Check”…

There is no money in any account to cover this check.  Anyone else doing that would be sent to prison.  It is legal for the Fed, however, because Congress wants the money, and this is the easiest way to get it…The process is mysteriously wrapped up in the banking system…The Federal Reserve check is then deposited in one of the Federal Reserve Banks…

These checks become the means by which the first wave of fiat money floods into the economy.  (For detail, please see Griffin, pp195-197)

These Federal Reserve Checks become commercial bank deposits.

Read the entire Source Article >>

The Truth about the Economy

By Dene McGriff

On Aug 10th, 2011, the stock market dropped over 500 points again after having gone up 450 the day before and down 640 the day before that.  What is this all about?  Why so much confusion?  Where is it going?  Is America on that long slide down to “third world-dom”?  Is China taking over as top dog?

I have been writing on the economy for quite a few years now.  I called the housing bubble back in 2004, the derivatives problem which led to the crash in 2008 and the continuing deflation (depression) the entire world is experiencing.  So what is the problem?  Is it the US debt?  Does it have anything to do with the US?  Will America be destroyed?  I would use the analogy of attacking a Chihuahua with a baseball bat – one swipe and he’s a goner.  Ever try and attack an elephant with a baseball bat?  The elephant will probably survive just fine but the attacker may not.  America may have problems but they are nothing compared to the rest of the world.  Bottom line is that we are much more able to absorb the blows than they are.

What is the Problem?

Let’s start with today.  Is the problem the credit downgrade of the U.S. by Standard and Poor’s?  No, in fact Treasury sales are better than ever (the markets aren’t that stupid) and long term interest rates continue to drop.  No, it is Europe and specifically France.  France has been supporting Greece and there isn’t enough money there to save them.  The stronger nations of Europe have been trying to save the weaker PIGIES (Portugal, Italy, Ireland, Greece and Spain) but France and England are not far behind.  Does this floundering European Union sound like the burgeoning power that will rule the world one day as some Christians think?  They can hardly agree on anything.  The EEC is a joke and it is disintegrating before our eyes.

So, you say, China holds all the cards and yes they have a pretty good hand.  But I have news for you, China has 1.5 billion problems: an aging population with fewer women (since baby girls were often eliminated), not to mention the logistics of providing fresh food and water, housing and other services for huge population.  Corruption and cronyism, demography and regional inequities will overwhelm and destabilize the new Asian miracle.  The same might be said to a slightly lesser extent for India.

So who does that leave on top?  You guessed it.  As we have said in the past, there is only one nation known as prophetic Babylon which matches this picture: apostate Christian, the great consumer nation, the greatest military power, and a friend of Israel (at least for now).  So the economic demise of America/Babylon may be greatly exaggerated.  Let’s look at the facts as to why America is nowhere near falling into oblivion.

There is a tremendous amount of debt all over the planet – corporate debt, government debt, local debt, personal debt, bank debt, not to mention the so-called unfunded liabilities (also an international problem) of retirement, medical care for the poor and elderly, unfunded pensions, etc.  Nearly every country in the world is having the same problems that we are but it is much worse.   The government “solution” is to print money (increase the money supply), both in cash and credit markets and just spend, spend, spend. Debt is parlayed and expanded in the form of derivatives.  One would think that since the 2008 meltdown fiasco we learned our lesson, but we haven’t and the derivative debts continue to grow exponentially.  The world is awash in funny money – fiat currency with no backing, but rather than causing hyperinflation, we see deflation which is the financial enema solution to excess liquidity.  Dead broke businesses, banks and factories go out of business and local governments and countries default (just don’t pay their debt).  The irony is that the world knows that America will never default and that is why the dollar is golden – even if they have to tax and take away nearly every dollar earned.  Nations flock to buy US Treasuries.  They can’t get enough even when they make nothing on them.  Those are the facts.

So in this article, we want to look at the debt ceiling crisis, why there isn’t enough money in the world to bail out the PIGIES, what will be the result of this failure and where we are headed as individuals.

From a prophetic point of view, we see that America will not decline commercially.  Up until the very end America will be the leading economic and military power.  However this doesn’t mean all goes well for you and me.  All of the crashes and bailouts have been at our expense.  More on that in a minute – the $16 trillion heist!  The long term trend is that the rich will get richer and the poor will get poorer and the middle income will continue to slip into poverty.  Right now, I am making one sixth of what I made twenty years ago.  I have three grown children and all are struggling to keep their heads above water.

The middle class is shrinking and here are stats to prove it.

  • 83 percent of all U.S. stocks are in the hands of 1 percent of the people.
  • 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
  • 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
  • 36 percent of Americans say that they don’t contribute anything to retirement savings.
  • A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
  • 24 percent of American workers say that they have postponed their planned retirement age in the past year.
  • Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
  • Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
  • For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
  • In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
  • As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
  • The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
  • Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
  • In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
  • The top 1 percent of U.S. households own nearly twice as much of America’s corporate wealth as they did just 15 years ago.
  • In America today, the average time needed to find a job has risen to a record 35.2 weeks.
  • More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
  • the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
  • This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
  • Approximately 21 percent of all children in the United States are living below the poverty line in 2010 – the highest rate in 20 years.
  • Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
  • The top 10 percent of Americans now earn around 50 percent of our national income.

So what are the prospects for your future?  Not very good.  I know you don’t like to hear this but all of the bailouts have occurred at your expense.  Let’s talk about the bailouts and stimulus. Who caused the crisis to begin with?  We all now know that it was the banks and their reckless derivatives. Who got bailed out?  How much money did you receive?  Nothing?  I didn’t either.  Imagine that.  But read on.  It gets much worse for us little peeps even though America will continue to prosper.

The Bailout and Dismantling of Europe

Look at Europe.  Greece already received $153 billion and now the Eurozone and IMF are providing another $152 billion.  Where does that money come from and who benefits?  It comes from tax payers.  The bailout doesn’t go to the Greek government.  It is just passing through to pay the banks to pay the 14% interest they already owe on their $476 billion in original debt!  This guarantees another default which will filter back through the banking system in Europe, the US and other countries.  Greece is very small potatoes.  It is 38th in size, $318 billion in 2010, whereas Italy is 10th and Spain 13th in size with a total economy of nearly $3 trillion.  Looking at it another way, the chart on the right shows the size of country debt by GDP.  We hear about the PIGIES all the time (Portugal, Ireland, Italy, Greece and Spain), but look at the other countries that are in equally bad condition.  Countries like the UK, France and Germany are the ones providing the loans to the PIGIES, but when the PIGIES default, who will cover those countries?  One guess is allowed.  Guess who will be left to save them all?

Analysts know that Italy and Spain are close to default and will soon be followed by England and France.  It isn’t a matter of the amount of debt.  Japan and the U.S. have shown that they can and will pay it back.  It is whether they can finance the debt and at what price.  The U.S. and Germany finance their debt for practically nothing (in the 2 percent range) whereas the PIGIES are paying all time highs of 14 to 30 percent.  These are holes they can’t dig out of and as one country after another defaults, Europe will be torn apart.  But will the Euro die?  Probably not.  Once the PIGIES drop out of the EU, then the EU will survive.  The PIGIES however are doomed because they won’t be able to finance their debt.  I would like to emphasize at this point that Europe and the rest of the world will look, perhaps grudgingly, to America to save them and establish order.

America and the Debt Crisis – Smoke and Mirrors!

America has a debt problem, no doubt about that and neither party faced it.  The so-called $4 trillion in cuts are not cuts at all.  It is not a cut in spending but a cut in the increase. The deficit was slated to double from $14 to $28 trillion over a ten year period.  The agreement was to cut that increase in debt back to only $10 trillion. The graph on the left shows the growth in the national debt through 2020 at that rate.

It shouldn’t take a rocket scientist to realize that this is not sustainable.  One lesson we should have all learned from the recent debt ceiling debate, is that if the rating agencies downgrade the US economy, we pay a higher interest rate on our debt.  Let’s look at some round numbers for a moment.  If we say that our national debt is $14 trillion and we pay 2 percent on that debt that makes our debt payment a mere $280 billion and everyone agrees that is okay.  That represents about 8 percent of the total Federal budget.   Historically, we paid 8 percent on our national debt.  That would quadruple the amount spent on debt.  You do the math.  What would the debt payment be at 8 percent on a $24 trillion deficit?
The more you tax, the more you grow government, the more of the GDP allocated to government, the smaller the productive economy and the higher the tax rate to pay for this massive debt.  This is why some legislators are screaming about debt and wanting a balanced budget!  The “compromise” reached by Democrats and Republicans did not limit spending but merely the size of the increase in deficit spending.

So what does this mean?  Bottom line it means massive tax increases if the administration has its way or massive cuts in government programs such as the military, Social Security, Medicare, Medicaid and Education.

The question you all may have is how did we get into this situation?  Where has all the money gone?  What about the stimulus and bailouts?  According to Bloomberg News in 2008, the total bank bailout amounted to $8.5 trillion.  According to the first audit ever done in the 99 year history of the Federal Reserve, they loaned over $16 trillion to US and foreign banks.  Now think about it, the federal banking system is run by a private banking cartel called “The Federal Reserve” which oversees our financial system made up of dollars – those little greenbacks that are backed by the “full faith and credit of the United States of America.”  We’ve heard those words before but what do they really mean?  “We the people” are the ones backing these huge loans.  Please read this article about the “Greatest Bank Robbery”.  For more information on the Federal Reserve, please see the article I wrote some years ago [ Modern Alchemy: The Money Illusion ].

Some of you may think that I am contradicting myself.  How can I say America is strong when it is destroying itself?  There are two answers to this question.  First, America is still golden to the rest of the world.  In spite of the downgrade in the credit rating, interest rates have gone down rather than up and the world is flocking to buy our debt.  Second, it would appear that the long term plan is to destroy all fiat currency and come up with some kind of digital world currency in order to help establish the New World Order.  It is also impoverishing those of us in the middle while the rich seem to grow richer.

Where do We Go from Here?

I would remind Christians that the book of Revelation clearly indicates that there will be an increasing gap between the rich and the poor, a subject I explored in great detail in the chapter on the four horses of the apocalypse.  Please see the section on the black horse.  Most Christians are also familiar with the absolute control the Antichrist establishes by requiring everyone to take the Mark of the Beast in order to buy or sell (Revelation 13:13-17) so the end of the age will have not only a one world government but a one world economy – talk about going global!

There is some truth to the debt crisis, but like most crisis in America this is manufactured, apparently designed to rob from the tax payers.  We are not a PIGIE.  We do not have the tremendous population pressure experienced by China or India, pressures that will eventually tear them apart and stall their miracle economies.  America still has tremendous natural resources and a population that is being molded into a patriotic frenzy that highlights America’s “Manifest Destiny” to save the world (whether they want saving or not).  There will soon be another Middle East war in Israel, a defense treaty with Israel, followed by a more massive civilization conflict between the Islamic and post-Christian worlds and the ultimate rise again of China and the powers to the East as armies mass for the final conflict in the battle of Armageddon.  We know the sequence of events.

Meanwhile, don’t trust in your 401K’s, your IRAs, pensions, investment or even gold.  The world is having birth pangs and a new era is about to begin.  Unfortunately, the Laodicean Church will be found Lukewarm and asleep in their “blessed rapture hope” of escape.  We are closer than we think and it is no coincidence that the year 2012 finds prominence throughout the world, and, as you will soon see, even in the sacred Scriptures.  Doug is about to present some earth shattering revelations.  Now is the time to not look to Mammon or anything in this world for our salvation, but to get out of the little box that has programmed our minds and open our hearts and minds to fresh revelation that God desperately wants to share with us – that generation spoken of in Daniel 12 that has a “need to know” what is coming down and why.  This is the generation of destiny, of sacrifice and of glory.  We need to humble ourselves before Him and present ourselves a holy sacrifice and let Him speak to us and reveal His purposes to us.

Copyright Dene McGriff
August 11, 2011 Sacramento

from:    http://blog.world-mysteries.com/ancient-writings/modern-alchemy-the-money-illusion/

Jay Weidner Interview w/Kerry Cassidy

Very Interesting interview with Jay Weidner discussing such things as

The evacuation of Banker Families, Gold, the Annunaki, Breatharians, Time, Ch’i, THE BOOK OF AQUARIUS, Fulcanelli, Volcanoes, Shasta, electro-magnetic coherence, Terence McKenna, etc., etc., etc.

Check it out here:    http://www.americanfreedomradio.com/archive/Project-Camelot-32k-020812.mp3

In El Salvador – Gold vs H20

Gold or Water? A Deadly Debate

To protect their water supply, Salvadorans are trying to ban corporate gold mining—and facing threats and violence as a result.
posted Aug 29, 2011

 

El Salvador Greenhouse

Photo by John Cavanagh

We are inside a greenhouse, gazing at row after row of hydroponic tomatoes and green peppers, learning why people in this community in northern El Salvador are receiving death threats. We have been sent byThe Nation magazine to chronicle the struggle by people here to protect their river from the toxic chemicals of global mining firms intent on realizing massive profits from El Salvador’s rich veins of gold.

Before going to the greenhouse, we spend the morning at the home of Carlos Bonilla, a farmer in his sixties whose handsome face is creased with the wisdom, suffering, and joy of decades of struggles for justice. Over a delicious meal of local tortillas, vegetables, and chicken, Carlos and a group of eight young people tell us their stories.

“We reject the image of us just as anti-mining. We are for water and a positive future. We want alternatives to feed us, to clothe us.”

These young people run a radio station, Radio Victoria, where they broadcast to a growing audience across this mountainous terrain. They tell us about giving air time to local leaders who, beginning seven years ago, found themselves facing a new threat: Mining firms, granted permits to explore for gold in the watershed of the great Lempa River (which supplies water to over half the country’s 6.2 million people), entered these communities with promises of jobs and prosperity.

Gold is now selling for more than $1500 an ounce. Local organizer Vidalina Morales tells us: “Initially, we thought mining was good and it was going to help us out of poverty…through jobs and development.”

But, then, a strange thing happened. A stream dried up near the exploration wells that a Canadian firm, Pacific Rim, was digging. Concerned, Vidalina and other activists traveled to nearby Honduras to meet with members of communities where large mining projects were already underway. They returned with grisly stories of cyanide poisoning the soil and water (cyanide is used to separate the gold from the surrounding rock), and people in mining areas suffering skin diseases and other ailments.

This wasn’t what they wanted, especially near the Lempa River. Local people in northern El Salvador began to organize against the mining firms. First, they linked up with other groups across this province of Cabañas to coordinate opposition. Next, they found allies in other provinces and in the capital San Salvador, and they formed a National Roundtable on Mining. After discussion and debate, the Roundtable decided that the only way to save their vital water source was to organize for a national ban on gold and other metals mining.

Then, they tell us, the death threats began. Some came as anonymous phone calls, some as untraceable text messages, some as people were stopped by men in cars. In June 2009, a dynamic local cultural leader, Marcelo Rivera, disappeared; his body was found in the bottom of a well, with signs of torture reminiscent of the bloody civil war that convulsed this region in the 1980s.

to read more, go to:    http://www.yesmagazine.org/blogs/john-cavanagh-and-robin-broad/gold-or-water-a-deadly-debate

Gold or Farms?

Gold hits $1,800; but what about farmland?

August 10, 2011, 12:40 PM

Nothing can seem to get in front of this gold freight train. The December contract gc1u, the most active, just hit an intraday record of $1,801 an ounce and recently traded up $44.40, or 2.6%, to $1,787.60 an ounce on the Comex division of the New York Mercantile Exchange. But Jon Nadler, an often bearish gold analyst for Kitco Metals Inc. North America, points out in his morning commentary that some of the so-called “smart money” has moved out of gold.. and into farmland? Read Nadler’s past commentary.

“Amid the chaos and the noise, someone (George Soros) is quietly buying ‘stuff’ you can actually use and which has value way beyond currencies or metals; yep, farmland.” He points to a Bloomberg News story out Wednesday about  investors, including a former bond fund manager, jumping into farm ownership, where returns have averaged 16% annually from Jan. 2008. A fund operated by Soros, whose funds shed gold holdings earlier this year, has also gone into farms. Read more on Soros’s move out of gold.

to read more, go to:    http://blogs.marketwatch.com/thetell/2011/08/10/gold-hits-1800-but-what-about-farmland/