"Let us therefore animate and encourage each other, and show the whole world that a Freeman, contending for liberty on his own ground, is superior to any slavish mercenary on earth" – George Washington, 2 July 1776
Revised January 2012+
RIP-OFF BY THE FEDERAL RESERVE
This mathematical analysis shows how:
1. The economic scheme in the U.S. of creating fiat book-entry money via T-securities in the amount of the principal of the security with a promise to repay the principal PLUS the interest (i.e., deficit spending), is impossible. The interest is never created. The debt must continually be increased to pay interest on earlier securities or the scheme will collapse.
2. The National Debt can never be paid off. Contracts that cannot be culminated are acts of fraud and are void from their inception.
3. The funds from all Treasury security auctions are received on the accounts of the FRBNY; records of disbursements are not disclosed or audited.
4. Congress has temporary benefit of deficit spending (a $1.4 trillion ‘loan’ for 2010) until maturity of the securities (the collateral). At maturity, all securities are perpetually rolled over without mention in government accounting records.
5. The Fed eventually receives the value of all national debt as purloined profit; every dollar of inflation from deficit spending security auctions is undeclared profit. Deficit spending was $1.4 trillion for 2010 and $7 trillion for the past six years.
6. Fiscal social obligations of the nation will be restricted during any economic downturn, whether or not deliberately initiated by the Fed, while debt will escalate to “stimulate the economy,” for war-mongering, and to compensate for reduced tax collection.
7. The operation is, as with any Ponzi scheme, predestined for inherent national bankruptcy when buyers to roll over the increasing debt lose faith that profit will be generated greater than inflation even while interest rates sky-rocket. Commerce, the engine of the economy, will cease to function from uncertainty.
8. Future debt will exceed the entire worth of the nation. As panicked holders of debt attempt to obtain value, they will sell securities to the Fed at reduced rates. The Fed will then purchase national heirlooms and assets at fire-sale prices as in Greece. Ownership of infrastructure and assets will be controlled by shareholders of the BOG. (or Wall Street fronts).
9. The touted concept that the public directly funds deficit spending is an illusion. Such funding can never produce inflation.
10. The 1913 Federal Reserve Act provides that profit from the Fed belongs to the government. Concealment of funds due the government violates several federal criminal laws.
The Federal Reserve uses euphemistic smoke and mirrors to obscure their scam. The appearance of the scheme is that Congress receives the benefit of inflation. In reality, it is the Fed that receives the purchasing power from inflation---without public awareness or documentation. With full knowledge the following is not the way the Fed or the government describes the system, allow me to offer a different analysis of their operation.
CREATING BOOK-ENTRY (FIAT) MONEY
Congress can pay for federal expenses with funds collected from taxes, but Congress is never satisfied with this amount. The desire to buy votes/campaign contributions from special interest groups induces congress-critters to spend more, and this is identified as deficit spending. To create this make-believe money requires the assistance of the Federal Reserve.
Congress will give the Fed a T-security (bill, bond, or note) and the Fed will accept the document as an asset of one of the twelve FR Banks. The Fed will then establish a line of credit for the U.S. government (a book entry) in the same amount and list the liability as Federal Reserve Notes. Voila !! Fiat money has just been created for Congress to spend. Ref: 2009 Annual Report to Congress by the Board of Governors, page 448 (for account identification only). http://www.federalreserve.gov/boarddocs/rptcongress/annual09/pdf/ar09.pdf The accumulated securities that have been authorized by Congress add up to the national debt.
If the Fed retained all of the securities (assets), the inflationary pressure created by the extended line-of-credit for Congress would be too obvious. Also, Congress complained several years ago the interest collected was too much profit. The Fed has been forced to return excess profit to the government. The Fed therefore wants to sell a major portion of the securities so it has arranged with the Treasury department to act as auctioneer for selling to the Primary Dealers. This immediately sells the assets of the Fed.
[FN: The Fed recently obtained $700 billion bailout funds. Secretary Paulson begged Congress, on actual bended knee, to give the Fed money and Congress gave them $700 billion in securities. The Fed then swapped the securities to GSE (Freddie and Fannie)/international bankers for toxic MBS‘s---and rescued Paulson’s $800 million in Goldman stock by bailing out AIG. ]
[FN: The 2009 Annual Report lists Assets of $776 billion securities and $908 billion Government Sponsored Enterprise Mortgage Backed securities out of $2.2 trillion total assets. Whether the bailout money, given in large part to international bankers for toxic assets, was a quid pro quo with the PD to avoid lawsuits for fraud is beyond the scope of this writing. The International Bankers do not lightly suffer transgression. The continued mutual benefit of programs, paid for by taxpayers, should evidence Wall Street and the Fed/international bankers constitutes a symbiotic relation.]
The value of any securities not sold by the Fed is still in circulation and becomes the Reserves for commercial banks. Commercial banks, as an aggregate, have no other source of reserves. All money in circulation is originated from T-securities. The reserves, derived from Treasury checks deposited throughout the world, are then multiplied via loans by commercial banks utilizing the fractional reserve practice. (The System Open Market Committee (SOMC) selling and buying of securities alters the reserves---with high leverage---but this effect is applicable only to securities that are already in the public domain.) The Fed currently holds a mere $750 billion of $12.5 trillion issued securities. Ref. http://www.fms.treas.gov/bulletin/b2009_3.pdf. Chart OFS-1.
Observe that the amount of money created by the security is the amount of the principal but the amount promised to be repaid is the principal AND the interest. The interest is never created but payment is required by the agreement. It is impossible. The linear expansion of base/reserve money via fractional reserves by creating commercial loans does not change this. If, hypothetically, all money in circulation was used to pay off the securities issued by Congress, all bank reserves would be wiped out and the commercial loans would collapse---and every dollar of interest on the national debt accumulated from day one would still be due---but there would be no money outside of the Fed’s vaults to pay it.
The debt created by usury based sovereign debt is perpetual; it can never be paid off. The contract cannot be culminated. Any contract that cannot be culminated is an act of fraud. A contract based upon fraud is invalid upon its inception. It would appear the national debt is not legally enforceable. (A debt incurred by a state or municipality is not a sovereign debt as used in this analysis. Such a debt is akin to a commercial loan and is completely repayable---but may be evidence of unwise administration and result in default.)
There are esteemed economists who contend the fractional reserve multiplier is a major cause of inflation. The concept is questionable. Assuming the amount of base money and the multiplier factor remain constant, the creation of fractional reserve money reaches a ceiling that cannot be exceeded until more base money (from T-security issues) is added. The multiplier factor is a mere linear increase of the base money. A major tool of the Fed is to alter the base money with SOMC transactions to boost or quench transient situations. Once the ceiling is reached, only congressional deficit spending can create new money in circulation.
In medieval times, the gold-guilds would inflate the illusion of a commodity with paper gold-certificates. Today, the fractional reserve multiplier increases the image of an image of value; i.e., it increases itself. The basis of value is from the Treasury security.
SOMC operations and multiplier factor alterations change the amount of FRN's in circulation---a debt obligation (IOU) of the Fed. Only congressional deficit spending changes the debt obligation imposed on the citizens. However, if the multiplier factor is reduced to zero and banks are permitted to issue currency without limit, it would produce an inflationary bubble of FR debt just as the housing scam produced a bubble of mortgage debt.
A little-appreciated concept that a FR bank can create money/debt on
their own account in the same manner as a commercial bank making a
fractional reserve loan appears to be rarely utilized. Any requirement
that a FR bank must have reserves is unknown, the lack of which would
allow an infinite expansion of money. This option may be the origin of
the $7.7 trillion recently discovered by Bloomberg that was created to
rescue the TBTF banks.
THE INESCAPABLE WHIRLPOOL OF PERPETUAL, ESCALATING NATIONAL DEBT
There is more skullduggery involved. Let us assume a newly established sovereign nation is setting up a usury based economy and will issue 100 unit securities, a five year maturity, and an annual interest rate of 20 percent over a span of five years. A high rate of interest and short maturity is used to reduce repetitive calculations. The identifications of Congress and the Fed will be used to convey the images.
Upon the issuance of the first security, Congress has 100 units to spend. At the end of the year, Congress/Treasury has to pay 20 units to the Fed for interest. If the nation had to pay off the security at the end of the first year, the bankruptcy is obvious. There have never been 120 units created. Twenty units could be removed from society but that would leave only 80 units in circulation, cause great financial hardships, and still leave an impossible obligation to redeem a 100 unit security. The solution is to put off the interest payment until the next issue of security for the second year. The interest is paid from the principal created by the second issue.
During the second year there are 200 units in circulation but the actual rate of interest on the second issue is not 20 percent. Since 20 units had to be paid to the security holders, congress only received 180 units to spend (100 + 80) but they are committed to pay 40 units of interest on the security at the end of the second year. The interest rate of 40 divided by 180 is 22.2 percent. Considering the second year alone, the interest is 20 divided by 80 or 25 percent.
When the security for the third year is issued, the interest of 40 units for the first two years securities will not be available for congress. Congress will receive only 60 units for public projects but will have to pay 20 units interest at the end of the year. The 240 units received by congress (100 + 80 + 60) will require 60 units of interest at the end of the third year. The cumulative interest rate (60 divided by 240) is 25 percent. The interest rate for the third year alone (20 divided by 60) is 33.3 percent.
At the start of the fourth year, the security will have to cover the interest charge for the three prior years of 60 units. Congress will receive 40 units for government spending. The 280 units received by congress (100 + 80 + 60 + 40) will demand 80 units of interest at the end of the fourth year. The cumulative interest rate (80 divided by 280) is 28.5 percent. The interest rate for the fourth year alone (20 divided by 40) is 50 percent.
The security issued for the fifth year will pay the 80-unit interest for the prior four years. Congress will have 20 units to splurge. The 300 units received by congress (100 + 80 + 60 + 40 + 20) will require 100 units of interest at the end of the fifth year. The cumulative interest rate (100 divided by 300) is 33.3 percent. The interest rate for the fifth year alone (20 units received--20 units in interest) is 100 percent.
At the end of the fifth year, 100 units must be found to redeem the maturing security issued the first year (that “loaned” 100 units to the government) in addition to 100 units of interest that must be paid. Congress has an obligation to pay 200 units. This factor alone makes it obvious that more debt must be incurred to continue the scheme. The inescapable whirlpool of usury debt can only avoid obvious default by increasing the value of future securities. Increasing the value of issued securities merely postpones the inevitable result.
As the sixth year approaches, the Fed holds 500 units of securities that must be redeemed by the Treasury before year eleven. The Fed has already received 200 units as interest while Congress retains 300 units from those securities. Before year eleven, the securities will accumulate an additional 300 units of interest payable to the Fed. That accounts for the entire 1000 units of securities and interest that have been involved over the five years. (Each of the five 100 unit securities involved 100 units of interest.)
Do not let the subtly of the numbers escape you. As the example demonstrates, the Fed receives the total value of the security and the interest if it does not sell the security. Only 500 units were created by the securities but 1000 units (interest and principal) were somehow acquired by the Fed. The only way for Congress to get the funding is to issue a 200 unit security at the end of the fifth and subsequent years and ALL of the value will be instantly due the Fed. The scheme is not only perpetual but it must increase in size to continue.
When the 200 unit security matures, the value will belong to the Fed. And then a larger security must be issued to pay for the 200 unit security and the accruing interest further down the road. This is the methodology of any Ponzi scheme. The increase in the required size of deficit spending to cover the interest must be large enough to make the interest payment a relatively acceptable percentage to minimize public hostility.
[FN: The 100 unit roll-over value for the example’s year five reached $7.0 trillion in year 2010. An additional $1.4 trillion deficit spending accounts for the $8.4 trillion received from the Treasury auctions. Ref. Post.]
A high rate of interest has been selected for the example to minimize repetitive calculations. A ten percent interest rate will return 100 percent of the security value in ten years; a five percent interest rate will take twenty years. Lower rates of interest merely require more years to reach the same inherent bankruptcy and tend to beguile the patsies. (Actually, bankruptcy occurs the first year irrespective of the interest rate, but then again, since the debt can never be paid off, the entire scheme is based upon fraud. A contract based upon fraud is void from its inception.)
But 5 year securities are a slow game. If we shifted our attention to 13 week bills, or even four-week bills, each obligation will quickly mature and must repeatedly be rolled over. Each new issue can cause the creation of fiat money (inflation) and is profit for the Fed to say nothing of lucrative transaction fees and commissions for Wall Street cronies. If time lapse between bid and issue dates are ignored, the roll-over of four week 100 unit securities can be repeated thirteen times within a year. The gain of 1300 units of profit for the Fed only involves 100 units of national debt.
An economic scheme that utilizes later investors to pay the interest due earlier investors is identified as a Ponzi scheme. This is precisely the scheme that has been presented above.
A government publication has noted the fiscal policy insecurity: “(T)his growing gap between (Government’s) receipts and total spending …cannot be sustained indefinitely.” http://www.fms.treas.gov/frsummary/frsummary2010.pdf page 3 of 12. The statement was undoubtedly intended to support confiscation of more wealth from the citizens.
ALL FIAT MONEY BECOMES A PROFIT FOR THE FED HIDDEN BY THE FRBNY; THE OPERATION TRANSFERS ALL THE WEALTH OF THE NATION TO “FINANCIERS”
If the Fed holds the security until maturity, as in the example, the government must redeem it at maturity. The government has no money (it spent the fiat money created upon issuance of the security) so it gives the Fed another security (it rolls it over). The Fed can then sell the new security and has the redeemed value as profit. In actual practice, the Fed can sell the initial security and the two steps have merged into one. The waiting period to receive the profit has been eliminated.
If a security is sold at auction, as approximately ninety percent of them are, the Fed receives the value of the security from the Primary Dealer and the ultimate purchaser is eventually reimbursed by the Treasury at maturity. The U.S. Treasury is authorized by 31 USC #3111 to issue an “obligation” to buy or redeem maturing debt. Whether auctioned or not, the Fed receives the value of the security. The value of all T-securities held by the Fed until redemption is a clear profit for the Fed, as is the value of all securities sold to and held by Primary Dealers, funds, nations, states, or financial institutes that create inflation.
Low interest rates will reduce gain for security investors but will provide cheap money for commercial banks to loan. Much of the interest from T-securities held by the Fed must be returned to the government as a result of 1970’s legislation, so the Fed has little motivation to raise rates to make more money--they receive the value of the security.
The total value of auctions in 2010 was $8.4 trillion. Approximately $6 trillion of the securities sold matured in less than one year. http://www.treasurydirect.gov/instit/annceresult/press/preanre/2010/2010.htm ; http://www.treasurydirect.gov/RI/OFAuctions?form=histQuery .
The handling of auction funds is the responsibility of the FRBNY. Ref. GAO FINANCIAL REPORT TO SECRETARY OF TREASURY, Nov 2010, page 17 of net; p14 of hardcopy. http://www.treasurydirect.gov/govt/reports/pd/feddebt/feddebt_ann2010.pdf. Confirmation of the practice is in ACCOUNTING FOR TREASURY SECURITIES AT THE FEDERAL RESERVE BANK OF NEW YORK , GAO /AFMD-84-10, May 2, 1984, page 9 of 30, http://archive.gao.gov/d5t1/124060.pdf. Additional confirmation is found in the Fed’s ANNUAL REPORT: BUDGET REVIEW 2010, “The Reserve Banks auction, issue, maintain and redeem securities…(and handle) paper U.S. savings bonds and book-entry marketable Treasury securities.” p 5. This writer concludes the sales are credited to an account of the Fed and not to an account of the Treasury. There is no inflation if it is otherwise.
The $8.4 trillion in income does not reveal itself in the ANNUAL REPORT TO CONGRESS; Ref. Tables 10 and 11, pages 454 to 462 REPORT for 2009. Id. (Auctions are not Open Market transactions. Securities that are not sold are assigned to SOMC.) This $8.4 trillion is concealed from Congress and the public.
“Aha!” exclaims a disciple of the Fed. “The above analyze proves the integrity of the Fed. The $8.4 trillion is obviously being used to pay the redeemed securities and the sale and redemptions are off-setting.” And thus would the Fed beguile the naïve. Indeed, the Treasury’s receiving the value from auctions for that purpose is widely proclaimed in media publications. Treasury financial statements claim “borrowing from the public” finances government operations. However, direct transfer of money from the public cannot, in any way, expand the monetary system or result in the creation of fiat money (i.e., inflation) any more than can the payment of taxes by a private entity. The label is deliberately misleading.
The $8.4 trillion is concluded to pay the $7 trillion redeemed securities with $1.4 trillion being available from the securities for deficit spending by Congress. The T-securities possessed as an asset by the Fed are sold at auction and the $1.4 trillion is retained by the Fed while Congress spends the book entry credits. Where the $1.4 value from the auctions is entered into the books of the Fed, and to where the $1.4 trillion goes, is not available information. This is how the fiat money of inflation is created as detailed earlier.
The $7 trillion for the rollover of redeemed securities does not produce inflation or add to the national debt. The auctioning of deficit funding securities increases the amount of credit in existence and adds to inflation. It also increases the national debt. By merging the two different groups of auction funds, receipts and payments for redeemed securities (by PDs) can be concealed with receipts of debt securities and payments to owners (PDs). The national debt has increased $7 trillion during the past 6 years and is considered hidden profit by the Fed.
It is assumed the IRS knows nothing of this income or profit. Whether Title 12 section 531 or some other provision excludes such income for the corporate Fed from taxation is for Congress to determine. However, taxation of the Fed is completely different from taxation of (unknown) shareholders of the BOG..
The deficit spending of $1.4 trillion required Congressional approval. The $7 trillion roll-over required no Congressional action but occurred pursuant to 31 USC #3111. With the national debt at approximately $15 trillion, the average maturity of Treasury securities is about one year.
The gain from the debt securities is laundered with auction receipts of rollover securities and the profit is distributed to the owners/PDs mingled with payments for redeemed securities. Rollover securities, sold to the public with an average maturity of approximately one year, do not add any additional inflation nor do they increase the national debt. If debt securities were handled in the same manner, there would be no national debt nor any inflation.
Every dollar of inflation is profit for the Fed yet it does not show up on any income statement or balance sheet of the Fed. Profit of the Fed has been identified by the courts and legislation as belonging to the government. Title 12 section 247 imposes upon the BOG a responsibility to make a “full report“ to congress. The law also provides “Whoever embezzles, steals, purloins…money or thing of value of the U.S…” is guilty of a crime. Ref. 18 USC 641. Anyone who knowingly “covers up by any trick, scheme, or device a material fact” of a fraud against the United States can be imprisoned for not more than five years. Ref. 18 USC 1001. In addition, if two or more individuals “conspire…to defraud the U.S. (and) effect the object of the conspiracy” they are each punishable by incarceration. Ref. 18 USC 371. Anyone knowing of such an offense who “relieves, comforts or assists the offender…to prevent his apprehension, trial or punishment, is an accessory after the fact.” Ref. 18 USC section 3, see also 656, 657, 1005, 1341, 1344. Each of the approximate 500 auctions annually could be a separate indictment count.
Does “accessory” include any congress-critter who, after being informed
of this scheme, does not expose and prosecute the perfidy of the Fed?
INITIATING THE SCAM---AND THE RESULT
Similar historic banking operations declared they loaned value to the king and therefore they should receive interest from the loan. The pretense is a sham. Congress and the Fed have agreed they are going to rip-off the public by devaluating the currency. Each party acquires purchasing power from the scheme. Congress gives a promise to pay (a security or collateral) which is given to the Fed and the Fed gives a promise to honor the government’s checks with fiat book-entry money (printing press money, i.e., FRN‘s, a legal tender--a debt of the Fed). A “legal tender” is a commodity that is required by law to be accepted for a contract stipulating another commodity (i.e., the original contract is for dollars; you must accept FRN denominated in dollars). It is an acknowledgement of debt that can never be paid because there is no lawful money available. Title 12 section 411 clearly stipulates “(Federal Reserve notes) shall be redeemed in lawful money on demand at the Treasury Department of the United States… or at any Federal Reserve bank.” Good luck with that. You will only receive more debt of an under-capitalized federal corporation created by Wall Street bankers during a week-long retreat on Jekyll Island and blessed by a rump session of Congress.
To get the scheme started and the con game financed by third parties, it must have the appearance that interest is their source of profit and a gain must be made from the brokerage difference. A prime concern for the Fed under these conditions would be the difference in the value credited to the Treasury account and the value received from the auction. If the value of securities purchased by the public is transmitted directly to the Treasury, there cannot be any inflation, but then there is no gain to the Fed from book-entry money. The percentage taken by the Fed from the auctions for profit can even be variable but is hidden without an audit.
If the Fed projected a guise of a brokerage firm selling government bonds to the public, it would be a simple arrangement with minimal investment or risk. The currency in circulation in 1913 was non-interest bearing U.S. Notes. After the operation was set up and the New York Federal Bank was handling the accounting, it would be a simple shift of accounting procedures to have the securities accepted by the bank as owner instead of as a broker. The difference allows the bank to create fiat money (inflation or Federal Reserve Notes) as a profit for the bank. Whether this falls within the parameters of embezzlement or other crimes depends upon many conditions.
The courts have repeatedly concluded the profits of the Fed belong to the United States. Ref. Scott v FRB of Kansas City, 405 F3d 532, 535; In Re Hoag Ranches, 846 F2d 1227. The fact that the income is not reported is suggestive of subterfuge.
But the courts are merely upholding legislated provisions. The disposition of the Fed’s profit was established by the Federal Reserve legislation of 1913: “[A]ll the net earnings (of Federal reserve banks] shall be paid to the United States as a franchise tax…(and) be applied to the reduction of the outstanding bonded indebtedness of the United States…” Section 7, paragraphs 1,2. Any reduction of the “bonded indebtedness” (nation debt) is unknown; any net profit received from the Fed may has been pooled with general revenue. The residual of a Fed bank’s assets after dissolution or liquidation “shall be paid to and become the property of the United States.” id. Ref. 12 USC section 289, 290.
The Fed claims exemption from unrestricted audit by the GAO. However, the Accounting and Auditing Act of 1950 clearly established authority for the GAO to verify “all essential facts regarding the bonded and other indebtedness of the Government…” There is no exception for, or even mention of, the Federal Reserve. The Federal Banking Agency Audit Act of 1978 amended the above Act and exempted the Fed from audits of FOMC transactions, of certain foreign transactions, and of policy matters. The above Acts are now codified as Title 31 section 714. The Fed additionally claims that since it does not receive funds from the government or handle government money it is not subject to audit by the GAO. (The non-receiving of government funds is but one facet inconsistent with the parameters of a government agency.)
None of the above claims appear to exempt the auction accounts from audit by the GAO.
First off, the Fed DOES handle government funds. The auction transactions, and the IRS collection accounts, are both government funds. The accounts are clearly subject to review by the GAO to assure efficient and correct handling of government finances and to prevent theft or unacceptable accounting. Secondly, the exclusions of section 714 do not prohibit review of the auction accounts. It appears Congress can instruct the GAO to make such an audit at any time, even without the necessity of additional legislation.
The Fed's claim of exemption from GAO audit is inane. The Fed is mandated by 12 USC 247 to "make a full report to Congress." And the Fed believes the government is prevented from verifying compliance with that requirement? In addition, the Federal Reserve Act of 1913 clearly identified all profit of the Fed belongs to the government. And the government is supposed to be prevented from accounting for the profit from the auctions that is confiscated by the (unknown) owners of the Board of Governors? Such a claim defies logic.
It is a source of amazement that Bloomberg news took Freedom of Information Act requests to the Court of Appeals to discover the Fed had loaned $7.7 trillion to the TBTF and international banks (Are these the owners of the Fed? Where did the funds come from?) after the Fed had successfully hidden the information from the government. Perhaps a FOIA request should be made for records of the Treasury auctions. The government deemed specific legislation was necessary to obtain similar information. Ref. Report GAO-11-696.
To put $8.4 trillion in perspective, the 2010 operation of the U.S. government involved $3.4 trillion and that includes the $1.3 trillion deficit. The entire amount of taxes collected by the U.S. government was only $2.1 trillion.
If asked “Who owns the T-securities that are sold at the auctions--the Fed or the U.S. government?” a Fed representative will respond “The securities are a liability of the government.” An astute observer will note the inquiry was avoided; it was not answered.
A newspaper article a couple of years ago informed us the annual increase in interest to be 15 percent while the budget only grew 7 percent. That reflects the exponential growth of interest. More recently the deficit has been increasing much faster to rescue financial institutes from default. Professor Bob Blain, Southern Illinois University, Edwardsville has graphed the exponential growth in debt from 1915 to be irregular only during the 1930’s.
In 1790 during congressional consideration of Alexander Hamilton’s proposal to pay the national debt with usury based obligation placed upon the citizens, congressman James Jackson, after lengthy reflection on the devastation similar plans had imposed on European countries and cities, included the following observation to Congress:
“Let us take warning by the errors of Europe, and guard against the introduction of a system followed by calamities so universal…The funding of the debt will occasion enormous taxes for the payment of the interest…(such a system) must hereafter settle upon our posterity a burthen (sic) which they can neither bear nor relieve themselves from.” Ref. ANNALS OF CONGRESS, Vol. 1, 1790, pp. 1141-2.
In actual practice within the United States, a collection of taxes for part of the government spending is well known. Payment of part of the government expenses by taxation does not alter the government’s usury program; for analytical analysis they can stand alone. The ninety year pattern of increasingly larger deficit spending is the escalation as the climax of chaos beyond description approaches.
The end result of economic exploitation by usury is becoming transparent in Europe. As various nations become indebted to “financiers,” the demand to satisfy the debt includes the selling of national heirlooms and infrastructure to the creditors. Airports, roads, government buildings, and all resources are fair game. It will not be the Chinese or Japanese that acquire property. Market securities will be purchased at reduced prices by the Fed, and then the Fed will acquire assets at fire-sale prices. It will be the unknown shareholders of the BOG that acquire title. Ownership of land and resources by a financial oligarchy is but one example of feudalism—the government becomes a mere facade.
The outstanding funded debt that is even now overhanging the citizens of the United States, currently $48,000 per individual, is more than enough to impose slavery if the people submit. The unfunded debt is in the neighborhood of $160,000 per individual. If the people can be conditioned to believe they must pay the debt, the income tax (if it exists) can be used to confiscate 100 percent of their income and the masses must subsist on government largess. The courts continue to uphold income tax indictments that rely upon statutes applicable to all taxes as identifying a “known legal duty” for income taxes (i.e., 7201 -7215) so the make-be-leave statute that imposes an income tax will not be submitted to contestation with the burden of proof upon the government. The pursuit of a livelihood, long secured as a Constitutional Right by the clause of Liberty, cannot be a proper object for a revenue tax. The Republic of sovereign citizens has been degraded to a totalitarian nation of obsequious vassals. The hallmark of every Great Society has been the confidence that each individual has been able to retain and enjoy the fruits of his labor, and that is being destroyed in the United States.
Benjamin Ginsberg documents in FATAL EMBRACE numerous times when societies have revolted against oppression involving “financiers.” One interesting revelation by Ben involved Barons revolting after financiers induced King John to invade Normandy. The Barons would have had to pay for the campaign and it lead to the Magna Carta. Ben laments the financiers subsequently had their estates confiscated and were exiled. War-mongering has been a consistent money-maker for financiers. What the people of the U.S. will tolerate remains to be seen.
For decades, the economic exploitation of other nations, including orchestrated coups of elected non-compliant governments as formulated by Kermit Roosevelt, without any regard for laws whether domestic or international, has been the modus operand of the CIA, IMF, and World Bank. Ref. CONFESSIONS OF AN ECONOMIC HIT MAN by John Perkins; KILLING HOPE by William Blum; Google CIA; ROGUE AGENCY RUN AMUCK. It should be apparent the economic objective has been for the greed of financiers on Wall Street even when financed by, implemented with, and overseen by government bureaucracy including the U.S. military. The U.S. government gains nothing from Empire building. The U.S. and European financiers have consorted to plunder the world. Ref. TRAGEDY AND HOPE by Carroll Quigley. Now, as humongous deficits are demanded to give fiat funds to the Fed and rescue financial institutes from their fraudulent scams even after TARP, Maiden Lane, QE1 and QE2 have depleted its coffers and international bankruptcy still looms, and after military facilities/actions throughout the world to protect their international economic exploitation have bankrupt the Nation, the chickens are coming home to roost.
[FN: Much has been made over the Federal Reserve banks being privately owned as distinguished from a government agency. The confusion is fueled by names and definitions.
The twelve FR Banks (incorporated, and franchisees ?) have been identified by courts as privately owned by the commercial banks (shareholders) each with a nine member board of directors---for the issues before the courts. FDIC is another FR corporation statutorily identified as a government agency. The FR Board of Governors is separately incorporated with shareholders alleged to be foreign and NY bankers. The BOG has complete administrative and supervisory control of the FR Banks---they can remove a director without cause or they can rescind a policy. The BOG has assumed the guise of a government agency but does not comport with the parameters of an agency as established by the courts nor with the legislated definition of an agency.
The FR system juggle adjudication and FOIA actions to obtain the best position of a private versus agency status. This conclusion is confirmed, but may not be continued, after Fox News Network v BOG of FR, 601 F3d 158 (2010, 2nd Cir).
Dr. Bob Blain, Emeritus Professor of Sociology at Southern Illinois University, Edwardsville, in a published paper “Revisiting U.S. Public and Private Debt” released in 2008 observes the exponential increase in national debt from 1915 and the destruction inflicted upon historic societies by usury based monetary systems.
FATAL EMBRACE by Benjamin Ginsberg documents historic occasions in which a usury debt based economic system (but not so identified) resulted in the “financiers” facing public fury including deportation, confiscation of estates, and physical abuse of the individuals involved.
GREENSPAN’S BUBBLES; THE AGE OF IGNORANCE AT THE FEDERAL RESERVE by Bill Fleckenstein reveals how the Fed suppressed Federal Fund interest rates to create a false prosperity that devastated the economy for 20 years and destroyed the home construction industry.
THIS TIME IS DIFFERENT; EIGHT CENTURIES OF FINANCIAL FOLLY by Carmen Reinhart & Ken Rogoff reviews sovereign defaults as seen by an economist speaking to the International Monetary Fund/World Bank. It is the nature of governments to steal from the people.
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