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Gold And Debt: The 1929 Great Depression vs The Next Great Collapse

Discussion in 'Topical Discussions (In Depth)' started by searcher, Sep 5, 2016.



  1. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Gold And Debt: The 1929 Great Depression vs The Next Great Collapse

    [​IMG]
    by SRSrocco
    Sep 3, 2016 12:08 PM

    By the SRSrocco Report,

    The situation Americans face in the future will be nothing like anything they have experienced in the past. While we have seen old footage and heard stories about the Great Depression (starting in 1929), we have no idea how bad things really were during the 1930's.

    At that time, approximately 25% of the American population were farmers. Thus, when things really got bad, folks in the cities could move out and stay with their families or relatives on the country farm. This is not an option for most Americans today as only 2% of the population are farmers and ranchers (source).

    After WWII, Americans left the farms in large numbers for the allure of the great life in the cities and suburbs. For decades, living in the city or suburb offered Americans a much easier way of life as the United States had plenty of cheap energy and resources to tap into.

    Matter-a-fact, after the 1930's Great Depression, U.S. oil production continued to increase for nearly 40 years:

    [​IMG]

    Even though U.S. oil production declined some years (1930-1970), overall growth steadily increased in a linear fashion. However, the recent surge in U.S. oil production (2007-2015), mainly due to the ramp up of expensive shale oil, moved up exponentially and will likely decline in the same fashion. This will have a profoundly negative impact on the U.S. economy and financial system.

    Furthermore, the U.S. was able to pull itself out of the Great Depression due to the fact that it was just starting to tap into its huge reserves of cheap, high EROI (Energy Returned On Investment) oil supplies.

    For example, the massive Lakeview Gusher in California (1910) had an estimated EROI of 35,000/1 (source):

    [​IMG]

    Basically, for one barrel of energy equivalent consumed to drill the Lakeview Gusher, it provided 35,000 barrels of oil. Today, Shale Oil comes in at whopping 5/1 EROI and Oil Sands in Canada is about 4-5/1 EROI.

    The EROI of U.S. Oil & Gas in 1930 was 100/1. This includes exploration and production. According to white paper, A New Long Term Assessment Of Energy Returned On Investment (EROI) For U.S. Oil & Gas Discovery and Production, the U.S. oil industry in 1919 was finding 1,200 barrels of oil for each barrel of oil equivalent energy it consumed in exploration. Today it has fallen to less than 5/1.

    As the U.S. oil and gas EROI declined, especially after 1970, the United States continued to thrive due to the Petro Dollar system and the ability to import high EROI from the Middle East and other oil exporting nations. Unfortunately, this is not a situation that will continue for much longer as the massive debt in the system is unsustainable.

    Comparing U.S. Debt 1929 vs Today

    It's quite interesting to see how much of a change has occurred since the Great Depression. While things were very bad for Americans in the 1930's, the amount of U.S. public debt per person was very low versus today:

    [​IMG]

    According to several sources, the U.S. population was 122 million in 1929 while total public debt was $16.9 billion. Thus, the average debt per American in 1929 was $139. Compare that to a population of 320 million and $19.4 trillion in debt at an average $60,625 per American today.

    NOTE: A few readers suggested that I adjust for inflation in this example. So, if we take $139 in 1929 and adjusted for inflation today, it would be worth $3,288. So, the net difference would be nearly 20 times higher.

    What is interesting about total U.S. debt is that after each World War, the total level of debt declined for several years. For example, after the end of World War I, total U.S. debt fell from $27.4 billion in 1919 to $16.1 billion in 1930 (source). This was also true after World War II when total U.S. debt fell from a high of $269 billion in 1946 to a low of $252.7 billion in 1949. Over the next several, as total U.S. debt continued to increase, there were a few years that experienced declines (1951, 1956 & 1957).

    However, after 1957, there wasn't a single year that total U.S. debt declined.... it continued to increase for 58 consecutive years:

    [​IMG]

    I believe the reason total U.S. debt was able to decline after each World War and during a few years in the 1950's, was due to the relatively high EROI of U.S. oil and gas. Moreover, as cheap domestic U.S. oil production peaked in 1970, oil imports had to increase to supply the ever-growing sprawl of the AMERICAN LEECH & SPEND SUBURBAN ECONOMY.

    At the peak, the U.S. imported a staggering 14.1 million barrels a day of oil in 2005 (net imports). This accounted for nearly three-quarters of total U.S. oil consumption. Again, the Petro-Dollar system allowed the United States to exchange U.S. Treasuries (paper IOU's) for oil.

    As U.S. oil consumption declined after the 2008 Investment Banking and Housing collapse on top of increasing domestic shale oil production, net imports fell to a low of 4.1 million barrels a day in May 2015. However, according to the EIA - U.S. Energy Information Agency's recent update (Aug 24th), net oil imports jumped to 6.6 million barrels a day (source).

    So, now that U.S. oil production has declined 12% from its peak last year, imports are again on the rise. Unfortunately, many oil exporters in the future will likely not take U.S. Treasuries or Dollars for oil. This will cause serious trouble for Americans as U.S. oil production continues to collapse over the next 5-10 years.

    While U.S. debt has exploded, so has the value of gold.

    Homestake Mining 1929 vs Barrick Gold Today

    If we compare the two largest mining companies in the U.S., we can see what a difference has taken place since 1929. I was able to obtain several older annual reports from Homestake Mining, which was the largest gold producer in the country during 1929.

    Here is a rare copy of Homestake Mining's 1929 Annual Report:

    [​IMG]

    According to the USGS 1929 Gold & Silver Annual Report, Homestake Mining produced 312,328 oz of gold in 1929. As we can see on the top of the annual report, Homestake Mining processed 1,437,935 tons of ore which resulted an average yield of 0.22 ounces per ton (oz/t).

    Now, if we compare that to Barrick that produced 6.1 million oz of gold in 2015 while processing a staggering 139 million tons of ore, their average yield was a pathetic 0.04 oz/t:

    [​IMG]

    When Homestake Mining was producing gold in 1929, it was extracting nearly enough gold per ton to make an 1/4 oz Gold Eagle (0.27 oz) versus Barrick in 2015 that wouldn't have enough metal to make half of an 1/10 Gold Eagle (0.11 oz) (source).

    Furthermore, Homestake Mining paid its shareholders a staggering $1.7 million in dividends on total revenues of $6.5 million that year. Thus, Homestake Mining's dividends were 26% of total revenue in 1929 and each investor received a stunning $7 per share.

    Now, let's look how this compares to Barrick. Barrick paid a total of $160 million in dividends in 2015 on total revenues of $9 billion. Which means, Barrick's dividends were less than 2% of total revenues while investors received a paltry 14 cents for each share.

    What a difference, eh? By the way, Homestake Mining only had a little more than 251,000 outstanding shares versus Barrick's 1,165 million.... LOL. So, if an individual had 100 shares of Homestake Mining in 1929, they would have received $700 versus Barrick's investors receiving $14. The math is certainly not good for modern gold mining investors.

    If we compare the cost to mine gold at Homestake Mining 1929 vs. Barrick Gold Q2 2016, there is a significant difference. According to my adjusted income approach in calculating an estimated break-even for gold mining for each:

    Homestake Mining 1929: = $17.33 oz (based on $20.63 spot in 1929)

    Barrick Gold Q2 2016: = $1,152 oz (based on $1,259 spot in Q2 2016)

    Even though Homestake Mining's 1929 margin of a 16% profit was only twice as high as Barricks Q2 2016 margin of 8%, we can clearly see the real winners were the Homestake Mining shareholders who made 50 times more money in dividends than Barrick's shareholders.

    NOTE: The margins were simply calculated by taking the cost of production by the spot price in both examples.

    As we can see, producing gold for its shareholders was a much better deal for Homestake Mining investors than for Barricks. Furthermore, a Dollar could buy a lot more gold in 1929 than it can today.

    U.S. Gold Certificates 1929 vs Federal Reserve Notes Today

    Prior to President Roosevelt confiscating gold in 1933, the U.S. Treasury issued Gold Certificates. Thus, any American could go into a bank prior to that period and turn in their paper Gold Certificate and demand actual gold. Today, if you tried to do that at any bank, they would bring everyone out from the back and laugh at you.

    Below are two $20 bills. The top is a $20 Gold Certificate and the bottom is a $20 Federal Reserve Note:

    [​IMG]

    [​IMG]

    The $20 Gold Certificate was printed in 1929, and the $20 Federal Reserve Note was printed 80 years later in 2009. Both are bills, but one was backed by real gold and the other is now backed by $19.4 trillion in U.S. Public Debt. That is why it's called a "Note."

    We must remember, a "Note" is an obligation. When you take out a home mortgage or car loan, it can be also called a "Note." So, all those Federal Reserve Notes we keep in our wallet or purse are debts or obligations we owe, rather than an asset such as a Gold Certificate that represents physical gold.

    Here is another Gold Certificate printed in 1928:

    [​IMG]

    This $1,000 Gold Certificate was rare and even rarer today. Of the 84,000 printed that year, there are only 200 available today to collectors (source). The value of this $1,000 bill today ranges from $4,000 to over $20,000 depending on the condition. So, not only did this $1,000 Gold Certificate represent a lot of value in gold at the time, it's worth 4 to 20 times more today.

    If an American took that $1,000 bill and went to the bank to demand gold bullion in 1929, he or she would receive (50) $20 gold coins. The amount of gold in a typical $20 St. Gaudens gold coin was 0.967 oz. (source). So, even though the spot price of gold in 1929 was $20.63, when we multiply it by 0.967, we end up with almost $20.

    Regardless, that $1,000 Gold Certificate in 1929 would enable the holder to a nice bag full of 50 gold coins. The average cost of a new car in 1929 was $643 and a new median home price was $7,246. Today, $643 would only pay half of the taxes on a $25,000 car. Furthermore, $7,246 would be less than a third of one percent of a down payment for the typical $250,000 house today.

    Lastly, $1,000 today in (10) $100 bills won't even buy you one ounce of gold. All you could get today for $1,000 is 3/4 oz gold compared to 50 oz in 1929.

    What a change in 85 years... eh?

    Americans are in real trouble and I don't continue to say that just to be pessimistic or negative. U.S. oil production is about to collapse while total U.S. public debt of $19.4 trillion turns out to be a staggering $60,625 for each American. There is no way this debt will ever be repaid.

    Some investors and analysts believe there should be a "Debt Jubilee" or a wiping out of debt so we can start fresh. I would like to remind these "Einsteins" that wiping out debt also wipes out the supposed assets on the other side. When assets implode, so will the capital available to the market for future economic activity.

    Anyhow, U.S. debt will implode due to the collapse of U.S. domestic oil production on top of falling oil imports in the future. This will create an event in history that will make the population understand the value of GOLD & SILVER once again.

    While Americans have been suffering 45 years of Gold & Silver Monetary Amnesia, PRECIOUS METALS RELIGION will finally wake up the living dead. However, when this occurs, I would imagine most Americans will be caught by surprise as many will be wondering why their Banks are closed for an extended "Holiday" and their brokers are no longer taking their calls.

    While I have tried to wake up family and friends about whats coming, I hate to say...

    GOD HATH A SENSE OF HUMOR.....

    Lastly, if you haven't checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do.

    Check back for new articles and updates at the SRSrocco Report.

    http://www.zerohedge.com/news/2016-09-03/gold-debt-1929-great-depression-vs-next-great-collapse
     
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  2. Mujahideen

    Mujahideen Black Member Midas Member

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    I don't see the problem of having a federal fiat currency other than the symptom that it can create; governments creating currency by decree in an arbitrary manner to help hide their cronyism. A national currency that was strictly managed and its processes were clear, uncomplicated and transparent would be sufficient.

    And also there never was anywhere close to enough physical gold or silver to back 100% of the certificates that were printed by the United States. It was more like a gold credit system. So long as everyone had faith in the government and large amounts of people didn't redeem for bullion, the system could go on.

    We have dug so deep into this system of cronyism that we as a society rely on corporations to feed us. Until we as a society no longer rely on federal reserve notes to surivive, but rather our own hard and honest work (self-sufficiency) the banks and corporations will continue their quest to dig us very deep into a feudal state and ultimately they will exterminate us once they no longer need us.
     
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  3. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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    SRSrocco doesnt talk about or place in his equation the untapped oil in Alaska or the off-shore oil fields... not does he account for the oil wells that are drilled but capped sitting in reserve....

    Why do these clowns continue with their nonsense, as in a "debt based" system the greater the debt, the wealthier the economic jurisdiction is.... Debt isnt the problem, the problems arise when the debt cannot be adequately & timely serviced.... If the debt levels really mattered, Japan would have sunk long ago, yet they thrive, as they can service both their internal & external debts.

    I do agree that debt matters in a system based upon a fixed amount of substance, however public substance based monetary systems have been abandoned.... ergo debt doesnt matter until it cannot be properly serviced.... with todays fiat printing presses & digital currencies it will be a long time before debts cannot be serviced.... Again, look at Japan & BoJ.... !!!
     
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  4. Carl

    Carl Gold Member Gold Chaser

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    The notion the people are on the hook for a certain percentage of the national debt is fallacious, no one will ever be tasked to pay in such a manner. BB is correct.

    In 1929, a $20 dollar gold piece bought you $20 dollars worth of goods, same as the $20 dollar note, or $20 dollars of private credit. Aside from being a unit of account and a measure of value, money's only real value is in its use and acceptance as a medium of exchange and its only worth is in what it can buy. This holds true regardless the material construct of the monetary medium.

    We already have a federal fiat currency, it's called a Federal Reserve Note, own by the people via the U.S.G., it's our 'Public Money'. Contrary to the lies that have been propagated against the legal tender, public money, it's a debt free currency and it's not borrowed, lent or spent into circulation. (Yes that's right, Wall Street does not get 'first use'.)
    How Currency Gets into Circulation

    98% of all commerce is conducted in bankster generated debt based private credit.
     
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  5. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

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    ^ explain please
     
  6. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    There is always enough gold, silver or whatever to back any amount of currency. The problem was and is that the metals arent priced high enough. We could even back the US debt with gold but the prices would need to be about 50k an oz.
     
  7. Mujahideen

    Mujahideen Black Member Midas Member

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    This doesn't make sense.

    You can price gold at whatever number you want, but what will it buy is the real question.

    Gold has to reflect supply and demand. If we are using today's purchasing power as reference, there is no possible way that gold be valued at 50k an ounce.

    We would all quit our jobs and we would only need to find 1/50th an ounce of gold a week to live off of and be doing well, or someone finding 1 ounce and taking an entire year off of work. That's not real.
     
    Last edited: Sep 6, 2016
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  8. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    What is real? Almost 20 trillion in debt? Gold isnt reflected in that debt because everyone thinks that 20 trillion isnt real and will never be paid back.

    But lets take a step back for a moment to a time when Gold and silver were money. Congress has the authority to coin money and regulate the value of it. In a simplified world lets say the US needs 1 million dollars to run smoothly. Lets also say that there are 1 million gold coins in circulation. So, congress decides that the value of a gold coin is 1 dollar....... Fast forward 5 years and all of a sudden the US needs 10 million dollars to run smoothly. Lets assume there has been no production in that time. Congress can now decide that the value of a gold coin is 10 dollars.
    My point is, it doesnt matter how much gold or silver there is, congress can value those coins anyway they want.. Why is Canadas silver coin worth 5 dollars and the US is only worth 1? Same amount of silver but Canada decided it was worth more than 1 dollar.
    Since we arent on a gold standard the price of gold reflects nothing more than investor demand. However if we were to ever go on a gold standard the price of gold could be anywhere Congress decides it to be. If they decide its worth 50k then so be it. If people are lucky enough to find an oz a year mining then thats great however I think the scenario will be more like the rest of the world rejects the dollar, all the dollars around the world come flooding back to the US and hyperinflation kicks in. In that moment 50k gold wont seem so far fetched. Even without that scenario in our childrens lifetimes they will probably see 50k gold.
    Less than 100 years ago gold was 20 bucks. If you would have told them back then that gold would be 1300 plus in 100 years they would have laughed at you. 20 X 65 is 1300. Things are also accelerating but lets say they stayed at the current pace. In another 100 years gold would be 1300 x 65 = 84,500 an oz.
     
  9. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Here is a chart of the Venezuelan change in gold price as their currency has collapsed,

    Since 2009 from about 2500 to today over 13,000 per ounce

    vene gold price.jpg
     
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  10. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    It costs $150 to buy a dozen eggs in Venezuela right now
    [​IMG]
    Venezuelans line up to buy bread outside a store in Caracas on May 17, 2016. (Maria Isabel Sanchezfederico Parra / AFP/Getty Images)
    By Mery Mogollon and Alexandra Zavis
    The International Monetary Fund has predicted that inflation in Venezuela will hit 720% this year. That might be an optimistic assessment, according to some local economic analysts, who expect the rate to reach as high as 1,200%.

    A sharp drop in global prices for oil -- on which Venezuela depends for most of its foreign currency -- is a big part of the problem. Critics also accuse the government of irresponsible spending on social welfare programs and oil subsidies to Cuba and other countries.

    To understand what that kind of inflation means, we spoke to Maria Linares, a 42-year-old single mother who works as an accounting assistant at a government ministry and lives in an impoverished neighborhood of the capital, Caracas.

    Her monthly pay, including a food allowance, is 27,000 bolivars.

    That’s $2,700 a month at the official exchange rate of 10 bolivars to the dollar. But Venezuelans have so little faith in their currency -- or the government's ability to fix the country's deepening economic crisis -- that a dollar can fetch upward of 1,000 bolivars on the black market. At that rate, Linares earns just $27 a month.

    Either way, it’s not enough.

    [​IMG]
    In December, she was spending about half her salary on groceries. It now takes almost everything she earns to feed her two children, who subsist on manioc (also known as cassava or yuca), eggs and cornmeal patties called arepas, served with butter and plantains.

    “The last time we had chicken was in December,” she said.

    The best deals are generally at government-run stores, such as Mercal and Bicentenario, where the prices are regulated.

    To shop there, however, Linares said, she has to line up overnight. Even then, she might come home empty-handed if everything sells out before she gets to the front of the line -- or if she is robbed leaving the store.

    “The last time I bought food in a Mercal was three months ago,” she said. “They sold me one kilo [2.2 pounds] of rice, a kilo of pasta, a kilo of sugar and a liter of cooking oil for 1,540 bolivars. But to buy the basket of regulated products, I had to buy a watermelon for 400 bolivars. I didn’t want the watermelon and didn’t have the extra money to pay for it.”

    These days, she buys most of her food from illegal street vendors known as bachaqueros.

    Everything is more expensive, she said, and she might have to try five or six places to find what she needs. How much more expensive?

    Here is what she spends on some staples:

    Eggs
    [​IMG]
    (Robert F. Bukaty / Associated Press)
    At the Mercal, a dozen eggs cost 450 bolivars in December.

    The official price is now 1,020 bolivars. But Linares said she never finds eggs at the Mercal.

    So she buys them from street vendors for around 1,500 bolivars -- a staggering $150 at the official exchange rate, or about $1.50 at the black market rate.

    Manioc
    [​IMG]
    (Andre Penner / Associated Press)
    In December, Linares could buy manioc for about 50 bolivars per pound at the government-run stores.

    The official price is now about 300 bolivars per pound.

    Street vendors sell manioc for less, about 200 bolivars per pound, but Linares said the quality is inferior.

    Powdered milk
    [​IMG]
    (Fotolia / TNS)
    In December, Linares could buy powdered milk for her 10-year-old daughter and 8-year-old son for about 90 bolivars per pound at the government-run stores.

    The official price increased to 245 bolivars in February.

    But Linares said she pays between 750 and 1,000 bolivars per pound at the street markets.

    Corn flour
    [​IMG]
    Arepas made of corn flour (Spencer Weiner / Los Angeles Times)
    Linares used to be able to buy corn flour to make arepas for just 9.5 bolivars per pound.

    Last week, the official price increased to 95 bolivars per pound.

    It's hard to find the product outside the government-run stores, and the price is much higher on the black market.

    The family was never wealthy, Linares said, but such prices are making her and her kids feel poorer than ever.

    “Now we are feeling hunger,” she said. “I don’t know what I’ll do if prices keep going up.”

    ALSO

    'We can't go on like this': Shortages, economic crisis make Venezuela a nation of lines

    Unrest continues to grip Venezuela as president threatens to make opposition-controlled legislature 'disappear'

    Venezuelans are fed up. Here's why

    alexandra.zavis@latimes.com

    Twitter: @alexzavis

    Special correspondent Mogollon reported from Caracas and Times staff writer Zavis from Los Angeles.

    http://www.latimes.com/world/mexico-americas/la-fg-venezuela-inflation-0531-snap-htmlstory.html
     
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  11. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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    I dont know where or why so many writers have gone wrong in their research, this is to say "promoting" mis & disinformation & fallacies... It is plain logical that an observer cannot compare the operations of a private commercial credit & trade system with the sovereign fiat monetary system, they are two different species of systems... then to make matters even worse, blend & unify the commercial credit & fiat systems into one then compare said systems & their operations against former systems of substance such as THE gold standard & the
    B-W quasi gold trade system....

    The fight raging today is "Merchants" & their commercial credit system V. "Sovereigns" & their fiat payment systems.... The entire scope & subject of the current debate surrounding the "abandonment" of Sovereign physical currency & coin is the result of "Commerce & Merchants" seeking to unify the global trade system into a single medium of exchange credit based accounting system, which effectively prevents Sovereigns from exercising their rights of seniorage, a.k.a. creating public money that competes with the private credit....

    One dollar remains valued @ 100 cents, 100 cents = one dollar... The dollar has retained this value since the Coinage Act of 1792... You must understand that the dollar IS NOT losing value, it is "commercial" dollar denominated credit that is losing value. Since the "price system" has been transformed into a private credit system, the false ILLUSION is created that the physical dollar has lost value, when in fact it remains the same since 1792.... It is dollar denominated private credit issuances that have lost PPP against the U.S. fiat physical $ currency & coin. The illusion occurs because the banking system will exchange their highly devalued private bank commercial credit for the much higher valued Sovereign issued physical currency & coinage.... This occurs because you spend the cash & coins into the "price system" which is based & priced upon flotations of credit, the merchants then redeposit the cash & coin back into the banking system and you never realize that you lost XXX purchasing power of physical currency, for all of the wholesale, retail & labor pricing is priced in private bank. credit terms...

    Its the same game that played out with substance standards of THE gold & B-W standards... these standards exposed the true depreciating nature of credit as a medium of exchange & reconciliation of trade. The same thing once again is now occurring with sovereign physical currency & coinage.

    $1.00 is 100 cents but when $1.00 of denominated private commercial bank credit is valued against the physical Sovereign issued dollar, the $1.00 of bank credit will only purchase $.05 cents of goods & services. Hence commercial credit has devalued 95% against the physical dollar & coinage.

    And as the past abandonments of THE gold & B-W systems have shown, whenever a system including the physical fiat dollar system exposes the chickanery & fraud of commercial credit & compounding interest, that system must be abandoned. Hence the current systemic war against physical currency & coin.....

    Its a "monopoly" play, once all physical substance is eliminated for exchange or payment, the family of Sovereigns around the world will be completely at the mercy & grace of the commercial credit system and its operators....

    The Commercial Credit System (.pdf)

    http://freedom-school.com/tax-matters/the-commercial-credit-system.pdf

    The Dispatch of Merchants

    http://famguardian.org/Subjects/Taxes/Articles/DispatchOfMerchants.htm#INTRODUCTION
     
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  12. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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    A prime example of establishing equalibrium between currency denominated credit & sovereign physical currency issuances.

    Either the credit becomes worthless or the currency becomes worthless or in the end they both become worthless when they move into equalibrium....

    Since ALL currency is debt based, the issuer can never move into equalibrium no matter what operations or policies are engineered... They create new credit issuances which is evidenced by a debt note or digital accounting to repay previous debts... Since the pricing system is credit based, prices rise with each new issuance of inflated credit... the horse chasing the carrot!

    This is the inevitable demise of the over issuance of credit... beyond a certain point the established equalibrium is interupted and the debts cannot be properly serviced thru the production of goods & services. It is at this apex that authorities attempt to recreate equalibrium with the printing presses...

    We had a bout of it post 2007/08 when POO was $150 bbl. & the general price index tripled.... The system attempted a return to natural equalibrium, but the attempt was arrested by & thru artificial monetary & regulatory policies such as relaxing mark to market, NIRP, ZIRP & TARP etc...
     
  13. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    BB,

    which is kind of a immaterial argument as a dollar is nothing but a credit to start with,

    IMO you are more accurately describing the difference between treasury held debt and fed based debt issuances.

    There is nothing special about a fiat dollar, of which the value is zero, no matter what is applied to the face.

    To me, the correct way to look at all of this is thru purchasing power. When viewed this way, the whole argument of a dollar retaining its value is meaningless.
     
  14. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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    Of this I agree, whether Sovereign or Private credit, both are just fictions... this is where "La-La Land" begins & ends! Two adversarial fictions at war with each other, neither are real, but socioeconomically most "bank" on the fictions being authentic as represented.

    Holding & understanding PM's is in a word to say you dont believe or possess confidence in either fiction! Hence the ongoing battle against the "real" world!
     
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  15. Mujahideen

    Mujahideen Black Member Midas Member

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    Congress can determine the number of units that gold is priced in by law, but they do not have the power to determine its purchasing power. That is up only to the market.

    This is what will happen if we only use gold as currency for the 300+ million people here. We will either have a huge shortage of currency if we are being honest, and the economy will collapse unless something else is used as currency alongside gold... Or we have massive inflation while the government tries to keep up with the price, anyone holding paper dollars and not gold coin will be robbed via inflation, people will hoard physical and people will see that there is no integrity to the gold backed dollar. This is exactly why we had to get off the system.
     
  16. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

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    I always thought that there was exactly the correct amount of gold in the world to account for all the paper dollars in circulation.
     
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  17. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    IIRC in 1971 when Nixon temporarily suspended the gold back buck they valued gold at 35 an oz. That 35 an oz was about the same since confiscation times back in the 30's isn't it. I dont remember exactly but I think it was like 31 an oz back then so none of the inflation was priced into the gold since then.
     
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  18. Carl

    Carl Gold Member Gold Chaser

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    Gold was never a common use currency

    Prior to 1933, gold was 'priced' at $20 oz, today its official 'price' is $42.22 oz.

    The notion that the fiat dollar has a 'value of zero' is nonsensical. As long as it is used and accepted as a medium of exchange, it has value and it will always be worth whatever it can buy, exactly the same as gold or silver as money.
     
    Last edited: Sep 6, 2016
  19. Joe King

    Joe King Gold Member Gold Chaser

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    The point is that Au is what was intended to "strictly manage" the national currency.
    Unfortunately, due to human nature, the aforementioned "cronyism" is something that is inherent in the system if left unchecked.
    Ie: why do you think the Founders included the part about Au/Ag in the Constitution? It wasn't just for the hell of it. They knew what would happen without there being some form of monetary leash on those with the power to create "money" and those seeking to abuse that power had been working tirelessly to loosen those bounds ever since. They succeeded in '33.



    Yes, even back then the system was abused, but with the gold standard it at least kept them much more honest than they otherwise would have been. Ie: they had to at least keep the abuse within a reasonable amount, lest it become painfully obvious to all.



    Sure it does. If Au is priced correctly it is a means of allowing you to see the true worth of the dollar you hold. That can't be permitted if you're planning on inflating the snot of of that dollar. Therefore, tying the dollar to Au presents a very big stumbling block to those wanting to do that.



    The only thing that's been retained about the dollar is its use as a unit of account. That way they can pretend that a dollar is a dollar is a dollar, over the course of time. The only alternative would be to allow an ounce of gold to be an ounce of gold to be an ounce of gold, over the course of time.



    I think it was more like $42.67 or somewhere in that neighborhood. But hey, what's a paltry $7 between friends?
    BTW, that's still the "official" Au price that is used for .gov accounting.
     
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  20. Mujahideen

    Mujahideen Black Member Midas Member

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    The "gold backed" currency will experience inflation and encourage hoarders unless more currency is printed than bullion to maintain the illusion of stability.

    Where is a single example of this not happening?
     
  21. Joe King

    Joe King Gold Member Gold Chaser

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    What encourages hoarding is the appearance of fiscal mismanagement on the part of those inflating the currency. Like what happened in late '32 early '33. The People knew what was up, so they went to get their gold, but FDR cut 'em off at the pass.
    ...and why would anyone hoard gold if an ounce is worth $42.67 but has a face value of $50?
     
  22. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Carl,

    seriously? You are going to come here to advertise yourself while ripping on people,

    advertising removed
     
  23. Carl

    Carl Gold Member Gold Chaser

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    I was asked to explain my point, and I provided a link to that explanation.
    But I do understand why you would choose to censor me.
     
  24. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    ahhh censor you,

    I have not censored you there kemosabee
     
  25. Carl

    Carl Gold Member Gold Chaser

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    You lie like a dog, and the truth ain't in you.

    MONEY

    [​IMG]



    What is our current money?
    Let's recap, shall we.....

    Within the U.S. there is a debt free money already available that circumvents bank lending, it's called "legal tender". Legal tender (public money*1) is not borrowed, loaned or spent into circulation and the only legal way to get it, is by your demonstrated productivity and by demand for the medium.

    Another interesting thing, neither the Fed or the banks possess the legal authority to create money, and they don't. What they do create is asset backed, debt based private credit, not a legal tender.

    You see, ours is a Legal Tender Monetary System. This means that our money is not defined by Ludwig von Mises, John Maynard Keynes, Murray Rothbard, Milton Friedman, Joseph Salerno, G. Edward Griffin, Paul Krugman, Mike Maloney, Peter Schiff, Tom Woods, Ron Paul or any other economist or talking head. Nor is it defined by Austrian Economics, Keynesian Economics, Monetarist Economics, Capitalist Economics, Socialist Economics, Modern Monetary Theory, the Federal Reserve, the U.S. Banking system, conventional wisdoms, esoteric blather or what people may use. It means our money is defined by law. And nowhere in law does it designate or even acknowledge Fed and bank generated asset backed, debt based private credit as being a legal tender, or money, or currency, or a medium of exchange, it is 100% private issue, Bank Debt, even when it comes from the Fed.

    The legal tender (public money) in use today is provided as a duty, an obligation of the U.S.G., born from the outlawing and confiscation of gold as money back in 1933. People with and without bank accounts, turned in their gold property and received the legal tender as replacement property. The legal tender system today is an extension of that time. That time has obscured the legal tender's gold origins, existing as the people's property first, makes it no less our property in the present, and the banking system's legal obligation to provide either upon demand or over time, the fruits of our labor as represented by those deposit accounts, our legal tender property.

    The legal tender (Federal Reserve notes, U.S. notes and coins) is the official currency of the United States, it is what the U.S.G. owes in payment of its debts and it is what the banks owe to their depositors. Fractional reserve banking allows banks to generate credit (a non-monetary unit) in excess of the legal tender held as reserves. The reason that the credit is a non-monetary unit is that it fails to meet any of the qualifying aspects of a money, it has no physical presence so it's not a medium, it doesn't store or transfer value, it's a marker of debt, and it requires an intermediary for its use and continued existence. The only reason private credit is accepted is the underlying belief that it represents the transfer and payment of actual legal tender money and that, the legal tender is available upon demand. In other words, it is the legal tender that is being utilized 'in absentia' by people in commerce, not the debt obligations of the banks.

    People are confusing a means of payment, the transfer of a debt obligation (credit), for the medium of exchange, what is owed as payment (an asset). By legal definition United States coins and currency, including Federal reserve notes, are legal tender money, a medium of exchange by law. Checks as well as debit cards, credit cards, money orders, etc., are a means of payment, referred to as a generally accepted (institutional) arrangement or method that facilitates delivery of money from one to another. Payment has not been made unless or until actual money proper has changed hands. All credit is debt outstanding.

    All you’re doing when you use a debit/credit card (private bank credit) to make a purchase is, transferring your obligation to pay the vendor, to the bank, payment has yet to be made. The bank deducts the amount from its debt to you, as represented by your account with them, and adds that amount to the debt it owes to the vendor, as represented by his account with the bank. There was no money or currency of any type, digital, electronic or otherwise, used or exchanged in that transaction, just a transfer of an obligation to pay, which has yet to be met.

    The notion that we’re using ‘digital money’ or ‘digital currency’ or ‘digital dollars’ or 'credit dollars' or 'credit money' (an oxymoron) as a medium of exchange is nothing more than a trick of the mind, a figment of our overactive imaginations, a deception, it’s how we rationalize the transaction, and it's how the banksters get away with stealing our labor and wealth.

    .....

    [​IMG]


    Correcting a few reassuring lies.

    The "Money Multiplier" theory, is pure fiction.
    The Bank of England Corrects a Widespread Myth
    Does the Money Multiplier Exist?
    The role of reserves and money in macroeconomics has a long history. Simple textbook treatments of the money multiplier give the quantity of bank reserves a causal role in determining the quantity of money and bank lending and thus the transmission mechanism of monetary policy. This role results from the assumptions that reserve requirements generate a direct and tight linkage between money and reserves and that the central bank controls the money supply by adjusting the quantity of reserves through open market operations. Using data from recent decades, we have demonstrated that this simple textbook link is implausible in the United States for a number of reasons. First, when money is measured as M2, only a small portion of it is reservable and thus only a small portion is linked to the level of reserve balances the Fed provides through open market operations. Second, except for a brief period in the early 1980s, the Fed has traditionally aimed to control the federal funds rate rather than the quantity of reserves. Third, reserve balances are not identical to required reserves, and the federal funds rate is the interest rate in the market for all reserve balances, not just required reserves. Reserve balances are supplied elastically at the target funds rate. Finally, reservable liabilities fund only a small fraction of bank lending and the evidence suggests that they are not the marginal source data for the most liquid and well-capitalized banks. Changes in reserves are unrelated to changes in lending, and open market operations do not have a direct impact on lending. We conclude that the textbook treatment of money in the transmission mechanism can be rejected. Specifically, our results indicate that bank loan supply does not respond to changes in monetary policy through a bank lending channel, no matter how we group the banks."

    Here's a good explanation on how pseudo-loans are actually created.
    Banks do not loan money.
    Basics of Banking: Loans Create a Lot More Than Deposits

    Banks are not intermediaries between borrowers and savers, they originate pseudo-loans as deposits, irrespective of credited savings accounts or current reserves held.
    Banks do not loan money.
    Working Paper No. 529: Banks are not intermediaries of loanable funds

    Legal tender money (cash) is not borrowed or loaned into circulation.
    Banks do not loan money.
    How Currency Gets into Circulation


    Applicable Laws and Information.
    Federal Reserve Act, Section 16
    Legal Tender Status
    Legal tender Law


    Now, we can observe in the Treasury's Legal Tender Status, (a brief synopsis of the Federal Reserve Act) that the Fed must pay for the production of FRN notes, and they must post collateral of equal value to the notes it issues into circulation. (The Fed assets used as the collateral mentioned, have changed to Mortgage Backed Securities and Treasuries.) Also noteworthy is that member banks must buy the notes at face value from the Fed by drawing down their accounts with the Fed and that, Federal Reserve notes represent a first lien on all the assets of the Federal Reserve banks and on the collateral specifically held against them.

    Taking that into consideration along with congress's right to take possession of the notes and collateral upon the dissolution of the Fed, we can infer that, the Fed does not own the legal tender Federal Reserve notes. Combine that with the New York Fed's explanation of how FRNs get into circulation, we can also infer that FRNs are neither borrowed, loaned or spent into circulation.

    From this, we can objectively conclude that Federal Reserve notes are a debt free legal tender currency (public money), issued into circulation through the Fed and the banking system, in compliance with their legal obligation to supply that money property, as represented by the credited deposit accounts, to the account holders upon their demand.

    As I cannot prove a negative, the next three assertions require a little bit of effort, they require disproving.

    1) There is no law anywhere that grants to the Federal Reserve or the banking system the authority to create money, and they don't.

    2) There is no law anywhere that designates or acknowledges the debt based credit generated by the Fed or the banking system as being a legal tender, or money, or currency, or even a medium of exchange.

    3) The only legal validity given to the debt based credit, is held by the debts incurred with its use.

    If the banking system collapsed tomorrow and all debt based credit !POOF!ed out of existence, all debts will still be valid and collectible even though the debt based credit used to create and service them, no longer exists. See: 1930's Great Depression. 2007-10 Credit Collapse.

    The takeaway from all of this should be the realization that, there are two Federal Reserve administered systems in operation and running concurrently within the U.S.:
    1) The legal tender monetary system. - Implemented by U.S. Law.
    2) The Fed and Banks' asset backed, debt based private credit system. - Implemented by Rote Hearsay.

    Currently, there is only $1.45-Trillion in U.S. legal tender money in circulation around the globe, with about $280-Billion of that in circulation within the U.S., all the rest is Fed and bankster generated asset backed, debt based credit, not money.

    Note: The U.S.G. is under no legal obligation to make good on Fed and bankster generated debt based credit. They proved that point in the 1930's and again in 2008, so the notion that the U.S.G. will simply print to cover, is erroneous.

    Note: *1Public Money: money issued into circulation by a government or its agent and used in daily commerce by the public; legal tender is public money.



    [​IMG]





    To Be Continued......



    Posted by Dwain Dibley at 4:03 PM
    Thursday, May 14, 2015
    The Ban on Cash - Part II[/paste:font]


    [​IMG]
    Chasing After Debt


    So anyway, I ran my little observation of the 'ban on cash' by Mike "Mish" Shedlock and his reaction was, shall I say, less than receptive. His response; "banning cash does not eliminate debt the notions is totally absurd and it should be obvious why".

    Now, I know that on rare occasions I have managed to miss sighting the tree standing in the forest but, I don't think this is one of those occasions. I think Mish's apparently startled and clipped response is a product of his rote learning and let me explain why.

    If I repeatedly called an apple an orange and I managed to convince others around me to call the apple an orange to the point that everyone routinely referred to the apple as an orange, would the apple be an orange? The 'obvious' answer is NO. The apple is an apple and the orange an orange, one cannot change the nature of an apple simply by changing what you call it, obvious.

    As with our inability to change the nature of the apple to an orange by simply calling it an orange, calling credit 'money' does not change the true nature of credit to money. And I think this is the key to understanding Mish's response, and in the push to ban cash. People have gotten so used to referring to credit as if it were money, they actually believe that credit and money are the same thing, especially so if that credit populates their deposit accounts or comes in the form of loans or even, from the Federal Reserve. That is simply not the case because unlike money, all credit is someone else's debt, it cannot exist otherwise. For example, the credit that populates your deposit account, is the bank's debt.

    To aid you in understanding my position, let me break it down to its base: Our 'money' is defined by law, specifically Section 31 U.S.C. 5103, it's a short paragraph. In it, you will not find the credit generated by the banks or the Federal Reserve listed. In point of fact, there is no law anywhere that grants to either the Federal Reserve or the banks the authority to create money, not even the Federal Reserve Act does that. That right/privilege/authority is exclusively retained by the U.S. government via the U.S. Department of the Treasury (it's a 'Sovereign Right' thing).

    This means that, as of 04/2015 the actual Money Supply stands at $1.36-Trillion in circulation and another $2.6-Trillion held in reserves. That is the extent of our Legal Tender Money (LTM) Supply, everything else is Credit, a ledger book account entry that denotes a promise to pay LTM, or the assumption that LTM will be paid, either upon demand or over time. Thanks to modern technologies, we can use these "ledger book account entries" to mimic a medium of exchange, so much so, that we don't even bother with the LTM that supposedly backs the credit's use, and are promised in payment in the end when all ledger book accounts are settled, LTM = Unit of Account (UoA). Credit cannot be the UoA because it's a promise to pay LTM, all credit is debt.

    Let's do a little math: $1.36-Trillion LTM in circulation (-) $620-Billion LTM overseas (-) $11-Trillion in Deposit Accounts (-) $18-Trillion in Public Debt (-) $59-Trillion Total Economic Debt (-) $1,000-Trillion in Derivatives (+) $2.6-Trillion LTM in Reserves (+) $20-Billion in FDIC (I don't know what the FDIC is holding, it could be LTM, or just their fingers crossed for luck) (=) Somebody Is Not Getting Paid. Can you guess who?


    [​IMG]

    Bankster solution: Ban Cash, Ban LTM/UoA, in effect, they force the apple to be an orange. Not an unprecedented move, they've managed to get the LTM/UoA outlawed once before, when it was Gold.

    What does banning LTM (cash) do for the UoA? It makes credit the de facto 'money' by which all accounts can be settled. Hooray for the banksters! They get out of their obligations to pay LTM upon demand and over time, and the account entries that were on the debit side of their ledger get moved over to the credit side. (For them, not you, you still owe, you still have to pay.) Your credited deposit accounts, which were bank debt, are 'monetized' and reserves are no longer needed, as all accounts are now fully covered with credit as the money. And all those few people with over $250,000 in deposits will be happy because their deposits will be more than just 'iffy bank debt' subject to POOF!ing out of existence the moment their bank goes insolvent. (Goodbye FDIC, your placebo services are no longer needed.)

    Most people probably wouldn't even notice the change. That is, until the Fed sets the interest rates at below zero and the amount is deducted from their deposit accounts. (Gesell's demurrage comes into play.) With credit as the de facto money, and your deposit account directly affected by interest rates, with a negative rate your only options to prevent loss will be to move your credit to an investment that pays interest, spend your credit. Or, you can just sit back and watch your earnings/savings dwindle away,demurrage. Most with investable credit will choose to invest and those with modest or humble means, will spend. Banksters and Wall Street win again, the economy and stock markets get boosted and the banksters get more credit deposited under their "care".

    So the banksters have finally reached their promised land, total control over the money supply and the economy via a system of debits/credits, that is 100% theirs. No bothersome LTM limitations, no more reserves to maintain or constrict their activities, no more threats of insolvency and, no apparent down side. Well, there is that one pesky little thing, the U.S. government's sovereign right to coin money.

    Question: When is the issue of U.S. Treasury Bonds not a debt? Answer: When the bonds are used to back the medium with which they are paid......WOAH, WAIT, What????

    On the Federal Reserve note the 'FRN', our 'LTM': Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the FRNs that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides "backing" for the note issue. A commercial bank belonging to the Federal Reserve System can obtain FRNs from the Federal Reserve Bank in its district whenever it wishes. It must pay for them in full, dollar for dollar, by drawing down its account with its district Federal Reserve Bank. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.

    The "Federal Reserve Note" designator on every Dollar is not a mark of ownership, it's a mark of Liability. What is the topic? Oh yes, Banning Fed/Bankster Liabilities.....I mean 'cash'.

    Question: When is U.S. Government not borrowing to spend? Answer: When the spending by U.S. Government automatically creates the payment.

    The Banksters get their way, cash is banned, their obligations are mitigated, a system of credit/debts is locked in and the entire economic system is theirs to command and control, except they've lost one key element, government debt. You see, it's not just the banksters that get the benefit of moving their debit to the credit side of the ledger, the U.S.G. gets to do that too. With the ban on cash, the U.S.G. takes back its LTM and, it also gets all the assets held by the Fed that were used to back the LTM, as well. As for the Treasuries held by the banks, the banksters would most likely have to prove that there are no credit obligations attached to the bond at maturity in order to get a reimbursement for holding and using them as collateral backing for the credit they've created, otherwise they may be considered paid in full, or any outstanding credit attached, due and payable.

    And the reason for this; it's the U.S.G.'s sovereign right to coin the money. Credit is now the money, which means that the 'money' (formerly credit) generated from U.S.G. debt is now, the payment in full. The 'money' generated by banksters using U.S. bonds to cover their obligations, is the property of the U.S.G. as well. In effect, the banksters were acting as a proxy of the U.S.G. when they used the bond to create the credit, now money. (Goodbye Federal Reserve, your services are no longer needed.)
    Hooray! for the U.S.G.....

    As the monetary system currently stands, it is almost entirely a credit/debit system with cash being little more than an addendum, acting as a weak restraint upon the banksters due to its status as the UoA (Unit of Account), the medium in which all credit generated by the banksters is due and assumed payable. In that regard, LTM (Legal Tender Money) represents the Sword of Damocles hanging over the bankster's head. And it is that sword they're attempting to get out from under with the banning of cash.

    [​IMG]

    Summary:
    The U.S.G. does not 'borrow' the Legal Tender Money from the Fed.
    Neither the Fed or the banks can create 'Money'.
    They can generate credit and use a percentage of 'Money'
    as a reserve backing for the credit they generate.
    That's called "Fractional Reserve Banking"..
    The 'Fractional Reserve System' was born in bankruptcy and it will die bankrupt.

    ADDENDUM:
    [​IMG]
    Making It Real
    Rendering total Bankster controlled, Government administered ownership
    of your lives and livelihood.
    Can you say, TOTALITARIANISM
    --------------------------
    The Cashless Society Is Going to Backfire for the Establishment

    Joshua Krause
    ------------------------
    Money is Coined Liberty – The Latest Salvos in the War on Cash
    Acting Man

    ------------------------

    Posted by Dwain Dibley at 9:59 AM
    Saturday, May 9, 2015
    On The Banning of Cash...[/paste:font]


    [​IMG]

    Doesn’t banning cash transform credit/debt into the de facto ‘Unit Of Account’?

    If so then, it will make the Fed, whose primary function is converting government checks/debt into spendable credit, obsolete as the very act of deposit creates the credit to pay in one step. There is nothing to settle, the check is paid in full upon deposit, and any bank can do that. Banning cash would totally eliminate government debt. What would they owe? It’s already paid in full at the moment of deposit !!

    What value would a Treasury Bond held by any bank hold? They would no longer be I.O.U. Cash Dollars, they would no longer represent a government debt obligation, as any ‘Promise To Pay’ by government, is paid the instant the banks used it to create credit, paid in full.

    With credit as the de facto ‘Unit Of Account’, any credit created by banks using Government Bonds, would have to be returned to the government with the bond as that credit is a product of the bond and is attached to the bond throughout its existence. No bond, no credit. This transforms banks into the primary debtors, effectively reversing the rolls of obligor and obligee.

    Those fools in the banking system who are promoting the banning of cash are totally outwitting themselves as it will make all centralized banking with its attendant government debt obsolete, and place the banks who use Treasuries to create credit, in debt to the government!

    Also: If they ban the use of cash, that ban would have to be 100%, any less than that, and they leave in place a tool to measure the value of the credit in use, a means by which credit can and would be discounted. To give you an idea of that potential discount; if we were to properly value the 'credit dollar' against the current unit of account, the legal tender FRN, the true value of the bankster's fictitious 'credit dollar' would be around $0.14 in legal tender.

    [​IMG]

    Note: 86% of the dollar's value has been stolen via the use of bankster generated credit/debt, erroneously referred to as 'dollars' and operating in the guise of 'our money'.

    Wow......

    Random Thought: The reason the QE's didn't work is simply due to the fact that it did not add any 'money' to the economy. It increased credit/debt but not the actual money supply. Credit, which is always someone else's debt, is channel locked, it cannot and does not flow the way actual, debt free, money flows, it is not dynamic. And new credit always has to be borrowed into economic existence. It is my contention that the economy is starved for the lack of free flowing, debt free cash.

    Credit as currency is invisible, it does not provide the tangible, visible proof of quantity and it is this intangible, lack of proof of quantity that lets the government run up an $18-Trillion debt with little inflationary consequence. Can you just imagine the effects from $18-Trillion in Legal Tender Notes flooding the world? The dollar's value would have been crashed into a hyper-inflated mass, long before it reached $18-Trillion. Seeing is Believing.
    Something to think about.....

    Posted by Dwain Dibley at 3:15 PM
    Monday, February 16, 2015
    There is a difference between Money and Credit.[/paste:font]

    Money as defined by law. Section 31 U.S.C. 5103, defines legal tender as "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.

    The Fed defines credit as such: "Credit dollars are a debt generated currency that is denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account. However, many forms of credit can readily act as a medium of exchange. As such, various forms of credit are frequently referred to as money and are included in estimates of the money supply."

    As an aside; why does the Fed count 'credit', which is primarily BANK DEBT, as if it were money and include it, even though they admit it isn't, as being part of the 'money supply'? Also noteworthy is the Fed's use of the term "credit dollars", which is a fiction, the credit they generate is neither dollars or a currency.

    Do you think you would confuse a gold sovereign with a tally stick? They were both used to purchase the same basic things at the same basic price. Because they shared this functional commonality, does that make them the same thing? Money - Credit.

    What about the official legal tender money supply which is a product of Law and Government, and credit (digital tally sticks), which can be created by anyone in contract. They are both used to purchase the same basic things at the same basic price. Because they share this functional commonality, does that make them the same thing? Money - Credit.

    As with that gold sovereign, you can hold a legal tender note free from any obligatory attachments, not so with credit, it only exist as a debt obligation. In fact, unlike tally sticks, you can't even hold credit, you are totally dependent upon the banking system to hold and manage its existence for you. And when I say existence I mean exactly that, the bank goes insolvent and your credit is gone!...POOF!

    Read this carefully:
    Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (Fed liabilities). This would meet the requirements of Section 411 (Federal Reserve Act), but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.

    Do you comprehend that? (I knew you would)

    Now, what does the government NOT get in that transaction?

    It does not get the Trillions in credit created by the banks and Wall Street!

    Why is that you may ask?

    Because all that credit created by the banksters and Wall Street IS NOT PART OF THE MONEY SUPPLY!!!

    It is because we conflate money with credit, we are living in a bankster's paradise (debt hell for us).

    Do you think the banksters give a rat's ass worth of care that their exuberant over expansion of credit drives inflation up and the value of the legal tender down? NO! They just create more credit by having you go further in debt to compensate!

    There is no law anywhere that grants to banks the power to create money, not even the Federal Reserve has that power, which is a right retained exclusively by the government via the U.S. Department of the Treasury.

    The whole credit system runs on the belief that somebody will eventually pay what is owed.
    [​IMG]
    'Crediting Your Account' and 'Payment' Are Two Different Things


    Do you still believe legal tender money and credit are the same thing?

    Addendum:
    The only ones who benefit from the conflation of money and credit are the issuers of credit with no money.
    Has the term 'Fractional Reserve Banking' lost all meaning?
    This is how safe your 'money' is when it is deposited in a U.S. bank; it is stolen by the bank at the moment of deposit (assuming the 'money' existed in the first place) and your account is credited with the amount stolen. This means that the richest amongst us have exactly the same amount of 'money' in their credited accounts as the poorest amongst us have in theirs, $0.00.

    That a bank maintains some 'money' on hand to placate a few requests for the medium, does not negate the fact that all credited accounts maintain a zero monetary balance. A ledger book entry denoting the amount of 'money' the bank owes to (stole from) the depositor, is not 'money', regardless of anyone's ability to 'simulate spending' that ledger book entry with a debit card. Passing around bank debt from one recipient to another, is not payment for anything. Crediting an account with the amount and actual payment are two different things.
    Some people bitch, howl, whine and complain all the time about 'gold' and 'silver' being 'real money' and denounce the 'fiat paper', and they're not even getting or using the 'fiat paper', which is the money as defined by law. Do you know what is not listed in that legal definition of money? Ledger book entries made by the Fed and the banks denoting the amount of money they owe.
    The only reason any government issuing a fiat currency can be in debt is due to the fact that it did not print the payment. This also means that the U.S.G. does not need to 'borrow' or 'tax' to meet any of its obligations. The whole U.S.G. debt meme, is B.S..
    **By the way, I just gave you a description of real 'fractional reserve banking', did you spot it?

    Banking In Real Time

    -----------------------------

    Basics of Banking: Loans Create a Lot More Than Deposits
    How Does Europe Borrow Dollars From The Fed?

    John Carney
    --------------------
    The Bank of England Corrects a Widespread Myth
    Working Paper No. 529: Banks are not intermediaries of loanable funds

    ------------------------------

    Does the Money Multiplier Exist?

    Federal Reserve Board
    .......................................


    Posted by Carl at 11:45 AM
    Wednesday, April 27, 2011
    All money is currency but not all currency is money[/paste:font]


    Fiat Currency:
    Section 31 U.S.C. 5103, defines legal tender as "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."
    Federal Reserve notes are legal tender currency notes. The twelve Federal Reserve Banks issue them into circulation pursuant to the Federal Reserve Act of 1913. A commercial bank belonging to the Federal Reserve System can obtain Federal Reserve notes from the Federal Reserve Bank in its district whenever it wishes. It must pay for them in full, dollar for dollar, by drawing down its account with its district Federal Reserve Bank.
    Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (liabilities). This would meet the requirements of Section 411, but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.
    By law, Federal Reserve Notes (FRNs) are money, a tightly controlled, tangible product with severe penalties for their unauthorized reproduction.
    FRN's (a.k.a. Dollars) are the primary unit of account by which all public/private debt can be extinguished. They are also a medium of exchange and are assumed to be a store of wealth.
    Fractional Reserve Currency:
    Commercial banks do not create money as defined by law. They create a "money substitute" a.k.a. "book keeping money", a.k.a. "electronic digits", a.k.a. "Credit Dollars", a fractionalized derivative of the primary money, Federal Reserve Notes, that is denominated in dollars. This practice is known as Fractional Reserve Banking (a practice that has been destroying economies, countries and lives for over 600 years).
    'Credit dollars' are a debt generated pseudo-currency that is denominated by a unit of account (FRNs). Unlike money (by a strict definition), credit itself cannot act as a unit of account. However, many forms of credit can readily act as a medium of exchange. As such, various forms of credit are frequently referred to as money and are included in estimates of the money supply.
    Credit as currency is, quite simply, a promise to pay FRN's (dollars) upon demand as well as over time. The everyday physical representation of that promise is the debit/credit card, which is the hallmark of modern computerized, fractionalized, debt driven commercial/investment banking. Literally billions of dollars' worth of transactions are conducted in credit currency each and every day without any thought given to the un-fulfill-able promise that backs its use or the inevitable consequences of its failure.
    Our economy is totally dependent upon the continuing flow of digits, which necessitates the continued expansion of public/private debt as well as the continued expansion of assets and asset values, for its survival.
    Unlike FRNs, which are an obligation of the government (the provision of a monetary system) and a liability of the Fed (financially liable for every FRN in circulation) . Credit, when used as a currency, is not covered, thus the need for the FDIC. The objective of the FDIC is to re-digitize credited deposits (positive credit) that have reverted to their natural state of bank debt upon its failure. In other words; the FDIC's function is to keep the illusion of "credit is money", and the fractionally reserved banking system that issues and administers this "money substitute", alive.

    Credit has no legal standing as currency, but all debts incurred through its use as such, are legally binding.

    How Currency Gets into Circulation



    The Chicago Plan Revisited

    Aside From Erroneously Calling Bankster Credit, 'Money'

    Michael Kumhof Gets Most Of It Right.
    He Misses On The Current Fiat


    To Be Continued.....

    ** Without skipping a beat, they took the old "Gold Standard" accounting practices (where governments borrowed or owed gold and went into debt) and applied them to the Fiat as if they were the same!
    82 years later and not a hint that anyone has caught on to that scam!

    And now they have you convinced that the "Credit" the Fed and the banksters are creating is 'Fiat' too.
    damn...

    It’s as I’ve stated before (revised):
    1787 - 1834
    Gold, Silver = Money
    Paper = A Proxy For Money
    Credit = Debt

    1834 - 1933
    Gold = Money
    Paper = A Proxy For Money
    Credit = Debt

    1933 - 1990
    Paper gets Promoted = Money (Fiat)
    Credit = Debt

    1990 - Present
    Paper = Money (Fiat)
    Credit = Debt + A Proxy For Money

    In Progress
    Credit/Debt gets Promoted = Money = Perpetual Debt
    We’ve Been Weaned!
     
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  26. madhu

    madhu Silver Member Silver Miner

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    Carl,
    Excellent post. Had to read it twice. Dont know if i understood it all.
    LTM- legal tender money issued by usg and us treasury. Real money
    Bank account numbers-ponzi scheme credit numbers based on debt payment by another peasant.
    Fed reserve and all banks. Enron like accounting with fake entries to keep the illussion of economy going that will put anderson to shame. Billionaire and homeless person own nothing in bank credit, but owe their debts based on their ability to support the ponzi.
    FDIC- insurance fraud. Duh what do you expect from any insurance company
    Cash holder-criminal. No more bank runs because walmart doesnt accept cash.
    USG can track all our economic activity and welcome us to a new utopia.
    Did i miss something?
    Thanks
     
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  27. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    Holy mother of long posts batman.. I think my head just exploded .
     
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  28. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    honestly you sort of lost me at the ban on cash and the Government no longer owing anyone anything so the fed is no longer needed or something like that.
    I'm fairly certain that if some guy on the interweb figured all that out then the bankers have as well. I'll even go a step further, if there is no fed needed and there is a ban on cash then why would banks be needed at all? Everyone can just swipe their iphones and walk away with stuff or sell stuff and have it credited to their iphone account.

    Who's going to tell SA and China that we owe them nothing because the credit isnt part of the money supply.
     
  29. madhu

    madhu Silver Member Silver Miner

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    There used to be a poster called JC carving bloc, erudite scholar, miss his posts.
     
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  30. madhu

    madhu Silver Member Silver Miner

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    Lets assume that the price of gold falls to 500 USD, ie ten times the price of barrel of oil. Why is the disconnect between the official price of 42.22 and the market price of 500?
     
  31. madhu

    madhu Silver Member Silver Miner

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    This was in September. Cannot understand everything in here.
     
  32. Flight2gold

    Flight2gold Silver Member Silver Miner Site Supporter ++

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    While the EROI of oil and gas may stay in the bottom of the barrel forever a vacuum will always be filled.
    2017 will see a revival of the coal industry that Obama almost killed completely.
    If things go haywire with imports, due to who knows what, we have an administration incoming that has the cojones
    to do something radical like allow new energy sources.
    Thousands out there. They just need some visibility.
     

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