| Below/ Barbara Ehrenreich is interviewd by By Bill Moyers Bill Moyer's Journal - Rising Inequality in America - Part 1 Bill Moyer's Journal - Rising Inequality in America - Part 2 |
Stock Trades on UAL and AAL
Airlines Used on 9-11 Targeted by
Short-Selling Before Attack
Financial transactions in the days before the attack
suggest that certain individuals tried to use
foreknowledge of the attack to reap huge profits. The
transactions included purchases of five-year U.S.
Treasury notes and the purchase of put options on
United Airlines and American Airlines, the two airlines
used in the attack. U.S. Treasury notes are among the
best investments in the event of an international crisis,
and put options are a kind of leveraged bet that allows
the holder to profit from declines in the value of the
stock. The purchase of put options is also known as
short-selling. Michael Ruppert has researched the
short-selling of UAL and AAL stocks in detail. He wrote:
Between September 6 and 7, the Chicago Board
Options Exchange saw purchases of 4,744 put options
on United Airlines, but only 396 call options. Assuming
that 4,000 of the options were bought by people with
advance knowledge of the imminent attacks, these
insiders would have profited by almost $5 million.
On September 10, 4,516 put options on American
Airlines were bought on the Chicago exchange,
compared to only 748 call options. Again, there was no
news at that point to justify this imbalance; Again,
assuming that 4,000 of these options trades represent
insiders, they would represent a gain of about $4 million.
[The levels of put options purchased above were more
than six times higher than normal.]
No similar trading in other airlines occurred on the
Chicago exchange in the days immediately preceding
Black Tuesday.
Morgan Stanley Dean Witter & Co., which occupied 22
floors of the World Trade Center, saw 2,157 of its
October $45 put options bought in the three trading
days before Black Tuesday; this compares to an
average of 27 contracts per day before September 6.
Morgan Stanley's share price fell from $48.90 to $42.50
in the aftermath of the attacks. Assuming that 2,000 of
these options contracts were bought based upon
knowledge of the approaching attacks, their purchasers
could have profited by at least $1.2 million.
Merrill Lynch & Co., which occupied 22 floors of the
World Trade Center, saw 12,215 October $45 put
options bought in the four trading days before the
attacks; the previous average volume in those shares
had been 252 contracts per day [a 1200% increase!].
When trading resumed, Merrill's shares fell from $46.88
to $41.50; assuming that 11,000 option contracts were
bought by insiders, their profit would have been about
$5.5 million.
European regulators are examining trades in
Germany's Munich Re, Switzerland's Swiss Re, and AXA
of France, all major reinsurers with exposure to the
Black Tuesday disaster. [FTW Note: AXA also owns
more than 25% of American Airlines stock making the
attacks a double whammy for them.]
On September 29, 2001 the San Francisco Chronicle
reported, Investors have yet to collect more than $2.5
million in profits they made trading options in the stock
of United Airlines before the Sept. 11, terrorist attacks,
according to a source familiar with the trades and
market data.
"The uncollected money raises suspicions that the
investors whose identities and nationalities have not
been made public had advance knowledge of the
strikes. They don't dare show up now. The suspension
of trading for four days after the attacks made it
impossible to cash-out quickly and claim the prize
before investigators started looking."
"October series options for UAL Corp. were purchased
in highly unusual volumes three trading days before the
terrorist attacks for a total outlay of $2,070; investors
bought the option contracts, each representing 100
shares, for 90 cents each. [This represents 230,000
shares]. Those options are now selling at more than
$12 each. There are still 2,313 so-called put options
outstanding [valued at $2.77 million and representing
231,300 shares] according to the Options
Clearinghouse Corp."
"The source familiar with the United trades identified
Deutsche Bank Alex Brown, the American investment
banking arm of German giant Deutsche Bank, as the
investment bank used to purchase at least some of
these options. This was the operation managed by
Krongard until as recently as 1998."
Airlines Used on 9-11 Targeted by
Short-Selling Before Attack
Financial transactions in the days before the attack
suggest that certain individuals tried to use
foreknowledge of the attack to reap huge profits. The
transactions included purchases of five-year U.S.
Treasury notes and the purchase of put options on
United Airlines and American Airlines, the two airlines
used in the attack. U.S. Treasury notes are among the
best investments in the event of an international crisis,
and put options are a kind of leveraged bet that allows
the holder to profit from declines in the value of the
stock. The purchase of put options is also known as
short-selling. Michael Ruppert has researched the
short-selling of UAL and AAL stocks in detail. He wrote:
Between September 6 and 7, the Chicago Board
Options Exchange saw purchases of 4,744 put options
on United Airlines, but only 396 call options. Assuming
that 4,000 of the options were bought by people with
advance knowledge of the imminent attacks, these
insiders would have profited by almost $5 million.
On September 10, 4,516 put options on American
Airlines were bought on the Chicago exchange,
compared to only 748 call options. Again, there was no
news at that point to justify this imbalance; Again,
assuming that 4,000 of these options trades represent
insiders, they would represent a gain of about $4 million.
[The levels of put options purchased above were more
than six times higher than normal.]
No similar trading in other airlines occurred on the
Chicago exchange in the days immediately preceding
Black Tuesday.
Morgan Stanley Dean Witter & Co., which occupied 22
floors of the World Trade Center, saw 2,157 of its
October $45 put options bought in the three trading
days before Black Tuesday; this compares to an
average of 27 contracts per day before September 6.
Morgan Stanley's share price fell from $48.90 to $42.50
in the aftermath of the attacks. Assuming that 2,000 of
these options contracts were bought based upon
knowledge of the approaching attacks, their purchasers
could have profited by at least $1.2 million.
Merrill Lynch & Co., which occupied 22 floors of the
World Trade Center, saw 12,215 October $45 put
options bought in the four trading days before the
attacks; the previous average volume in those shares
had been 252 contracts per day [a 1200% increase!].
When trading resumed, Merrill's shares fell from $46.88
to $41.50; assuming that 11,000 option contracts were
bought by insiders, their profit would have been about
$5.5 million.
European regulators are examining trades in
Germany's Munich Re, Switzerland's Swiss Re, and AXA
of France, all major reinsurers with exposure to the
Black Tuesday disaster. [FTW Note: AXA also owns
more than 25% of American Airlines stock making the
attacks a double whammy for them.]
On September 29, 2001 the San Francisco Chronicle
reported, Investors have yet to collect more than $2.5
million in profits they made trading options in the stock
of United Airlines before the Sept. 11, terrorist attacks,
according to a source familiar with the trades and
market data.
"The uncollected money raises suspicions that the
investors whose identities and nationalities have not
been made public had advance knowledge of the
strikes. They don't dare show up now. The suspension
of trading for four days after the attacks made it
impossible to cash-out quickly and claim the prize
before investigators started looking."
"October series options for UAL Corp. were purchased
in highly unusual volumes three trading days before the
terrorist attacks for a total outlay of $2,070; investors
bought the option contracts, each representing 100
shares, for 90 cents each. [This represents 230,000
shares]. Those options are now selling at more than
$12 each. There are still 2,313 so-called put options
outstanding [valued at $2.77 million and representing
231,300 shares] according to the Options
Clearinghouse Corp."
"The source familiar with the United trades identified
Deutsche Bank Alex Brown, the American investment
banking arm of German giant Deutsche Bank, as the
investment bank used to purchase at least some of
these options. This was the operation managed by
Krongard until as recently as 1998."
The Money Masters -
Play Video> Part 1 Part 2
The Money Masters the documentary discuss the topics
of money (as it relates to central banking and fractional
reserve banking), debt, taxes and their development
throughout the modern world.
[edit] Private central banking and fractional reserve
banking The documentary criticises the control aspects
of modern centralized banking systems and regulation.
The film uses as evidence the history of money and
banking, showing the viewer how central banks came to
be what they are today, and how they operate. It
supports its assertions by references and quotations
from past Presidents and major players in the banking
industry.
Play Video> Part 1 Part 2
The Money Masters the documentary discuss the topics
of money (as it relates to central banking and fractional
reserve banking), debt, taxes and their development
throughout the modern world.
[edit] Private central banking and fractional reserve
banking The documentary criticises the control aspects
of modern centralized banking systems and regulation.
The film uses as evidence the history of money and
banking, showing the viewer how central banks came to
be what they are today, and how they operate. It
supports its assertions by references and quotations
from past Presidents and major players in the banking
industry.
Historical Value of the U.S. Dollar
What one dollar was worth in
constant 2005 dollars.
1820-1850 $13.28
1850-1875 $13.14
1875-1900 $14.85
1900-1925 $11.38
1935 $9.91
1945 $7.56
1965 $4.31
1975 $2.35
1985 $1.26
1995 $1.20
2005 $1.00
What one dollar was worth in
constant 2005 dollars.
1820-1850 $13.28
1850-1875 $13.14
1875-1900 $14.85
1900-1925 $11.38
1935 $9.91
1945 $7.56
1965 $4.31
1975 $2.35
1985 $1.26
1995 $1.20
2005 $1.00
NEW$
the fed is run like a crooked poker game.
Educate your self your family and friends.
the fed is run like a crooked poker game.
Educate your self your family and friends.
LINK$
Links to banking institutions, information,
alternative currency and precious metals.
Links to banking institutions, information,
alternative currency and precious metals.
Who Owns the Federal Reserve?
Reuters News
Gold Price .org
New York Stock Exchange
Chicago stock Exchange
Chicago Mercantile Exchange
London Stock Exchange
Tokyo Stock Exchange
CNN Money Magazine
Smart Money. com
MSN Money. com
Reuters News
Gold Price .org
New York Stock Exchange
Chicago stock Exchange
Chicago Mercantile Exchange
London Stock Exchange
Tokyo Stock Exchange
CNN Money Magazine
Smart Money. com
MSN Money. com
NEW$
The Rich Get Richer
WITH MEDICAID and food stamps on the chopping block,
the House of Representatives is about to vote for a $290
billion tax break for the richest sliver of Americans. The
subject is, once again, the estate tax. Under the
convoluted, dishonest plan Congress approved in 2001,
the estate tax was to be gradually reduced and
eliminated by 2010, only to spring back the following year
to its 2001 level: a tax of 55 percent on estates of $1
million or more. Tomorrow the House is set to vote to
keep full repeal in place after 2010.
This is unnecessary, irrational and unaffordable. Those
who inveigh against the "death tax" point to the travails of
family farmers and other small-business owners whose
heirs are supposedly forced to liquidate enterprises to
pay the tax bill. In fact, even if the estate tax were to
revert in 2011 to its 2001 level -- and no one believes
that the exemption will remain at $1 million -- it would
affect the estates of only 2 percent of those expected to
die that year. At $3.5 million (and $7 million for a couple)
-- the level proposed in a Democratic alternative
sponsored by Rep. Earl Pomeroy (N.D.) -- a mere
three-tenths of 1 percent of estates would be covered. In
other words, no one but the richest Americans would be
asked to pay estate tax.
Moreover, an analysis by the Urban Institute-Brookings
Institution Tax Policy Center supports the contention that
the family forced to sell its farm to pay the tax is, if not a
fiction, close to it. Looking at situations in which farm and
business assets represent most of the estate, the Tax
Policy Center found that there would be just 50 affected
in 2011 in the entire country if the exemption were set at
$3.5 million.
The true cost of repeal is far higher than $290 billion, an
amount that covers only the first few years of making
repeal permanent. The bill for a full 10 years without
estate tax would be $745 billion -- close to $1 trillion if
you throw in increased interest payments. In contrast,
raising the exemption level to $3.5 million and setting the
tax rate at 47 percent would cost less than a third of that;
$21 billion in 2015 compared to $71 billion for full repeal.
The effective rate would be far less than 47 percent,
because the tax is levied only on the amount above the
exemption and state payments and charitable bequests
also reduce the tab.
The estate tax is a tough vote for some lawmakers in part
because of the enormous amount of misinformation
surrounding it. House members who fear that a vote for
the more responsible Pomeroy alternative will be used
against them should ask themselves two questions: Will
my constituents really punish me for a vote to exempt
99.7 percent of estates from taxation? And how can I
justify adding to the deficit, or cutting other programs, to
underwrite a costly tax break for the extremely rich?
WITH MEDICAID and food stamps on the chopping block,
the House of Representatives is about to vote for a $290
billion tax break for the richest sliver of Americans. The
subject is, once again, the estate tax. Under the
convoluted, dishonest plan Congress approved in 2001,
the estate tax was to be gradually reduced and
eliminated by 2010, only to spring back the following year
to its 2001 level: a tax of 55 percent on estates of $1
million or more. Tomorrow the House is set to vote to
keep full repeal in place after 2010.
This is unnecessary, irrational and unaffordable. Those
who inveigh against the "death tax" point to the travails of
family farmers and other small-business owners whose
heirs are supposedly forced to liquidate enterprises to
pay the tax bill. In fact, even if the estate tax were to
revert in 2011 to its 2001 level -- and no one believes
that the exemption will remain at $1 million -- it would
affect the estates of only 2 percent of those expected to
die that year. At $3.5 million (and $7 million for a couple)
-- the level proposed in a Democratic alternative
sponsored by Rep. Earl Pomeroy (N.D.) -- a mere
three-tenths of 1 percent of estates would be covered. In
other words, no one but the richest Americans would be
asked to pay estate tax.
Moreover, an analysis by the Urban Institute-Brookings
Institution Tax Policy Center supports the contention that
the family forced to sell its farm to pay the tax is, if not a
fiction, close to it. Looking at situations in which farm and
business assets represent most of the estate, the Tax
Policy Center found that there would be just 50 affected
in 2011 in the entire country if the exemption were set at
$3.5 million.
The true cost of repeal is far higher than $290 billion, an
amount that covers only the first few years of making
repeal permanent. The bill for a full 10 years without
estate tax would be $745 billion -- close to $1 trillion if
you throw in increased interest payments. In contrast,
raising the exemption level to $3.5 million and setting the
tax rate at 47 percent would cost less than a third of that;
$21 billion in 2015 compared to $71 billion for full repeal.
The effective rate would be far less than 47 percent,
because the tax is levied only on the amount above the
exemption and state payments and charitable bequests
also reduce the tab.
The estate tax is a tough vote for some lawmakers in part
because of the enormous amount of misinformation
surrounding it. House members who fear that a vote for
the more responsible Pomeroy alternative will be used
against them should ask themselves two questions: Will
my constituents really punish me for a vote to exempt
99.7 percent of estates from taxation? And how can I
justify adding to the deficit, or cutting other programs, to
underwrite a costly tax break for the extremely rich?
NEWS$$
MONEY $$$$$$$
 |  |  |  |  |  |
Ronnie LoBello Editor
IRS Information
mostpeople don't
know
play movie
mostpeople don't
know
play movie
| ONE DOLLAR TALISMAN - 911 PROPHECY PART II - MAGICK MONEY MEDITATION Play Video |
America:
From Freedom to Fascism.
For years I've been encouraging people to read "The
Creature from Jekyll Island." It tells the story of how our
Federal Reserve System and "Income tax" came into
existence. It's a story of fraud and deception that will
leave most readers speechless; a story of how (and why)
America is intentionally being destroyed by men who
care nothing for our country. Unfortunately, the book is
nearly 600 pages long. Its length undoubtedly
discourages many from reading it.
This new documentary by Aaron Russo (America: From
Freedom to Fascism) does an excellent job of
summarizing many of the important points covered in
"The Creature from Jekyll Island." Aaron's film is every bit
as important (and perhaps more so in some ways)
because it makes this information accessible to the
masses. Every American who cares about the future of
this country needs to understand the underlying
mechanics of how it is being destroyed. You need to
know who is pulling the strings and what their ultimate
aim is. You need to WATCH this documentary. (And then
you need to read The Creature from Jekyll Island for the
full story!)
Click Here to Play (Google Video)
From Freedom to Fascism.
For years I've been encouraging people to read "The
Creature from Jekyll Island." It tells the story of how our
Federal Reserve System and "Income tax" came into
existence. It's a story of fraud and deception that will
leave most readers speechless; a story of how (and why)
America is intentionally being destroyed by men who
care nothing for our country. Unfortunately, the book is
nearly 600 pages long. Its length undoubtedly
discourages many from reading it.
This new documentary by Aaron Russo (America: From
Freedom to Fascism) does an excellent job of
summarizing many of the important points covered in
"The Creature from Jekyll Island." Aaron's film is every bit
as important (and perhaps more so in some ways)
because it makes this information accessible to the
masses. Every American who cares about the future of
this country needs to understand the underlying
mechanics of how it is being destroyed. You need to
know who is pulling the strings and what their ultimate
aim is. You need to WATCH this documentary. (And then
you need to read The Creature from Jekyll Island for the
full story!)
Click Here to Play (Google Video)
WATCH THIS VIDEO! Money As Debt
A short film about money and how it is created and how
the world banking system works.
A short film about money and how it is created and how
the world banking system works.
WATCH THIS SHORT VIDEO!
Nickle and Dimed, From the American
Ruling Class Read Story Here!
Nickle and Dimed, From the American
Ruling Class Read Story Here!
Don't Blame the Market for the Housing
Bubble.
The Federal Reserve provides the mother’s milk for the
booms and busts wrongly associated with a mythical
“business cycle.” Imagine a Brink's truck driving down a
busy street with the doors wide open, and money flying
out everywhere, and you’ll have a pretty good analogy
for Fed policies over the last two decades. Unless and
until we get the Federal Reserve out of the business of
creating money at will and setting interest rates, we will
remain vulnerable to market bubbles and painful
corrections. If housing prices plummet and millions of
Americans find themselves owing more than their
homes are worth, the blame lies squarely with Alan
Greenspan and Ben Bernanke. learn more
Bubble.
The Federal Reserve provides the mother’s milk for the
booms and busts wrongly associated with a mythical
“business cycle.” Imagine a Brink's truck driving down a
busy street with the doors wide open, and money flying
out everywhere, and you’ll have a pretty good analogy
for Fed policies over the last two decades. Unless and
until we get the Federal Reserve out of the business of
creating money at will and setting interest rates, we will
remain vulnerable to market bubbles and painful
corrections. If housing prices plummet and millions of
Americans find themselves owing more than their
homes are worth, the blame lies squarely with Alan
Greenspan and Ben Bernanke. learn more
NORFED and the Police State Deputy:
By Robert Jensen
An account of harassment and ignorance by a Travis
County Deputy who had to save face after being
exposed to NORFED and refused to acknowledge the
truth.
The following is an honest and frank account by the
victim, Bowie V. Ibarra, of what transpired on January 5,
2002 between an deputy sheriff officer who was
ignorant about the alternative currency, NORFED. The
account will also document his inability to distinguish
between counterfeit and lawful money and the resulting
harassment and intimidation by the officer due to his
inability to accept that his assessment of the money
was wrong. Continued.
By Robert Jensen
An account of harassment and ignorance by a Travis
County Deputy who had to save face after being
exposed to NORFED and refused to acknowledge the
truth.
The following is an honest and frank account by the
victim, Bowie V. Ibarra, of what transpired on January 5,
2002 between an deputy sheriff officer who was
ignorant about the alternative currency, NORFED. The
account will also document his inability to distinguish
between counterfeit and lawful money and the resulting
harassment and intimidation by the officer due to his
inability to accept that his assessment of the money
was wrong. Continued.
| NORFED National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code |
| THE VANISHING AMERICAN How much has the dollar depreciated? Try this calculator to find out. Click URL Below. www.minneapolisfed.org/rese arch/data/us/calc/ |
Fears of recession spark further
turmoil in markets
David Usborne
London Independent
Friday, March 2, 2007
Fresh anxiety erupted about the health of the world's
major economies yesterday after investors in stock
markets across Asia, Europe and the United States once
again staged significant retreats two days after
Tuesday's unexpected global equity sell-off. Read
More!
turmoil in markets
David Usborne
London Independent
Friday, March 2, 2007
Fresh anxiety erupted about the health of the world's
major economies yesterday after investors in stock
markets across Asia, Europe and the United States once
again staged significant retreats two days after
Tuesday's unexpected global equity sell-off. Read
More!
FIAT EMPIRE - Why the Federal
Reserve Violates the U.S.
Constitution WATCH IT NOW FREE! This Telly
Award-winning documentary, which features presidential
candidate RON PAUL, was inspired by the book, "The
Creature From Jekyll Island" by author and FREEDOM
FORCE founder, G. EDWARD GRIFFIN.
To order a high-quality "Director's Cut" DVD or VHS tape
(with up to 160-minutes of unedited ADDITIONAL
interviews) go to www.FiatEmpire.com/screener. To
instantly download a DVD-quality version of FIAT
EMPIRE, go to www.mecfilms.com/mid/orders/fiat4.htm or
www.PAY-PER-VIEW.com.
Find out why some feel the Federal Reserve's practices
are a violation of the U.S. Constitution and others feel it's
simply "a bunch of organized crooks." Discover why
experts agree the Fed is a banking cartel that benefits
mainly bankers and their corporate clients as well as a
Congress that would rather increase the National Debt to
$9 trillion than raise taxes. Find out how the corporate
media facilitates the partnership between the Fed and
Congress and why it fails to disclose what's going on.
Lastly, find out how the Federal Reserve member banks
are owned and controlled by an elite group of insiders.
Produced by attorney William L. Van Alen, Jr., this 1-hour
documentary is a co-production between Matrixx
Productions and Cornerstone Entertainment. In addition
to interviews by G. Edward Griffin and Congressman Ron
Paul (R-Texas), FIAT EMPIRE features interviews with
media expert/MOVIEGUIDE founder, DR. TED BAEHR, as
well as constitutional attorney, EDWIN VIEIRA, Ph.D.,
(with four degrees from Harvard). FIAT EMPIRE was
written and directed by Hollywood filmmaker, James
Jaeger, and narrated by Kris Chandler with music by
Jack Rooney. Associate producers are Ted Pollard
(author and former Commissioner of Radnor Township);
James E. Ewart (well-known author of MONEY) and
Kenneth Gullekson (formerly with DISNEY).
For more information on FIAT EMPIRE visit
www.FiatEmpire.orgor the mirror site at
www.mecfilms.com/fiat. For updates on Matrixx
Production's new documentary, ORIGINAL INTENT, and
the release of the RON PAUL Volunteer Edition of FIAT
EMPIRE, stay tuned to www.mecfilms.com/update.htm
For articles on important issues, see JAEGER
RESEARCH INSITUTE at www.mecfilms.com/universe
To make a difference, join FREEDOM FORCE at
www.freedomforceinternational.org
Reserve Violates the U.S.
Constitution WATCH IT NOW FREE! This Telly
Award-winning documentary, which features presidential
candidate RON PAUL, was inspired by the book, "The
Creature From Jekyll Island" by author and FREEDOM
FORCE founder, G. EDWARD GRIFFIN.
To order a high-quality "Director's Cut" DVD or VHS tape
(with up to 160-minutes of unedited ADDITIONAL
interviews) go to www.FiatEmpire.com/screener. To
instantly download a DVD-quality version of FIAT
EMPIRE, go to www.mecfilms.com/mid/orders/fiat4.htm or
www.PAY-PER-VIEW.com.
Find out why some feel the Federal Reserve's practices
are a violation of the U.S. Constitution and others feel it's
simply "a bunch of organized crooks." Discover why
experts agree the Fed is a banking cartel that benefits
mainly bankers and their corporate clients as well as a
Congress that would rather increase the National Debt to
$9 trillion than raise taxes. Find out how the corporate
media facilitates the partnership between the Fed and
Congress and why it fails to disclose what's going on.
Lastly, find out how the Federal Reserve member banks
are owned and controlled by an elite group of insiders.
Produced by attorney William L. Van Alen, Jr., this 1-hour
documentary is a co-production between Matrixx
Productions and Cornerstone Entertainment. In addition
to interviews by G. Edward Griffin and Congressman Ron
Paul (R-Texas), FIAT EMPIRE features interviews with
media expert/MOVIEGUIDE founder, DR. TED BAEHR, as
well as constitutional attorney, EDWIN VIEIRA, Ph.D.,
(with four degrees from Harvard). FIAT EMPIRE was
written and directed by Hollywood filmmaker, James
Jaeger, and narrated by Kris Chandler with music by
Jack Rooney. Associate producers are Ted Pollard
(author and former Commissioner of Radnor Township);
James E. Ewart (well-known author of MONEY) and
Kenneth Gullekson (formerly with DISNEY).
For more information on FIAT EMPIRE visit
www.FiatEmpire.orgor the mirror site at
www.mecfilms.com/fiat. For updates on Matrixx
Production's new documentary, ORIGINAL INTENT, and
the release of the RON PAUL Volunteer Edition of FIAT
EMPIRE, stay tuned to www.mecfilms.com/update.htm
For articles on important issues, see JAEGER
RESEARCH INSITUTE at www.mecfilms.com/universe
To make a difference, join FREEDOM FORCE at
www.freedomforceinternational.org
| THANK YOU! |
Edward Griffin interview on The Liberty Dollar
The Liberty Dollar Is Helping Small Communities
Resurrect Their Local Economies
FBI Raids Liberty Dollar part 1of 3
FBI Raids Liberty Dollar part 2of 3
FBI Raids Liberty Dollar part 3of 3
Ron Paul on Liberty Dollar Raid
The Liberty Dollar Is Helping Small Communities
Resurrect Their Local Economies
FBI Raids Liberty Dollar part 1of 3
FBI Raids Liberty Dollar part 2of 3
FBI Raids Liberty Dollar part 3of 3
Ron Paul on Liberty Dollar Raid
Bailing Out Banks
There has been a lot of talk in the news recently about
the Federal Reserve and the actions it has taken over
the past few months. Many media pundits have been
bending over backwards to praise the Fed for
supposedly restoring stability to the market. This
interpretation of the Fed's actions couldn't be further
from the truth.
The current market crisis began because of Federal
Reserve monetary policy during the early 2000s in which
the Fed lowered the interest rate to a below-market rate.
The artificially low rates led to overinvestment in housing
and other malinvestments. When the first indications of
market trouble began back in August of 2007, instead of
holding back and allowing bad decision-makers to suffer
the consequences of their actions, the Federal Reserve
took aggressive, inflationary action to ensure that large
Wall Street firms would not lose money. It began by
lowering the discount rates, the rates of interest charged
to banks who borrow directly from the Fed, and
lengthening the terms of such loans. This eliminated
much of the stigma from discount window borrowing and
enabled troubled banks to come to the Fed directly for
funding, pay only a slightly higher interest rate but also
secure these loans for a period longer than just
overnight.
After the massive increase in discount window lending
proved to be ineffective, the Fed became more and more
creative with its funding arrangements. It has since
created the Term Auction Facility (TAF), the Primary
Dealer Credit Facility (PDCF), and the Term Securities
Lending Facility (TSLF). The upshot of all of these new
programs is that through auctions of securities or
through deposits of collateral, the Fed is pushing
hundreds of billions of dollars of funding into the financial
system in a misguided attempt to shore up the stability of
the system.
The PDCF in particular is a departure from the
established pattern of Fed intervention because it
targets the primary dealers, the largest investment banks
who purchase government securities directly from the
New York Fed. These banks have never before been
allowed to borrow from the Fed, but thanks to the Fed
Board of Governors, these investment banks can now
receive loans from the Fed in exchange for securities
which will in all likelihood soon lose much of their value.
The net effect of all this new funding has been to pump
hundreds of billions of dollars into the financial system
and bail out banks whose poor decision making should
have caused them to go out of business. Instead of
being forced to learn their lesson, these poor-performing
banks are being rewarded for their financial
mismanagement, and the ultimate cost of this bailout will
fall on the American taxpayers. Already this new money
flowing into the system is spurring talk of the next
speculative bubble, possibly this time in commodities.
Worst of all, the Treasury Department has recently
proposed that the Federal Reserve, which was
responsible for the housing bubble and subprime crisis
in the first place, be rewarded for all its intervention by
being turned into a super-regulator. The Treasury
foresees the Fed as the guarantor of market stability,
with oversight over any financial institution that could
pose a threat to the financial system. Rewarding poor
performing financial institutions is bad enough, but
rewarding the institution that enabled the current
economic crisis is unconscionable.
| Did Bush "cut the deficit in half"? |
Money;
HOW TO RESTORE
CONSTITUTIONAL MONEY:
The Challenge
by
Dr. Edwin Vieira, Jr.
President
National Alliance for Constitutional Money
presented to the Board of Trustees of
The Conservative Caucus Foundation
at its Annual Meeting in Washington, D.C.
on January 13, 1997
DR. EDWIN VIEIRA: We're coming, in this topic I guess,
down to the bottom line. What makes the gears of
government turn is the grease, money. And given that it
has become more and more difficult to differentiate the
government from a criminal family, I will quote from Don
Corleone who asked the question: "What's in it for my
family?".
Well, we have a mechanism in this country that has been
set up to answer that question for certain groups that are
in a privileged position, and that mechanism is known as
the Federal Reserve System.
The major cross that I have to bear is dealing with the
Federal Reserve System and attempting to explain the
major problems that it poses with respect to Constitutional
law, economics, and the fundamental moral climate of the
country.
THE FED IS UNCONSTITUTIONAL
The bottom line of my presentation is very simple. The
Federal Reserve System is unconstitutional. You start
there and you know everything else that there is to know
about it.
The Constitution established commodity monies,
specifically, silver and gold coinage as the money of the
United States.
REVOLUTIONARY INFLATION AND DEPRESSION LED TO
REJECTION OF PAPER MONEY IN 1787
If you go back historically, in 1787 the founding fathers
were considering structure of government at the
Constitutional level. Who were these people? Well, as a
practical matter, they were eyewitnesses to one of the
worst economic situations that the country had ever faced
— a raging inflation, a massive depression that had
followed the emission of bills of credit and other forms of
paper currency by both the Continental Congress in which
they served, and many of the state legislatures in which
they served, during the War of Independence.
So these were not people who were unacquainted with the
economic problems of money. They were also not people
who could foist off those problems, at least in terms of
cause and effect, on somebody else. They had been
responsible for putting these paper monies into circulation.
What did they do? Well, they drafted the monetary powers
of the Constitution to prevent repetition of that calamity by
outlawing what James Madison in the Federalist papers
denounced as "the fallacious medium and improper and
wicked project of paper money".
U.S. CONSTITUTION ESTABLISHES A BIMETALLIC
STANDARD
Very, very simple is the language of the Constitution, but it
is quite profound in its economic and political
consequences. In Article I, Section 8, Clause 5 and Article
I, Section 10, Clause 1, the Constitution adopts silver and
gold coin exclusively as the money of the United States.
Now the standard in this system is the dollar, and, if you
know nothing else about the monetary system of the
United States constitutionally, learn what a dollar is. A
dollar is a silver coin containing 371-1/4 grains of silver.
That word is mentioned twice in the Constitution: in Article
I, Section 9 and in the Seventh Amendment, guaranteeing
the right to jury trial.
In the system that the founding fathers devised, the legal
value of all the silver coinage must be proportional to the
weight of silver they contain, and the legal value of all the
gold coinage must be proportional to the weight of gold
that the coins contain in relationship to the exchange value
between silver and gold at the prevailing free market
exchange rate.
All silver and gold coins may be legal tender for the values
of silver and gold they actually contain, and Congress has
the authority to, as the Constitution says, regulate the
value according to these principles.
FIAT MONEY PROHIBITED
In Article I, Section 8, Clause 2 and Article I, Section 10,
Clause 1, the Constitution prohibits explicitly or implicitly
the emission of any form of what was called in those days
"bills of credit". Today we would call that paper money.
Properly construed these provisions preclude any
government at any level from granting special legal
privileges to the notes, deposits, or currencies of private
banks as well, or allowing private banks to use
governmental debt as so-called reserves for the emission
of bank notes.
GOLD AND SILVER COIN ONLY AS LEGAL TENDER
Article I, Section 10, Clause 1 also disables the states from
imposing on unwilling creditors anything but gold and silver
coin as a tender in payment of debts — which, of course,
reflects the inherent disability of Congress to declare
anything other than gold and silver coin a legal tender.
And Article I, Section 8, Clauses 1, 2, and 5; Section 10,
Clause 1; and the Fifth, Ninth, Tenth, and Fourteenth
Amendments, if properly construed, would deny Congress
and the states any power to seize people's gold or silver,
except through taxation, or to prevent specific performance
of private contracts payable in silver, gold, or any
monetary medium — which, of course, was what happened
in the 1930s when Roosevelt came in.
FREE MARKET IN MONEY AND BANKING IS
GUARANTEED
And Article I, Section 8, Clause 3; Article IV, Section 2, and
the Fifth, Ninth, Tenth, and Fourteenth Amendments would
guarantee individuals free entry into private banking,
ensure that private banks might issue their own non-
fraudulent notes and securities, and deal in deposits of
silver, gold, foreign currencies, or any other monetary
medium — in other words, grant a complete free market to
money.
Now, that is an important point, because the proposition
that I would lay before you today is the Constitution really
has two prongs — or an obverse and a reverse. One I call
the integration of market and state. Only commodity money
— by weight — is constitutionally recognized.
The Constitution defined money and banking system that
relies on and embodies free market principles. It adopted
the type of money the world had historically favored, that
is: commodity money — money capable of being coin —
gold and silver. It adopted as money the very commodities
that the international markets had historically recognized.
It adopted the very unit of money that the American market
at that time was using — the silver dollar — and it left the
ultimate supply of money to the market too, by implicitly
incorporating the system of free coinage that had been
used throughout Anglo-American law — and, in fact, it first
occurs in the first Coinage Act of 1792.
SEPARATION OF BANK AND STATE
So, it is fairly clear from that history that the Constitution
integrated market and state with respect to official money
— silver and gold coinage — and it separated bank and
state with respect to everything else. The government is
not to be a player with respect to the private market in
terms of privileging banks or other financial institutions.
Well, what's happened since then?
LINCOLN'S WARTIME POLICIES UNDERMINED
INDEPENDENCE OF PRIVATE ECONOMY
The government has radically diverged from these
principles, starting with the Civil War, which was one of the
those great divides in Constitutional theory, again because
of a crisis situation. Interestingly enough, crisis situations
also seem to have driven this country always in one
direction, and not the other.
The Civil War was the beginning of the degeneration or
the devolution of the American Constitutional monetary
system. In 1862, the Congress submits the first legal
tender paper currency, the greenbacks, and it maintained
those as an irredeemable currency until the 1870s.
Of course, the Supreme Court was there to give all sorts of
fallacious reasons as to why that was justifiable. Always be
sure the Supreme Court will be there to give reasons when
the cogs turn in one direction, but never to give reasons
when the cogs turn in the other direction (and I have spent
25 years futzing around with the Supreme Court, so I
speak from experience).
THE FED WAS CREATED TO DELINK CONTROL OF
MONEY FROM CONSTITUTIONAL ACCOUNTABILITY
Now we come to 1913, which is another one of those
wonderful years — we had the income tax and we had the
Federal Reserve System put in.
The Federal Reserve System is a quasi-public, largely
private cartel that asserts the kind of political
independence from supervision by Congress, the
President, the courts, and, especially, the electorate. The
Federal Reserve is privileged to emit its own paper
currency, Federal Reserve Notes.
FED HAS POWER TO DETERMINE THE AMOUNT OF
DEBT OBLIGATIONS U.S. TAXPAYERS MUST
GUARANTEE
Now what is interesting about those notes is they have
been declared, or were from the beginning, declared to be
obligations of the United States and to be redeemed in
lawful money, and yet nevertheless, in complete disregard
of Article I, Section 9, Clause 7 of the Constitution,
Congress has never enacted a single statute authorizing
the dollar amount of obligations that the Federal Reserve
can generate out of nothing, and from which the treasury
of the United States, and ultimately the taxpayers, are
somehow liable as guarantors or sureties. Fantastic
situation.
How much have they generated? Federal Reserve notes
alone total $370 some billion now. There is not a single
statute giving them authority to issue one dollar's worth.
IN 1933, ASSURANCE OF REDEEMABILITY IN GOLD WAS
ENDED
In 1933, of course, another wonderful year, Congress
declared Federal Reserve Notes legal tender for all debts,
public and private, and rescinded the requirement that
those notes be redeemable in gold coin.
In 1933 and 1934, Roosevelt, and then Congress licensing
Roosevelt, seized all the gold coin in circulation and
nullified all public and private contracts that called for
payment in gold.
SILVER COINAGE TERMINATED IN 1965,
REDEEMABILITY IN 1968
In 1965, Congress terminated coinage of Constitutional,
that is silver, dollars, and authorized the so-called clad
coinage, that is, slugs.
In 1968, Congress terminated redemption of any form of
United States currency in silver coin and, in 1971,
[President Richard M.] Nixon and [Treasury Secretary John
B.] Connally repudiated the redemption of Federal
Reserve Notes internationally.
So 1971 is actually the year: the first time in American
history that we had what amounts to a fiat currency — "fiat"
from the Latin "let it be" money, because otherwise it
wouldn't be money. No one would treat it as money.
In 1973 and 1977, interestingly enough, there was some
backsliding, in that Congress permitted Americans to own
gold and to make private contracts payable in gold,
although continuing to refuse to redeem any obligations of
the government in gold.
The reason that was given for that was "Well it doesn't
matter. Gold has been demonetized. This will not cause
anything bad to happen." And you know they were right.
Nothing "bad" happened — which is an interesting contrast
between then and 1862.
In 1862, the greenbacks come out, they were
irredeemable, immediately everybody and his brother
starts making so-called "gold clause" contracts, demanding
to be paid in gold instead of in greenbacks, one of the
classic examples being Benjamin Butler, the corrupt
senator from Massachusetts who later went down as the
military governor of New Orleans. Go to New Orleans and
talk to people about Benjamin Butler even today and they
will tell you about that individual. He voted for the
greenbacks and he would turn around and make gold
clause contracts.
One of the most famous gold clause contract cases in the
Supreme Court was the Butler case in which he was
defending his own gold clause contract. So he was the
man who knew. He really knew. It wasn't a matter of should
have known, might have known — he knew. He knew just
what he was doing.
In 1985, Congress authorized the minting of new silver and
gold coins (Ron Paul had something to do with that, as I
recall), but, once again, although they are there, they do
not function as a circulating medium because their nominal
values are completely out of line with their market values
and Gresham's law takes hold. The real money is kept in
the pocket and the bad money is tossed out into the
marketplace.
OUR PRESENT MONETARY SYSTEM IS
COMPREHENSIVELY UNCONSTITUTIONAL
So since 1968, the commonly circulating currency of the
United States has consisted solely of paper chits and slugs
— Federal Reserve Notes, and these so-called "clad
coins".
Clad coins contain no silver at all. Silver and gold coins
have been withdrawn as the basis of the monetary system.
Federal Reserve Notes are irredeemable, and the Federal
Reserve System, which is composed of thousands of
private banks, ultimately controls the supply and quality of
America's money, and none of this has any Constitutional
justification whatsoever.
There are economic and political consequences. Economic
harm occurs both in the public and in the private sectors.
Go to the private sector first.
In a free market, interest rates fall because people's time
preferences change whether or not there is a change in
the supply of money. Interest rates reflect the idea that an
apple is worth more to me today than 100 years from now.
It is a very simple concept. I live in time. I am concerned
about values over time. It has nothing to do with Alan
Greenspan or the Congress of the United States or
anything else.
LOW INTEREST YIELDS RISE IN REAL INCOME
Now, when interest rates fall, people consume less, and
they invest more. The prices of consumer goods fall. The
price of capital goods increase. More resources flow into
production, less into consumption. As increased
investments and capital goods result in increased
production, real incomes rise, everyone is better off.
And, if the supply of money has not increased while all that
is going on, the purchasing power of the money unit
increases, people become wealthier and their money
becomes more valuable than before, and for people who
are on salaries (wage earners, for instance) that's a very
consequential matter.
And you will find that, at the turn of the century, people
such as Samuel Gompers, the old AFL (American
Federation of Labor) president, was very, very concerned
about inflation and how it cheated the working man.
Go to your average union leader today and talk to him
about inflation and he will give you some kind of blank
stare and tell you that the Federal Reserve is something
that creates jobs. He has never read Keynes's book that
said "inflation was a way to lower real wage rates and
therefore defeat the power of trade unions."
Okay, we live in an era of massive illiteracy, but that's the
way it is.
What about under a regime of inflation that is induced by
banks or governments? Things are completely different
then.
FRACTIONAL RESERVE BANKING RESULTS IN BOOM-
BUST DISRUPTIONS
Assume private banks expand the supply of fiat paper
currency through fractional reserve techniques. That's the
example, the way they do it today.
The expanded supply of money enables the banks to offer
loans to businesses at lower rates of interest than before.
Theoretically, they can drive the rate of interest down to
zero. They just keep pushing it out. Eventually, somebody
will take it. They just keep lowering that price.
The sudden availability of this low-cost credit induces
businessmen to believe that there are real resources out
there that are now available for projects that in the past
weren't available. So they have been deceived by the
action of the banks. They then begin to take those loans
and invest in capital goods as if there had been a change
in society's ratio of investment to consumption. Even
though there has been no decrease in the level of
consumption in society. This is all a paper trick that's being
promulgated by the banks.
The businessmen use this newly borrowed money to
purchase capital goods and labor. Prices of those goods
and that labor goes up. Resources are diverted from other
areas of production.
Eventually, however, this money percolates down into the
hands of the ordinary consumer, and the ordinary
consumer spends it according to his own preferences
between investment and consumption.
At that point, reality hits the fan, economically speaking.
Now this takes years to occur, but it does occur. It has an
inexorability about it.
This reasserts the original free market rate of interest, or
at least it creates attention in the system between the
bank's rate of interest and the actual rate of interest.
It causes the prices of consumer goods to rise, the prices
of capital goods to fall, and, at that point, the investment in
these new capital goods — the investment with these new
fictional loans — is recognized as over-investment, as mal-
investment, which is unprofitable or maybe even
completely wasted. And, at that point, you have what is
called the bust, the depression, the recession, stagflation
— we have all sorts of words for it — but it is the rug being
pulled out from under the economy.
EVEN STAGES OF BOOM AND BUST
Now this boom or bust, or the business cycle (I like to call it
the fractional reserve banking cycle) has a number of
stages.
The first stage is the inflation (money supply increases
because the banks generate paper currency). The second
stage is the expansion (the banks loan the new money to
business). The third stage is the boom (the businessmen
over-invest in capital goods). Everyone is feeling good
about things.
Then there is the reaction, as consumption increases in
accordance with original investment consumption ratios.
Then there is the crisis (when the businessmen realize
what is happening). Then there is the bust — at which
point businessmen and workers lose money as the mal-
investments have to be written off in some way. And the
seventh, and the last stage, which is always the most
important one: the political hysteria.
THE PROBLEM IS SEEN AS THE SOLUTION
At that point, people who have been hurt by the
contraction, the system, the recession, the depression, the
stagflation, or whatever you are going to call it, they come
forward demanding what? Not that fractional reserve
banking be limited, not that we go back to the
Constitutional system, but that the government take action
to get the country moving again. Right? John Kennedy is
resurrected or whatever happens — get the country
moving again through government action.
LOWERING OF INTEREST RATES BY INFLATION IS
ILLUSORY AND TEMPORARY
So the short answer is that inflation can lower the rate of
interest temporarily, but, in the long run, the market
controls.
MOST PEOPLE LOSE MONEY, BUT BANKERS AND
THEIR FRIENDS PROFIT
And the only lasting effects of all of this churning of the
system is:
1) a decrease in the purchasing power of the unit of
money (Federal Reserve Notes lost 90 percent of their
purchasing power since World War II),
2) losses from over-investments and mal-investments in
projects that have proven uneconomic,
3) transfer of wealth (I mean people do make money,
banks make money, some businessmen make money.
There is always money to be made by the churning of
fractional reserve banking, but, in general, society loses.
Overall, society loses.),
4) and then, that final bottom line, the political bottom line:
agitation for new governmental intervention.
As Mises was wont to say "as each intervention proves
catastrophic, the next step is to have some more and more
catastrophic governmental intervention". So we never
learn anything, except that we know that no one ever
learns anything from this.
Now, during the boom, what people call "inflation" may not
necessarily occur, because there can be countervailing
forces, such as increase in the supply of goods or services
or the demand for money.
So right now, we could very well be suffering a catastrophic
inflation in the sense of what is happening under the
surface in this system, even though you do not see more
than a 3 or 4 percent price rise. And, recall a 4 percent,
4½ percent, price rise was what induced Nixon in 1971 to
call for wage and price controls. He considered that
catastrophic. Right now we live with it, no problem. Pretty
soon we will have 20 percent, then Argentinean rates.
These things have that kind of momentum behind them.
Booms can continue, putting off the day of reckoning, if the
banks expand the money supply, and these, as it were,
extraneous factors do not appear, so that people don't
realize what's happening. That's the beauty of this whole
system. It is surreptitious. It is deceptive. It is kind of
"stealth economics", if you will. It comes up off the radar
screen in many instances.
A SHELL GAME WITHOUT A PEA
Now, let's take a look at the economic consequences on
the public side. What goes on when the Federal Reserve,
as they say in the trade, "monetizes public debt", that is,
generates money on the security of public debt in order to
give the money to the government to spend for whatever,
entitlement projects, or whatever?
FOUR ROADS TO RUIN
What's going on there is that the board of governors of the
Federal Reserve System is lending the public credit, on
the security of the public credit. This is the ultimate of the
shell game — where's the pea? Except there is no pea in
this game at all.
I want to give you an example of this. Assume the
government wants to expend $100 billion on new
programs. Let's assume they are even Constitutional
programs. That's a shock, but let's assume that.
How can it do this? Well, it essentially has four choices:
(1) PAY AS YOU GO — BY HIGHER TAXES
First, it can tax $100 billion from the public, and spend the
tax receipts. That's a redistribution of $100 billion from the
taxpayers to the tax recipients and the bureaucrats in the
middle, who do the collecting and the expending.
But no new money has been created. No one has received
any interest payments, and the advantages of the system
are that the present generation pays for its own
expenditures, its own programs (which one would think is
only fair), and that tends to limit those programs to what
the present generation will accept, and the public tends to
know who receives the benefits, who pays for them, what
they cost, and so on. So it's all on the table.
I suppose the disadvantage is that, of course, these
schemes of taxation are all devised by bureaucrats and,
therefore, economically they always tend to be harmful,
but, in this imperfect world, where government is going to
be spending something, that probably is the bottom line of
harm — the direct "tax and spend" situation.
(2) BORROW AS YOU GO — WITH INTEREST PAID TO
PRIVATE CREDITORS BY FUTURE TAXPAYERS
Well, the next level is the government can borrow $100
billion at what, let's say 10 percent interest, from the public
— not the banks — but from the public, and spend the
loan receipts.
Now, of course, the government must collect $110 billion
from the taxpayers sometime in the future to pay that off,
so there is a redistribution of $110 billion instead of $100
billion, but, again, no new money has been created. Some
taxpayers will eventually pay that extra $10 billion for the
privilege of other taxpayers having had taxes deferred for
the lifetime of the bonds.
Now the disadvantage of the system over the first
alternative (that is direct taxation) is that the present
generation may tend to overspend, hoping that it can push
the burden onto a future generation.
(3) INFLATE AND SPEND — DEPRECIATION OF DOLLAR
VALUE
What's a third route? Well, here we come into the
greenback route. This is the sequence that was followed
actually in our history — taxation, borrowing, and, when
they find themselves in a hole, they turn to the greenback
route. The government simply emits $100 billion in
irredeemable interest-free treasury notes, and spend
these things directly into circulation, requiring you as a
government creditor to take them, and then giving them
legal tender power so that they will circulate.
Justice Field, who dissented in one of the famous legal
tender cases, Juilliard v. Greenman, asked, "If Congress
has the power to make treasury notes a legal tender and
to pass as money, why should not a sufficient amount be
issued to pay the bonds to the United States as they
mature?".
Why not pay interest on the millions of dollars of bonds
now due, when Congress can, in one day, make the
money to pay the principal? And why should there be any
restraint upon unlimited appropriations by the government
for all imaginary schemes of public improvement if the
printing press can furnish the money that is needed for
them? Well, why indeed? I mean that is a very good
question. Why, indeed?
And under the theories that have been put forward by the
Supreme Court in the legal tender cases, even the gold
clause cases, following through, the borrowing power of
the country is really supererogatory. The government can
simply print this money. Never have to borrow it. Why?
Why borrow? Why tax? Why borrow?
And an economic crisis recourse to that expedient may
become politically compelling. I might point out that, in the
Agricultural Adjustment Act of May of 1933, Roosevelt was
given the authority to do exactly that — to expand the
greenback base under the law of 1862. He didn't do it, but
he had it. So people have been thinking this way.
But you notice at this stage we still haven't come to banks.
There were no banks involved in this at all.
Now I don't say that printing of money is Constitutional, but
the Supreme Court said that. So it is lurking there in the
background.
(4) BORROW AND INFLATE AS YOU GO — WITH
INTEREST PAID TO THE FED
BY FUTURE TAXPAYERS AND INFLATION SUFFERED BY
YOU
Now we come to Number Four and this is the scheme
whereby the government sells its $100 billion of bonds and
again paying 10 percent interest to the member banks of
the Federal Reserve System, which creates $100 billion in
new demand deposits, so-called "money" created out of
nothing, because they paid for those things simply with a
checking account that they create and the government can
now spend on its programs.
Well now, how does this occur? Say the commercial banks
don't have $100 billion. This is not the case in Number
Two, where you go and borrow from people who actually
have the money. They don't have it.
The Federal Reserve goes into the marketplace and it
buys say $25 billion worth of old government bonds. Now I
am assuming that it has a reserve ratio of one to five. It
does this simply by creating $25 billion out of nothing. It
just goes and it buys $25 billion in bonds.
FRACTIONAL RESERVE BANKING MAGNIFIES FED'S
INSIDIOUS INFLUENCE
The securities dealers who sold these bonds take the $25
billion back to their banks, that is now deposited, and,
miraculously, through the system of fractional reserve
banking, lo and behold, $125 billion in new money is
generated on the basis of those notes.
And, in fact, they could do a lot more. I have a calculation
down here in the notes that shows if it were done directly
by the Federal Reserve regional banks they could
generate $500 billion from $25 billion. So, there is a lot of
leverage, as they say, in this system.
And then if the commercial banks needs Federal Reserve
notes, they go to the Federal Reserve regional banks with
these government bonds and say monetize these, give us
the notes if we need actually to pay and the Board of
Governors can do that for them.
FED BANKS ARE PAID INTEREST ON THE "MONEY"
THEY CREATE
Notice what happens here though. The government ends
up paying $110 billion. $10 billion in unnecessary interest
to whom? to the banks. Interest for what? not for having
saved any money, not for having reduced consumption as
in case Number Two, but for having exercised the privilege
of creating money which was given to the bank by the
government. They paid the banks for the exercise or the
privilege that was given to those banks by the government.
U.S. GOVERNMENT BUYS "PROTECTION" FROM THE
BANKERS —
YOU AND YOUR POSTERITY PAY THE BILL
Well, this has to be the most obviously crooked scheme of
all. And yet everyone looks at this and says, "Well now,
this is obviously also the way to go." As Don Corleone
would say, "What's in it for my family?".
Now what's the political harm of this. Well, the political
harm is that, contrary to the Alan Greenspans of this world,
there is no such thing as "politically neutral" or "politically
independent" money.
Money is a medium for storing and exchanging wealth. It is
a form of property and a means of implementing contracts
that transfer property from one party to another.
So, even if you have a free market economy with a limited
government, money has a political character, inasmuch as
the degree to which the government protects the money
system from private fraud and public looting, reflects the
degree to which the government respects and protects
private property.
AN IMMORAL MONEY SYSTEM PRODUCES POLITICAL
AND CULTURAL IMMORALITY
So if you have a free market economy you will have one
form of money. If you have a mixed or fascist economy,
which is what we have, you have another form of money. If
you have a socialist economy, you have a third form of
money. But the money is really reflective, in the way
suggested a moment before, as is the legal system and
the moral system, of the underlying type of government
that you are going to have.
WHEN THE FED TALKS "INDEPENDENCE" — THEY MEAN
THEY WILL BE INDEPENDENT OF ACCOUNTABILITY TO
CONGRESS AND TO YOU
So, if you look at the debate that sometimes you hear
about the degree to which the Federal Reserve System
must be politically independent, that is really a misdirected
debate.
IT'S THE MONEY THAT SHOULD BE INDEPENDENT OF
POLITICAL CONTROL AND MANIPULATION
The Constitution made money independent of electoral
politics by fixing gold and silver as the basis of the system.
And, of course, the Constitution is a political document. So
rather than making money politically independent or
politically neutral, the Constitution settled on one very
specific political formula for money.
Creating the Federal Reserve in 1913 did not change that
concept. It did not make money politically independent or
politically neutral. It changed the political character of the
money system.
IF THE "MONEY" IS CONTROLLED, THE MARKETS ARE
NOT FREE
Now a small unelected group of experts, the board of
governors, and the people that meet with them, the
Federal Open Market Committee and the Federal Advisory
Committee, and the Secretary of Treasury's agents and so
forth, are able to control the supply of money, interest
rates, all the other monetary and banking phenomenon.
HOW CAN MONEY BE A "STORE OF VALUE" IF IT'S
VALUE IS SUBJECT TO MANIPULATION?
So, as contrasted with the Constitutional system, the
Federal Reserve System actually politicized money,
because now the politicians, administrators, and bankers
have a much greater degree of influence — some people
would even say control — over the entire direction of the
monetary system, and, therefore, the direction of the
economy as a whole.
What is interesting today is that, although what I have said
I should hope would be rather obvious, politically speaking
nobody talks about the Federal Reserve System. There is
no major political movement that is advocating
disestablishment of the Federal Reserve, or reinstitution of
Constitutional money.
Nobody attacks fractional reserve banking and all the
economic problems it has. Nobody denounces the
relationship between the banking system and the
government. Nobody looks at the power of private parties
here to regulate the economy and impose — really one
aspect of this whole police state that is being set up — the
banking surveillance of everyone that goes on — talk
about medical records. Think about what they do with
banking records. Read the Bank Privacy Act of 1980 (or
whenever) — a good example of precisely how that moves
forward.
HOW HAS DEBATE OVER THE SUBSTANTIVE BEEN
SUPPLANTED
WITH FOCUS ON THE TRIVIAL?
What that tends to tell me is that the people behind this
system must be one of the most politically powerful, if not
the most politically powerful group in the entire country,
because they have been able to suppress discussion of an
issue that was of great political significance just at the turn
of the century.
Let's leave aside Jefferson. Let's leave aside Jackson.
Let's leave aside the greenback debate. Let's leave aside
the question in the 1870s about return to specie
payments. You just look at what happened at the turn of
the century in this country.
William Jennings Bryan, everyone in this room remembers,
if not the "Cross of Gold" speech, at least that there was
such a speech, and he gave it and it had something to do
with money. That was a major plank in a major political
platform.
And then, of course, even before the Federal Reserve
came in there was a major debate in the Wilson-Roosevelt-
Taft election over the direction the country would or would
not go in terms of central banking. So, as late as 1916, this
country was seriously debating matters of banking and
money.
WHAT IS TO BE DONE?
This brings you now in a sense to Lenin's question, or it
brings me in a sense to Lenin's question, "What is to be
done?".
Well, we first have to realize what we have. We have
essentially a fascistic banking cartel running this country.
This is really nothing different from what Mussolini would
have set up, except maybe the uniforms are not as nice
and the parades are not as big, because they want to
keep the level of public understanding down. But
fundamentally this is the fascist system, and I use that
word in the technical economic sense, without any
pejoratives at all.
A SYSTEM OUT OF CONTROL
Now, it also is not simply a monetary control mechanism. It
is one of the two most important mechanisms, (the other
being, I think, the tax system and the graduated income
tax) for economic regulation that has been set up in this
country since the turn of the century. And that really
explains why it demands political independence, because,
if you do not have political independence, you are not in a
position to regulate a free market system as well as you
would if you were subject to electoral supervision by the
people.
And that extreme political independence that they demand,
and the fact that they have, tends to show precisely how
far away they have gotten from any kind of control by the
American people.
TYRANNY IMPOSES A HIGH COST ON ITS VICTORY
So, where are we? We have seven major consequences
that I like to point to with the Federal Reserve System.
1. Our money lacks any intrinsic value, and, by intrinsic
value, I mean it is not tied back into the commodity system
or the market, so there is no rationality to it in an economic
sense.
2. Because it has no intrinsic value, because it does not
have an economic connection, the purchasing power is
subject to political manipulation. It could go up, but
politically speaking, you know it is always going to go down.
THE FED IMPOSES HIDDEN "TAXATION WITHOUT
REPRESENTATION"
3. So that allows the system to be used as a mechanism of
hidden taxation, taxation without representation. It's worse
than taxation without representation. I mean most people
don't even know about this. Not a question of they don't
get a vote in it — they know, but they don't vote. They
don't even know about it. It is completely hidden from them.
FRACTIONAL RESERVE SYSTEM LETS BANKERS
BESTOW
MONETARY FAVORS ON THEIR POLITICAL ALLIES
4. The effect of that is redistribution of the nation's wealth,
not simply at the political level, by hidden taxation in the
sense of governmental use, governmental monetization,
but a lot of monetization is going on in the private sector as
well with those groups that are particularly favored by the
banks, using the method of fractional reserve banking to
redistribute wealth to themselves from other segments of
the society.
POLITICIANS WITH BANKER FRIENDS CAN GET THE
MONEY THEY NEED
5. Well, what does this effectively do politically? It
systematically corrupts the electoral process. The electoral
process is now entirely dependent on these banks. You
cannot find anyone who will question these banks because
they know perfectly well that the whole superstructure of
entitlements depends upon the ability of that banking
system to bail them out, or to bail out Mexico, or to bail out
whomever it is...
HOWARD PHILLIPS: Or, in the case of Bill Clinton's
election, for the Worthen Bank to give him a timely $2 or
$3 million loan so that he could win in 1992.
DR. EDWIN VIEIRA: That's right. At whatever level of
corruption, from the lowest to the highest.
CONTROL OVER THE MONEY SUPPLY IS ARBITRARY
6. Well, that enables them ultimately to loot the public
treasury. That's why I was so insistent upon pointing out
that there has never been a statute indicating how much
the board of governors should or should not generate in
Federal Reserve Notes. These people have complete
discretion to generate as much paper money as they want,
or as they dare, I should say.
CENTRAL ECONOMIC PLANNING IS ANTI-FREE MARKET
7. And then the seventh point is, of course, the Federal
Reserve System is functionally a key element in a
mechanism of central economic planning. That's really
what fascism is — the kind of central economic planning
where the businessmen do the planning, as opposed to
socialism and communism where the petit intelligentsia
does the planning. Right.
So fascism at least works for a longer period of time than
socialism does, but that's what this thing is there to do.
FED FACILITATES REDISTRIBUTION OF WEALTH FROM
THE PEOPLE
TO THE FAVORED ELITES
Fundamentally, it is there to redistribute wealth so that the
big business segment of society will be able to find capital
when it needs and wants capital, and the payoff to the
politicians is to say we will do the same for you. We will
provide a mechanism of looting that will pay off your polit-
ical constituents as long as you let us use this mechanism
of looting to maintain capital flows to us.
Really very simple: What's in it for my family? What's in it
for your family? Okay. Those are the seven points.
Well what we have to understand is that this is not a
permanently viable policy. It may have a longer life than
socialism and Communism, and, remember, they lasted 70
years.
Socialism is incapable of economic calculation. This
system is capable to a certain degree of economic
calculation. It just has a tremendous level of irrationality
built into it. But it is not permanently viable.
HOW LONG WILL OTHER NATIONS AGREE TO SUSTAIN
OUR DEBT?
It is not permanently viable domestically, and it's certainly
not permanently viable internationally because you have a
system of international competition among currencies.
And it is not necessarily true that the Germans and the
Japanese, and maybe even the Chinese or the
Indonesians, will continue to support the level of debt that
this country is willing to assert or assess upon itself in
order to maintain the fiction that we are richer than we
probably are.
IS HYPERINFLATION IN THE OFFING?
Eventually, the chickens are going to come home to roost.
My own guess in this is, they are going to come home to
roost through a massive inflation, because politicians
understand that a depression is the most politically
destabilizing of all events, and so they will try to keep that
off as long as possible and the only way to do that is to
keep pumping in money and credit, and you cannot keep
the lid on prices indefinitely, so you are probably going to
see a very, very large inflation over the years.
Very, very large — I am not talking big numbers. I am not
talking 1,000 percent. I am not talking 1923. I am talking 20
percent, 30 percent, 40 percent inflation, and then there
will be reaction, and then another one, and reaction, swing
back and forth and up and down.
WILL FEDERAL RESERVE NOTES LOSE THEIR
LEGITIMACY?
The interesting thing about this is, as the purchasing
power of the currency falls, the social demand for the
currency will fall, prices will start to rise faster than the rise
of the supply of money and credit, and the thing begins to
get a life of its own.
And this is what eventually happened in such countries as
Germany in 1923. They could not print the money fast
enough for the price rises. Prices were not rising because
money was being printed. Money was being printed
because prices were rising. People just simply started
walking away from the currency into something else,
anything else, and the system broke down.
So it gets out of control. And this system will get out of
control with Alan Greenspan or whoever is in there. It will,
at a certain stage, get out of control. And, in a sense,
maybe that's the solution. You let nature take its course.
If the politicians, the bankers, and those who fatten off this
system refuse to respond to the problems, refuse to return
to some level of rationality and Constitutionality in this
system, then let the system implode. Let the people walk
away from the system, because they will.
Everywhere in world history a system of this kind has been
set up, it has either destroyed the country in the course of
a war, I mean it breaks down, or, if the system has lasted
long enough, people have walked away from it,
economically speaking, and the system has imploded.
Hyperinflation: the end of, as Jackson said, the
Establishment's rag money.
CONSTITUTIONAL RESTORATION IS THE ONLY WAY TO
FORESTALL CERTAIN CHAOS
That may be the only real solution. I don't think it is the
preferable solution because I think we understand what
would happen politically if that were to occur. The
demands would immediately be for even stricter and
stricter governmental control over the system.
UNFAMILIARITY WITH COMMODITY MONEY MAKES
CRISIS MORE LIKELY
So that leaves me with the question at our level of what is
to be done. The real problem here is that we do not have
an alternative that is, at the present time, functioning.
If you look at the Jacksonian period when they walked
away from the Second Bank of the United States, if you
look even at the period from the Civil War to the
resumption of specie payments in 1879, people were, in
fact, using gold and silver as currency.
During the period of the irredeemable greenbacks, they
were not paying it out unless they had gold clause
contracts, but there was a gold and silver price structure.
In fact, there were parallel price structures at that time
between the paper price and the gold and silver price. So
people understood the use of gold and silver as an
alternative currency. That does not exist today.
TO AVOID CHAOS, PARALLEL PRICE STRUCTURE
NEEDED
So your first step in this process, which economically is to
have essentially a parallel price structure, is not there.
Now that leaves me to conclude that maybe the only
solution, if we had control of the government, would be for
the government, slowly but surely to begin a phase over. I
am talking about the necessity of developing these
economic institutions, where you begin to demand
payment or to give people the option of making payment in
silver and gold, make gold and silver legal tender for public
transactions, monetize foreign silver and gold coins as it
did at the turn of the 19th century, so that this price
structure would begin to develop, and that a competition
would occur in the marketplace between the Federal
Reserve System (which at that point would be
disestablished, in the sense that the Federal Reserve
System would be given no privileged position), and the
gold and silver price structure.
GOOD MONEY WILL DRIVE OUT BAD
And I am convinced that, if that were to occur, the banks
would be driven very, very quickly into moving towards a
redeemable currency, or at least they would have to offer
a redeemable currency as one of the options, and the
banking system would have to clean up its own mess.
THE REAL COST OF THE UNCONSTITUTIONAL
WELFARE STATE WILL BECOME EVIDENT
The grave difficulty is that, as soon as you begin to make a
step in that direction, all the special interests come out of
the woodwork, and begin to say, "Well, wait a minute, you
are not only not going to be able to finance the expansion
of our programs, but the continuation of our programs,
because the taxpayer at that point will not accept paying
taxes in gold and silver for these programs. I mean the real
cost of the thing is going to be laid on the table.
And, at that stage, they say, and I have heard this over
and over again from so-called free market economists,
until you get the fiscal situation under control, you can
never get the monetary situation under control, because
they will always pervert the monetary situation to provide
them with the resources to keep the fiscal situation above
water.
I look at it the other way around. Until you get the monetary
situation under control, you are always giving them the
lever or the spigot or whatever it is to continue to fund,
and, therefore, not to have to face the tax problem with
respect to the entitlement programs.
INCREMENTALISM WAS REJECTED BY AMERICA'S
FOUNDERS
And the interesting thing about the founding fathers of this
country, they did not sit back and say, "Well, wait a minute,
we have a tremendous inflation and a recession,
depression, and all these other things. First, we have to
get our fiscal house in order before we do any of these
other things." They did not say that. They enacted the
Constitution so we can do it all at once. Here it is. Here is
the Constitutional monetary system. Live with it for the
government. One always has to remember that. The
Constitutional monetary system only controls the
government's use of money.
GOLD AND SILVER WOULD FLOW INTO AMERICA
And I think if you had a President who was willing to
execute the laws, if you had a Congress that would not
impeach him for doing that...and you simply came up with a
reform package that put the government back on the gold
and silver system, with just a little bit of time, as they say in
Russia (was it "perediska", a breathing space?), if we just
have a little breathing space to maneuver in, you would
have the biggest influx of capital into this country the world
has ever seen because all the gold and silver of the world
that is now sitting idle in hoards because it cannot earn
interest, would suddenly find a marketplace, which would
be the United States, because, at a minimum, that gold
and silver could be used to pay taxes into this system.
And, as soon as that happened, and that real capital
appeared, jobs, productivity, investment, everybody would
be better off at that point. Then you could turn around and
say, "Well, you see what we did?" This is step Number
One. You did not believe it, but here is step Number One.
RIDICULE YIELDS SILENCE
The difficulty I think is the psychology. People today, when
you talk about gold and silver, they look at you as if, not as
if you were someone from the 19th century. "This is
extremism". If you question the Federal Reserve System
and central banking, they start asking whether you are
questioning the influence of the Rothschilds — that's the
next thing you hear out of them.
They have generated in this country, on the one hand, a
conspiracy of silence, and, on the other hand, they have
generated a kind of conspiracy of ridicule that makes it
extraordinarily difficult for anyone to put these kinds of
ideas on the table without being laughed away or attacked
by the ADL, if you know what I mean.
Anything else can be put on the table no matter how
ridiculous, but talk about reforming the monetary system,
use that dirty four letter word "gold", imagine using "silver",
it is even worse, then you become a "bimetalist", you
become an "inflationist", you become William Jennings
Bryan, people think of "Inherit the Wind". It is unbelievable
what you see when this stuff comes out.
RE-EDUCATION OF THE ECONOMIC POPULARIZERS IS
NEEDED
And there is our big problem. And I think that is not a
problem that can be solved by going to people at the
lowest level initially because nobody understands this.
Absolutely nobody understands this.
SOUND MONEY IS GOOD FOR WORKERS
I think what has to be done is some middle-level in the
intelligentsia has to be re-educated, and then has to pass
this on to those institutions that will find out that it is in their
interest (what's in it for my family?). I mean look at the
unions. The unions are the classic example in my mind of
an institution that ought to be screaming for monetary
reform — screaming for monetary reform — not simply
because economically it is to their advantage, but also
because politically it is to their advantage. They are going
downhill. They are being extinguished.
And that would be a way to revitalize that movement
politically. And, historically, they can look back at years,
and years, and years of the greatest leaders, if you will, of
the labor movement being solidly behind sound money.
SOUND MONEY IS GOOD FOR THE ELDERLY
If a group of intellectuals could reach the retired people in
this country who are being looted by this system, if a group
of intellectuals could reach the blacks in this country who
cannot get jobs because meaningful investment is all going
to the Chinese, and God knows where else, if a group of
intellectuals could reach young people who could
understand that after 40 or 50 years of work they are
going to end up with nothing, because this system is
designed systematically to loot them, what percentage of
the voters would you have in this country? Sixty percent?
"CONSERVATIVE" THINK TANKS HAVE DUCKED THE
ISSUES
But that middle-level intelligentsia, as far as I can tell, is not
there. Now I am not going to name names of think tanks
here in Washington that we all know that are right-wing or
conservative or whatever.
I'll give you a Krugerrand — but let me be patriotic — I'll
give you an American Eagle gold coin — for each
symposium or meeting of those groups that you can bring
me in the last ten years that dealt with money. And you
can't include the one I had at the Heritage Foundation
through the Mises Institute because I did give a talk many
years ago, and I was never invited to speak there again.
So I consider that to be a negative one. I'm not paying for
that one.
Any other — they don't do it. Cato Institute is the only one
that holds, as far as I know, a yearly monetary conference
and they all sit around talking up the benefits of the
Federal Reserve and monetary this and monetary that.
This kind of stuff never gets in front of them.
So I think that is our major problem — is somehow
translating this material or putting this material in a form
that a middle-level intellectual group, the scribblers — what
was Hayek's phrase for them? — "the second-hand
dealers in ideas". The second-hand dealers in ideas can
begin to market to those institutions that have an economic
stake in this matter.
HOWARD PHILLIPS: History is the history of elites, and we
now have a corrupt, ignorant elite. We have to build a new
elite to replace it.
DR. EDWIN VIEIRA: [President Andrew] Jackson could give
his campaign at the lowest level because people — if you
read the newspapers from that period, it is incredible what
the average person would read in them. It is incredible
what they were talking about. They understood fractional
reserve banks and they understood the difference
between commodity money and paper money. It is
absolutely incredible. Today, zero. Zilch.
BALANCED BUDGET AMENDMENT IS A THREAT TO
CONSTITUTIONAL RESTORATION
HOWARD PHILLIPS: What are the implications for our long-
range success if the Balanced Budget Amendment (BBA),
in a form similar to that in which it was proposed last time,
were to be added to the Constitution?
Let me say my concern is that it might limit our ability to
rely on the plain text of the 1787 Constitution as presently
amended, and that the Balanced Budget Amendment
might implicitly provide a rationale, not simply for a
Presidential role in the legislative process, but for the
legitimatization of our present financial arrangements —
everything from OMB to the Fed. What do you think?
DR. EDWIN VIEIRA: I agree with that. I am totally against
the Balanced Budget Amendment.
EVOLUTION OF EURO COULD MAKE FRNs EXTINCT
HOWARD PHILLIPS: What implications do you believe
there will be for our economy and for the dollar if, and
when, the Euro comes on line as the common currency of
the European Union?
DR. EDWIN VIEIRA: Well, the Federal Reserve Note, not
the dollar, is now the premier world reserve currency as a
result of the hangover from the Bretton Wood's
agreement. But, to a great extent, it is supported in its
value by the Germans and the Japanese buying United
States bonds. We are holding them hostage in a sense.
What happens when another currency that is superior to
the Federal Reserve Note appears and can now be
substituted as a reserve?
Well, the value of the Federal Reserve Note, its
purchasing power, depends upon its uses. If one of its
major uses is eliminated or seriously curtailed, its
purchasing power will go down. To the extent that it stops
being, or is less of, a world reserve currency, its
purchasing power will go down. Those Federal Reserve
Notes then will not be used overseas. They won't be held
overseas. They will come back here, and there will be a
terrific price increase.
We export inflation. We don't see the inflation here
because the purchasing power and Federal Reserve Note-
denominated debt is overseas and that is circulating
around overseas. It is circulating around overseas
because it is useful. So we can expect that to happen, and
that "exported inflation" will now become "imported
inflation".
HOWARD PHILLIPS: So in other words, we have been
insulated from our own profligacy by the status of the
dollar, or the Federal Reserve Note, as the reserve
currency of the world.
DR. EDWIN VIEIRA: That's right.
HOWARD PHILLIPS: Foolishly, our government has been
pushing the European nations to adopt a common
currency — which is going to have the effect of leveling the
U.S. economy. It is going to increase price inflation in the
United States. It is going to cost us jobs. It is going to
hasten the day of reckoning. Maybe that's good, but a lot
of people are going to suffer as this artificially high dollar
sinks, and that is going to happen in the next several
years. It could have a profound effect on the election of
the year 2000. It could be the predicate for a hyper-
inflationary depression. All kinds of things could happen.
DR. EDWIN VIEIRA: The great difficulty is all economic
analysis is based upon the principle, all other things being
equal. If you do A, all other things being equal, B will follow.
Unfortunately, in the real world all of the things are not
equal. It is impossible to analyze at the present time. All
you can look at is the rate of increase of the money supply
— the M1s, the M2s, the M3s, and then you ask yourself,
well why is it that you only have 4 percent price increases.
Well, is that because actually the economy is expanding in
production?
If the economy is becoming more efficient, prices should
go down. If that's happening at the same time that the
banks are expanding the money supply, prices will not go
up as fast as they otherwise would.
Now that's all well and good except prices should, in fact,
be going down. The redistribution of wealth is still
occurring, but you have to do the arithmetic a slightly
different way.
In terms of these being the highest interest rates in history,
well, no, I imagine we must have had much higher interest
rates — real interest rates — around the Civil War period.
They were asking 20 percent.
DR. JANE ORIENT: I have heard the argument that actually
prices should be going down rather dramatically because
of improvements in technology and that that has been
shielding us from seeing the effect of inflation.
DR. EDWIN VIEIRA: Well, you see that in electronics. They
have gone down terrifically, but they should have gone
down much more.
If you look at the non-constitutional gold standard that they
had at the turn of the century, from 1879 to 1907, what
happened with prices then, there was a gradual lowering of
prices. At the same time, there was a tremendous
economic boom, huge influx of immigrants, and so forth,
and so on.
And that was because productivity was increasing,
efficiency was increasing, jobs were going up, and you had
no real equivalent increase in the money supply. So the
purchasing power of money kept increasing, prices kept
going down, and that's what you would expect in a free
market economy — purchasing power of the money would
go up, prices of goods and services would go down, the
lower level of society would become increasingly wealthy.
In a sense, it would be a slow transfer of wealth from the
top to the bottom, but, of course, the top would be making
it up through entrepreneurial profits so we are not talking
about redistribution in that sense. And that is why I have
not been able to understand why since World War II all the
unions have been so quiet about this. It is something that
is just so simple, and yet there they are, saying nothing
about it.
MAN FROM AUDIENCE: What is going to be the effect
when the ECU comes into effect, how do you see that
affecting the trade balance and the exchange rates if they
have the European currency come into effect, and
suppose there is a, perhaps, better value as far as the oil
nations are concerned as far as using ECU, or possibly
even the Yen, instead of the dollar?
DR. EDWIN VIEIRA: Well, to the extent that they move their
reserves from one to the other, the purchasing power of
the Federal Reserve Note has to go down.
MAN FROM AUDIENCE: Do you see that as a possibility?
HOWARD PHILLIPS: Sure, all of these things go together.
One of the reasons the dollar is the reserve currency is
because America is the military leader of the world. But, as
we emasculate our military, as we turn over more power to
the United Nations, expand the U.N. police forces, as our
own economy declines relative to other economies, there
is less incentive for other countries to look to the United
States for their reserve currency. And, if they can get a
better deal in Deutschmarks, or Yen, or in the Euro, they
will go to that.
History is full of examples of nations losing power and their
currency ceasing to be the reserve, whether it was the
Spanish currency, the French currency, or the British
pound sterling.
The dollar has reigned, but, as God punishes us for our
sins, and as we commit economic suicide, the dollar will
pass, unless we turn around, and if the dollar sinks, our
economic standard of living is going to go into the tank.
About Dr. Edwin Vieira, Jr.
Dr. Edwin Vieira, President of the National Alliance for
Constitutional Money, is a 1964 graduate of Harvard
College who received an M.A. degree in 1966 from
Harvard's Graduate School of Arts and Sciences, and a
PhD in 1969 from the same institution. In 1973, he was
awarded a degree by the Harvard Law School, from which
he graduated cum laude.
A member of the bars of Maryland, D.C., Virginia, the U.S.
Supreme Court, and the U.S. Courts of Appeals for the
Third, Fourth, Sixth, Seventh, Eighth, and Eleventh
Circuits. Dr. Vieira is an attorney in private practice
specializing in constitutional and labor law, and legal
economic analysis.
He has served as a member of the Board of Fellows of the
Public Service Research Council, a consultant to the U.S.
Department of Labor, and a research staff member and
speech writer in the 1972 U.S. Senate campaign of John
Chafee (R-R.I.).
Dr. Vieira has also been an assistant professor of law at
Wake Forest University School of Law, and Research
Director of Wake Forest's Institute for Labor Policy
Analysis. He is a member of the Advisory Board of the
Citizens for a Sound Economy, and has been a consultant
to the National Right to Work Committee and the National
Right to Work Legal Defense Foundation.
His published works include Pieces of Eight: The Monetary
Powers and Disabilities of the United States Constitution: a
Study in Constitutional Law, Old Greenwich, Connecticut:
Devin-Adair Publishing Company, 1983.
Back to the "First 100 Ways" Index Page
Copyright © 1997 The Conservative Caucus Research,
Analysis and Education Foundation. All rights reserved.
HOW TO RESTORE
CONSTITUTIONAL MONEY:
The Challenge
by
Dr. Edwin Vieira, Jr.
President
National Alliance for Constitutional Money
presented to the Board of Trustees of
The Conservative Caucus Foundation
at its Annual Meeting in Washington, D.C.
on January 13, 1997
DR. EDWIN VIEIRA: We're coming, in this topic I guess,
down to the bottom line. What makes the gears of
government turn is the grease, money. And given that it
has become more and more difficult to differentiate the
government from a criminal family, I will quote from Don
Corleone who asked the question: "What's in it for my
family?".
Well, we have a mechanism in this country that has been
set up to answer that question for certain groups that are
in a privileged position, and that mechanism is known as
the Federal Reserve System.
The major cross that I have to bear is dealing with the
Federal Reserve System and attempting to explain the
major problems that it poses with respect to Constitutional
law, economics, and the fundamental moral climate of the
country.
THE FED IS UNCONSTITUTIONAL
The bottom line of my presentation is very simple. The
Federal Reserve System is unconstitutional. You start
there and you know everything else that there is to know
about it.
The Constitution established commodity monies,
specifically, silver and gold coinage as the money of the
United States.
REVOLUTIONARY INFLATION AND DEPRESSION LED TO
REJECTION OF PAPER MONEY IN 1787
If you go back historically, in 1787 the founding fathers
were considering structure of government at the
Constitutional level. Who were these people? Well, as a
practical matter, they were eyewitnesses to one of the
worst economic situations that the country had ever faced
— a raging inflation, a massive depression that had
followed the emission of bills of credit and other forms of
paper currency by both the Continental Congress in which
they served, and many of the state legislatures in which
they served, during the War of Independence.
So these were not people who were unacquainted with the
economic problems of money. They were also not people
who could foist off those problems, at least in terms of
cause and effect, on somebody else. They had been
responsible for putting these paper monies into circulation.
What did they do? Well, they drafted the monetary powers
of the Constitution to prevent repetition of that calamity by
outlawing what James Madison in the Federalist papers
denounced as "the fallacious medium and improper and
wicked project of paper money".
U.S. CONSTITUTION ESTABLISHES A BIMETALLIC
STANDARD
Very, very simple is the language of the Constitution, but it
is quite profound in its economic and political
consequences. In Article I, Section 8, Clause 5 and Article
I, Section 10, Clause 1, the Constitution adopts silver and
gold coin exclusively as the money of the United States.
Now the standard in this system is the dollar, and, if you
know nothing else about the monetary system of the
United States constitutionally, learn what a dollar is. A
dollar is a silver coin containing 371-1/4 grains of silver.
That word is mentioned twice in the Constitution: in Article
I, Section 9 and in the Seventh Amendment, guaranteeing
the right to jury trial.
In the system that the founding fathers devised, the legal
value of all the silver coinage must be proportional to the
weight of silver they contain, and the legal value of all the
gold coinage must be proportional to the weight of gold
that the coins contain in relationship to the exchange value
between silver and gold at the prevailing free market
exchange rate.
All silver and gold coins may be legal tender for the values
of silver and gold they actually contain, and Congress has
the authority to, as the Constitution says, regulate the
value according to these principles.
FIAT MONEY PROHIBITED
In Article I, Section 8, Clause 2 and Article I, Section 10,
Clause 1, the Constitution prohibits explicitly or implicitly
the emission of any form of what was called in those days
"bills of credit". Today we would call that paper money.
Properly construed these provisions preclude any
government at any level from granting special legal
privileges to the notes, deposits, or currencies of private
banks as well, or allowing private banks to use
governmental debt as so-called reserves for the emission
of bank notes.
GOLD AND SILVER COIN ONLY AS LEGAL TENDER
Article I, Section 10, Clause 1 also disables the states from
imposing on unwilling creditors anything but gold and silver
coin as a tender in payment of debts — which, of course,
reflects the inherent disability of Congress to declare
anything other than gold and silver coin a legal tender.
And Article I, Section 8, Clauses 1, 2, and 5; Section 10,
Clause 1; and the Fifth, Ninth, Tenth, and Fourteenth
Amendments, if properly construed, would deny Congress
and the states any power to seize people's gold or silver,
except through taxation, or to prevent specific performance
of private contracts payable in silver, gold, or any
monetary medium — which, of course, was what happened
in the 1930s when Roosevelt came in.
FREE MARKET IN MONEY AND BANKING IS
GUARANTEED
And Article I, Section 8, Clause 3; Article IV, Section 2, and
the Fifth, Ninth, Tenth, and Fourteenth Amendments would
guarantee individuals free entry into private banking,
ensure that private banks might issue their own non-
fraudulent notes and securities, and deal in deposits of
silver, gold, foreign currencies, or any other monetary
medium — in other words, grant a complete free market to
money.
Now, that is an important point, because the proposition
that I would lay before you today is the Constitution really
has two prongs — or an obverse and a reverse. One I call
the integration of market and state. Only commodity money
— by weight — is constitutionally recognized.
The Constitution defined money and banking system that
relies on and embodies free market principles. It adopted
the type of money the world had historically favored, that
is: commodity money — money capable of being coin —
gold and silver. It adopted as money the very commodities
that the international markets had historically recognized.
It adopted the very unit of money that the American market
at that time was using — the silver dollar — and it left the
ultimate supply of money to the market too, by implicitly
incorporating the system of free coinage that had been
used throughout Anglo-American law — and, in fact, it first
occurs in the first Coinage Act of 1792.
SEPARATION OF BANK AND STATE
So, it is fairly clear from that history that the Constitution
integrated market and state with respect to official money
— silver and gold coinage — and it separated bank and
state with respect to everything else. The government is
not to be a player with respect to the private market in
terms of privileging banks or other financial institutions.
Well, what's happened since then?
LINCOLN'S WARTIME POLICIES UNDERMINED
INDEPENDENCE OF PRIVATE ECONOMY
The government has radically diverged from these
principles, starting with the Civil War, which was one of the
those great divides in Constitutional theory, again because
of a crisis situation. Interestingly enough, crisis situations
also seem to have driven this country always in one
direction, and not the other.
The Civil War was the beginning of the degeneration or
the devolution of the American Constitutional monetary
system. In 1862, the Congress submits the first legal
tender paper currency, the greenbacks, and it maintained
those as an irredeemable currency until the 1870s.
Of course, the Supreme Court was there to give all sorts of
fallacious reasons as to why that was justifiable. Always be
sure the Supreme Court will be there to give reasons when
the cogs turn in one direction, but never to give reasons
when the cogs turn in the other direction (and I have spent
25 years futzing around with the Supreme Court, so I
speak from experience).
THE FED WAS CREATED TO DELINK CONTROL OF
MONEY FROM CONSTITUTIONAL ACCOUNTABILITY
Now we come to 1913, which is another one of those
wonderful years — we had the income tax and we had the
Federal Reserve System put in.
The Federal Reserve System is a quasi-public, largely
private cartel that asserts the kind of political
independence from supervision by Congress, the
President, the courts, and, especially, the electorate. The
Federal Reserve is privileged to emit its own paper
currency, Federal Reserve Notes.
FED HAS POWER TO DETERMINE THE AMOUNT OF
DEBT OBLIGATIONS U.S. TAXPAYERS MUST
GUARANTEE
Now what is interesting about those notes is they have
been declared, or were from the beginning, declared to be
obligations of the United States and to be redeemed in
lawful money, and yet nevertheless, in complete disregard
of Article I, Section 9, Clause 7 of the Constitution,
Congress has never enacted a single statute authorizing
the dollar amount of obligations that the Federal Reserve
can generate out of nothing, and from which the treasury
of the United States, and ultimately the taxpayers, are
somehow liable as guarantors or sureties. Fantastic
situation.
How much have they generated? Federal Reserve notes
alone total $370 some billion now. There is not a single
statute giving them authority to issue one dollar's worth.
IN 1933, ASSURANCE OF REDEEMABILITY IN GOLD WAS
ENDED
In 1933, of course, another wonderful year, Congress
declared Federal Reserve Notes legal tender for all debts,
public and private, and rescinded the requirement that
those notes be redeemable in gold coin.
In 1933 and 1934, Roosevelt, and then Congress licensing
Roosevelt, seized all the gold coin in circulation and
nullified all public and private contracts that called for
payment in gold.
SILVER COINAGE TERMINATED IN 1965,
REDEEMABILITY IN 1968
In 1965, Congress terminated coinage of Constitutional,
that is silver, dollars, and authorized the so-called clad
coinage, that is, slugs.
In 1968, Congress terminated redemption of any form of
United States currency in silver coin and, in 1971,
[President Richard M.] Nixon and [Treasury Secretary John
B.] Connally repudiated the redemption of Federal
Reserve Notes internationally.
So 1971 is actually the year: the first time in American
history that we had what amounts to a fiat currency — "fiat"
from the Latin "let it be" money, because otherwise it
wouldn't be money. No one would treat it as money.
In 1973 and 1977, interestingly enough, there was some
backsliding, in that Congress permitted Americans to own
gold and to make private contracts payable in gold,
although continuing to refuse to redeem any obligations of
the government in gold.
The reason that was given for that was "Well it doesn't
matter. Gold has been demonetized. This will not cause
anything bad to happen." And you know they were right.
Nothing "bad" happened — which is an interesting contrast
between then and 1862.
In 1862, the greenbacks come out, they were
irredeemable, immediately everybody and his brother
starts making so-called "gold clause" contracts, demanding
to be paid in gold instead of in greenbacks, one of the
classic examples being Benjamin Butler, the corrupt
senator from Massachusetts who later went down as the
military governor of New Orleans. Go to New Orleans and
talk to people about Benjamin Butler even today and they
will tell you about that individual. He voted for the
greenbacks and he would turn around and make gold
clause contracts.
One of the most famous gold clause contract cases in the
Supreme Court was the Butler case in which he was
defending his own gold clause contract. So he was the
man who knew. He really knew. It wasn't a matter of should
have known, might have known — he knew. He knew just
what he was doing.
In 1985, Congress authorized the minting of new silver and
gold coins (Ron Paul had something to do with that, as I
recall), but, once again, although they are there, they do
not function as a circulating medium because their nominal
values are completely out of line with their market values
and Gresham's law takes hold. The real money is kept in
the pocket and the bad money is tossed out into the
marketplace.
OUR PRESENT MONETARY SYSTEM IS
COMPREHENSIVELY UNCONSTITUTIONAL
So since 1968, the commonly circulating currency of the
United States has consisted solely of paper chits and slugs
— Federal Reserve Notes, and these so-called "clad
coins".
Clad coins contain no silver at all. Silver and gold coins
have been withdrawn as the basis of the monetary system.
Federal Reserve Notes are irredeemable, and the Federal
Reserve System, which is composed of thousands of
private banks, ultimately controls the supply and quality of
America's money, and none of this has any Constitutional
justification whatsoever.
There are economic and political consequences. Economic
harm occurs both in the public and in the private sectors.
Go to the private sector first.
In a free market, interest rates fall because people's time
preferences change whether or not there is a change in
the supply of money. Interest rates reflect the idea that an
apple is worth more to me today than 100 years from now.
It is a very simple concept. I live in time. I am concerned
about values over time. It has nothing to do with Alan
Greenspan or the Congress of the United States or
anything else.
LOW INTEREST YIELDS RISE IN REAL INCOME
Now, when interest rates fall, people consume less, and
they invest more. The prices of consumer goods fall. The
price of capital goods increase. More resources flow into
production, less into consumption. As increased
investments and capital goods result in increased
production, real incomes rise, everyone is better off.
And, if the supply of money has not increased while all that
is going on, the purchasing power of the money unit
increases, people become wealthier and their money
becomes more valuable than before, and for people who
are on salaries (wage earners, for instance) that's a very
consequential matter.
And you will find that, at the turn of the century, people
such as Samuel Gompers, the old AFL (American
Federation of Labor) president, was very, very concerned
about inflation and how it cheated the working man.
Go to your average union leader today and talk to him
about inflation and he will give you some kind of blank
stare and tell you that the Federal Reserve is something
that creates jobs. He has never read Keynes's book that
said "inflation was a way to lower real wage rates and
therefore defeat the power of trade unions."
Okay, we live in an era of massive illiteracy, but that's the
way it is.
What about under a regime of inflation that is induced by
banks or governments? Things are completely different
then.
FRACTIONAL RESERVE BANKING RESULTS IN BOOM-
BUST DISRUPTIONS
Assume private banks expand the supply of fiat paper
currency through fractional reserve techniques. That's the
example, the way they do it today.
The expanded supply of money enables the banks to offer
loans to businesses at lower rates of interest than before.
Theoretically, they can drive the rate of interest down to
zero. They just keep pushing it out. Eventually, somebody
will take it. They just keep lowering that price.
The sudden availability of this low-cost credit induces
businessmen to believe that there are real resources out
there that are now available for projects that in the past
weren't available. So they have been deceived by the
action of the banks. They then begin to take those loans
and invest in capital goods as if there had been a change
in society's ratio of investment to consumption. Even
though there has been no decrease in the level of
consumption in society. This is all a paper trick that's being
promulgated by the banks.
The businessmen use this newly borrowed money to
purchase capital goods and labor. Prices of those goods
and that labor goes up. Resources are diverted from other
areas of production.
Eventually, however, this money percolates down into the
hands of the ordinary consumer, and the ordinary
consumer spends it according to his own preferences
between investment and consumption.
At that point, reality hits the fan, economically speaking.
Now this takes years to occur, but it does occur. It has an
inexorability about it.
This reasserts the original free market rate of interest, or
at least it creates attention in the system between the
bank's rate of interest and the actual rate of interest.
It causes the prices of consumer goods to rise, the prices
of capital goods to fall, and, at that point, the investment in
these new capital goods — the investment with these new
fictional loans — is recognized as over-investment, as mal-
investment, which is unprofitable or maybe even
completely wasted. And, at that point, you have what is
called the bust, the depression, the recession, stagflation
— we have all sorts of words for it — but it is the rug being
pulled out from under the economy.
EVEN STAGES OF BOOM AND BUST
Now this boom or bust, or the business cycle (I like to call it
the fractional reserve banking cycle) has a number of
stages.
The first stage is the inflation (money supply increases
because the banks generate paper currency). The second
stage is the expansion (the banks loan the new money to
business). The third stage is the boom (the businessmen
over-invest in capital goods). Everyone is feeling good
about things.
Then there is the reaction, as consumption increases in
accordance with original investment consumption ratios.
Then there is the crisis (when the businessmen realize
what is happening). Then there is the bust — at which
point businessmen and workers lose money as the mal-
investments have to be written off in some way. And the
seventh, and the last stage, which is always the most
important one: the political hysteria.
THE PROBLEM IS SEEN AS THE SOLUTION
At that point, people who have been hurt by the
contraction, the system, the recession, the depression, the
stagflation, or whatever you are going to call it, they come
forward demanding what? Not that fractional reserve
banking be limited, not that we go back to the
Constitutional system, but that the government take action
to get the country moving again. Right? John Kennedy is
resurrected or whatever happens — get the country
moving again through government action.
LOWERING OF INTEREST RATES BY INFLATION IS
ILLUSORY AND TEMPORARY
So the short answer is that inflation can lower the rate of
interest temporarily, but, in the long run, the market
controls.
MOST PEOPLE LOSE MONEY, BUT BANKERS AND
THEIR FRIENDS PROFIT
And the only lasting effects of all of this churning of the
system is:
1) a decrease in the purchasing power of the unit of
money (Federal Reserve Notes lost 90 percent of their
purchasing power since World War II),
2) losses from over-investments and mal-investments in
projects that have proven uneconomic,
3) transfer of wealth (I mean people do make money,
banks make money, some businessmen make money.
There is always money to be made by the churning of
fractional reserve banking, but, in general, society loses.
Overall, society loses.),
4) and then, that final bottom line, the political bottom line:
agitation for new governmental intervention.
As Mises was wont to say "as each intervention proves
catastrophic, the next step is to have some more and more
catastrophic governmental intervention". So we never
learn anything, except that we know that no one ever
learns anything from this.
Now, during the boom, what people call "inflation" may not
necessarily occur, because there can be countervailing
forces, such as increase in the supply of goods or services
or the demand for money.
So right now, we could very well be suffering a catastrophic
inflation in the sense of what is happening under the
surface in this system, even though you do not see more
than a 3 or 4 percent price rise. And, recall a 4 percent,
4½ percent, price rise was what induced Nixon in 1971 to
call for wage and price controls. He considered that
catastrophic. Right now we live with it, no problem. Pretty
soon we will have 20 percent, then Argentinean rates.
These things have that kind of momentum behind them.
Booms can continue, putting off the day of reckoning, if the
banks expand the money supply, and these, as it were,
extraneous factors do not appear, so that people don't
realize what's happening. That's the beauty of this whole
system. It is surreptitious. It is deceptive. It is kind of
"stealth economics", if you will. It comes up off the radar
screen in many instances.
A SHELL GAME WITHOUT A PEA
Now, let's take a look at the economic consequences on
the public side. What goes on when the Federal Reserve,
as they say in the trade, "monetizes public debt", that is,
generates money on the security of public debt in order to
give the money to the government to spend for whatever,
entitlement projects, or whatever?
FOUR ROADS TO RUIN
What's going on there is that the board of governors of the
Federal Reserve System is lending the public credit, on
the security of the public credit. This is the ultimate of the
shell game — where's the pea? Except there is no pea in
this game at all.
I want to give you an example of this. Assume the
government wants to expend $100 billion on new
programs. Let's assume they are even Constitutional
programs. That's a shock, but let's assume that.
How can it do this? Well, it essentially has four choices:
(1) PAY AS YOU GO — BY HIGHER TAXES
First, it can tax $100 billion from the public, and spend the
tax receipts. That's a redistribution of $100 billion from the
taxpayers to the tax recipients and the bureaucrats in the
middle, who do the collecting and the expending.
But no new money has been created. No one has received
any interest payments, and the advantages of the system
are that the present generation pays for its own
expenditures, its own programs (which one would think is
only fair), and that tends to limit those programs to what
the present generation will accept, and the public tends to
know who receives the benefits, who pays for them, what
they cost, and so on. So it's all on the table.
I suppose the disadvantage is that, of course, these
schemes of taxation are all devised by bureaucrats and,
therefore, economically they always tend to be harmful,
but, in this imperfect world, where government is going to
be spending something, that probably is the bottom line of
harm — the direct "tax and spend" situation.
(2) BORROW AS YOU GO — WITH INTEREST PAID TO
PRIVATE CREDITORS BY FUTURE TAXPAYERS
Well, the next level is the government can borrow $100
billion at what, let's say 10 percent interest, from the public
— not the banks — but from the public, and spend the
loan receipts.
Now, of course, the government must collect $110 billion
from the taxpayers sometime in the future to pay that off,
so there is a redistribution of $110 billion instead of $100
billion, but, again, no new money has been created. Some
taxpayers will eventually pay that extra $10 billion for the
privilege of other taxpayers having had taxes deferred for
the lifetime of the bonds.
Now the disadvantage of the system over the first
alternative (that is direct taxation) is that the present
generation may tend to overspend, hoping that it can push
the burden onto a future generation.
(3) INFLATE AND SPEND — DEPRECIATION OF DOLLAR
VALUE
What's a third route? Well, here we come into the
greenback route. This is the sequence that was followed
actually in our history — taxation, borrowing, and, when
they find themselves in a hole, they turn to the greenback
route. The government simply emits $100 billion in
irredeemable interest-free treasury notes, and spend
these things directly into circulation, requiring you as a
government creditor to take them, and then giving them
legal tender power so that they will circulate.
Justice Field, who dissented in one of the famous legal
tender cases, Juilliard v. Greenman, asked, "If Congress
has the power to make treasury notes a legal tender and
to pass as money, why should not a sufficient amount be
issued to pay the bonds to the United States as they
mature?".
Why not pay interest on the millions of dollars of bonds
now due, when Congress can, in one day, make the
money to pay the principal? And why should there be any
restraint upon unlimited appropriations by the government
for all imaginary schemes of public improvement if the
printing press can furnish the money that is needed for
them? Well, why indeed? I mean that is a very good
question. Why, indeed?
And under the theories that have been put forward by the
Supreme Court in the legal tender cases, even the gold
clause cases, following through, the borrowing power of
the country is really supererogatory. The government can
simply print this money. Never have to borrow it. Why?
Why borrow? Why tax? Why borrow?
And an economic crisis recourse to that expedient may
become politically compelling. I might point out that, in the
Agricultural Adjustment Act of May of 1933, Roosevelt was
given the authority to do exactly that — to expand the
greenback base under the law of 1862. He didn't do it, but
he had it. So people have been thinking this way.
But you notice at this stage we still haven't come to banks.
There were no banks involved in this at all.
Now I don't say that printing of money is Constitutional, but
the Supreme Court said that. So it is lurking there in the
background.
(4) BORROW AND INFLATE AS YOU GO — WITH
INTEREST PAID TO THE FED
BY FUTURE TAXPAYERS AND INFLATION SUFFERED BY
YOU
Now we come to Number Four and this is the scheme
whereby the government sells its $100 billion of bonds and
again paying 10 percent interest to the member banks of
the Federal Reserve System, which creates $100 billion in
new demand deposits, so-called "money" created out of
nothing, because they paid for those things simply with a
checking account that they create and the government can
now spend on its programs.
Well now, how does this occur? Say the commercial banks
don't have $100 billion. This is not the case in Number
Two, where you go and borrow from people who actually
have the money. They don't have it.
The Federal Reserve goes into the marketplace and it
buys say $25 billion worth of old government bonds. Now I
am assuming that it has a reserve ratio of one to five. It
does this simply by creating $25 billion out of nothing. It
just goes and it buys $25 billion in bonds.
FRACTIONAL RESERVE BANKING MAGNIFIES FED'S
INSIDIOUS INFLUENCE
The securities dealers who sold these bonds take the $25
billion back to their banks, that is now deposited, and,
miraculously, through the system of fractional reserve
banking, lo and behold, $125 billion in new money is
generated on the basis of those notes.
And, in fact, they could do a lot more. I have a calculation
down here in the notes that shows if it were done directly
by the Federal Reserve regional banks they could
generate $500 billion from $25 billion. So, there is a lot of
leverage, as they say, in this system.
And then if the commercial banks needs Federal Reserve
notes, they go to the Federal Reserve regional banks with
these government bonds and say monetize these, give us
the notes if we need actually to pay and the Board of
Governors can do that for them.
FED BANKS ARE PAID INTEREST ON THE "MONEY"
THEY CREATE
Notice what happens here though. The government ends
up paying $110 billion. $10 billion in unnecessary interest
to whom? to the banks. Interest for what? not for having
saved any money, not for having reduced consumption as
in case Number Two, but for having exercised the privilege
of creating money which was given to the bank by the
government. They paid the banks for the exercise or the
privilege that was given to those banks by the government.
U.S. GOVERNMENT BUYS "PROTECTION" FROM THE
BANKERS —
YOU AND YOUR POSTERITY PAY THE BILL
Well, this has to be the most obviously crooked scheme of
all. And yet everyone looks at this and says, "Well now,
this is obviously also the way to go." As Don Corleone
would say, "What's in it for my family?".
Now what's the political harm of this. Well, the political
harm is that, contrary to the Alan Greenspans of this world,
there is no such thing as "politically neutral" or "politically
independent" money.
Money is a medium for storing and exchanging wealth. It is
a form of property and a means of implementing contracts
that transfer property from one party to another.
So, even if you have a free market economy with a limited
government, money has a political character, inasmuch as
the degree to which the government protects the money
system from private fraud and public looting, reflects the
degree to which the government respects and protects
private property.
AN IMMORAL MONEY SYSTEM PRODUCES POLITICAL
AND CULTURAL IMMORALITY
So if you have a free market economy you will have one
form of money. If you have a mixed or fascist economy,
which is what we have, you have another form of money. If
you have a socialist economy, you have a third form of
money. But the money is really reflective, in the way
suggested a moment before, as is the legal system and
the moral system, of the underlying type of government
that you are going to have.
WHEN THE FED TALKS "INDEPENDENCE" — THEY MEAN
THEY WILL BE INDEPENDENT OF ACCOUNTABILITY TO
CONGRESS AND TO YOU
So, if you look at the debate that sometimes you hear
about the degree to which the Federal Reserve System
must be politically independent, that is really a misdirected
debate.
IT'S THE MONEY THAT SHOULD BE INDEPENDENT OF
POLITICAL CONTROL AND MANIPULATION
The Constitution made money independent of electoral
politics by fixing gold and silver as the basis of the system.
And, of course, the Constitution is a political document. So
rather than making money politically independent or
politically neutral, the Constitution settled on one very
specific political formula for money.
Creating the Federal Reserve in 1913 did not change that
concept. It did not make money politically independent or
politically neutral. It changed the political character of the
money system.
IF THE "MONEY" IS CONTROLLED, THE MARKETS ARE
NOT FREE
Now a small unelected group of experts, the board of
governors, and the people that meet with them, the
Federal Open Market Committee and the Federal Advisory
Committee, and the Secretary of Treasury's agents and so
forth, are able to control the supply of money, interest
rates, all the other monetary and banking phenomenon.
HOW CAN MONEY BE A "STORE OF VALUE" IF IT'S
VALUE IS SUBJECT TO MANIPULATION?
So, as contrasted with the Constitutional system, the
Federal Reserve System actually politicized money,
because now the politicians, administrators, and bankers
have a much greater degree of influence — some people
would even say control — over the entire direction of the
monetary system, and, therefore, the direction of the
economy as a whole.
What is interesting today is that, although what I have said
I should hope would be rather obvious, politically speaking
nobody talks about the Federal Reserve System. There is
no major political movement that is advocating
disestablishment of the Federal Reserve, or reinstitution of
Constitutional money.
Nobody attacks fractional reserve banking and all the
economic problems it has. Nobody denounces the
relationship between the banking system and the
government. Nobody looks at the power of private parties
here to regulate the economy and impose — really one
aspect of this whole police state that is being set up — the
banking surveillance of everyone that goes on — talk
about medical records. Think about what they do with
banking records. Read the Bank Privacy Act of 1980 (or
whenever) — a good example of precisely how that moves
forward.
HOW HAS DEBATE OVER THE SUBSTANTIVE BEEN
SUPPLANTED
WITH FOCUS ON THE TRIVIAL?
What that tends to tell me is that the people behind this
system must be one of the most politically powerful, if not
the most politically powerful group in the entire country,
because they have been able to suppress discussion of an
issue that was of great political significance just at the turn
of the century.
Let's leave aside Jefferson. Let's leave aside Jackson.
Let's leave aside the greenback debate. Let's leave aside
the question in the 1870s about return to specie
payments. You just look at what happened at the turn of
the century in this country.
William Jennings Bryan, everyone in this room remembers,
if not the "Cross of Gold" speech, at least that there was
such a speech, and he gave it and it had something to do
with money. That was a major plank in a major political
platform.
And then, of course, even before the Federal Reserve
came in there was a major debate in the Wilson-Roosevelt-
Taft election over the direction the country would or would
not go in terms of central banking. So, as late as 1916, this
country was seriously debating matters of banking and
money.
WHAT IS TO BE DONE?
This brings you now in a sense to Lenin's question, or it
brings me in a sense to Lenin's question, "What is to be
done?".
Well, we first have to realize what we have. We have
essentially a fascistic banking cartel running this country.
This is really nothing different from what Mussolini would
have set up, except maybe the uniforms are not as nice
and the parades are not as big, because they want to
keep the level of public understanding down. But
fundamentally this is the fascist system, and I use that
word in the technical economic sense, without any
pejoratives at all.
A SYSTEM OUT OF CONTROL
Now, it also is not simply a monetary control mechanism. It
is one of the two most important mechanisms, (the other
being, I think, the tax system and the graduated income
tax) for economic regulation that has been set up in this
country since the turn of the century. And that really
explains why it demands political independence, because,
if you do not have political independence, you are not in a
position to regulate a free market system as well as you
would if you were subject to electoral supervision by the
people.
And that extreme political independence that they demand,
and the fact that they have, tends to show precisely how
far away they have gotten from any kind of control by the
American people.
TYRANNY IMPOSES A HIGH COST ON ITS VICTORY
So, where are we? We have seven major consequences
that I like to point to with the Federal Reserve System.
1. Our money lacks any intrinsic value, and, by intrinsic
value, I mean it is not tied back into the commodity system
or the market, so there is no rationality to it in an economic
sense.
2. Because it has no intrinsic value, because it does not
have an economic connection, the purchasing power is
subject to political manipulation. It could go up, but
politically speaking, you know it is always going to go down.
THE FED IMPOSES HIDDEN "TAXATION WITHOUT
REPRESENTATION"
3. So that allows the system to be used as a mechanism of
hidden taxation, taxation without representation. It's worse
than taxation without representation. I mean most people
don't even know about this. Not a question of they don't
get a vote in it — they know, but they don't vote. They
don't even know about it. It is completely hidden from them.
FRACTIONAL RESERVE SYSTEM LETS BANKERS
BESTOW
MONETARY FAVORS ON THEIR POLITICAL ALLIES
4. The effect of that is redistribution of the nation's wealth,
not simply at the political level, by hidden taxation in the
sense of governmental use, governmental monetization,
but a lot of monetization is going on in the private sector as
well with those groups that are particularly favored by the
banks, using the method of fractional reserve banking to
redistribute wealth to themselves from other segments of
the society.
POLITICIANS WITH BANKER FRIENDS CAN GET THE
MONEY THEY NEED
5. Well, what does this effectively do politically? It
systematically corrupts the electoral process. The electoral
process is now entirely dependent on these banks. You
cannot find anyone who will question these banks because
they know perfectly well that the whole superstructure of
entitlements depends upon the ability of that banking
system to bail them out, or to bail out Mexico, or to bail out
whomever it is...
HOWARD PHILLIPS: Or, in the case of Bill Clinton's
election, for the Worthen Bank to give him a timely $2 or
$3 million loan so that he could win in 1992.
DR. EDWIN VIEIRA: That's right. At whatever level of
corruption, from the lowest to the highest.
CONTROL OVER THE MONEY SUPPLY IS ARBITRARY
6. Well, that enables them ultimately to loot the public
treasury. That's why I was so insistent upon pointing out
that there has never been a statute indicating how much
the board of governors should or should not generate in
Federal Reserve Notes. These people have complete
discretion to generate as much paper money as they want,
or as they dare, I should say.
CENTRAL ECONOMIC PLANNING IS ANTI-FREE MARKET
7. And then the seventh point is, of course, the Federal
Reserve System is functionally a key element in a
mechanism of central economic planning. That's really
what fascism is — the kind of central economic planning
where the businessmen do the planning, as opposed to
socialism and communism where the petit intelligentsia
does the planning. Right.
So fascism at least works for a longer period of time than
socialism does, but that's what this thing is there to do.
FED FACILITATES REDISTRIBUTION OF WEALTH FROM
THE PEOPLE
TO THE FAVORED ELITES
Fundamentally, it is there to redistribute wealth so that the
big business segment of society will be able to find capital
when it needs and wants capital, and the payoff to the
politicians is to say we will do the same for you. We will
provide a mechanism of looting that will pay off your polit-
ical constituents as long as you let us use this mechanism
of looting to maintain capital flows to us.
Really very simple: What's in it for my family? What's in it
for your family? Okay. Those are the seven points.
Well what we have to understand is that this is not a
permanently viable policy. It may have a longer life than
socialism and Communism, and, remember, they lasted 70
years.
Socialism is incapable of economic calculation. This
system is capable to a certain degree of economic
calculation. It just has a tremendous level of irrationality
built into it. But it is not permanently viable.
HOW LONG WILL OTHER NATIONS AGREE TO SUSTAIN
OUR DEBT?
It is not permanently viable domestically, and it's certainly
not permanently viable internationally because you have a
system of international competition among currencies.
And it is not necessarily true that the Germans and the
Japanese, and maybe even the Chinese or the
Indonesians, will continue to support the level of debt that
this country is willing to assert or assess upon itself in
order to maintain the fiction that we are richer than we
probably are.
IS HYPERINFLATION IN THE OFFING?
Eventually, the chickens are going to come home to roost.
My own guess in this is, they are going to come home to
roost through a massive inflation, because politicians
understand that a depression is the most politically
destabilizing of all events, and so they will try to keep that
off as long as possible and the only way to do that is to
keep pumping in money and credit, and you cannot keep
the lid on prices indefinitely, so you are probably going to
see a very, very large inflation over the years.
Very, very large — I am not talking big numbers. I am not
talking 1,000 percent. I am not talking 1923. I am talking 20
percent, 30 percent, 40 percent inflation, and then there
will be reaction, and then another one, and reaction, swing
back and forth and up and down.
WILL FEDERAL RESERVE NOTES LOSE THEIR
LEGITIMACY?
The interesting thing about this is, as the purchasing
power of the currency falls, the social demand for the
currency will fall, prices will start to rise faster than the rise
of the supply of money and credit, and the thing begins to
get a life of its own.
And this is what eventually happened in such countries as
Germany in 1923. They could not print the money fast
enough for the price rises. Prices were not rising because
money was being printed. Money was being printed
because prices were rising. People just simply started
walking away from the currency into something else,
anything else, and the system broke down.
So it gets out of control. And this system will get out of
control with Alan Greenspan or whoever is in there. It will,
at a certain stage, get out of control. And, in a sense,
maybe that's the solution. You let nature take its course.
If the politicians, the bankers, and those who fatten off this
system refuse to respond to the problems, refuse to return
to some level of rationality and Constitutionality in this
system, then let the system implode. Let the people walk
away from the system, because they will.
Everywhere in world history a system of this kind has been
set up, it has either destroyed the country in the course of
a war, I mean it breaks down, or, if the system has lasted
long enough, people have walked away from it,
economically speaking, and the system has imploded.
Hyperinflation: the end of, as Jackson said, the
Establishment's rag money.
CONSTITUTIONAL RESTORATION IS THE ONLY WAY TO
FORESTALL CERTAIN CHAOS
That may be the only real solution. I don't think it is the
preferable solution because I think we understand what
would happen politically if that were to occur. The
demands would immediately be for even stricter and
stricter governmental control over the system.
UNFAMILIARITY WITH COMMODITY MONEY MAKES
CRISIS MORE LIKELY
So that leaves me with the question at our level of what is
to be done. The real problem here is that we do not have
an alternative that is, at the present time, functioning.
If you look at the Jacksonian period when they walked
away from the Second Bank of the United States, if you
look even at the period from the Civil War to the
resumption of specie payments in 1879, people were, in
fact, using gold and silver as currency.
During the period of the irredeemable greenbacks, they
were not paying it out unless they had gold clause
contracts, but there was a gold and silver price structure.
In fact, there were parallel price structures at that time
between the paper price and the gold and silver price. So
people understood the use of gold and silver as an
alternative currency. That does not exist today.
TO AVOID CHAOS, PARALLEL PRICE STRUCTURE
NEEDED
So your first step in this process, which economically is to
have essentially a parallel price structure, is not there.
Now that leaves me to conclude that maybe the only
solution, if we had control of the government, would be for
the government, slowly but surely to begin a phase over. I
am talking about the necessity of developing these
economic institutions, where you begin to demand
payment or to give people the option of making payment in
silver and gold, make gold and silver legal tender for public
transactions, monetize foreign silver and gold coins as it
did at the turn of the 19th century, so that this price
structure would begin to develop, and that a competition
would occur in the marketplace between the Federal
Reserve System (which at that point would be
disestablished, in the sense that the Federal Reserve
System would be given no privileged position), and the
gold and silver price structure.
GOOD MONEY WILL DRIVE OUT BAD
And I am convinced that, if that were to occur, the banks
would be driven very, very quickly into moving towards a
redeemable currency, or at least they would have to offer
a redeemable currency as one of the options, and the
banking system would have to clean up its own mess.
THE REAL COST OF THE UNCONSTITUTIONAL
WELFARE STATE WILL BECOME EVIDENT
The grave difficulty is that, as soon as you begin to make a
step in that direction, all the special interests come out of
the woodwork, and begin to say, "Well, wait a minute, you
are not only not going to be able to finance the expansion
of our programs, but the continuation of our programs,
because the taxpayer at that point will not accept paying
taxes in gold and silver for these programs. I mean the real
cost of the thing is going to be laid on the table.
And, at that stage, they say, and I have heard this over
and over again from so-called free market economists,
until you get the fiscal situation under control, you can
never get the monetary situation under control, because
they will always pervert the monetary situation to provide
them with the resources to keep the fiscal situation above
water.
I look at it the other way around. Until you get the monetary
situation under control, you are always giving them the
lever or the spigot or whatever it is to continue to fund,
and, therefore, not to have to face the tax problem with
respect to the entitlement programs.
INCREMENTALISM WAS REJECTED BY AMERICA'S
FOUNDERS
And the interesting thing about the founding fathers of this
country, they did not sit back and say, "Well, wait a minute,
we have a tremendous inflation and a recession,
depression, and all these other things. First, we have to
get our fiscal house in order before we do any of these
other things." They did not say that. They enacted the
Constitution so we can do it all at once. Here it is. Here is
the Constitutional monetary system. Live with it for the
government. One always has to remember that. The
Constitutional monetary system only controls the
government's use of money.
GOLD AND SILVER WOULD FLOW INTO AMERICA
And I think if you had a President who was willing to
execute the laws, if you had a Congress that would not
impeach him for doing that...and you simply came up with a
reform package that put the government back on the gold
and silver system, with just a little bit of time, as they say in
Russia (was it "perediska", a breathing space?), if we just
have a little breathing space to maneuver in, you would
have the biggest influx of capital into this country the world
has ever seen because all the gold and silver of the world
that is now sitting idle in hoards because it cannot earn
interest, would suddenly find a marketplace, which would
be the United States, because, at a minimum, that gold
and silver could be used to pay taxes into this system.
And, as soon as that happened, and that real capital
appeared, jobs, productivity, investment, everybody would
be better off at that point. Then you could turn around and
say, "Well, you see what we did?" This is step Number
One. You did not believe it, but here is step Number One.
RIDICULE YIELDS SILENCE
The difficulty I think is the psychology. People today, when
you talk about gold and silver, they look at you as if, not as
if you were someone from the 19th century. "This is
extremism". If you question the Federal Reserve System
and central banking, they start asking whether you are
questioning the influence of the Rothschilds — that's the
next thing you hear out of them.
They have generated in this country, on the one hand, a
conspiracy of silence, and, on the other hand, they have
generated a kind of conspiracy of ridicule that makes it
extraordinarily difficult for anyone to put these kinds of
ideas on the table without being laughed away or attacked
by the ADL, if you know what I mean.
Anything else can be put on the table no matter how
ridiculous, but talk about reforming the monetary system,
use that dirty four letter word "gold", imagine using "silver",
it is even worse, then you become a "bimetalist", you
become an "inflationist", you become William Jennings
Bryan, people think of "Inherit the Wind". It is unbelievable
what you see when this stuff comes out.
RE-EDUCATION OF THE ECONOMIC POPULARIZERS IS
NEEDED
And there is our big problem. And I think that is not a
problem that can be solved by going to people at the
lowest level initially because nobody understands this.
Absolutely nobody understands this.
SOUND MONEY IS GOOD FOR WORKERS
I think what has to be done is some middle-level in the
intelligentsia has to be re-educated, and then has to pass
this on to those institutions that will find out that it is in their
interest (what's in it for my family?). I mean look at the
unions. The unions are the classic example in my mind of
an institution that ought to be screaming for monetary
reform — screaming for monetary reform — not simply
because economically it is to their advantage, but also
because politically it is to their advantage. They are going
downhill. They are being extinguished.
And that would be a way to revitalize that movement
politically. And, historically, they can look back at years,
and years, and years of the greatest leaders, if you will, of
the labor movement being solidly behind sound money.
SOUND MONEY IS GOOD FOR THE ELDERLY
If a group of intellectuals could reach the retired people in
this country who are being looted by this system, if a group
of intellectuals could reach the blacks in this country who
cannot get jobs because meaningful investment is all going
to the Chinese, and God knows where else, if a group of
intellectuals could reach young people who could
understand that after 40 or 50 years of work they are
going to end up with nothing, because this system is
designed systematically to loot them, what percentage of
the voters would you have in this country? Sixty percent?
"CONSERVATIVE" THINK TANKS HAVE DUCKED THE
ISSUES
But that middle-level intelligentsia, as far as I can tell, is not
there. Now I am not going to name names of think tanks
here in Washington that we all know that are right-wing or
conservative or whatever.
I'll give you a Krugerrand — but let me be patriotic — I'll
give you an American Eagle gold coin — for each
symposium or meeting of those groups that you can bring
me in the last ten years that dealt with money. And you
can't include the one I had at the Heritage Foundation
through the Mises Institute because I did give a talk many
years ago, and I was never invited to speak there again.
So I consider that to be a negative one. I'm not paying for
that one.
Any other — they don't do it. Cato Institute is the only one
that holds, as far as I know, a yearly monetary conference
and they all sit around talking up the benefits of the
Federal Reserve and monetary this and monetary that.
This kind of stuff never gets in front of them.
So I think that is our major problem — is somehow
translating this material or putting this material in a form
that a middle-level intellectual group, the scribblers — what
was Hayek's phrase for them? — "the second-hand
dealers in ideas". The second-hand dealers in ideas can
begin to market to those institutions that have an economic
stake in this matter.
HOWARD PHILLIPS: History is the history of elites, and we
now have a corrupt, ignorant elite. We have to build a new
elite to replace it.
DR. EDWIN VIEIRA: [President Andrew] Jackson could give
his campaign at the lowest level because people — if you
read the newspapers from that period, it is incredible what
the average person would read in them. It is incredible
what they were talking about. They understood fractional
reserve banks and they understood the difference
between commodity money and paper money. It is
absolutely incredible. Today, zero. Zilch.
BALANCED BUDGET AMENDMENT IS A THREAT TO
CONSTITUTIONAL RESTORATION
HOWARD PHILLIPS: What are the implications for our long-
range success if the Balanced Budget Amendment (BBA),
in a form similar to that in which it was proposed last time,
were to be added to the Constitution?
Let me say my concern is that it might limit our ability to
rely on the plain text of the 1787 Constitution as presently
amended, and that the Balanced Budget Amendment
might implicitly provide a rationale, not simply for a
Presidential role in the legislative process, but for the
legitimatization of our present financial arrangements —
everything from OMB to the Fed. What do you think?
DR. EDWIN VIEIRA: I agree with that. I am totally against
the Balanced Budget Amendment.
EVOLUTION OF EURO COULD MAKE FRNs EXTINCT
HOWARD PHILLIPS: What implications do you believe
there will be for our economy and for the dollar if, and
when, the Euro comes on line as the common currency of
the European Union?
DR. EDWIN VIEIRA: Well, the Federal Reserve Note, not
the dollar, is now the premier world reserve currency as a
result of the hangover from the Bretton Wood's
agreement. But, to a great extent, it is supported in its
value by the Germans and the Japanese buying United
States bonds. We are holding them hostage in a sense.
What happens when another currency that is superior to
the Federal Reserve Note appears and can now be
substituted as a reserve?
Well, the value of the Federal Reserve Note, its
purchasing power, depends upon its uses. If one of its
major uses is eliminated or seriously curtailed, its
purchasing power will go down. To the extent that it stops
being, or is less of, a world reserve currency, its
purchasing power will go down. Those Federal Reserve
Notes then will not be used overseas. They won't be held
overseas. They will come back here, and there will be a
terrific price increase.
We export inflation. We don't see the inflation here
because the purchasing power and Federal Reserve Note-
denominated debt is overseas and that is circulating
around overseas. It is circulating around overseas
because it is useful. So we can expect that to happen, and
that "exported inflation" will now become "imported
inflation".
HOWARD PHILLIPS: So in other words, we have been
insulated from our own profligacy by the status of the
dollar, or the Federal Reserve Note, as the reserve
currency of the world.
DR. EDWIN VIEIRA: That's right.
HOWARD PHILLIPS: Foolishly, our government has been
pushing the European nations to adopt a common
currency — which is going to have the effect of leveling the
U.S. economy. It is going to increase price inflation in the
United States. It is going to cost us jobs. It is going to
hasten the day of reckoning. Maybe that's good, but a lot
of people are going to suffer as this artificially high dollar
sinks, and that is going to happen in the next several
years. It could have a profound effect on the election of
the year 2000. It could be the predicate for a hyper-
inflationary depression. All kinds of things could happen.
DR. EDWIN VIEIRA: The great difficulty is all economic
analysis is based upon the principle, all other things being
equal. If you do A, all other things being equal, B will follow.
Unfortunately, in the real world all of the things are not
equal. It is impossible to analyze at the present time. All
you can look at is the rate of increase of the money supply
— the M1s, the M2s, the M3s, and then you ask yourself,
well why is it that you only have 4 percent price increases.
Well, is that because actually the economy is expanding in
production?
If the economy is becoming more efficient, prices should
go down. If that's happening at the same time that the
banks are expanding the money supply, prices will not go
up as fast as they otherwise would.
Now that's all well and good except prices should, in fact,
be going down. The redistribution of wealth is still
occurring, but you have to do the arithmetic a slightly
different way.
In terms of these being the highest interest rates in history,
well, no, I imagine we must have had much higher interest
rates — real interest rates — around the Civil War period.
They were asking 20 percent.
DR. JANE ORIENT: I have heard the argument that actually
prices should be going down rather dramatically because
of improvements in technology and that that has been
shielding us from seeing the effect of inflation.
DR. EDWIN VIEIRA: Well, you see that in electronics. They
have gone down terrifically, but they should have gone
down much more.
If you look at the non-constitutional gold standard that they
had at the turn of the century, from 1879 to 1907, what
happened with prices then, there was a gradual lowering of
prices. At the same time, there was a tremendous
economic boom, huge influx of immigrants, and so forth,
and so on.
And that was because productivity was increasing,
efficiency was increasing, jobs were going up, and you had
no real equivalent increase in the money supply. So the
purchasing power of money kept increasing, prices kept
going down, and that's what you would expect in a free
market economy — purchasing power of the money would
go up, prices of goods and services would go down, the
lower level of society would become increasingly wealthy.
In a sense, it would be a slow transfer of wealth from the
top to the bottom, but, of course, the top would be making
it up through entrepreneurial profits so we are not talking
about redistribution in that sense. And that is why I have
not been able to understand why since World War II all the
unions have been so quiet about this. It is something that
is just so simple, and yet there they are, saying nothing
about it.
MAN FROM AUDIENCE: What is going to be the effect
when the ECU comes into effect, how do you see that
affecting the trade balance and the exchange rates if they
have the European currency come into effect, and
suppose there is a, perhaps, better value as far as the oil
nations are concerned as far as using ECU, or possibly
even the Yen, instead of the dollar?
DR. EDWIN VIEIRA: Well, to the extent that they move their
reserves from one to the other, the purchasing power of
the Federal Reserve Note has to go down.
MAN FROM AUDIENCE: Do you see that as a possibility?
HOWARD PHILLIPS: Sure, all of these things go together.
One of the reasons the dollar is the reserve currency is
because America is the military leader of the world. But, as
we emasculate our military, as we turn over more power to
the United Nations, expand the U.N. police forces, as our
own economy declines relative to other economies, there
is less incentive for other countries to look to the United
States for their reserve currency. And, if they can get a
better deal in Deutschmarks, or Yen, or in the Euro, they
will go to that.
History is full of examples of nations losing power and their
currency ceasing to be the reserve, whether it was the
Spanish currency, the French currency, or the British
pound sterling.
The dollar has reigned, but, as God punishes us for our
sins, and as we commit economic suicide, the dollar will
pass, unless we turn around, and if the dollar sinks, our
economic standard of living is going to go into the tank.
About Dr. Edwin Vieira, Jr.
Dr. Edwin Vieira, President of the National Alliance for
Constitutional Money, is a 1964 graduate of Harvard
College who received an M.A. degree in 1966 from
Harvard's Graduate School of Arts and Sciences, and a
PhD in 1969 from the same institution. In 1973, he was
awarded a degree by the Harvard Law School, from which
he graduated cum laude.
A member of the bars of Maryland, D.C., Virginia, the U.S.
Supreme Court, and the U.S. Courts of Appeals for the
Third, Fourth, Sixth, Seventh, Eighth, and Eleventh
Circuits. Dr. Vieira is an attorney in private practice
specializing in constitutional and labor law, and legal
economic analysis.
He has served as a member of the Board of Fellows of the
Public Service Research Council, a consultant to the U.S.
Department of Labor, and a research staff member and
speech writer in the 1972 U.S. Senate campaign of John
Chafee (R-R.I.).
Dr. Vieira has also been an assistant professor of law at
Wake Forest University School of Law, and Research
Director of Wake Forest's Institute for Labor Policy
Analysis. He is a member of the Advisory Board of the
Citizens for a Sound Economy, and has been a consultant
to the National Right to Work Committee and the National
Right to Work Legal Defense Foundation.
His published works include Pieces of Eight: The Monetary
Powers and Disabilities of the United States Constitution: a
Study in Constitutional Law, Old Greenwich, Connecticut:
Devin-Adair Publishing Company, 1983.
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