Federal Reserve Fraud
The purpose of this application report is to describe the problems with The Federal Reserve and the money system and explain why I think these are problems today. I think this is important because it has to do with everyone in the United States. I will examine the perspectives of three economists, and analyze my findings. In this report I hope to accomplish proving how the American public was lied to and robbed of their gold and silver supply.My first economist is Tom Rose, an ex-religious agnostic who later became a Christian after studying the Bible. He is a retired professor of economics from Grove City College, Pennsylvania. He is author of seven books and hundreds of articles dealing with economic and political issues.
My second economist is Steven Jacobson, author of the audiotape series Mind Wars.
My third economist is Alan Greenspan, Chairman of the Board of Governors of the Federal Reserve System and Chairman of the Federal Open Market Committee.
Alan Greenspan, at the annual Dinner and Francis Boyer Lecture of The American Enterprise Institute for Public Policy Research on December 5, 1996 stated, “Augmenting concerns about the Federal Reserve is the perception that we are a secretive organization, operating behind closed doors, not always in the interests of the nation as a whole. This is regrettable, and we continuously strive to alter this misperception.”
My research and findings will show otherwise. I will show how the Federal Reserve has confused the public, lied to them and stole their gold and silver.
In a letter to Thomas Jefferson in 1787, John Adams wrote: “All the perplexities, confusion, and distress in America arise, not from defects of the Constitution, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation.”
It was Daniel Webster who said; “Of all the contrivances devised for cheating the laboring classes of mankind, none has been more effective than that which deludes him with paper money.”
Garet Garrett, in writing about the Federal Reserve System and World War I, said:
…after many years of blundering toward it, and only a few months before the beginning of the war in Europe (WWI), we had found the formula for the most efficient credit machine that was ever invented. This was the Federal Reserve System. Most people are unsure of the meanings of words such as money, dollar, wealth, inflation and credit. The average person would be very surprised if they knew how the money system used to work compared to how it operates now.
According to Jacobson, The essence of psychological warfare is to confuse the meaning of words, and infiltrate the mind with conflicting concepts. Jacobson goes on to say that the use of the word Federal in the name federal Reserve leads the public to believe that the Federal Reserve is a government institution, when it is really a private corporation owned by foreign and domestic banks and operated for profit. The FED controls nation’s money supply and interest rates, and there by manipulates the entire economy, in violation of Article 1, Section 8 of the United States Constitution that expressly charges Congress with power to coin money and regulate the value thereof. Article 1, Section 10 of the constitution says: No State shall make any thing but gold and silver Coin a Tender in payment of Debts.
Federal Express and Federal Ammunition Company both have the word federal in them but the public knows about them, they know they are not government agencies because they are not misled about the companies.
Over time, gold and silver coins were removed from our money supply and removed as backing for our paper currency and replaced with debt (or credit). Credit is only in our minds. It is an idea, not a thing. It is expressed by bookkeeping entries and computer symbols.
According to Jacobson, “The manipulation of words and their meaning is the key to controlling what people think. Traditional definitions are eliminated while new meanings are repeated over and over again until accepted.”
The definition of dollar has changed to hide the fact that a dollar is not money, but a unit of measurement for gold and silver coin. Title 12 United States Code Section 152 says: “The terms lawful money or lawful money of the United States shall be construed to mean gold or silver coin of the United Sates.” Title 31 United States Code, Section 5101 says: “The money of account of the United States shall be expressed in dollars.”
Hundreds of years ago people would pay the local goldsmith to store their gold for them in his vault. He would then give them a receipt for the amount of gold that was stored. The receipt was not money, it was a money substitute. It was later common for people to use the receipts as payment for goods and services since they could be exchanged for the gold held in the vault at any time.
The goldsmith found out that only a small amount of the gold was ever claimed since people just kept exchanging the receipts. The goldsmith started writing receipts for more gold than he had, using some of the receipts to buy things and loaning the rest at interest, while taking title to real property as collateral. The gold for these extra receipts did not exist. By adding to the amount of receipts in circulation, the goldsmith stole from the people with the real receipts and decreased the value of the real gold receipts by creating inflation. The more of something there is, the less it is worth and more it takes to trade it for something else. Paper currency is a money substitute, it is not money. It is only valid when the number of paper currency equals the amount of real money that it is a substitute for. By manipulating the number of receipts in circulation, the goldsmith stole the wealth of the town without anyone figuring it out. By lowering the number of receipts, he could make money scare, creating a depression where he could foreclose on the property and magnify his riches. He could then quicken economic activity and bring abundance by raising the number of receipts until his next rip off.
America’s economic problems started with issuing fraudulent receipts for gold that does not exist. This became standard procedure for the banking business.
The recent equivalent to the goldsmith’s receipt for gold is the Federal Reserve Note. The word “Federal” implies Federal government, but the Federal Reserve is a privately owned corporation. The word “Reserve” implies that something gives the paper receipt value, but no gold or silver backs this paper. The word “Note” implies a contract, because legally a note must state who is paying, what is being paid, to whom and when.
Most people say something like, “I have a dollar bill”. But what is a bill? A bill is a receipt of a debt owed by one person or company to another. Therefore, a “dollar bill” is a receipt (or bill) of debt of one dollar that is owed.
According to Jacobson, from 1914 to 1963, Federal Reserve Notes never claimed to be money, nor did they claim to be dollars. A note for five dollars read: “The United States of America will pay to the bearer on demand five dollars.” How can a promise to pay five dollars be five dollars? To the left of the President’s picture and above the bank seal, it said: “This note is legal tender for all debts public and private, and is redeemable in lawful money at the United States Treasury or at any Federal Reserve Bank.” In 1963 the FED began to issue its first series of notes without the promise, while taking notes with the promise out of circulation. How can paper become what it promises by removing the promise? To the left of the President’s picture and above the bank seal, it now read: “This note is legal tender for all debts public and private.” A note is an IOU, it is proof of debt. It is not possible to pay off a debt with a debt. No debt can be paid in full unless paid in gold or silver, coined and regulated in value by Congress. The name “Federal Reserve Note” is a fraudulent label since each word claims to be something that in reality it is not. By removing the promise to redeem the note in lawful money, the Federal Government in cooperation with the Federal Reserve, eliminated the monetary system of the United States as established by the Constitution and replaced it with something totally different.
If you are holding a one dollar Federal Reserve Note, the question is, what is it one dollar of? The answer is absolutely nothing. The number one measures no substance. The only thing that give paper money value is the confidence people have in it as is stated in chapter 30 of our textbook. Federal Reserve Notes are only accepted because people believe they have value. If the truth were ever found out, it would cause fininancial chaos because people would know they have no value.
There are only two economic systems. They are barter and credit. Barter is the trading of one thing of value for something else of value. A money system using gold and silver coin is a barter system. Throughout history, many different things have been used for bartering because money, in and of itself, does not exist. Something must be used as money. People have traded for goods and services using farm animals, large rocks, shells and crops.
Gold and silver have been used as money worldwide for thousands of years. All things used as money have had one thing in common, they were all tangible wealth. They were all things you could touch. They were all things you could weigh and measure. Credit, however, is intangible. You cannot touch credit. You cannot weigh and measure it because there is no substance to weigh and measure. It is all imagination.
Credit is not wealth. No work is used in the creation of credit other than a booking entry. Hundreds of years ago, when the goldsmith issued his first receipt for gold that did not exist, he created credit and inflation, because credit and inflation are the same thing. They are both receipts for capital that does not exist. They are both an imaginary unit of exchange. When half of the receipts circulating as a money substitute are redeemable in gold, the other half of the receipts are both credit and inflation. When none of the receipts are redeemable, all of it is credit and inflation. Credit is inflation, therefore, the only cure for inflation is real, honest money.
A twenty dollar gold coin is twice as large, and twice as heavy as a ten dollar gold coin. A dollar is a unit of measurement for gold and silver coin to insure uniform weight, purity, and value. A dollar unit of paper money that is not redeemable in gold or silver coin is a dollar unit of inflation, which is a dollar unit of credit, which is a dollar unit of nothing.
The purpose of paper money that is not redeemable for gold or silver coin is to get things without paying for them. Those who issue and control paper money as credit get everything for nothing. The cost to the Federal Reserve for printing a “note” is about two cents, no matter what denomination is printed on it. Paper money as credit is used to take wealth using numbers where numbers of nothing are exchanged for things of substance and value. This grand theft occurs in full view unnoticed because the public has been made an accessory to the crime by accepting pieces of paper with numbers on them in place of lawful money, not knowing the difference between worthless “notes” and lawful money.
Oliver Ellsworth, the countries third Chief Justice of the Supreme Court said of paper money: “This is a favorable moment to shut and bar the door against paper money. The mischief of the various experiments which have been made are now fresh in the public mind and have excited the disgust of the respectable parts of America.”
Roger Sherman, a delegate from Connecticut and author of the gold and silver coin provision of the constitution, wrote a condemnation of paper money entitled A caveat Against Injustice in which he said…”If what is used as as a Medium of Exchange is fluctuating in its value it is no better than unjust weights and measures, both which are condemned by the laws of God and Man, and therefore the longest and most universal Custom could never make the Use of such a Medium either lawful or reasonable.”
And so the framers of the Constitution specified a money system of gold and silver, to be coined and regulated in value by Congress and prohibited by the government from issuing paper money as stated in Article 1 sections 8 and 10 of the Constitution: “Congress shall have Power to coin money and regulate the value thereof. No State shall make any thing but gold and silver Coin a Tender in Payment of Debts.”
When Congress passed the Federal Reserve Act on December 23, 1913. Congressman Charles A. Lindbergh, Sr., father of the famous airman, told Congress after the vote, “When the President signs this act, the invisible government by the money power will be legalized.” President Woodrow Wilson signed the act into law, turning over the money system of the country to a group of private bankers and allowed them to create money by making bookkeeping entries, loan it at interest, and take title to real property as collateral. Because of this, the citizens of the United States have lost control over their money system and their government. The banking system operates the same as the goldsmith that deceitfully issued receipts for more gold than was on deposit.
According to Jacobson, Federal Reserve Notes are evidence of debt the U.S. Government owes to the owners of the Federal Reserve the payment of which is guaranteed by the collateral of all property and income of all U.S. citizens. When the U.S. Government needs to borrow money, the Treasury creates a bond, and promises to pay a specified amount of money at a specified interest on a specified date. This bond is evidence of debt just as an. I.O.U. is evidence of debt. This interest-bearing debt is the foundation for this nation’s money supply and its payment is guaranteed by the collateral of all property and income of all U.S. citizens. The Federal Reserve “buys” this debt simply by making a bookkeeping entry for the amount and writing a check against no funds, and then converts it into paper currency and checkbook money.
The U.S. Bureau of Engraving prints the paper currency in whatever denominations ordered by the Federal Reserve and charges about two cents for each note, regardless of the denominations, which the Federal Reserve “pays for” by making another bookkeeping entry and writing another bad check. In effect the Federal Reserve lends the U. S. Government its own credit, our credit, and then charges interest on it. If the public does this, it is called kiting, which according to Webster’s dictionary is defined as, “to use (a bad check) to get credit or money”.
If a citizen does this they can be jailed or fined for it.
Every dollar created by the Federal Reserve System is debt for the citizens of the United States, which the central bank collects interest on, in addition to the interest from the bond created by the Treasury that put this magic money making machine in motion. The Federal Reserve inflates the amount of the bond in order to make even more loans of imaginary dollars and collect more interest on an investment that cost nothing. Under fractional reserve banking, the amount of money a bank can create is limited by the reserve ratio or fraction it is required to maintain. For example, when the reserve ratio is ten to one, a bank can create and loan ten dollars for each dollar held in reserve and charge interest on it. While the reserves of the goldsmith were gold, the reserves of the Federal Reserve is paper, nothing more than bookkeeping entries that are a record of debt.
The absurdity of the situation is that if there were no debts, there would be no money, since every dollar of paper currency and checkbook money is loaned into circulation. And, in order to pay the interest, there has to be another loan because the banking system only creates the principal and not the interest. In fact, the interest can never be paid because it is not possible to return to the bank more dollars than were created, making it inevitable that the Federal Reserve Banking System acquire title to all wealth in the nation. This is exactly what the Framers of the Constitution intended to prevent when they specified a money system of gold and silver coin and prohibited the government from issuing paper money, because a nation that uses money based on debt can never be free of debt.
Increasing the amount of currency and checkbook money increases inflation. Creating new dollars reduces the value of all dollars, resulting in higher prices. By manipulating the quantity of created dollars, the purchasing power of every dollar is altered. Depressions are the result of private bankers reducing the money supply by tightening credit and withdrawing currency, causing a drop in prices, unemployment and foreclosure of property. This is premeditated theft.
Thomas Jefferson warned against private banks when he said: “If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporation that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”
By calling gold and silver “money”, and then calling Federal Reserve Notes “money”, the two blended together in the public’s minds so that over time the difference between them was erased from the people’s memories. A promise to pay money substituted for lawful money until the promise was removed. Exchanging paper currency is not a complete transaction until payment is made in gold or silver coin. Until then, it is both credit and debt a record of a specific amount of money to be paid or received.
Credit, a deferred payment and debt, a sum of money due, are the same thing. It is hidden by deceptive double-entry bookkeeping where a debt becomes an asset by calling it a credit. Paper money that redeems nothing only appears to have value because it can be exchanged for things of value. When a piece of paper representing debt is exchanged for wealth, someone has been robbed. Paper money transfers wealth from one person, then from another, then from another, and on and on until the last person will be stuck with it.
During the Great Depression people who had gold in the banks wanted the banks to honor their contract to redeem the paper currency for gold.. The fraudulent nature of fractional reserve banking was at risk of being exposed because there was not enough gold on deposit in the banks to redeem all Federal Reserve Notes issued promising payment in gold. That was when President Roosevelt declared a national emergency and closed the banking system for two days as recommended by the Board of Directors of the Federal Reserve Bank of New York. Congress then passed the Emergency Banking Act declaring it illegal for U.S. citizens to own gold under penalty of up to a $10,000 fine and/or up to 10 years in prison. The people exchanged their gold and gold certificates for Federal Reserve Notes of created dollars based on debt, which stated a promise of redemption in lawful money.
Gold was now removed from the system leaving silver dollars as the only lawful money available. Silver was eventually eliminated from the money system, leaving the public with a totally scam money system of irredeemable paper currency and copper-nickel clad tokens that represent a debt owed to the owners of the Federal Reserve Banking System, the payment of which is guaranteed by the collateral of all property and income of all U.S. citizens.
According to Jacobson, when banks cannot honor their contract to redeem their notes for gold or silver coins, they are bankrupt. The contract between the people and the Federal Reserve printed on each bank note promising to pay in lawful money was invalidated because the system went bankrupt and because the amended version of the “Trading with the Enemy Act of 1917” placed all U.S. citizens in the category of enemy, and no contract is considered valid between enemies. American citizens were declared to be the enemy by their own government, for indeed they would be if the people ever discovered what had happened to their money.
Being unable to trade in wealth such as gold and silver coin enslaves the people to those who create and control what is being called money. All it took to rob the public was to convince people that paper and credit are money. The Federal Government and the Federal Reserve have the power to create unlimited amounts of credit because credit does not exist. It is not a tangible substance, but an idea represented by bookkeeping entries and computer symbols.
To pay means to deliver a tangible substance as money like gold and silver coin. Where there is no substance, there is no payment. There is only pretend payment. Banks do not really lend money, they only pretend to lend money. They put no money in a borrower’s account. They only make bookkeeping entries that are reduced as the borrower writes checks against imagined deposits.
When the banks charge interest on a loan they do not make, banks impart psychological value to numbers of nothing. Charging interest sustains the illusion that banks loan something of value, when all they do is rent the appearance of money.
Three years after signing the Federal Reserve Act into law, President Woodrow Wilson made the following statement: “Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world–no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of small groups of dominant men.”
According to Jacobson, the Secretary of the Treasury is not the U.S. Secretary of the Treasury because the U.S. Treasury was bankrupted in 1933. The Secretary of the Treasury is not paid by the United States Government. The Secretary serves as U.S. Governor of the International Monetary Fund as receiver of the bankrupt United States, collecting the debt from U.S. citizens. According to Tom Rose, economics is the science of choice: the science, or study, of how man values alternative choices, and how he acts in implementing those choices in order to maximize his sense of well-being. This definition is somewhat broader than the dictionary definition of economics, that economics is “a social science concerned chiefly with description and analysis of production, distribution and consumption of goods and services.”
He defines Biblical economics as what the Bible says about man. He says that we must always remember that God is the Author and Controller of all economic law, and that man’s role is to discover and to apply God’s law in the created universe. Tom Rose says that according to Leviticus 19:35-36 monetary inflation is immoral, whether it is effected by the government treasury’s printing fiat money, or whether it is brought about by the central bank (Federal Reserve Bank) “validating” government deficits through sophisticated, hard to understand forms of credit creation. Monetary inflation, properly defined as the creation of new purchasing media (money), is immoral because it changes the measure of the monetary unit by debauching the currency that people use in their everyday transactions. Monetary inflation is what counterfeiters engage in when they create false money, and it is just as morally wrong for civil rulers to “legally” create false money as it is for counterfeiters to do it illegally. In short, it is a clear breaking of God’s admonishment to maintain a system of just weights and measures.
Tom Rose says that The Federal Reserve Bank has provided the needed sleight-of-hand credit financing to involve us in every foreign war during the twentieth century. The net result of our getting involved in one foreign war after another has been a consequent steady decline in personal freedom; the growth of a highly centralized, bureaucratic and fascistic government; a horrendous rise in taxation; the planned destruction of the gold standard, which used to give some degree of protection to American citizens against an out-of-control, profligate, high-spending government in Washington, D.C.; and decades of planned monetary inflation which has brought the 1940 purchasing value of the dollar to less than 8 cents. Yes, 92 percent of the value of the 1940 dollar has evaporated as a result of the Federal Reserve’s long-term monetary policy, which has quietly cooperated with the federal government to finance government deficits with Federal Reserve credit.
In conclusion, Alan Greenspan stated, “Augmenting concerns about the Federal Reserve is the perception that we are a secretive organization, operating behind closed doors, not always in the interests of the nation as a whole. This is regrettable, and we continuously strive to alter this misperception.”
According to Jacobson, by using misleading words the Federal Reserve has misled the public. They have over time replaced our system of real money of gold and silver coin with worthless paper, which is against the law according to The Constitution. Tom Rose says that according to Leviticus 19:35-36 monetary inflation is immoral, because it is not an honest standard as God commands in Leviticus.
I think the only solution to this problem is to do away with the Federal Reserve and go back to the way it used to be and have our money system based on gold and silver coin. As Jacobson said, the only solution to the problem is honest money. Besides the economic issues I have mentioned in this paper, there are other good reasons to have our money system based on gold and silver coin. For one thing, there would be no more counterfeiters. The only reason people do that now is because paper is pretty worthless. But they print a value on it, and all of a sudden it’s worth something. But you cannot counterfeit gold or silver. You cannot take an ounce of gold or silver and make it worth more than it is already worth. If you take an ounce of gold and stamp it into a US gold coin, it is worth no more than an ounce of gold. You can create paper money, just like The Federal Reserve does. But you cannot create gold or silver.
Another good reason for gold and silver coin is that it doesn’t wear as bad as paper money does. Paper money is frequently replaced because it wears out so quickly. I have silver dollars over 130 years old and they are still in great shape. In a way, gold and silver never wear out because at the worst they will wear down the fine edges. When this happens, they can just be recycled again into new coins.
I think in this paper I have accomplished what I have set out to do, that being to describe the problems with The Federal Reserve and the money system and explain why I think these are problems today. I have proved how the American public was lied to and robbed of their gold and silver supply.