Sovereign Currency and Sovereign Monetary SystemIt is about time that, We, as Americans start asking are we a Sovereign Nation? Are we the masters within our own borders? Or are we controlled by outside interests who do not have America's best interests at heart? There are many that are worried that there will be some unknown secretive event that will transpire and America will become part of a New World Order. This event that so many worry about and wait with great anticipation will never happen! We have been in the process of a slow and methodical conversion for many years. No one will recognize this event as happening overnight.....we will only recognize it after the sleeping American Public wake up and realize that they have been globalized. We would like to stop this process of conversion to a globalist society and so like Paul Revere we are ringing the bells and waving the lantern. America is no longer a Sovereign Nation and has not been a Sovereign since we unhinged ourselves from the gold standard. We were setup! You see many economist correctly identified the short comings of an intrinsic currency based upon a scarce commodity in a global economy where there is one way trade which is not mutually beneficial. That is a long way for describing that all of our gold was leaving the country to pay for all the foreign goods we purchase. The gold reconciled the trade imbalances we had every year and America hemorrhaged gold every year since so called free trade policies were put into place. Economist correctly predicted that in such an economy the scarcity of gold holds back the productivity of the people and keeps its people from realizing their dreams. If America went back to being a Sovereign Nation under the gold standard they would very quickly see why America is or was no longer a Sovereign Country and that we are a dependent country. If you pull a dollar bill out of your pocket....you cannot possibly surmise that that dollar bill is backed by the full faith and credit of the American Government. Our money is backed, primarily, by China, Japan, and India. Our money is as foreign to us as Chinese fried Cricket on a stick. America at one time had a great deal of the world's wealth under a Sovereign currency system. The Socialist did not like that so they became radical environmentalist and persons of Academia to teach Americans that we should not develop our own resources. When this happened America started down the road of dependency just as any drug addict does. Dependency upon other nations begets a trade deficit and since America could not develop her resources or it was to expensive to do it domestically....companies moved overseas. America had all her gold going out and none coming back in and had her companies and jobs shipped overseas. We realized under President Nixon we were losing all our gold and so we correctly unhinged ourselves from the gold standard so our economy would grow because it would have enough currency to do so. With our current foreign trade imbalance many times greater than in Nixon's day, (primarily because Nixon did go to China) if we were to own all the gold that was ever produced and returned to the gold standard, it would take less than three years to drain America of 150 million metric tons of gold and distribute it to the countries we do business with. Returning to a gold standard would be to impose the worst type of depression imaginable upon the American Public. Gold is only a good currency when it doesn't leave the country but a better Sovereign currency is a currency based upon the productivity of the American people. This type of currency cannot be manipulated as it is the people of our country who control the content, quantity, and quality of the currency through their productivity and the pursuit of American exceptionalism. We are unreservedly for sound money. As such we are for disbanding the
unconstitutional entity known as the Federal Reserve and reimpose that
duty back upon the government with rules that prevent the current and
unceasing debt and replace our problems with a sound fiscal policy. We are unalterably opposed to every measure calculated to debase our currency or impair the credit of our country. We are, therefore, opposed to any federally imposed gold standard. Gold and Silver currency should only be a secondary and an internal intrinsic currency and retainer of wealth used and encouraged for and by the States. America must free itself from the current demand side debt based currency and replace her monetary system with a Sovereign Government imposed Labor based (productivity) supply side currency.
Above
is the current form of our Government in the shape of a tetrahedron (3
sided pyramid). The Constitution resides at the pinnacle because it is
above everything. Without the Constitution we would not have our current
form of government. The Presidential, the Legislative, and the
Judiciary are all answerable to the Constitution as it lays out our
governments rules, powers, and system of law. The problem as Ben
Franklin correctly recognized was that the Constitution did not directly
or properly provide for a fourth branch of government equal in power to
the other three that regulated the amount of wealth the Federal
Government or banks could fleece from the people. The Constitution does
provide some language because the founding fathers were torn on how to
finance government and how to provide for the checks and balances as
they were indecisive in considering many different monetary systems.
With no true agreement the Founding Fathers and Benjamin Franklin
foresaw that the Constitution would someday have to be amended to
include better monetary language or include Ben’s elusive fourth branch,
because it was he, that most thoroughly understood monetary systems and
economics. This Fourth branch that Franklin conceived would have the
same interconnecting checks and balances just as the rest of the
branches do.
Time
has proven Benjamin Franklin correct as all his concerns have been
validated and historic discoveries about ancient economies as well as
studying contemporary economies prove Benjamin Franklin was well ahead
of his time in his solution for a prosperous monetary system for the
United States. Monetary Bill of Rights
How the Fourth Branch Works
The advantages of a supply side debt free currency and a Monetary
Branch of Government are numerous and not all facets can be listed here.
The Monetary Branch’s board of directors would be made up of 8 current or former State Governors that would be appointed by the President. They would serve lifetime terms but must undergo an annual national popular vote of confidence by the people. If at anytime any board member would lose the confidence of the people they will be removed from the board and the President must appoint another person in their place. The US Congress will vote to determine which members will be officers. There are three sources of income from where the Monetary Branch Derives it’s funds.
It is because of fund articulation that would be mandated by the Monetary branch that each part of our economy must be self sufficient and it ingeniously eliminates Socialism once and for all. There is no way to take from one to give to another in this system. The mandatory corporate tithing is placed upon a corporations that have no conscience and the tithing is a way that we impose a conscience upon an emotionless entity. The bulk of the individual responsibility of charity will be returned to the conscience of the American people. What about Social Security and Medicare and Medicaid and these other paid for mandatory services? All the services imposed by Congress will have to become optional and so they will have to compete with the private sector and Tax money cannot be used to bail out any program failure. If Congress wants to offer a service it can but it cannot mandate your participation. America must honor those programs through to their completion for those presently in the system and not alienate those it has forced to participate, but no one, from the point the Monetary Branch is implemented, will ever be forced to participate in a Federal Program again. Additionally, the Congress can have no other source of income other than the Monetary Branch and so agencies such as the department of the Interior will now have to sell land at cost and there can be no mineral right or natural resource permits for the sake of income. Congress can charge permitting fees to cover legitimate expenses. Because of this clause the Congress will be forced to end many of it’s programs and that money is returned to the people to be used to better their condition. By eliminating the middle man (the Federal Reserve) and foreign debt and focusing our government’s efforts we will have a stronger more effective government that works with the people instead of against the people. We the people finally have the means to limit and control government. The National Reserve and Trust lends at simple interest to State Reserve and Trusts based upon their credit rating and their credit rating is derived at how many bad loans has the State Reserve and Trust made. The SR&T makes loans either directly to the citizens of it’s state or to private lending institutions that follow new banking rules. SR&T’s may purchase gold and silver to use to store the wealth of it’s holdings and may mint intrinsic currency not based upon labor. The State Reserve and Trust is a better Public Bank
Cut spending, raise taxes, sell off public assets – these are the
unsatisfactory solutions being debated; but the states’ budget crises
did not arise from too much spending or too little taxation. It arose from a credit freeze on Wall Street. In
the wake of the 2009 financial market collapse, banks curtailed their
lending more sharply than in any year since 1942, driving massive
unemployment, which has caused local tax revenues to plummet. The logical solution, then, is to restore credit to the local economy. But how? The Federal Reserve could of provided the capital and liquidity necessary to create bank credit, in the same way that it provided $12.3 trillion in liquidity and short-term loans to the large money center banks. But Fed Chairman Ben Bernanke declared in January 2011 that the Fed has no intention of doing this -- not because it would be too costly (the total deficit of all the states comes to less than 2% of the credit advanced for the bank bailout) but because it is not part of the Fed’s mandate. If Congress wants the Fed to advance credit to local governments, he said, it will have to change the law. This is why we are proposing to eliminate the Federal Reserve an replace it with a truly public entity known as the United States Reserve and trust that can only loan money to 50 public banks (State Reserve and Trusts) that each state would create. The USRT would be under the auspices of the Monetary Branch of Government and the State Reserve and Trust would be under control of their respective states and their legislatures. The states are on their own. Policymakers
are therefore considering a variety of reforms designed to increase
bank lending, particularly to small businesses, the hardest hit by
tightening credit standards. One measure that is drawing increasing interest is the creation of a bank modeled on the Bank of North Dakota (BND), currently the only state-owned bank in the country. The BND has a 92-year history of safe, secure and highly profitable banking. North Dakota has the lowest unemployment rate in the country; and in 2009, when other states were floundering, it had the largest budget surplus it had ever had. Fourteen states now have introduced bills either to form state-owned banks or to do feasibility studies to determine their potential. This year, bills were introduced in the Oregon State legislature on January 11; in Washington State on January 13; in Massachusetts on January 20 (following a 2010 bill that lapsed); in Arizona on January 24th; in the Maryland legislature on February 4; in New Mexico on February 16th; in California on February 17th (amended on March 31st); Montana on March 26th; New York on March 28th; and in Maine, on April 12th. They join Illinois, Virginia, Hawaii, and Louisiana, which introduced similar bills in 2010. The Center for State Innovation, based in Madison, Wisconsin, was commissioned to do detailed analyses for Washington and Oregon. Their conclusion was that state-owned banks in those states would have a substantial positive impact on employment, new lending, and state and local government revenue. Some will say a state run bank is socialism and we would say that were true if these banks determined loans at a local level but all 50 state banks must compete against each other for loans and since this is making loans to a capitalist system We find it hard to classify this system as socialist. Our current banks currently create money by making loans and expand the economy and they are paid a percentage of interest of all of our labors and ingenuity and we say...just like the founding fathers....the profit from creating currency should benefit the people and not private bankers....bankers can earn legitimate money from lending and should not make a profit from creating currency because they did nothing to earn that right. State-owned banks could be a win-win for virtually everyone. Objections are usually based on misconceptions or a lack of information. Proponents stress that: 1. A state-owned bank on the BND model would not compete with community banks. Rather, it would partner with them and support them in making loans. The BND serves the role of a mini-Fed for the state. It provides correspondent banking services to virtually every financial institution in North Dakota and offers a Federal Funds program with daily volume of $330 million. It also provides check clearing, cash management services, and automated clearing house services. It leverages state funds into credit for local purposes, funds that would otherwise leave the state and be leveraged for investing abroad, drawing away jobs that could go to locals. 2. The BND not only does not compete for loans but does not compete for commercial deposits. Less than 2% of its deposits come from consumers, and municipal government deposits are also reserved for local community banks, which are able to use these funds for loans specifically because the BND provides letters of credit guaranteeing them. Virtually all of the BND’s deposits come from the state itself. All state revenues are deposited in the BND by law. 3. Although the BND is a member of the Federal Reserve System, it is insured by the state rather than by the FDIC. This does not, however, put depositors at risk. Rather, it helps avoid risk and unnecessary expense, since the BND’s chief depositor is the state, and the state has far more to deposit than $250,000, the maximum covered by FDIC insurance. FDIC insurance is not only very expense but subjects members to FDIC regulation, making the state subservient to a semi-private national banking association. (The FDIC calls itself an independent agency of the federal government, but it receives no Congressional appropriations. Rather, it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.) North Dakota prefers to maintain its financial independence. 4. BND officials stress that the bank is run by bankers, not politicians bent on funding their favorite development projects or bestowing political favors. The bank is run very conservatively, doing only creditworthy deals and avoiding speculation in derivatives and risky subprime loans. By partnering with local banks, the BND actually shields itself from risk, since the local bank takes the initial loss if the borrower fails to pay. 5. The BND does not imperil state funds or tax money but is self-funding and self-sustaining. It keeps federally-guaranteed funds in the state that would otherwise go elsewhere, including VA and FHA loans and low-income subsidies. Profits on these federally-guaranteed loans can then be used to build a capital surplus from which riskier loans can be made to local businesses. The BND has a return on equity of 25-26% and has contributed over $300 million to the state (its only shareholder) in the past decade -- a notable achievement for a state with a population less than one-tenth the size of Los Angeles County. Compare California’s public pension funds, which entrust their money to Wall Street and are down more than $100 billion, or close to half the funds’ holdings, following the banking debacle of 2008. 6. Partnering with the BND allows community banks to fund local projects in which Wall Street is not interested, leveraging municipal government funds that would otherwise not be available for loans. Further, infrastructure projects can be funded through the state bank at substantially less cost, since the state owns the bank and gets the interest back. Studies have shown that interest composes 30-50% of public projects. 7. The North Dakota Bankers’ Association does not oppose the BND but rather endorses it. North Dakota has the most local banks per capita and the lowest default rate of any state. What about Gold, Ron Paul, and multiple currencies? The system that Ron Paul proposes is inherently better than the one we currently have but still falls far short of providing true freedom to Americans and it does provide ample opportunity for potential corruption. Gold markets have always been able to be manipulated either by governments or by the very rich and this manipulation has never benefited the people. Multiple currencies while very ingenious is not very practical at the checkout line at the grocery store and while gold has always been a great retainer of value, historically, it has not shown to be a good national currency. It fills a niche as a novelty currency or as an investment. Gold has intrinsic value so long as it is rare. What if a solid gold meteor struck the earth weighing a million tons....then how much would gold be worth? How much is gold worth in a severe depression....nothing but your labor and food is. Your labor and the labor of your fellow man however, always has value (even if it fluctuates just like gold). The difference is gold is a lot easier to manipulate than you because it is an inanimate object and you are not. It is by this reasoning that labor is and always has been the best basis for a currency because the people control it’s amount and quality. A fiat currency whose very essence is controlled by “We the People” is far more sound than any other currency because it requires the least amount of conversion and cannot be manipulated on a widespread basis without there being serious consequences for the manipulator. Gold, Silver, and other intrinsic currencies should be encouraged and developed at the state level. An Introduction to Our Founding Fathers Brand of Capitalism Recently, we were told by a very liberal, almost socialist friend of ours that greed is destroying the world and American capitalism is at the forefront of this destructive force. She could not comprehend that in a land of such wealth why some must be forced to go without and this is why the government has a responsibility to tax the rich to give to the poor. Almost all Liberals that we talk to foster this “Robin Hood Government” mentality. We tell her she does not recognize human nature and the natural order of God’s creation. We could go back and cite the natural failure of socialism in the Virginia Bradford colony and the resulting prosperity of the capitalist system there.....but she would not understand the necessary component to make Capitalism successful is a moral people and that begets the introduction of moral religions to keep the conscience of a people that keeps capitalism from spinning out of control....becoming ripe with illicit greed and corruption. The Socialist and liberal have a point about greed running amok in our society but this greed is really the result of big government and higher taxes and perpetuating the Robin Hood mentality only drives our society further down the path of moral decay, greed, and decadence. Let’s examine some natural principles: If it is hard to get....it is hard to give. If it is hard to earn money then it is equally hard to give money to charity and to help your fellow man because you are busy just trying to help yourself.. The harder it is to keep and retain wealth the harder it is to give to charitable causes. Greed is sometimes spawned out of the fear of not being able to retain ones wealth and this leads to abhorrent behavior and an immoral decision making process. Stealing ones wealth is done in many ways in our modern American Society through taxation, banking, currency, and immoral and unethical companies. *Note the vast majority of companies act morally and ethically. Socialist tend to take aim at industrialist and companies and point out the very few bad and immoral companies but fail to compare them to the stratospheric amount of good and moral operating companies. I tell my socialist friends to take aim higher.... to the much more corrupt pattern of behavior of the banking industry and the American government. The banking industry and government take far more of your earnings than any corrupt company can and since they make it “hard to get” they make it “hard to give” an ever increasingly this drives our population to make the wrong decisions and decisions that are laced....seemingly with greed. One could surmise that it is so hard to reach the first rungs on the ladder of success that once people do become successful they forget about the little guy because they are still operating with the mindset they did at the bottom of the ladder. Don’t get me wrong Americans give more to charitable causes than any other country but they also work harder and longer than any other country. Americans have the shortest average vacations of every country in the world including China and Mexico. The only reason America had not cascaded into failure long ago is because of it’s Judea/Christian heritage....as this imparts a moral perspective conducive to prosperity and this is why so many give even when it is hard to do so. This is why America moves ahead in spite of its politicians and banks but increasingly the politicians and banks are making it hard to do so. If it’s easy to get......... then it is easy to give The easier it is to make and retain your wealth the easier it is to give to charitable causes. America has a much better society and much better chances for prosperity when taxes are lower. Why? The more taxes we pay the less money that can be given to establishments of religion, like your church. The less religion there is,,,, the less society has a grounding of a moral conscience to produce virtuous people. The less moral conscience there is the more greed and apathy for the poor grow. High taxes has always equated to the moral decay of the public throughout history. Why? High taxes helps to make a country's people learn greed, envy, and apathy for their fellow man because it is so hard to earn a buck you covet the buck. As this behavior perpetuated by an increasingly greedy government and ever higher taxes eventually it reaches the end of a cycle and implodes by the moral decay of it’s citizens and results in one of two things: Revolution by the people or bondage of the people. The only two things that slow the cycle is realization of the cycle and a firm moral footing that normally comes only through a religion. High taxes leads to a societal decay because it takes from moral and just people and organizations of religion that spreads the reasons for us to have a moral conscience. The larger government grows the less influence the church has on society and the more government does because one can fund it self far more than the other. In the excesses of government it tries to act as a deity by replacing God with Government because a government (the beast or the false idol) that operates on greed cannot operate within the boundaries of God’s will. Hence, the first thing Socialist and Communist do is to eliminate religions or at the very least highly endorse secularism. This is why Socialized governments and it’s people suffer, not necessarily because of a lack of capitalism, but because of a lack of religion. It is easy for one to see in a sense it is worshiping a false idol. When you depend on your government for your food, shelter, water, and transportation, many rationalist would ask what need do they have for a God when government does all the providing. Please bow to the alter of government. Many politicians go further and want to control your everyday lives going so far as wanting to tell you what to eat. While organized religions may have their problems they have far fewer problems than government and any time you would want to compare which entity has superior ethics and morals you need look no further than your church as compared to city hall or Congress. Government is quickly becoming a false idol and though my friend the socialist can recognize the problem with society .......she is making the mistake of bowing to the alter of a false idol in the form of an American Socialist government ideology and looking to those that caused the problem to correct the problem. (Barney Frank, Freddie Mac, and Fannie Mae, come to mind) Why should people listen to the Church and their message when the new deity the US government can provide them with everything they need in a time of need? Why is it that so many modern Socialist are overwhelmingly atheist? This is because modern Christianity (thanks Pope John Paul) destroys socialism. To our socialist friend....we will continue to state that by letting the people keep their own money you reduce the amount of greed in the world and increase charity, brotherhood, solidarity with your neighbor, and an increasingly moral and ethical people. This has been proven throughout history and is a part of America’s contemporary history. This is what our founding fathers knew and that is why they developed our form of an ethically regulated capitalism and prohibited charity from government and left charity to the domain of the people so charity is not used as a tool of dependency. Government sponsored welfare is not charity as charity must come from the heart and not from a faceless entity that forcibly takes from one to give to another. Our Socialist friend then wanted to know what the solution was to fundamentally transform America back into what it was intended to be and we told her it must start with cutting the head off the snake and that is to reform our banking and monetary system. She said what about government spending? We said “You can’t spend what you don’t have and governments never save for a rainy day...... so like a parent to a child we must make sure we give them a small allowance because since they did not earn the wealth .......they can never have respect and spend money properly without our watchful eye” This is fundamentally what the Tea party movement is all about even if most may not realize it. Why do we have Debt Associated with our $Money? Why is it that to buy anything these days that the interest that is associated with the purchase is rising at an ever increasing an appalling amount (not just what you are charged but the hidden interest as well). Is it because of those greedy Capitalists? Sure it is! Those capitalist bankers that don’t earn their wealth and create wealth through fractional reserve banking. (don't worry we are still for capitalism) dressed up to not make it so obvious. If you buy a $100,000 house over a 30 year period you may pay over $200,000 for the house to the bank......you’ve just bought the banker a house for the privilege of the loan for your house. Most could and would call this loan-sharking (and they would be right) and the only thing that is missing is the seedy smoke filled room in the back of a bar and a guy named Joey that will break your legs if you don’t pay up. As Americans we have come to accept this high amount of debt associated with the borrowing of money because of the time value of money (The money a bank could expect to see a return on from investment in the market rather than lending money to you). The banker will say “Why should my bank loan you money at a rate less than what it could make invested in the stock market?”. The banker’s point is right if you accept the current definition of what our banks have become compared to what our founding fathers had envisioned them to be! Banks were not envisioned to invest in stocks, bonds, or futures. Banks were to make their money by expanding the economy through loans that created productivity. It was never the intention to tie interest rates of banks to the time value of money as banks would of been prohibited from these types of investments because they could eventually manipulate the markets with their wealth and thusly prevent the natural evolution of the markets (i.e Adam Smith's invisible hand of the markets). Our markets in America are not free because they are controlled and manipulated by the decisions of banks and not the people. Investments in stocks and bonds were to be the domain of the individual investor so as to keep great diversification in the market place. This would allow markets to evolve naturally based upon the products, goods, or services produced and not allow the manipulation of markets by banks. By making sure banks could not invest in non-real (intangible) assets and only invest in real-physical assets helped make sure the banks would not control the lives of Americans through a system of debt. This is however not the case in today’s America. All Americans learn how the money system works as we grow up in America but the vast majority of us never learn to question it’s foundation and the reason why the way it is. Trade and Currency In the days gone by a farmer may have traded wheat with a blacksmith in order to get his horses shoed. The blacksmith and the farmer would agree on an amount of wheat to get one horse shoed. Both men are trading the fruits of their labor. Let’s say, they mutually agree that 50 lbs of wheat equates to one horse being shoed. We’ll say for arguments sake the farmer and the blacksmith trust each other. The farmer sometimes has the need for his horses to be shoed in the winter when he is without any wheat. So he writes an IOU to the blacksmith as a promise to pay the blacksmith when his early summer harvest comes in. The same is true of the blacksmith, sometimes he needs wheat but the farmer is not in need of having his horses shoed so the blacksmith writes IOU’s to the farmer to shoe his horses at a later date for an amount of wheat. These IOU’s are a form of currency that represent a promise to pay at some point in the future with the fruits of their labor. The Birth of Currency Let’s say for instance: The farmer and blacksmith decide they want an easier way to keep track of these IOU’s so they devise a system of Notes of “Promise to Pay” called “bucks” to represent the IOU’s. One buck is equal to one pound of wheat and fifty bucks is equal to one horse being shoed. Now the farmer and the blacksmith have a universal representation of their labor as the “buck” is a both a unit of measure of their labor and a unit of value in trade. The farmer and blacksmith tell the townspeople of the system they devised and how well it works. Many of the townspeople want in on the system...... as with this system you can get what you want when you need it and you pay the price with your future labors. The Baker decides that 3 loaves of bread equals one buck. The Seamstress decides a pair of pants is worth five bucks. The Barber decides a haircut is worth half a buck. Soon the Baker, the Seamstress, and the Barber are all trading bucks to get their everyday necessities done in a more timely fashion. A Supply Side / Labor Based Currency If we relate this towns currency to our modern system of currency.....can anyone see where there is any debt associated with the currency of the “buck”? Where is there debt owed to private foreign banks? There is none........... Why? Because this is a supply side/labor based currency system rather than a demand side/debt based currency system. All currency after it is created and enters the money supply is converted to a Labor based currency and ceases to be based upon physical assets or debt financing (such as gold or treasury bills). The problem is the original creation costs of money cannot be ignored not unless they (the debt) are never incurred in the first place. There just simply is no need to associate debt with our currency as the example of the townspeople illustrates. In the above example everything is built upon trust and corruption could easily enter into the system. The farmer, for instance, could issue more bucks than what he could possibly payback. Let’s imagine for arguments sake: This system becomes so popular everyone in the village wants to be in on this new currency system because it replaces the need to immediately trade physical items and services (which is a representation of the fruits of the villagers labors). But the villagers realize the potential for corruption. Enter the Public Bank They elect a council of the most trustworthy citizens to create a repository (a mall if you will) for the notes called “bucks” and to be the sole printers of the notes. The villagers could go to the repository and trade goods for bucks or purchase the goods at the repository. The repository could also loan bucks. The first ancient malls had their own currency to aid trade. A villager could borrow bucks from this repository that resembles a bank. The council of the repository considers a farmers loan: A farmer wants to borrow bucks to buy more acreage and expand his farming business. The council determines whether to give the loan based upon the probability of the farmer being able to repay the loan. From experience, the council knows after making many loans, that 5% of the value of all loans are bad. The farmer is looking to borrow 1,000 bucks. So the council will loan the farmer the 1,000 bucks for the 5% fee of 50 bucks upfront. The 50 bucks is held in reserve by the repository and is taken out of the village money supply (by holding it in reserve) to cover defaults. When the farmer makes 20 payments of 50 bucks each over a period of 10 years the council’s bank could theoretically refund him the 50 bucks if defaults go down and bank profits go up. This bank is not concerned with making a large profit because it is a community bank and it would just be skimming the profits off the top of the townspeople's labor.... not unlike what all modern day banks do. They skim the profits off of the top of our labor. They take a piece of everything that is created by the market and it’s people through interest. The Problem with Interest There was a problem the council recognized: If enough people take out loans, there (in this case) was the simple interest charge of 5% that is taken out of each loan and out of the money supply, some of the borrowers will run short of bucks. Why? The loans are for 1,000 bucks but money needs to be created for 1,050 bucks because of the interest and that 50 bucks needs to enter the economy somehow so money does not become scarce and some of the people can pay back their obligations. In this scenario: The bank goes ahead and prints 1,050 bucks. The farmer pays the bank the 50 bucks for the loan and they hold that 50 in reserve. The bank pays the farmer 1,000 bucks. The bank has to somehow get the 50 bucks it printed into the money supply because they took 50 bucks out of the money to hold in reserve. The council decides to inject the other 50 bucks they printed into the economy by using it for local government spending that produces private sector jobs and not government jobs. These are new projects (not maintenance or repair of) such as building roads, bridges, running gas lines, electrical, and water lines for a business park. The government is using the 50 bucks to prime the proverbial pump by creating the atmosphere for business growth and expansion(which is also known as promoting the general welfare not providing it). This also ensures that there is enough money for citizens to pay back their loans by the government proactively spending money into the money supply. Look at it this way....if everything is operating OK with a certain amount of money in the economy and a bank decides to take some money out of the economy and hold it in reserve this hurts the economy....so it is important to maintain the proper amount of money circulating in the economy. This is inflation (having too much money in the money supply) or deflation (having too little money in the money supply). The above system controls the rate of expansion of the economy as the economy will grow at the rate of the value of bad loans (or the insurance of bad loans) and be affected by the investment decisions of the projects the government invests in. Inflation and deflation can be controlled by raising or lowering the lending rate and the size of government is effectively limited by the business decisions made by the government. Government may grow but it always remains in a much lower proportion to the private sector. Notice there is still no debt associated with the money supply and there is no talk of gold covering the currency in this example. A Self-Limiting Government The bank and the government are limited by the growth of the private sector as this bank cannot print more additional money than the interest deposit that is charged to insure bad loans (money required upfront). Government is contained (self limited) in this example of a supply-side currency system. If the government raises interest rates too high thinking it will reap huge rewards ....less loans will be made and less money would go to the government. If they make money too easy to get... with too low of interest rates and the un-creditworthy default on their loans......then the losses eat up the reserve and the interest rates rise to cover losses. If the government invests unwisely in the community......then business will not expand and less loans will be made effectively shrinking the size of government. *The money the government prints that represents the interest portion of the loan could be used to properly regulate the markets to foster expansion (over-regulation or participation in the markets by the government always shrinks the potential of markets). This type of government and banking system is always concerned with a measurable return on their investment (and that return is the expansion of business and not government). This government would be very concerned if they invest in a school that did not produce educated students as this would hurt business, the economy, and the school would cease to exist. This supply side economy (or IOU economy) has checks and balances and natural growth based upon the governments ability to make good decisions unlike our modern contemporary version in America. Our current version rewards politicians for bad decisions as they then have a reason to tax us more to make up for their poor choices. Taxation, Tithings, and Tariffs In the IOU (supply side/labor based) economy there is no overtaxation. The only tax that can be charged has checks and balances and is a consumption tax with the caveat that all the necessities of life are exempted on modern day things such as air, food, water, minimum shelter, minimum healthcare, minimum transportation, and minimum communications. If the government sets the tax too high...no one buys products....business shrinks....and so does the government. In the IOU economy corporations pay no taxes. Corporations are forced to pay a tithing equal to 10% of their profit (not revenues) to a charity of their choice effectively privatizing our modern governments social safety net. This safety net is a much more efficient charity system that Churches and other places of worship would provide as they once did as compared to our current safety net. Competition enters into this system of Charity as places of worship vie for charity dollars. You may wonder how does the IOU economy handles foreign trade? It uses tariffs. Tariffs are used to combat economic warfare perpetrated by bankers and other nations and is the means by which this government prevents all the wealth from being literally sucked out of the country like what is being done in America (Though our government is also guilty of pushing it out as well through high taxation). The IOU economy matches the tariff rate to the value of the trade imbalance. The larger the trade imbalance the higher the tariff. This protects the country but not individual industries and as such the markets are allowed to work naturally. Specific items imported into our economy are never targeted unless there is proof of malfeasance. Tariffs are spread based upon the value of all the countries imports in order to remedy the trade imbalance. Parity is expected of the other country. These tariffs help to stabilize world markets and produce steady and reliable growth free from the current up and downs of our modern system. In the IOU economy the government is run by the inter-relational checks and balances of a national public bank, a consumption tax, tariffs, and corporate tidings No debt is associated with the currency No Private Bank is printing currency or authorizes the printing of currency No compounding interest No fractional reserve banking Government is limited and kept in check by natural means Creation of new wealth rests with the economy and not the banks In our present system our banks create new wealth with accounting entries through the magic of fractional reserve banking (a ponzi scheme) and keep a percentage of all new wealth that is created through compounded interest, simple interest, or fees. Fractional Reserve banking allows a bank to lend many times over that which they hold in reserve essentially creating new wealth that never was borne out of labor or ingenuity and that they (the bankers) never earned. The banks proactively create wealth, they keep their cut (interest), and provide the means for default if the bank doesn’t print enough money for the money supply. Strategic defaults actually reward the banks (envision you paying of 90% of the mortgage of your house and then you default and the bank reaps a windfall by selling your house and starting the process all over again). The IOU (Labor based /Supply side) economic monetary system returns the wealth to those that earn it. Ben Franklin and the American System This type of an economy is Biblical in it’s origins and has been instituted many times down through the ages of man (each time being associated with great wealth, abundance, and prosperity i.e. the Renaissance Era, Pax Romana, the American Colonies). This specific type of IOU system was developed by an American genius....... You may of heard of him......... His name was Benjamin Franklin.........A founding father of our country. This system allowed the colonies to gain such wealth they were able to defeat the super-power of the day (England) and gain their Independence. Franklin studied what led man out of the dark ages and into the Renaissance era (golden age) and he found this was the abolishment of usury (compound interest) on the money supply and the creation of the aforementioned system of fiat money that is regulated by checks and balances to prevent corruption and over domineering of all consuming greed. Franklin was intrigued that during the great age of enlightenment (the Renaissance Era) a man could support his entire family and pay all his bills with only 12 weeks worth of labor out of an entire year. In our economy 12 weeks worth of labor doesn’t even pay our taxes. Private Bank Profits in the Federal Reserve Most economist see the need for usury to be charged on a loan because the time value of money is a fine point of contention in their argument. They would be right if this were a loan between private individuals but Franklin saw most banks as part of the government and largely free of a profit or greed motive. The allegory that is all to frequently used is “Why should a bank lend money at a far lower rate of return than what they could expect to receive as a return on an investment in the stock market?” A private bank shouldn’t....but then again...a private banks purpose is not the prosperity of it’s citizens....its purpose is to make a profit for it’s owners. A public bank is concerned with the development and expansion of the markets and the health of the economy as a whole. Private banks do not promote stable markets and nor do they facilitate natural growth within the markets as their private interests drives their motives for investment. Nationalizing banks is not socialist thinking.....in fact by not nationalizing the banking system......you are more susceptible to socialist tendencies such as we are now seeing with our government. Would private banks exist in the Franklin economy? Yes! Although they would not be able to create new wealth through Fractional Reserve Banking. Banks would be relegated to making profits on loans (not fees, fines, penalties, or gambling in the stock market, derivative markets, or with any other financial market speculation). The banks intrusion into the markets other than as a money-lender to the masses has skewed the natural order of the markets. To allow the markets to evolve, to allow technology to evolve, to allow the betterment of man’s condition to progress..... is not to insure the markets against risk.....it is to have consequences for actions and to use failure as a deterrent for making bad decisions. Natural Laws Rule the Market in the American System Franklin’s system used in the colonies became known as the American system and the English House of Lourdes as well as the House of Commons could not bring themselves to believe the results of the American system. When Franklin traveled to England and addressed both houses, England was in the middle of a depression. Franklin told the English the colonies were a land of plenty where no one went hungry and everyone was gainfully employed. They asked Franklin how the colonies acquired such wealth. Franklin simply said “We print it and attach no debt to our currency!”. He went on to explain that the legitimate creation of wealth comes from the sweat of a mans brow and illegitimate wealth was the creation of the present day banking system (now known as fractional reserve banking). Private banks did not control the colonist. The fate of the colonist lay in their own hands in the form of a public colonial banks.
By printing notes that are based upon the future labor of the people within the economy and matching the money supply to the growth and expansion of the economy......the government helps to push the growth of the economy by supplying it the means to do so in a naturally occurring environment. Earned Wealth is Natural Wealth Paper money always becomes a measurement representation of labor for the purposes of trade no matter what it is initially based upon. No debt ever need be associated with any currency we create. Debt associated with the currency allows banks to take a percentage of everything produced in the economy and then control the economy by concentrating wealth into the hands of a few large banks (like the Federal Reserve). They can then manipulate the markets with their investments from money created by accounting entries that the bank never did a thing to earn. The entire debt-based/demand-side/banking system is a giant Ponzi scheme designed to fleece the working man of their earnings perpetuated by a collusion of Bankers and Politicians..... not the capitalist....... as so many socialist would have you believe. Socialist and liberals would have you believe the capitalist is at fault and they seek to correct this wrong with their brand of socialism. They neglect to see that Socialism is an extreme brand of unregulated capitalism where the government always is run by an extreme few that control all the wealth and the worker is forced to produce poverty for themselves while party leaders reap the workers rewards. Socialist are tricked into trading many so-called greedy capitalist pigs for far fewer and richer communist pigs. It is simply the rules that are put in place by the current banking system that fleeces the rightful owner of their wealth and not the greed of capitalists. Change the rules and you simply change the entire dynamic of our economy. The people would now succeed or fail based upon their own actions and not the actions of those few controlling the economy as now everyone has an equal opportunity to affect the economy in their own way. At the very least the economy is much more diverse and balanced just as your stock portfolio should be. The founding fathers banking system was always intended to provide for the conditions and opportunity for economic growth in the markets by facilitating trade just as in the example of the farmer and the blacksmith. Franklin always believed that legitimate wealth is not made by speculation (gambling). It is by man using labor combined with raw materials to create a product that he can sell for more than what it cost to build. These products often better the condition of man. Company profits and an individual labors should always be the source of the creation of new wealth and not banks as it is this new wealth that drives an economy. Today the Federal Government takes a cut of company profits in the form of taxes. Bankers take a cut in the form of the debt based securities they sell to back the dollar and again by the compounded interest they charge on the loans they issue. The founding fathers always believed the intention of government was only to protect and regulate the markets ensuring free and fair competition. The intent was never to over-regulate, redistribute wealth, or impart social engineering through taxation. The government, for all it’s flaws, ranks above the banking system for moral character. At least the government still provides for the protection of the markets through the military. Whereas the bankers have no redeeming quality. The Depression Cycle The current banking system has many flaws and detriments not the least of which is it’s cycles of mediocre prosperity followed by recession or depression. This represents the beginning and the ending of the Ponzi scheme that is “Fractional Reserve banking”. The beginning of the Ponzi scheme is good, and as it ends, it turns into a disaster, and then the government and banks trick the public into starting it all over again. The government shuffles the rules around and plays a game of smoke and mirrors...all while never making any real fundamental changes to the banking system. We are yet again coming to the end of the Ponzi scheme in the form of a world-wide depression and I ask you....no I beg you....lets lift ourselves out from under the thumb of the government and the bankers and free ourselves from the greatest hindrance to prosperity since man took his first breath. This time after the fall we will take destiny into our own hands and we will be the arbiters of our own wealth. How would Franklin’s American system work today? Making the Federal Reserve Federal The Federal Reserve ceases to be a private bank as it is now constituted and becomes a truly Federal Reserve. For clarity sake let’s rename the bank and call it the USRT United States Repository and Trust. The USRT could then consolidate under it’s purview all finance auditing, enforcement, and banking functions of the government and entities such as the US Treasury, all US mints, The Bureau of Ink and Engraving, and the IRS. The IRS would cease to exist in it’s present form and would become a much smaller agency as it’s need would diminish. It could be concerned not with collection of taxes, as that would fall to the states, but it could be in charge of auditing and compliance. The IRS would become a Department of the USRT which we could call the USDAC United States Department of Auditing and Compliance and that would mainly be to keep tabs on State agencies and not the public. The Specific goal of the USRT is to break even or to make a relatively insignificant amount of profit that would not hinder the growth of the markets. Gone is Fractional Reserve Banking and Compound Interest. Fractional Reserve banking and compounded interest would be banned from all public banks. Fractional Reserve banking and compound interest would be banned from primary private banks. Secondary private banks (banks that don’t borrow money from government agencies) may charge compound interest but they cannot use fractional reserve banking. All banks private and public must retain a 100% reserve. Banks would be banned from all other financial instruments used in speculation except for those that deal with real and tangible assets. State Banking Reserves Each state would create a bank called an SRT State Reserve and Trust. The USRT may only lend to the 50 newly created State SRT’s. The SRT’s can only loan money to Public or Primary Private Banks within their state at a rate based upon the safety, security, and success of the banks lending practices. Investment banks will cease to exist as no loans may be made for the purposes of speculation (Only for real tangible assets). This means the banks ability to manipulate the markets for their own gain will perish and the market will again be able to flourish and evolve naturally for the betterment of man. Investment Banks that once bought IPO’s (Initial Public Offerings) such as as Google and make huge profits from buying the IPO stock low and selling the stock high, prevented many smaller investors from doing the same thing and reaping the profits.....which would of caused better natural distribution throughout the markets (preventing the too big to fail mentality). Natural distribution of wealth is the key strategy to prosperity and not artificial wealth redistribution as all wealth should be earned. It is in this way that our economy will act as a living organism and natural selection of those choices that succeed with flourish and those choices that do not succeed will fail and no failures will be artificially supported upon the backs of the people. Primary Private Banks Primary Private banks review loans and assess risk. Primary banks are loaned money from the SRT at a rate commensurate to it’s combined loans realized risk (the default rate of all of their loans). The USRT loans money to the SRT on the same basis. When the money supply is short in order to maintain reserves the USRT prints currency in the amount of the principle and the simple interest plus fees. The principle goes to the borrower and the amount equal to the simple interest and fees are split 50/50 between the State and Federal governments for projects that aid in the expansion of the markets on Projects such as:
This money cannot and must not be used for welfare, social programs, propping up bureaucracies and or other entities such as Labor Unions within the government that hold monopolies. This is what Corporate Tithings and individual charity are for. This money has to be used to foster business growth and by doing so expands business and expands the tax base as well as reducing the need for any government based charity and social welfare programs. Checks and Balances If a private bank makes many bad loans they will be charged a higher interest rate by the SRT. If the SRT makes many bad loans to many bad banks the USRT will charge the SRT a higher interest rate. If the USRT makes bad loans to SRT’s they are obligated to cover their losses by raising the overall SRT lending rate which means less private loans and less government spending. If legislators make laws that hurt business or try to over-tax business, or the people, this retards the growth of the economy and the governments growth is retarded as well. Franklin’s American System:
Examples: The only type of interest allowed under the American system is simple interest for the sake of insurance and an upfront profit charge. In banking the time value of money is ignored since banks can no longer invest in those markets. Money becomes much cheaper to lend and hence less loans should default and as a result the true wealth of the people, that was once illegitimately concentrated into the hands of the banks, now is distributed to the rightful owners of that wealth. (No Socialism needed just a fixed and regulated capitalist system): Let’s say the national default rate on loans is 3% of their total value. The National USRT is obligated to set the lending rate to at least 3% to all State SRT’s. Some SRT’s may vary if they make many bad loans. Let’s says Ohio’s SRT (OHSRT) makes bad loans at the average rate of 3%. Lets say however that Ohio lowers their consumption tax and to make up for it they raise the interest on loans and the state reserves the right of an additional 2% to add to their coffers. So OHSRT loans to the Primary Private banks at 5% on average. The bank in Ohio you are looking to get your loan from has an average default rate and can borrow from the OHSRT at 5%. Let’s say: you are looking for a loan to buy your first house for $100,000 over a thirty year period. In today’s banking system that is normally over the life of the loan a $200,000 charge to you. Let’s see how much it is under the American system Franklin devised: The private bank in Ohio sets it’s profit for all loans at 4%. They determine you are a low risk loan so no additional interest is needed to cover you. Additionally, the bank needs 4% interest on loans to generate enough revenue to pay simple interest upon savings accounts. The bank also figures it will cost them $10 to process each of the 360 payment transactions you will make during your 30 year loan. So the upfront loan costs will be 5% OHSRT 4% Profit 4% to the depositors of the bank $3,600 processing fee 5% + 4% + 4% = 13% 13% times $100,000 = $13,000 plus the $3,600 processing fees = $16,600 So the money you need to come up with for the loan is $16,600 and the monthly payments are: $100,000 divided by 360 payments = $277.78 per month. The way our current system is set up a typical $100,000 loan over the thirty year period costs at least $200,000 or more over the life of the loan which would make payments be at least $555.56 per month. Everything just became Much Cheaper! Why? The wealth that fractional reserve banking stole from the public is returned to the public. The USRT prints $116,600. $100,00 goes to you the borrower. The $16,600 printed to cover the interest and fees is split equally between the State and Federal government ($8,300 each). Both governments could spend this money immediately but that could cause inflation and temporarily devalue the dollar. Ideally, both governments would match the infusion of cash into the economy at the same rate the loan is paid back. Which would be for each government (federal and state) (over a 30 year period), the rate of spending of $23.60 per month. Money is only printed when there is not enough to lend or when inflation or deflation become a problem. At the point the USRT or SRT makes a profit the managing board can determine to either retain it for a rainy day or return it to taxpayers. The Congress cannot touch this money (profit made by the banks). Everything in Benjamin Franklin’s American system has checks and balances. This type of system is an automatically a self-limiting form of government and removes the prison of debt financing from the American People. Additionally, the USRT and SRT can buy and sell physical assets that appreciate in value with the money in the repository. This can create profit that may be realized from the sale of appreciated real assets such as land, gold, silver, precious gems, oil, and copper as an example. This profit could be used to finance a universal electronic banking system where payments could be made via no fee or interest free debit cards much like credit cards and the transfer of real money could be made between banks on a monthly basis. This would greatly reduce the costs involved in banking. If profits appreciate from the sale of physical assets in excess they may be used to refund a portion of the cost of the loan (original money put upfront). Why Not the American System? It would be an gross understatement to say we are currently in a large amount of debt to China, Japan, and India. Implementing the American System will take time and until it is implemented we are left with free but unfair trade policies because our politicians do not understand the economics of trade or have been bought off by foreign interests.. We can start taking our country back tomorrow by passing legislation to tax the exchange rate of the currency China, Japan, and India and start moving toward the American system. These nations artificially devalue their currency purposefully so their products arrive in America at a lower price than domestically produced goods. This causes a massive trade imbalance and a massive amount of our wealth to flow out of the country. Without wealth we lose our prosperity and depend on government more for needs and services and tailspin into socialism. By taxing the exchange rate of their currency it would have the effect of positioning these countries foreign products much closer to their true value and make America legitimately competitive once again. Is this a protectionist policy? Yes it is! So far we have been in an economic war and our government hasn’t lifted a finger to help American businesses. A currency exchange tax would be the first shot across the bow. “Free market capitalism is destroyed by protectionist policies!” you say. “Balderdash!”, we need not be economic Pacifist when our markets and currency are manipulated by other nations for illegitimate gains upon our peoples labors. Socialist and Conservative a like bash these so-called protectionist policies because they know so much of what isn’t so! Tariffs upon the value of trade imbalances or taxes upon the exchange rate of a competing countries currency is justified to bring domestic markets into an equilibrium with foreign trade. This prevents globalization (homogenized markets) and preserves the diversity of markets. Why is diversity in markets good? It makes countries exploit their own resources to the greatest extent possible causing the best use of resources and prevents the world from throwing all it’s eggs into one basket (too big to fail mentality). Would you sink your entire financial portfolio into just one stock? No you wouldn’t and that is the same case used in the argument against globalization. This can be proven in many ways......look at America....it is now dependent on so many other countries for goods and resources and has many unnecessary entangling alliances that become a detriment and hindrance to many other country’s prosperity. As we move more towards the globalist mentality that all countries are dependent upon each other for goods and services....like many welfare dependents...they grow to resent the dependence and become ungrateful and this is the cause for the coming manipulation of entire markets for countries to gain the upperhand upon one another. For an example let’s say: China were to radically reduce the cost of the food it exports to choke out competition and they became the sole bread basket of the world.......if they were to have a drought, some natural catastrophe, or purposefully withheld the sale of food......then the world would very much miss the American farmers that China put out of business...and many would starve to death because of their economic tactics. Milton Friedman and Benjamin Franklin both believed that the world must have diverse natural markets so that countries do not become to big to fail otherwise mankind truly would become a slave to a world markets under government control and not be able to progress as it would become stuck in a situation where it could not extricate itself from without millions suffering such as in the China example. Every economy should be expected to protect itself and tariffs that bring trade imbalances into equilibrium do not have a negative effect on free markets. Quite the opposite, as stated earlier it forces a faster evolution of technology by having to learn, adapt to, and overcome obstacles within a nations own borders rather than looking for help elsewhere which leads to dependency. A good example of this is Brazil’s exploitation of ethanol. When faced with an energy supply shortage they adapted and overcame the problem by exploiting their own technology and resources for their own gain and betterment. It was that Benjamin Franklin had such faith in his American System that he thought it to be of divine inspiration.
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Why a Sovereign Currency? Explaining a Sovereign Currency Our Current Monetary System A Public Bank Benefits Why Current Solutions Won't Work Why Gold won't Work Part 1 Why Gold won't Work Part 2 Why Gold won't Work Part 3 Fractional Reserve Banking How it all Happened |
