Saturday, February 18, 2006

1913: a year that will live in infamy (part 2)

Don't get me wrong, taxing our incomes is bad, there is no mistake about that. Taxation is legalized theft. It destroys the gift that God endowed to us (free will). It violates the Eighth and Tenth Commandments (thou shalt not steal and thou shalt not covet). It is the 2nd Plank of the Communist Manifesto. It destroys what Americans created. It perverts the way we view our government, and the way our government views the people. It took our once nation of free men and women, and turn it into a nation of slaves. And, the most sinister concept of all, nowhere in the law that it requires the vast majority of Americans to pay. Nowhere. But, that was not the worse thing that could happened. That was not the worse thing that could happened in the same year. The most treacherous act by our government in 1913; the most treacherous thing in the history of America, is when Woodrow Wilson passed the Federal Reserve Act and confiscated our money.

When then American General George Washington defeated British Major General Charles Cornwallis at the Battle of Yorktown, virtually ending the American Revolutionary War, the States were at last free and independent. They had a government called The Articles of Confederation, a loose form of government with 13 independent members. This government made the states virtually sovereign nations, independent from each other, including making each its own money. The government didn't offer a solution on how to form their money, so most of them made money out of paper. But, Spanish and French troops wanted the new country to reimburse them for the cost of defending it, so they billed the government for their expenses. But, the Articles of Confederation could not raise money from the states by collecting taxes; it had no control over foreign commerce; it could pass laws but could not force states to comply with them, so the government was dependent on the willingness of the states to carry out its measures. The states, in order to make good with their foreign allies, printed the paper to cover the cost. But, since there was more money per capita than before, the money inflated, and thus, it was worth less. Some states printed money ad infinitum, and thus, their money was worthless. The Founders realized they made a mistake. Leaders gathered around at the Federal Constitutional Convention, and the Constitution was born. The Constitution replaces the Articles of Confederation in 1789.

Knowing what they know by the mistakes occurring from the Articles of Confederation, the Framers were well aware of the evils of fiat paper money. Alexander Hamilton still believe in a central bank. But Thomas Jefferson was wise. He won't let the relying on fiat money to destroy his country again. Jefferson once said, "The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences, and silence by their authority the interested clamors and sophistry of speculating, shaving, and banking institutions. Till then...[it will] deliver up our citizens, their property, and their labor, passive victims to the swindling tricks of bankers" or "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property, until their children will wake up homeless on the continent their fathers conquered. The issuing power of money should be taken from the banks and restored to Congress and the people, to whom it properly belongs. I sincerely believe the banking institutions having the issuing power of money, are more dangerous to liberty than standing armies."

But, the most anti-central bank advocate was Andrew Jackson. As a former major general in the War of 1812, he had a fiery temper, especially against bankers. He said, "The bank is trying to kill me, but I will kill it!" or "You are a den of vipers and thieves. I intend to rout you out, and by the Eternal God, I will rout you out!" The first central bank was named the First Bank of the United States. When the contract was up, they created the second central bank, also named the First Bank of the United States. When that contract expired, they created the third central bank, named the Second Bank of the United States. When Jackson appeared hostile toward it, the bank threw its power against him. But, Jackson triumphed. When Jackson vetoed the bank's recharter bill, Congress sided with Jackson. He threw out the bankers for 75 years...until 1913.

The Constitution gave birth to our national government. Article I, Section 8, Clause 5 gave Congress the power "to coin Money", but Article I, Section 10, Clause 1 says, "No state shall...make any Thing but gold and silver Coin a Tender in Payment of Debts". Also, in the same clause, it fobids the states to "emit Bills of Credit". In other words, the only things that will be considered legal tender is gold and silver coins. I see it in a slightly different way. I believe we should abolish "legal tender" laws altogether, and let the market determine what currency the people should take, but the Constitution's way makes an "A". They knew the perils of paper money from the time of the Articles of Confederation.

But, there is one problem with physical gold and silver coins; coins are loud and heavy. Paper is much quieter and lighter. In other words, paper is much better to carry than actual coins. So the government issued promissory notes. Promissory notes was not money, but it promised to pay the bearer of the note on demand a certain amount of gold or silver. While the notes themselves would often be negotiated, they did not trade like money. Gold or silver itself was the money.

The result was the soundest and prosperous economy in the history of mankind. Real wages doubled between 1800 and 1850, and doubled again between 1850 and 1900, while the value of the dollar remained the same (well, duh; the money was backed by gold and silver; you can't print gold and silver!). There was abundance everywhere, and our government was small and fully constitutional.

All of that changed in 1913. In December 23 of that year, the Federal Reserve was born. Government officials promised the American people that the central bank was the answer to our financial problems. But, of course, the opposite happened. The Federal Reserve is unconstitutional, it don't matter what the definition of "is" is. Look at the chart. The left side (white) was before the Federal Reserve. There are peaks and valleys (most notability is the valley from Abraham Lincoln printing fiat currency, and passed "legal tender" for it). The right side (picture) was after the Federal Reserve. First, there was World War I, and the money vastly inflated, and, thus, the value dropped. Next, the "Roaring 20s" came, when the Fed inflated the paper supply. Then, the Fed overtightening the money supply in 1929, giving America the stock-market crash and the Great Depression. Next, Franklin D. Roosevelt made it illegal to own gold, and nullified all gold clauses. The dollar dropped because of this.

There is one bright spot; John F. Kennedy planned to put an end to the Federal Reserve's control of our money (Executive Order 11110), but he was assassinated four months later (coincidence?), and Lyndon B. Johnson ignored the order. Finally, Richard Nixon closed the gold window, separating gold from the dollar completely. What America has today is a truly fiat paper dollar, backed up by nothing but a printing press. Today, the dollar is worth two cents as compared to a dollar in 1913.

I predict that the fall of our country (and I believe the fall is coming in my lifetime, especially when the people find out the truth and stop paying taxes, and the Federal Reserve's printers have to keep printing even more money to cover the cost) is when America spends itself into bankruptcy, if we don't change course dramatically. That is exactly what happened to the USSR in the late 80s/early 90s. I know, the USSR is a communist country, but America also has all ten planks of the Communist Manifesto (a central bank is no. 5). Who thinks like me is Rep. Ron Paul (District 14 from Texas). Paul is on the Financial Services Committee, and is known as an expert on the gold standard versus fiat money. With a massive debt, run-away spending, #1 prisoners per capita (mainly for drug possession), spiraling decline of the dollar, rising cost of regulating/socializing the healthcare system (wait until it's free!), and the never-ending war, I am confident the fall will be soon.

But, you can save yourself by trading your Federal Reserve Notes for Liberty Dollars (see currency display) Liberty Dollars (LD) are the second largest currency in the United States. LD are private currency 100% backed up by gold and silver. LD is not "legal tender", but it is lawful money; i.e., it is perfectly legal to spend it, like FRN. "Legal tender" is a legal term and it simply means creditors cannot refuse a payment from their debtors using the forementioned money. If we abolish legal tender laws altogether like I want, creditors can refuse or take any money they want. What money do you want to take? Money backed up by gold and silver, or money backed up by nothing (just a printing press, that runs ad infinitum). You be the judge.

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