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Fiat money is an oxymoron. Traditionally,
money has been both a storehouse of value and a medium of exchange. Fiat
money exists by mimicking both; but when its ability to do so ends, fiat
money exposed for what it is, reverts to what it is—government issued
coupons with expiration dates printed in invisible ink.
Fiat money distorts the time value of money and in
so doing destroys both money and the economies that use it. Real money like
gold and silver has value over time, the greater its value and the longer it
endures, the more likely it will be accepted as money.
Throughout history, gold and silver have
demonstrated such utility and as a consequence both have been used as money
for thousands of years. Unfortunately, throughout history governments have
either debased, sic diluted, the amount of gold and silver in their coins or
attempted to circumvent gold and silver entirely by mandating the use of
paper money, sic fiat.
This is why:
Wealth, e.g.
money, is power in a stored state. Unleashed, wealth is capable of doing its
possessors’ bidding for better or worse. Wealth can exacerbate
suffering or alleviate it and its power to do both— usually the
former—has been coveted by governments since governments existed.
While productivity is doing more with less, fiat
money allows governments to do more with nothing. Fiat currencies are a way
for governments to spend what they don’t have; and while counterfeiting
by individuals is a crime, passing government coupons off as money is legal
because governments make the laws.
WHOSE LAWS
WHOSE BENEFIT
The issuance of fiat money by
governments is, in truth, a white collar crime; and, as happens when white
collar crimes are discovered, a highly visible paper trail leads directly
back to the wrongdoers—in this case, the central banks.
Central banks are the mechanism by which
society’s productivity is drained and indebted. Credit-based money
issued by central banks turns into debt, debt which immediately begins to
accrue compounding interest paid by productive members of society, e.g.
workers, businessmen, farmers, savers and taxpayers. The interest, of course,
is paid to bankers, non-productive members of society.
The motives for the co-conspirators in this crime
are different but equally fulfilling. Governments get to spend what they
don’t have and bankers get to collect interest on money that is not
theirs—a win/win for the governments and bankers and a
lose/lose for citizens and savers.
FIAT MONEY IS A CANCER ON THE ECONOMIC
BODY
The longer a fiat money system exists, the greater
the odds of economic collapse. Over time fiat credit money destroys economies
because time exacerbates the systemic flaws of credit-based, sic capital, markets.
Capital is but the polite word for credit and that
is why it is used. Capitalism sounds so much better (and more like money)
than creditism. The word capital
implies a “moneyness” that does not exist.
Credit turns into debt and over time in fiat money
systems the growth of debt overwhelms the ability of producers and savers to
service it. This is why debt markets, e.g. bond markets, are now so much
larger than equity markets and why defaults involve increasingly larger and
larger amounts. In the current fiat money system, time is running out.
COMPOUNDING DEBT + TIME = INCREASING
DEFAULTS
Time also contributes to the destruction of the
“value” of fiat money. The continual issuance of fiat credit money
expands the amount of fiat “money” in circulation and thereby
lowers the value of all previously issued currency.
This is why savers are penalized in fiat credit
based economies. Savings, measured in terms of constantly declining dollars,
are worth less over time. In the 95 years since the creation of credit based
money by the Federal Reserve, the US dollar has lost 95 % of its purchasing
power.
In fiat credit-based economies, savers are penalized
and speculators are rewarded. And while this is welcomed by Wall Street, it
is a death warrant for Main
Street. In the US over the past twenty years,
while Wall Street has expanded, Main
Street has contracted.
The shift in America from a productive to a
speculative economy is evidenced by the recent growth and dominance of
financial “services” companies, e.g. Goldman Sachs, JP Morgan
Chase, BofA, Morgan Stanley, Lehman Bros, Wachovia, etc. —their only
“service”, of course, is a uniquely destructive and deadly form
of “self-service”.
Over time, parasites will kill the body on which
they live and this can be seen in the current decline of the United States.
The decline of America was
not caused by outside forces, e.g. communism, terrorism, illegal immigration,
currency manipulation or product dumping as the US corporate controlled media
would have Americans believe. The decline of America was an inside job.
The collapse of the US came from within. In 1913, the
US replaced its savings based currency with fiat debt-based money issued by
the Federal Reserve System, a consortium of European and US private banks
whose intent was to profit from the growing productivity of America—and
profit they did but to the detriment of America.
Since 1913, the Federal Reserve System has helped
Wall Street bankers leach and indebt the productivity of American businesses
and workers until America
is now but a shadow of its former self. As the fortunes of Wall Streets rose,
America’s
fortunes declined.
THE FIAT MONEY 3-STEP
CREDIT (step forward) DEBT (stumble)
DEFAULT (fall)
It’s been 95 years since the Federal Reserve
System and its credit based money took over the US economy. Now, the United States,
once the world’s only creditor is by far its largest debtor. A report
from the Federal Reserve in 2006 stated the US is technically bankrupt with
$65.9 trillion in irreconcilable obligations. Currently, the US can only
pay its debts by issuing new debt. Default comes next.
THE US CENTENNIAL CELEBRATION OF FIAT
MONEY
In 2013,
in only five years the Federal Reserve System will
celebrate its 100th birthday in America,
the celebration of 100 years of bankers, financiers and corporate CEOs
dismantling the productivity of America for personal gain.
It is my belief the next five years will determine America’s
destiny. Once seen as a beacon, it is now distrusted and feared and rightly
so. Those who bled this nation dry are still in control and the American
people, America’s
only hope, are not even aware of what has happened; and, if America is to
be saved, there is not much time left in which to do so.
The odds aren’t good and Americans, heavily
indebted and addicted to credit, are still hoping the Federal Reserve can
save them, much as a patient hopes doctors will provide the right medicines,
not knowing the doctors are getting kickbacks from the pharmaceutical
companies and are skimming prescriptions for their own benefit.
In fiat based economies, time is the enemy and 95
years have passed since fiat money was introduced into the US. In America and
elsewhere time is passing and the clock is ticking and recently it’s
been sounding more and more like a time bomb.
It is hoped the election of a new president will
save America.
It won’t. Democracy, once the hope of the world, is now its greatest
disappointment. Money—and fiat money at that—has subverted the
democratic process everywhere; and today, in all nations, politicians from
both conservative and liberal parties dance to fiat money’s funereal
beat—in a mockery of democracy’s original intent.
DEMOCRACY—A CONTROLLED DANCE
REQUIRING TWO PARTIES TO PERFORM
Nations, as well as people, can pass away in their
sleep; and unless the American people wake up and wake up soon, their slumber
will be the death rattle of what was recently the greatest nation on earth.
In just two weeks, on July 4th 2008, the United States
will celebrate its 232nd birthday. But during its last 95 years,
fiat money courtesy of the Federal Reserve System has steadily eroded the
economic foundations of America.
Once the wealthiest nation in the world, it is no longer. The cause is clear. So is
the cure.
Darryl
Robert Schoon
www.survivethecrisis.com
www.drschoon.com
Note II: I
will be speaking at Professor Antal E. Fekete’s Session IV of Gold Standard University
Live (GSUL) July 3-6, 2008
in Szombathely, Hungary. If you are interested in monetary
matters and gold, the opportunity to hear Professor Fekete
should not be missed. A perusal of Professor Fekete’s
topics may convince you to attend (see http://www.professorfekete.com/gsul.asp ). Professor Fekete, in
my opinion, is a giant in a time of small men.
Information
contained herein is obtained from sources believed to be reliable, but its
accuracy cannot be guaranteed. It is not intended to constitute individual
investment advice and is not designed to meet your personal financial
situation. The opinions expressed herein are those of the author and are subject to change without notice.
The information herein may become outdated and there is no obligation to
update any such information. The author,
24hGold, entities in which they have an interest, family and associates may
from time to time have positions in the securities or commodities discussed.
No part of this publication can be reproduced without the written consent of
the author.
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