Money In The Constitution

With a national debt at over $18 trillion and unfunded liabilities

With a national debt at over $18 trillion and unfunded liabilities over $100 trillion, the question begs being asked, “How did we get ourselves into such a mess?” It shouldn’t be surprising to learn that the founding fathers and the Constitution provided the solution and still have the solution to return us to solid financial ground and sound monetary policy. We will also explore in depth the Federal Reserve and the concept of inflation and what specific steps we can take to return sanity to our money in the United States.

 

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The following is an outline for the presentation

Money in the Constitution
I. Definitions of Monetary Terms – Historical and Present
          A. What is Money?
          B. What is a Dollar?
II. Founding Fathers Quotes on Money
          A. Washington, Jefferson, Madison
          B. Lesser Know Founding Fathers
III. The Actual Words of the Constitution in Reference to Money
          A. Article I, Section 8, Clause 5
          B. Article I, Section 8, Clause 6
          C. 10th Amendment
          D. Article I, Section 10, Clause 1
                 1. Fractional Reserve Banking
          E. Article I, Section 8, Clause
                 1. How do loans work?
          F. Article I, Section 7, Clause 1
          G. Article I, Section 9, Clause 7
                 1. How things worked prior to 1913 – 16th and 17th amendments and the                                            Federal Reserve
                 2. How things worked after 1913
IV. Modern Day Abuses of Money
          A. Federal Reserve
          B. Inflation
V. How Can We Restore the Constitution?
          A. 3 Steps
                 1. Educate Yourself
                       a) Introduce Competing Currencies
                       b) Repeal Legal Tender Laws
                       c) Focus on Spending First, then Taxation
                       d) Abolish The Federal Reserve – Step by Step
                 2. Inform Others
                 3. Become Active in the Solutions
          B. “Duties are Ours, Results are God’s”

 

 

Transcript

 

[00:00:00]
[Audio Begins]

Speaker 1: Well, welcome to Money in the Constitution, this is the 6th lecture in the Constitution Seminar Series and today is kind of a wild ride, talking about money. I will be the first to admit that I don’t understand everything about money. It is a very complex system. But I also will be the first to say that I really think and I really sincerely hold that the Constitution is very, very clear on its very basic principles that would make our money system very simple. If we did what the Constitution asked us we’d really build and have a monetary system that is based on true principles of freedom.
So, I want to start out, I like to start with this slide because a lot of times you hear the word million and billion and trillion and really, we have no idea what that means. All what it means all we know is that it means a bunch of zeroes, right, tons of money.
Let’s take an example. [0:01:00] this is probably about two years old this information. You notice right away because the money is not as big as it is these days in 2013.
U.S. tax revenue 2.17 trillion dollars, okay, that’s a 2.17 trillion dollars looks like. The federal budget is 3.8 trillion dollars. You should notice right away there is a problem. We spend 3.8 we take in 2.7, 2.17, okay, there is a little bit of a deficit that there isn’t there? So the new debt every year is 1.65 trillion dollars and of course those numbers have grown. This information is about 2 years old like I said, okay.
So, 1.65 trillion dollars in new debt. Now that’s what is called a deficit. Sometimes people are saying in terms of deficit is a yearly measurement, okay. We spend 3.8 we take in 2.17 therefore we have a yearly new debt deficit of 1.65 trillion dollars.
Now, the national debt. Here’s we can tell right away. This is old information because we already passed 17 trillion, okay. But, a couple of years [0:02:00] ago we were at 15 trillion. Fifteen trillion dollars in national debt. That’s a keen # [0:02:05] number. National debt gets added to every year, okay it’s a grand total number.
Unfunded liabilities. What are unfunded liabilities? What’s a liability is it something good or bad? Liability is bad and unfunded that’s a bad, bad, okay. You have no idea reading the papers this thing that you owe. Unfunded liabilities, at least a 114 trillion. That number is dependent on which generally set to the accounting practice it is right to give you a way more than 114 trillion but at least a 114 trillion dollars in unfunded liabilities. The great majority this is from our Social Security and from Medicare, okay.
Now the recent budget cuts, sometimes we get on the legislators case they say, “Come on guys, # [0:02:46] take a real chunk out of this, really cut back somewhere.” And they say, “Okay, we are going to get serious we are going to take out 38.5 billion dollars.” Okay, that’s a lot of money to be cut back.
Now, in order to understand what all these numbers mean, because like I said, billions, trillions, [0:03:00] this is kind of goes off into nowhere into oblivion. Let’s look at this as if you are a household budget. What I’ve done is I’ve taken off eight zeroes in order to give us a perspective what we are talking about here.
My annual family income let’s say is $21,700, okay, so you can see how, what essentially I have done is taken off the eight zeroes of 217 trillion and now it’s only 21,700, just take out those eight zeroes and you have a new number. The annual family budget then is $38,200 okay. I am spending $38,000 and I am only taking in roughly $22,000. Okay, see how I do that. The comparison of the upper numbers there just taken out was eight zeroes.
So the new debt on my credit card each year as a family — because I don’t have any other way to pay for it is $16,500. Wait I’m making $22,000 and I am putting on my credit card an additional $16,000. I am spending $30,000 and I got no choice $16,000 every year on my credit card. Is that out of control? It’s completely out of control isn’t it?
Now, not to worry about my [0:04:00] outstanding balance on my credit card is $150,000 and I’m adding $16,000 every year to that, okay. This is the story of my family household budget. But really what’s the story of, this is the story of the U.S. Government. And you could see how upside down we are monetarily.
Now, if future obligations is unfunded liabilities, right. I have seven kids and we are going to have some awesome weddings and et cetera. We have to pay for college, I know, I know that I am on the hook for 1.14 million dollars. I owe that somehow in the future, I am going to pay for that somehow in the future in the next 10 to 15 years, okay.
This looks like a very rosy picture from my budget, my family budget. No, it doesn’t even come close to being logical, does it. So, my wife when I sit down I say, “We are going to be serious, we are going to cut back and we need to cut back.” Okay, we say, “You know we are going to cut back $385.” That’s right, $385 that’s it and we’re supposed to be praised I mean serious about cutting [0:05:00] our budget, right?
Really, we are going to cut $385 when you owe that much money on your credit card on your future obligations. So you can see how it’s really comical how much the Congress cut back. And little asterisk next to that is the idea that they really didn’t cut back at all, all they did was reduce future increases by 385 billion dollars or 38.5 billion dollars. All these decrease future increases. So they still increase it’s not as much and we are still to praise them for being so serious of cutting back on the budget, okay.
So, anyway, this slide to me helps clarify, what kind of situation we’re in? We’re a hole or upside down case and monetarily we have something to look at.
I like this quote by George Washington. This contextually here, this is after they’d won the war for Independence, okay, and he said, you know, this is act that’s soothing, well gosh, once we won the war for Independence things should be peachy, right, it should be rosy. Here’s the quote that [0:06:00] Washington offers. He says that, “Any person that told me that it would have been such a formidable rebellion thus exist, I didn’t thought I am fit for a madhouse, what’s going on here.” 1787 we already won the war for Independence, four years ago, things should be good, right. Someone had told me what a formidable rebellion exist in the United States, you’re nuts. We just won the war, remember. Things are good and yet they weren’t, were they?
These were crazy. Europe was waiting, European nations were waiting for us to fall apart again. A lot of them didn’t even leave our continent, they have their own forts still in our land waiting to take over, Britain and France. One of the telling stories is our continental dollar. We printed the continental dollar to pay for our war debts, to pay our soldiers, to pay supplies, et cetera.
The continental dollar when it came out is worth $1 right? And by the end of just a few years it was only worth two pennies, okay. It even inflated so much that it was only worth two pennies at that point. There are some huge problems. The States were fighting, some citizens were killing each other there was all kinds of [0:07:00] chaos, literally rebellion on our hands, okay.
And the monetary situation is one of the biggest things. Because money wise, this continental dollar was only worth two pennies it was supposed to worth a dollar. It was worthless essentially.
I figured another quote by George Washington. In this quote since 1791, okay, in 1791 what had happened between 1787 instead of the previous quote and then four years later, what had happened is the Constitution, okay? Here’s what he said, “Tranquility reigns as opposed to four years, tranquility reigns, our public credit stands in the high ground which three years ago would have been considered as piece of the madness to have foretold.”
Okay, what happened, like I said before what happened is the Constitution? Were they in dire straits to have some major monitory reforms, they did, what they do. They made two principles of freedom in the Constitution and the result was tranquility reigning and public credit standing on high moral ground. Will they get their country in order again? [0:08:00]
Some people would say we’re beyond hope. Our monetary system is gone. I would say, why don’t we look to what the founders did? What George Washington proclaimed was look, go to the Constitution apply those principles and we can save our monetary system. So we are going to spend our time today looking at the principles of the Constitution in regards to money. And really, it’s a beautiful thing, I hope you get excited about it as I do.
So let’s throw out some definitions like we always do. What’s money? Money is any article or substance used as a medium of exchange, a measure of wealth or means of payment. That’s what money is. It is worth to understand that government didn’t create money, money is a natural phenomenon that happen between people. Okay, you have, I don’t have what you want so what if I give you this thing that you can use with someone else to get what you want that thing is called money. That wasn’t created by government it was created by naturally thinking and acting human beings, okay.
What are some characteristics that money should have? Well, first of all money should have some type [0:09:00] of intrinsic worth. If you choose something like trash to be your money it’s not going to last very long. You don’t even want it in the first place. It should have a type of intrinsic worth to it. It should also be divisible because in the market place of goods and services, buying and selling and trading, if your money, the very smallest common denominator of it, some huge chunk and you can’t divide it how do you spend a smaller commercial transactions, it has to be divisible, it has to be divided into smaller and smaller increments.
Thirdly, your money should be portable. If you have to hook up your trailer and load up this huge piece of money to take it into market every day and to use in your commercial transaction that’s not going to work very well. It should be something that’s portable or easy to be carried. It should be durable because if you drop your money on the ground and it shatters or if you sit on it wrong and it, whatever, [0:10:00] that’s not your regular money because it’s not durable. That’s not going to last. If it oxidizes if it’s wet and it erodes that doesn’t work for you if you don’t have money that lasts, okay that’s durable.
Lastly, it should be relatively scarce. Because if you choose money to be like sand and so well, here’s my money, it’s so plentiful it’s not scarce it’s so plentiful that has no value because it just commonly found everywhere. If it’s not scarce it’s not going to have any value, okay.
So, those are the five attributes of what money should be and people use different types of money throughout the history of the world, maybe its fish. Things that are edible. Tell me how fish has durability. The first day, it’s an asset, right, after the end of the first day it becomes liability, nobody wants it anymore you can’t use his money. So its durability is not rigorous, because fish don’t last too long. It’s nice for a simple economy but it doesn’t have any durability.
What about shells. Durability again, right? You sit on these things, they break what about the uniformity. You have this little country shell [0:11:00] that’s a little bit bigger than the other country shell, well how much is it worth, well, depends. It gets very complex doesn’t it? There is not some uniformity there.
What about cows. Tell me about their portability. How portable are cows to be used as money. They’ve been used as money in the past. They are not that portable, are they? They are very inconvenient to use. What about their divisibility. If you are on a trade, some of my cow for your chickens. You will have to, lap off, and kill my money in order to get some of you chickens. You are not going to want my money anymore because I killed the cow, right? So, some issues there as well.
So what throughout history has been most commonly used as money? It has always been gold and silver. Why is that? Because gold and silver has won out in the free market of ideas. It is the most durable, portable, divisible relatively scarce intrinsic worth substance that there is. It wins. Not because government edict, not because they said it shall be, but because people said this is what works the best, this is what is the most [0:12:00] qualifying for the terms that we want money to be.
Actually the thing about money is about gold and silver why its good money as it’s three other elements. The first one is, it’s homogenous, right? You have an ounce of a diamond is it necessary the same value as another ounce of diamond. Now it depends on its cut and clarity and all that stuff, right. When you buy an engagement ring they try and tell you about the four C’s, okay.
The other thing it is used and valued in every culture throughout the world, be it religious purposes, construction purposes, et cetera decorative purposes it is universally accepted. And thirdly, it has a high value to weight ratio. What little, little piece of gold is worth a lot? It’s not that there’s not enough coal that equals and have the same value as the gold, but you have to have the whole room full of coal equal one little tiny speck of gold, right. So, the high value to weight ratio.
Now, in our modern and lightened age, we rejected some basic ideas about the value of money. Now we have three different types of money. The first type of money [0:13:00] is commodity money. That is the one we just talked about. Commodity, what do you think about when I say commodity. We, the greens, those type of things. Commodity actually has value itself. Gold and silver coin has value itself.
Second type of money is this money called fiduciary. Notice the little yellow stamp on this piece of money. Fiduciary, what does that mean? It means trust. The piece of paper has no value except for the fact that you can trust you can turn it in for gold and silver, the real money, the commodity money.
We take it one step further and say that oh, our last type of money is fiat money. What’s fiat mean? Fiat means edict, mandate. It’s worth that because the government says it’s worth that and that’s it, there’s nothing backing it up. It’s simply the full faith and credit of the United States Government. They say it is therefore it is. Okay, that’s fiat money.
Now, it’s like a little comparison here. We’ve got a monopoly money and we’ve got the fiat money. Our current fiat money [0:14:00] is called the Federal Reserve Note. People call it the dollar but its real name is the Federal Reserve Note. When you look at it, it even says that, Federal Reserve Note at the top $1.00, that’s really a Federal Reserve Note.
Now, how are they any different? How is this $100 bill different than the $100 monopoly bill? Well, it’s got higher quality paper higher quality ink we hope but when you’re playing monopoly and you have this yellow $100 bill what can you do with that, can you buy houses, can you buy properties, can you buy hotels? Yeah, right? And no one can say you can’t. You say, “Yeah, I can according to the rules of the game, I can use that money to buy whatever I want to buy.”
When the game is over though, can you take your $100 yellow monopoly bill and go across the street and buy some tools with it? No, why? Because the game is over, you’re not playing monopoly anymore. As long as we’re playing the games at the Federal Reserve, then the Federal Reserve Note works. But what happens when the game of the Federal Reserve Note is over? It’s just a piece of paper.
Now Voltaire [0:15:00] who is a socialist. I don’t like to quote him very often, Voltaire said, “Paper money will always return to its intrinsic value which is paper, zero, nothing, it’s just paper.” And that’s what happens, paper money is just paper. That’s an important point to understand.
One of the thing, I’ve done this presentation quite a few times and it dawned on me one day, well there’s another way, this is monopoly money. How is it monopoly money? Because the Federal Government has given the power, the monopoly power over legal tender to the Federal Reserve Note. The Federal Reserve Note is the only legal tender it has monopoly over legal tender status in the United States. That’s another, its monopoly money because it had the monopoly over the market.
Okay, so what is a dollar? I’ve got an object lesson point here. I’ve got a $20 bill, okay, it’s actually a $20 Federal Reserve Note we call it $20 bill. If I were to take you $20 bill and say, “Hey I’ll give you $1.00 for your $20.” Will anyone take me up on that? No, why would I do that. [0:16:00] What if I clear my throat and say, no, no, no I’m sorry I didn’t understand, what I am going to do I’ll give you $1.00 for your $20 who would take me up on then. Anybody would, right? “I’ll give you your dollar.” “Oh, wait a second.” Why would I say I’ll give you a dollar for twenty did you say no and then I say, “No, no, no I’ll give you a dollar for twenty” you say, “Yes” what’s a dollar. I’m confused. This $20 bill remember is not a $20 bill it’s a $20 Federal Reserve Note and this dollar it actually has what in it, it’s actually commodity money has silver in it, that’s why people will say, “Yes I want this” even if there’s only one of these and twenty of these.
Let’s look at that a little more closely to understand that. So what’s a dollar? Okay, this is a coin you see here, isn’t it interesting, it’s called a Spanish piece of eight. The dollar that is in circulation at that time is called the Spanish milled dollar, it is also called the Spanish piece of eight or also called the column dollar. The reason why it is called the Spanish piece of eight because it is scored on the back you can pop it in half you could pop it quarters and you could pop it in eighths. [0:17:00] and each eighth was called the bit. Anyone heard eighth bits of dollar, okay, two bits a quarter, that’s where it comes from.
Now another little thing about this is called the column dollar, like I said because of this little columns that you see on it. Now, these columns are surrounded by an S-shaped little ribbon, so, as I click here and we work through it what it looks like what is that, that’s the dollar sign, isn’t it? That’s where the dollar sign came from. It is from the Spanish milled dollar.
So what is this thing we call a dollar. The dollar is actually mentioned twice in the Constitution. Once in Article 1 Section 9 Clause 1 and once in the 7th Amendment. But the founders never defined what a dollar was they just simply said the word dollar.
So historically, Jefferson had an arch enemy his name was Hamilton, they’re both on opposite sides, a lot of definitions, but, in this definition in this idea they needed to come to the definition what the dollar was they’re on the same page. Okay, what they did is they went into the market and found out the Spanish milled [0:18:00] dollar was being circulated.
When you do a scientific experiment, find out how much silver is in it. So, they simply took a market analysis. They didn’t politicize it, they didn’t campaign they simply took a market analysis found some of them rubbed thin and some of them rubbed off the edge and added their sample they found that there is an average, 371.25 grains of fine choice silver in each dollar.
And so, under the power, under the Mint Act of 1792 — one of the very first acts of the very first Congress — they defined the dollar to be 371.25 grains of fine choice silver. That is the definition of what a dollar is. It’s a mass, it’s a definition, it’s a scientific number it is not a politicized or governmentally manipulated idea. The dollar is simply a measurement of content of silver in the coin.
If anything, it is important to understand that. That’s the basis behind the whole monetary system. It is that it can’t be changed [0:19:00] by government. It is simply defined and then the people themselves are the ones who decide on what that thing is worth, what the value of the dollar is. Will it buy me a chicken, will it buy me — that just depends on the market.
Now let’s get the founders view on money. Washington said that, “If we should use unfunded paper money or any similar species of fraud, we shall assure to get a fatal stab to our national credit in its infancy.” Talking about unfunded paper money, like this stash? Yeah, if we use unfunded paper money he calls it what it is, it is a fraud it is a fatal stab.
He says, “Paper money will unbearably operate the body of politics the spirit liquors on the human body they prey on the vitals and ultimately destroy them.” He is talking about liquors, right? It’s a great analogy because what do you do when you’re drunk? You make a bunch of bad decisions and you just do more and more and more that’s what happens and that’s the intoxicating power of paper money.
There is more and more paper money that will not fix it, just pour more money and that will fix it. That doesn’t fix it, does it? [0:20:00] Now, this quote from Washington, “Paper money has had the effect in your State.” This is a letter to the dissenter friend. “Paper money has had the effect in your State that will ever have, to ruin commerce, to oppress the honest and to open the door to every species of fraud and injustice.” That’s what happens with paper money.
Jefferson. He started to get a feel for how they felt about paper money. Jefferson says, “Paper is poverty. It is only the ghost in money and not money itself.” Notice that whenever the founders talked about money they’re talking about money, right, commodity money real money and when they use the adjective paper, the money they’re talking about paper, right? They’re very clear. Jefferson says, “It’s not money it’s the ghost of money.” This is money.
Madison says this, “The extension of the prohibition that builds the credit must give pleasure to every citizen in proportion to his love of justice and his knowledge of the true springs of public prosperity.” There is a lot of words in there and they spoke a lot more eloquently. Here is, I am breaking it down into modern day English and interpreting what the founders said. [0:21:00]
It says this: “The Americans are happy to know that under the Constitution, government issued paper money is prohibited.” That’s what its saying. Because you understand the true springs of prosperity understand that government being restricted from issuing paper money is that true spring.
Another quote from Jefferson, he says, “The trifling economy of paper is the cheaper medium.” In other words, like I understand, there is an economic value in having paper because it’s cheaper, it’s cheaper to produce. We call it money is way cheaper than coined money. That’s true, I’ll give that to you.
Here is the second thing, it is convenient for transmission. No question, easier to carry one of these that has 10,000 on it than to carry 10,000 of these, right? It is more convenient to transfer, that’s true. I’ll give that to you, but, that was nothing in opposition to the advantages of the precious metals. Paper money is liable to be abused, has been, is, and forever will be abused in every country in which it is permitted. True, okay, historically people can’t resist [0:22:00] the temptation to abuse paper money, to create money out of thin air simply by printing it. That’s always will happen always will happen.
Now there is some famous founding fathers, right? Madison, Washington, Jefferson. What else are some of those less famous ones, what else is some of their comments in the Constitutional Convention? Let me give you a couple of indications how they felt. Albert Eldridge from Connecticut says this, “Shut and bar the door against paper money.” James Wilson, “Remove the possibility of paper money.” Pierce Butler from South Carolina, “Disarm the government of such power” and lastly John Langdon said it pretty clearly, “I reject the whole constitution if paper money is not barred.” Why? Because the power to destroy the monetary currency of the country is the power to destroy the country. They’re intertwined together.
And to give the government the power to defraud the people through printing money is something the rejecter, the founders rejected completely and entirely. Over and over it seemed dozens [0:23:00] cosigned already, right. Very clear they are against paper money.
Case analysis again on the Constitution. Let’s see where these cool ideas actually show up just like what we did in all of our presentations. Where quotes meet principles how do they show up in the Constitution? We will start with Article 1 Section 8 Clause 5: “Congress shall have the power to coin money regulate the value thereof of a foreign coin and fix the standards of weights and measures.” We will start from the bottom of these three or four different clauses in there.
First one, the fixed standard of weights and measures. Why would it be important for Congress to be able to set the standards for weights and measures? Let’s say in commerce, every State gets to set their own definition of what a pound is. “Hey, I want to buy a pound of honey from you.” “Oh, you’re talking about the Floridian pound or a Wyoming pound?” “No.” We are going to give that power to Congress to set a fixed standard of weight and measures otherwise commerce just gets slowed down with this intricacy if it doesn’t need a half an hour we need to have the standardized weights and measures. That was pretty clear. [0:24:00]
Now, the thing about here is to regulate the value thereof in a foreign coin. So, Congress has the power the ability to regulate the value of foreign coin. How would they do that? Let me name this # [0:24:12] what their coins are worth. No. But they can tell America within our economic system how much each foreign coin is worth based on what? On a vote or a politicized event? No, based on a fact.
If the Congress finds a reputable mint in Japan that coins or mints a coin that has 371.25 grains of fine silver in it consistently, Congress can say that coin from Japan is worth how much? $1.00, okay. What if they find a coin from a mint in Austria that consistently has 742 some odd ounces of silver in it, twice as much silver, they are going to say that coin, the Austrian coin is worth $2.00?
Now interestingly historically gold and silver are always been [0:25:00] about, gold has been about 16 times the value of silver. And so, what if there is a gold coin minted in Australia that had 371.25 grains of gold in it, it be worth $16.00. But notice, it’s all pegged to what? To silver. It is all pegged to a commodity it is all pegged to an actual mass amount. It can’t be politicized and manipulated or inflated or created it simply is. It’s a weight and has as much silver in it, it is worth this much in our economy. That’s the power they have.
And what does that do, it coincides with the proper old government their role their job is to protect the life, liberty and property of the people. Not to influence and change and manipulate the value of the dollars but simply to set it and so that people can be secure and know that what they’re dealing in is the actual money and not something that they can change in a whim of a government or a political party [0:26:00] or a campaign slogan.
Now, the other value to regulate our coined money as well. What does that mean? Same thing, right? If we have a coin that comes out, it’s got a picture of Madison’s head on it and has 371.25 grains of silver it’s going to be worth $1.00. 742 grains of fine silver, $2.00, et cetera they can regulate their own coins and determine the value thereof.
This last one, Congress shall have the power to coin money. Now, some people argue that the power to coin money just means the power to make money the power to print money. It’s all there, it’s all the same thing. Is it the same thing? I argue that it is not the same thing and I think the founders argue that it’s not the same thing at all.
And that’s why the plain language of the Constitution says, “They have the power to coin money.” Not print money not make money to coin money. Why? Because paper and coins are two different things. This thing can be printed in the thousands per minute, right? [0:27:00] This thing it’s metal, it’s a precious metal it is a commodity don’t just create inside of thin air this essentially do create out of thin air. There’s the difference there.
Now, another important point to make in coining money. All that Congress is doing is they’re sticking their stamp of approval on a piece of metal that says, “We in the U.S. Government recognize this has a certain content, purity and weight to it and therefor is $1.00 therefor is 371.25 grains of silver.” That’s all we’re doing, just putting our stamp of approval to say it is what it claims to be that’s all. They are not politicizing or manipulating the money market it is simply verifying what it is and that is in complete compliance of the government’s proper role is to protect the property of the people through regulating the value of their coins based on facts not based on politics. That makes sense?
That’s incredibly important. And like I said in the beginning when the innocent is true and simple principles is true it makes our monetary system really easy because what will be happening today [0:28:00] if this is the money we used, it’d be simple, I don’t know if that’s a dollar and has the same purchasing power of a dollar is that it, it’s 371.25 grains of silver. Right, this goes all over the face there is printed however they want to they make whatever, you know, just entries in the computers et cetera.
This is real money. This is the Goldstein money, right? Now, in order to understand this Article 1 Section 8 Clause 5, “Congress has the power to coin money,” we need to look at another part of the Constitution where it talks about coining money. This is in Article 1 Section 10 Clause 1 wherein it says, “No State shall coin money.” Okay, so we will have a little pop quiz here. Can States coin money? No. Can the Congress coin money? Yes. Why? That’s what it says in the Constitution and it makes sense with Principles of Liberty.
Moving on to the next part of Article 1 Section 10 Clause 1 it says, “No State shall emit bills of credit.” What does it mean to emit a bill of credit? [0:29:00] we can’t do, what’s it mean? Well, here is what it means. You got a bar of gold, right, you’re carrying this big bar of gold in your pocket. Like, this is lot more convenient if I just gave it to a bank, they’ll safely deposit it and they’ll give me a little piece of paper that says, “The bearer of this note has 100 pounds of gold in store at our vault in this bank.” They essentially give you a bill of credit. You have a credit of a hundred dollars or something of gold in there in their vault. So they issue this bill, that’s a bill of credit, emitting a bill of credit is issuing a bill of credit it is printing paper money to represent the real money that’s in store somewhere in value. That’s emitting a bill of credit is.
Essentially what it is, it’s an IOU. If I turn that in the Bank will give me my bar of gold. It’s an instrument of debt. This piece of paper means that the Bank owes me this when I give that back to him. Now, when I give them back the bill [0:30:00] of credit they give me back my gold. That’s emitting the bill of credit is.
So, no State shall emit bills of credit, can States do that? Can States print paper money to represent the gold that they have on hand? No, explicitly it says they can’t emit bills of credit. Why not? Well, because, the reason why not, is because the temptation is simply too great to print more paper than there really is gold. And that process is called fractional user banking to print more money and only have a fraction of the money that’s out there represented by your real money your real gold on hand.
What happens when the four people who have these bills come to collect their borrowed gold that the bill of credit says they can collect, what happens? Well, the only real answer at this point is to divide that bar [0:31:00] of gold up into four. So, all of a sudden, the people who have a note, he says I have $100 or something to get $25 worth of gold. What happens in reality in the real world, that news spreads like wildfire and there’s a run on the bank and the bank shuts down close their doors. The paper money that the people are left holding becomes worthless essentially.
So, government’s role is to protect people from this happening. To protect them from having their properties stolen not to participate in this. So it only makes sense that’s why Article 1 Section 10 Clause 1 says, “States can’t participate in emitting bills of credit.” The temptation is just too high to print bills that are not backed up by gold.
Now, it is very clear, States can’t do that. But, can Congress? What does Article 1 Section 8 Clause 5 say about Congress emitting bills of credit? It’s silent, isn’t it? It doesn’t say they can emit bills of credit it doesn’t say they can’t emit bills of credit so what do we do when the Constitution is silent on an issue? There is an explicit language in the Constitution that [0:32:00] addresses this issue and it’s called the 10th Amendment.
Here’s the 10th Amendment says: “The powers are not delegated to the United States by the Constitution.” Let’s be clear here, what are we talking about, we are talking about the power to print paper money, aren’t we? So, the power to print paper money is not delegated to United States by the Constitution. Is that true? Yeah. It is never delegated, it is never explicitly delegated.
Now, the power to print paper money is prohibited by to the States, you already read that, right? They can’t emit bills of credit therefore 10th Amendment says, those powers that are over the States respectively unless they are prohibited — which they are — or to the people.
So very clearly, the 10th Amendment says, “If the power is not delegated to the United States, it isn’t there.” The fact that the Constitution never delegated to Congress to the United States, the power to print paper money, means that Congress doesn’t have that power. That’s what the 10th Amendment clearly states.
It says very clearly this power to emit bills of credit to print [0:33:00] paper money, Congress can’t do it, 10th Amendment, States can’t do it Article 1 Section 10 but according to the 10th Amendment the people can. # [0:33:10] can you and I emit bills of credit. Can I take a piece of paper and say, “I owe you for your truck I owe you $10,000.” And if you want to do it, can you? Sure, I’d be glad to do that.
But, we can trade. If I want to trade a chicken for a cow, can I do that? Yes. You can trade whatever you want to, you can emit bills of credit people have that right. So, the people can issue bills of credit, can print paper money. Can private banks print paper money? Sure, those are entities of the people, right? They can print paper money. And if they want to print paper money, they want to stay in business they got to back up that paper money with gold, otherwise people are going to say, “Wait, how do I know which is monopoly money don’t have any value what’s going on here?”
Now, if I want to start a bank and I think to me it is much more convenient for people so I start issuing paper money called Jeff Hino’s Notes, [0:34:00] the people want to use that, that’s great. There is a built in natural law there that stops me from fractional reserve banking though. Why? Because you if you’re smart if you’re wise you’re not going to take a bill from me unless you first given me gold in return. Otherwise, you are going to know, look I am just taking money has no backing to it. You are going to make sure you give that to me.
Now, what if my partner in crime I am printing too much of bills and giving it to him and we start to inflate the money supply. We start to put up more money out there and just over and over inflate the market. Well, what happens? The same thing with each person holding their $100 bill, right? When they come to turn in for gold they realize, hey that’s not there.
But, what’s the mechanism which people realize, hey, my gold isn’t there. Because what if I just want to trade in paper money, trade in paper money, trade in paper money they never even go and bother to trade it in for gold because there is much more convenient I am on excess paper money so why do I mess around with the gold.
So, what’s the mechanism for people to realize [0:35:00] — wait a second — they’re printing money paper money that doesn’t have any gold behind it. There is a mechanism in the Constitution. Let’s look at that. So, it’s fascinating, it is the next part of Article 1 Section 10 Clause 1, it says, “No State shall make anything but gold and silver coin in tender in payment of debts.” No State shall make anything but gold and silver coin in tender in payment of debts. So, does the government have the privilege of printing paper money to pay for the debts? No. Government has to use gold and silver coin to pay their debts and to receive payment for their debts.
So, when it comes time for you and me who are trading in Jeff Hino’s Notes to pay our taxes to our State and Federal Government, what do we have to do? Can we pay them in paper money? No, not according to the Constitution. We have to turn in our paper money for gold and that’s the mechanism.
We show up to get our gold and say, “Oh shoot sorry you only get a quarter of the gold that you had on deposit because we printed too many notes, we printed too much paper money against that.” That’s the mechanism. [0:36:00] So it keeps the issuer of the paper money honest because they know that people have to turn on their paper money for gold at least yearly often, much more often and so that paper money is controlled naturally in the free market because of this prohibit, this call for the government to only accept gold and silver coins as payment in debts.
But is that what’s happening today? No, in fact the exact opposite is happening. Let me read this to make sure it’s clear. Government not only allows fractional reserve banking, inflation and printing of paper money but it has taken it many, many steps further by doing the exact opposite what the Constitution calls for by disallowing gold and silver to be used as legal tender. By only allowing paper money to be used as legal tender and by granting monopoly over the printing of the paper money and the accompanying interest rates of its loan rate to a private entity called the Federal Reserve.
So the reason we have some monetary problems is because we’re not following the Constitution. In effect we are doing the exact [0:37:00] opposite and to the nth degree of what the Constitution tells us we need to do which is allowing government to defraud in getting government the power to inflate fractional reserve, give power to the Federal Reserve to do these things. Do exactly the opposite what the Constitution calls for.
Here is a little quiz for you. What is Constitutional money? What is Constitutional money? What is Constitutional money? Now, here is a question that you and after going to this presentation people get confused what are these money right here, that’s Constitutional money. It’s backed up my gold so is that Constitutional? No, # [0:37:39] money it doesn’t matter what type of stamp it had to say it’s worth, it still paper money. The only Constitutional money is coin. Because coins represent real value and cannot be manipulated and printed at will at the Government’s pleasure.
That’s why they said they should coin money that’s a very simple concept it’s a principle of freedom to protect the property of people. [0:38:00] to explain that more clearly, this has a certain content purity and weight. It has a real value in it, that’s why it’s real money and this is just representative of real money. That’s the difference.
What else does the Constitution have to say about money? There’s a lot. Article 1 Section 8 Clause 6 says, “Congress has the power to provide for the punishment of counterfeiting the securities and current coin of the United States.” In the Mint Act of 1792 the same one they used to define the dollar to be 371.25 grains of silver. That same Act they used their power in Article 1 Section 8 Clause 6 to define the punishment for defrauding for counterfeiting the coin of the United States. What was the punishment?
It was a capital offense it was death. If you defraud the current coin of the United States you are guilty of death. Why is that? Because you manipulate and control our money you manipulate and control our Government. A little hypocritical today, right? That’s exactly what the Government is doing and yet they’re the ones who are supposed to be protecting us from that happening. [0:39:00] and that’s what our Constitution has written to protect that from happening.
And the Government has taken up to size and say no, no we’re going to do what we like to do. We are going to get involved in the monetary market get rid and try to save monetary system by doing what we are not authorized to do. And in the course, what have they done, they destroyed the monetary system. Which only makes sense. You buy the principles freedom you will reap the consequences.
Next Article 1 Section 8 Clause 2: “Congress shall have the power to borrow money on the credit of the United States.” Now, when I first did this presentation I didn’t even address this. You know, it says, “Borrow money” actually it has the word money in there. I didn’t print my money in the Constitution presentation because it bugged me.
This is the whole problem, right? They’re borrowing money over and over and over. But, when you look at it, it becomes very clear that the two key words in this that the founders implemented was to borrow money, not to print money and not to borrow paper money but to borrow money. In times of war, for example, when they can’t generate enough money to pay for war, can they borrow money from Austria [0:40:00] from other countries from Germany, yeah, they can.
But, what type of money. The money, the type of money they can borrow money from other nations, right? And in any nation that lends us money if they have half a brain they are going to say there is a contract here. You borrow this money you pay us this much back. So, the Congress can, instead of levying taxes to pay for debts they do have the authority under Article 1 Section 8 Clause 2 to borrow money on the credit of the United States. They can do that. But, once again it’s not printing money, it’s not borrowing paper money, its borrowing money.
It is interesting, this Article 1 Section 8 Clause 2 came directly from our, the previous Articles in the Federation wherein it said this, “Congress shall have the power to borrow money or emit bills on the credit of the United States.” That’s what the Articles in Federation stood for and allowed, but, the founders said, “No, no, no, we reject this.” They actually removed that provision from Article 1 Section 8 Clause 2 or from the original Article of the Federation and when it came into Article 1 Section 8 Clause 2 it had, emit [0:41:00] bills on credit, removed.
So, the founders directly looked at paper money in the eyes. Not only historically not only if there are quotes in the principles but also to look at what they did in the # [0:41:10] itself, they said, “Paper money will not be allowed in our Constitution, we do not have the power to emit bills of credit.”
I don’t know how many more times I can say that, “Congress can’t print money.” It is very clear in Article 1 Section 8 Clause 2 and all the other different provisions we looked at, they can’t do that. Let’s look at two more articles and develop a model around there, I think they’re quite interesting.
Article 1 Section 7 Clause 1 says: “All bills for raising revenue shall originate in the House of Representatives.” Article 1 Section 9 Clause 7 says: “No money shall be drawn from the Treasury but in consequence of appropriations made by law.” It is very, very clear that Congress is in charge specifically of the House for raising revenue they are not in charge of the money, right?
They say that the first strings are in the House. They are in charge of the first. And they have to make a law in order to pull money out of the Treasury. Very, very simple. What’s in the Treasury? [0:42:00] the gold and silver coin that people paid in taxes. If that’s going to come out the House of Representatives has to write a law to pull it out for a specific purpose. What’s that purpose? Within the proper old Government, to protect the rights of the citizens, period. It’s that easy, it’s not a complex system.
So now let’s take the model around these two clauses we just talked about. This is prior to 1913, okay, prior to the 16th and 17th Amendments and prior to the Federal Reserve Act, all three of those happened in 1913.
Who is in charge in America? Principally, theoretically on principle the people are in charge, right? Now the people hire — according to the last two clauses we just read — the people hire someone to manage their money. Who is that? The House of Representatives, that’s who the people hire, it’s the House of Representatives, they elect them.
Now, on the other hand, prior to the 1913 we have State Legislatures and who do they hire to represent their interest, they hire the U.S. Senate, remember this is prior to the 17th Amendment which destroyed that relationship.
Now, the basis behind Republican [0:43:00] government is the idea of representation. When you hire someone to work for you they do what you want them to do. So, what does the House of Representatives do, they look to their constituency they’re the people and say, “What do you want us to do?” The people say, “How about give us a Free Lunch Bill.” And the House says, “We are constituents, okay, we’ll do that.”
So they write up a “Free Lunch Bill” and they get sent to the U.S. Senate and what does the U.S. Senate say, “Hmm, let’s ask our constituency the State, you guys want to do this?” You are our constituents and the State says, “Well I don’t know, let me ask my constituency, let’s ask the people, hey people do you guys want to increase taxes in order to pay for this Free Lunch Bill?” People say, “No, no, we wanted a Free Lunch Bill, not a Lunch Bill, a Free Lunch Bill, no don’t do that, don’t raise taxes.” The State Legislators will say, “Hey, Senate, kill that bill, we don’t want it to pass.” And what happens is the Senate kills the bill.
This process is set up originally in the Constitution before the 16th 17th Amendment before the Federal Reserve Act. What did they do? They provided check and balance of [0:44:00] her on who? On the people. They protected them from the ludicrous idea that you can get something for nothing. And once you realize, “We have to pay for, oh, we don’t want it then.” That this check and balance system is set up that way to make sure that it wouldn’t just be going in to try and get a Free Lunch Bill.
Now, this law based on three critical principles. The first principle is representation. Originally the two Legislative branches represent two different bodies, the House represents the people and the Senate represents the States. Secondly, payment for programs comes through taxes. People can decide if the bill or the program or the war — name your favorite issue — is worth the rise in their taxes. It’s a direct pay. If you want this you have to pay for it. “What happened, no, we don’t want to pay for it, never mind, we don’t want that bad.” That’s the second principle, direct payment for what you get.
So, the third point is direct tax collection. Okay, prior to the 16th 17th Amendment only the States can collect taxes directly from the people. [0:45:00] this is upheld in this Article 1 Section 2 Clause 3 is: “The direct taxes shall be apportioned among the several States which may be included in this unit according to their respective numbers. The only way for the Federal Government to get money is for the States to directly tax the people. That is why they asked of you, do you want us to tax? They said, “No, don’t tax us.” Well then tell the Senators not to vote for that bill, exactly.
One other point of interest here is the idea that only States can collect taxes from their people to pay the Federal Government. That’s check and balance. Is the Federal Government won’t dare go out and borrow money from other nations unless they know the States are going to pay they are going to bill they collect from their citizens to pay back to Congress for that decision. Therefore, that’s why Congress is in charge of deciding whether or not they want to go and borrow money.
And who is Congress? It’s the people’s Representatives in the House. But it is the State’s representative in the Senate. If the States says, “Don’t borrow that money, because we’re not going to pay you back, we’re not going to ask our citizens to pay for that [0:46:00] loan or pay for that whatever it may be,” they’ll be able to control their Senators and say “Don’t do that.”
Otherwise, Congress will often make a loan or get a loan and then the States say, “We’re not going to we’re not going to collect the money.” That’s where the check and balance comes into play if the States only can get the money from the people — prior to the 16th 17th Amendment — only the States can collect it then Congress, meaning the Senate better know for sure if the State Legislature will support them in doing that, the way they know that, because the State Legislature appoints them to be their Senators, that’s how the States interest are represented.
Now let’s look at after 1913 this after the 16th Amendment 17th Amendment the Federal Reserve Act all that happened in 1913. We’ll look at this little system, who is in charge still, the people are in charge and we still hire the House of Representatives but now, the people also hire the U.S. Senate, direct popular election.
Why is that? Because of the 17th Amendment. What happens to the State Legislators? Well, the 17th Amendment says, “The States, [0:47:00] you’re out.” You don’t have any say you are out of the picture. The people are in charge here. This is a popular election now. The States no longer have their interest represented at the national level, the Federal level.
Now, people are you, there still is accountability. The House and Senate, right, they’re accountable to the constituents to the people and say, “What do you want us to do?” And the people say, “Oh, now it’s their Free Lunch Bill.” Well, the problem is they still have to go back to them and say, “Look guys you really want to increase taxes for that bill?” And they say, “No, no, no don’t raise taxes.” Right, they get back to say, “We don’t raise taxes.” It still is the same check and balance, isn’t it? Except that, with the introduction of the Federal Reserve Act, the Federal Reserve comes in and says, “You don’t ever have to have an uncomfortable conversation, we’ll provide the money for those programs.”
Federal Reserve comes in and says, “We will pay the money for those programs.” The people like that? Sure. “Someone else going to pay for it?” “Yeah, I like that.” Do politicians like that? You bet. I give the people all they want and they don’t [0:48:00] even have to get taxed for it? Guess what? My chance for re-election just went through the roof. I am going to be re-elected because I am giving everything they want, they don’t have to pay for it.
Does the Federal Reserve like it? Yes, because they have the monopoly power to set the interest rates. When they loan money, when they print that money, they don’t do so just for fun. The people themselves are on the hook to pay the interest back for that. But they don’t tell the people that, they just print the money and pay for it.
Pretty tight system isn’t it? Pretty nice. Which brings us to the 16th Amendment. What happened to the 16th Amendment? 16th Amendment is where the Federal Government can now tax the people directly. This is the Federal Income Tax. Now, the Federal Income Tax. Ronald Regan had some curiosity about and found out where is all these money for the Federal Income Tax go? So he issued a commission called The Great Commission Report. Guess what he found?
This report found out that a hundred percent of all the Federal Income Tax went to pay who? The Federal Reserve for the interest on the debt they created by printing paper money [0:49:00] to cover all these programs that they wanted and they didn’t think they had to pay for.
So who gets hosed at the end? The people do that because they had to pay for it. They just don’t realize it because the system is set up in such a way that it’s never directly in front of their faces to say they have to pay for it.
So after 1913 it virtually destroyed this whole model, didn’t it? Why? Because look at our three critical principles again. Representation, two legislative bodies represented two groups of people, the people and the States, what was that? It was destroyed by the 17th Amendment. What about the idea of direct payment for programs through taxes, well, don’t worry, the Federal Reserve Act took care of that. “Well you don’t have to pay for it.” “We’ll pay for it.” Eventually we’re going to pay for it, now you won’t realize it.
What about direct tax collection. Well, through this 16th Amendment the Federal Government is able to collect taxes in order to pay the Federal Reserve for the interest rate of those, the paper money that they just printed.
So, what happened? We destroyed the Constitution in that area in the 16th and the 17th Amendments as well as the Federal Reserve Act [0:50:00] and we debilitated the prohibitions on government from doing these things that created a free market and money system that worked and created a system that was advantageous to who? The power brokers in the Government, big business, corporate cronyism, et cetera et cetera. Kind of interesting or kind of man mean what they did.
Now, Chief Justice John Marshalls said, “There is among the enumerated powers we do not find that by establishing the bank.” Is he right? Yes. There is never a specific enumerated power that allows them to establish a bank but it took the logic that too many people take. Here’s the logic, he said, “But because the Constitution does not expressly prohibit one, we can establish a national bank, it’s constitutional.”
That’s in defiance of what the 10th Amendment says, right? The 10th Amendment says that, “The power is not given it’s not there.” The 10th Amendment doesn’t say, “Oh as long as it is prohibited you can do it.” That’s not what it says. It specifically delineated, delegated power and those aren’t in those list [0:51:00] you can’t do them. The power to establish a public bank, national bank was not there but they did it anyway.
The First National Bank comes into existence. Hamilton is very much a proponent of the National Bank through some different political things that happened. Jefferson was able to shut down the First National Bank because it is a bad thing. They shut it down. The Second National Bank comes and revives and is established.
Andrew Jackson managed his whole entire political campaign on shutting down the National Bank. Now Andrew Jackson is a fairly colorful figure. I don’t know enough about his past, put a judgment one way or the other whether he was good for freedom or bad freedom but in this area of wanting to shut down the National Bank he was right on.
Here’s what he said, this is a little paper clipping from a newspaper. I am going to read you a quote of what he said in front of the Board of Directors of the U.S. National Bank. He said, “Gentlemen, I too have been a close observer of the doings of the Bank of the United States. I have men watching you for a long time and I am convinced that you have used the funds of the Bank to speculate in the bread stuffs [0:52:00] of the country. When you won you divided the profits amongst you and when you lost you charged it to the Bank. Well it’s a nationalized bank, who takes the losses? The people, right, it’s nationalized. You tell me that if I take the deposits from the Bank in an old Charter I shall ruin 10,000 families. That may be true gentlemen, but that is your sin. Should I let you go on you will ruin 50,000 families and that would be my sin. You’re a den of vipers and thieves, I am determined to route you out and by the eternal — and he slams his fist on the rostrum he says — I will route you out.” Cool ha?
Because I will route you out, and what happened. The Second National Bank got shut down. The charter was annulled. So, we had the First National Bank shut down by Jefferson Second National Bank shut down by Jackson, did we ever have a Third National Bank? Yes, but did they call it the National Bank? No, what did they call it? The Federal Reserve.
1930 was a horrible year. Just to review, real quick the Wilson administration they passed the 16th Amendment [0:53:00]. They passed the 17th Amendment and they passed this Central Bank, The Federal Reserve System. Don’t forget plank number five the communist manifesto is, to have a centralized monopoly an issuing power in the Central Bank like the Federal Reserve.
There is a man named Rothschild, you’ll hear this name if you learn much about the evils of the world. Rothschild says this, “Let us control the money of a nation we care not who makes its loss.” Is that true? He who controls the money controls the nation, don’t they? And that’s very true. Rothschild and his family his ilk had been starting Central Banks throughout the world. They are very much highly involved in starting the National Bank here in America as well.
Now let’s look at the Federal Reserve for a second. What is the Federal Reserve? Anyone heard of FOIA Freedom of Information Act. If you’re a government entity someone, a citizen of the United States can say, “Hey I want to look your books because you’re government entity I want to look freely at your information.” In 2009 in an attempt to [0:54:00] avoid the Freedom for Information Act request, the Federal Reserve Bank in New York Board of Governors which is essentially the Board of Governors for the Federal Reserve said this, “The Federal Reserve Bank in New York is not established with the Executive Branch.” They also said, “It is a corporation whose stock is privately held, it is overseen by a Board of Directors the majority of whom are privately appointed and none of the stock in the Federal Reserve Bank in New York is government owned.”
So, in other words we are not part of the government, we don’t have to open our books. I don’t care if your Freedom for Information Act says that government entities have to open their books, we’re not a government entity. So they admitted openly what they have been denying for so many years, “Oh no, we’re part of the government.” They’re not part of the government at all even they say that, they’re not part of the government. They’re a private entity.
So that’s the way to understand. What is the Federal Reserve? Well, the first thing is the Federal Reserve is not Federal, right? It is not tied to the government and it is not a reserve. The Federal Reserve is more or less a computer system. [0:55:00] Now, does the Federal Reserve have a lot of gold? Yeah, they’re not stupid. They play this dollar gain as Federal Reserve Note. What do they do? They turn the Federal Reserve Notes into gold, because they know gold has value. When they can pump paper money in the system and they convert that paper money into gold they do that every chance they get. Because they know that only gold has value even their own money, they’re printing they’re afraid to store. They know it’s not worth anything.
So Federal Reserve, not Federal not a reserve. We shouldn’t be laughing, we should be crying at this point. Now, the Federal Reserve Act of 1913 is an Act to provide for the establishment of Federal Reserve Bank to furnish an elastic currency and the keyword in that is elastic. What does elastic mean? When the economy is going good you can inflate the money supply you can make all kinds of loans, that’s how you make money. And when you want to turn things around you can restrict the money supply and call out people’s loans say they need to pay and you can seize their assets because they can’t pay for it. Elastic means you can show [0:56:00] the interest rates, you can show the even flow of the money supply.
Which is frustrating. But they are able to do that though. Because, they had control. They have monopoly power from the government to do what they wanted to do with the Federal Reserve then, in this Act.
Aggression losses is bad money dries good money out of circulation. So once again, if I come to you say, “Oh I owe you a buck which one you want?” Well give me the real money right, you’ll take that, aren’t you? Maybe turn on your friend and say, “Hey I owe you a buck here’s your buck.” You are going to keep this under your bed aren’t you? What’s going to happen? Bad money drives good money out of circulation. People start sticking this under their bed and start circulating the paper money. This is bad money I am going to keep the good money I am not going to circulate it.
Bad money dries good money out of circulation. That’s exactly what was happening in 1933. People were hoarding, according to FDR they were hoarding the gold and silver and they’re making the depression worse, according to FDR. The people are simply acting like logical human beings. They say, “We know there’s paper money is worth nothing, [0:57:00] we are going to keep the gold and silver under our beds.”
And so what did FDR do? He made an Executive Order that you shall, every American shall turn in their gold, period. You will turn it into the Federal Government or else we will jail you for six months or fine you $10,000. And so, what did the people do? Dutifully and patriotically they turned in all their gold. That strike you as odd? It should be odd. If they’re stealing from the people taking from them their gold.
Now, it is interesting, at that time, gold was worth about $20.67 an ounce. People turned in their gold and the government gave them $20.67 worth of Federal Reserve Notes. What happened after that? After FDR got a lot of the gold in the system? He said, “Okay, for now, gold is worth $35 an ounce.” Wait a second, government has made billions of dollars on this illegal transaction that tricked the people who think it’s patriotic to turn their gold into the country. [0:58:00]
Kind of a challenge there. Now the rule was the Americans can’t turn their Federal Reserve Notes in for gold but the foreigners still could. The foreigners knew that Americans were doing this because they need to than they felt like the gold is secure. By 1971 all of the foreigners say, “Give me my gold” and they started turning in their Federal Reserve Notes quickly almost like a run on the Bank and gold is flying out of the country so Richard Nixon took us in 1971 off the gold standard.
No longer was the Federal Reserve Note tied at all to the gold standard. Because it can’t be turned in by anybody for gold. Even foreigners were caught up in 1971. And from then on our Federal Reserve Note was a complete and total Fiat currency. Is there a problem there? Yeah, minor. Because they can print this thing to oblivion there are some challenges that aren’t there?
So why did the people accept the Federal Reserve Act. Well propaganda just like always, right? # [0:58:54] says, “Men are inflations out of control it’s going all over the place it is erratic.” Well, if you look at this chart, it pops up [0:59:00]. Everyone there is some more, right, where they inflate the money supply to pay and pay it back down up and down up and down but then you get to 1913.
And then look at the cumulative effect from 1600’s there to 1913. How much had it changed? Very, very little. Inflation was not out of control and they said it was. We need to get it back in control from 1913 on look what happened. It was completely in control, in their control what happened to inflation? It sky rocketed because from 1939 they started to have the power to print money and to inflate the money supply. Okay, so they tricked us.
What’s inflation? A lot of you will think it’s the rise in prices, is inflation a rise in prices? No, inflation is an increase in the amount of money in the system which results in a rise in prices. Inflation is injecting more money into the system. Printed out of thin air. And it is too bad things that happened to us [1:00:00] when they print money. The current money we have is worth less because there is more out in circulation. It was one of only a thousand dollar bills in circulation and now they dumped 10 million into the system now it is one of 10 million dollar bills. The price is going to go up it’s going to cost you a thousand dollars to buy a loaf of bread instead of a dollar to buy a loaf of bread.
So that dollar that you had that could have bought you a loaf of bread yesterday now can only buy you a hundredth of a loaf of bread today. A decrease in the purchasing value of the dollar in your pocket. Another thing is that puts you — so the first part is it devalues the purchasing power of your dollar — the second thing that puts you on the hook to pay interest for the money that the Federal Reserve printed out of thin air. They don’t do it for fun they print it and say we’re going to charge you 5% and who is on the hook to pay that interest back, the people. Our purchasing power is devalued and we’re on the hook to pay interest for that.
So you guys have probably heard of the famous economist called Milton Friedman. He got assigned here he says, “Inflation is taxation without legislation.” We’re never taxed [1:01:00] unless there is a legislated bill that comes across and says just like we read previously. We are going to pull money out of the Treasury. And that legislation has to come up and it’s brought forward by our Representatives our Senators and they are for taxes.
What happens to inflation? It simply, “Oh don’t worry about, we’ll just have the Federal Reserve print a bunch of paper money to pay for it.” And then there is no legislation we never had the chance to look at it. Never had the chance to tell our Senators and Representatives nor to hold them accountable for providing the money for these programs and entitlements, et cetera et cetera, that we aren’t in agreement with. Inflation is kind of an invisible way to tax the people but that ever having legislation that ask for the permission to tax us.
Here is the way John Maynard Keynes put it. “John Maynard Keynes, Keynes in economics, I have an MBA went through a, Master Program of Economics in business. Keynes in Economics is a standard nowadays. Keynes in Economics says there is a problem what you need to do is spend your [1:02:00] way out of that problem. It’s ridiculous. Here is what he said, “By a continuous process in inflation governments can confiscate secretly and unobserved an important part of the wealth of their citizens in a manner that not one man in a million can diagnose.”
Essentially what he is saying, he is saying three things. Rob you blind. That’s what he’s saying. They can rob you blind because not one man in a million would realize, “I was robbed today by my government.” Because they are printing money without me authorizing it, they’re taxing me, they’re taking out of my pocket now they authorize that to happen. Inflation does that.
Are there any economists who realize that we need the gold standard? Yeah, there was a very famous economist. Here’s what he said, “In the absence of the gold standard there’s no way to protect savings or confiscation through inflation. You have to have the gold standard otherwise you continue to inflate the money supply and steal from people. You can do that, we have to have the gold standard.” Who said that? Alan Greenspan.
Alan Greenspan was a gold buggy. He is very much a proponent of the gold standard and yet for the last 30 [1:03:00] for 30 years he was the chairman of the Federal Reserve and very much was a changed man, a proponent of inflation a proponent of paper money a proponent of interest rate manipulation.
Henry Hazlitt a famous economist said this, “Inflation tears apart the whole fabric of stable economic relationships. It drives men towards desperate remedies that leads men to demand totalitarian controls and ends in burying the embittered dissolution and collapse.”
You want to talk about extreme inflation, let’s talk about Germany. You remember in 1919, 170 German Marks were equal to 1 ounce of gold. By November 1923, just four years later, it was 87 Chilean Marks worth 1 ounce of gold. That’s called super hyper-inflation. The stories of women who come to collect the pay check of their men every four hours after lunch break to go spend their money at the store before it inflated again. That’s super inflation.
What happened in Germany? It [1:04:00] drove men to demand totalitarian controls. Who did the Germans ask to come solve their problems? Germany asked Hitler. They demanded totalitarian control, that’s the problem. Government causes problems and then they provide the solution in more government. It’s a story of history that’s what government always does. The inflation tears apart the whole fabric of stable relationships. That’s the challenge it faces not some small little potatoes thing it’s a big deal. Inflation can destroy any government any country.
With the Federal Reserve, do they just print money within the United States and they just put the citizens of the United States on the hook to pay interest. No, they also do that internationally. There’s a bill that was put forward by Ron Paul to edit the Fed, to audit the Fed and in that bill, it got watered down a lot, but it finally made it through, it was very watered down bill but what it found is in this audit, in the 2 ½ year period starting at the end of 2007 [1:05:00] the Federal Reserve provided more than 16 trillion dollars in secret bail outs to banks in other companies around the world.
Interesting. Look at this list, you got France, United Kingdom, Switzerland, are there any banks in there that are United States Banks? Yeah, 16 trillion dollars. I’ll tell you about a slight conflict of interest of JP Morgan Chase one of their VP’s sits on the Board of Directors for the Federal Reserve. The Federal Reserve paid JP Morgan Chase 391 billion dollars. Is that a conflict of interest? Slight. Yeah, you work for JP Morgan Chase and you’re sitting on the Federal Reserve Board of Directors and your Bank gets paid 391 billion dollars.
These are secret loans. These are loans that didn’t make public. These are loans that are given out to the tune of 16 trillion dollars of federal reserves, printing 16 trillion dollars-worth of money of paper money into the system which devalues our purchasing power per dollar because 16 trillion dollars is more [1:06:00] that are out in the market. Now, what about the loans in France, loans in Switzerland. We’re not on the hook to pay interest on that but the citizens of France and Switzerland are on the hook to pay for that interest on the debt that they issued. Now this is in addition to the 850 billion authorized for TARP. We all went crazy about 850 billion what’s 16 trillion. Its magnitude is bigger than 850 billion.
We’re end of the quote here. Jefferson said this, “I believe that banking institutions are more dangerous to our liberties and standing armies.” Can you see why now? Yeah, if the American people ever allowed private banks to control the issue of their currency first by inflation and then by deflation, is that what’s happening? Yes, the private bank, the Federal Reserve inflates and deflates the money supply. And do they control that? Can people close to them make a bundle of money during inflationary periods and a bundle of money during deflationary periods? Yes, because they know the market, they’re making the market.
The banks and corporations all grew up around the banks who deprived the people of all property until the children wake up homeless on the continent their fathers conquered. The epitome of corporate cronyism. Here are these banks and incorporators that grew up around us say, “Hey, hand me this, I want this favor, I’ll scratch your back you scratch mine.” It’s all be a people who’ll understand how to work the money system. Instead of a simple money system that the people are protected under and is simply engaged in simple commerce.
The issuing power should be taken from the banks and restored to the people to whom the property belongs. What does that mean? How do you restore the issue in power back to the people? Here’s how. If it is just gold and silver coin, who controls the gold and silver in the world? People who own mines, right? Just like anyone who controls the wheat there are all the people on farms and grow wheat.
If, like any commodity it’s in their best interest and it’s worth the money to invest the labor and time and equipment to mine gold and silver out of the ground, they will do that. And that’s how money is issued. What do they do with that gold? [1:08:00] If they want to use it in commerce they could just hand someone a nugget and say, “Hey this is gold and it weighs as much as this is much purity will you take it.” It’s like maybe an automobile, we’ll trade I’ll pay your automobile with this.
Well people who mine those gold miners they take the gold and they take it to the government. U.S. Government stamps it and says, “It does have a certain quantity and purity and content of gold in it.” In that way when I go to buy it, the person who, at the dealership is going to say, “Yeah U.S. stamped that this is what’s in it, okay I’ll take that.” I might not take your nugget because I am not really sure what it is but since the U.S. Mint has stamped this and given their approval for whatever it is, yeah okay, I’ll go ahead and take that.
And who is in charge of issuing the currency that way? The people. Who is in charge of the market as gold and silver? The people. It is very simple. A government is out of it they are not involved in that marketing, they can’t manipulate it. They’re simply protecting and establishing, what is legal tender which should be gold and silver, according to the constitution. And in those coins that are coined what the purity and content in the way that these coins are. [1:09:00]
So the last line, what can be done? This is particular, this presentation, we need to introduce competing currencies. Congress could do so because Article 1 Section 8 Clause 5, we have to have competing currencies. It demands that they coin money. They are not coining money nowadays. They’ve given the monopolistic currency to the Federal Reserve, a private entity.
In the State Legislature in Article 1 Section 10 Clause 1 it calls for gold and silver coin to be that competing currency because once again if we have a competing currency, which one am I going to take? I am going to take this one. And eventually this one will go out of existence because people realize this is only paper it’s not worth anything. Competing currencies let the best rise to the top which will be the coin.
Secondly, we need to repeal legal tender laws. Legal tender gives the monopoly power to the Federal Reserve. Number three, this is interesting, we need to reduce spending first then reduce taxes. We are always talking about, we got reduce taxes, we got to lower taxes. What we need to do is [1:10:00] spend only on constitutionally allowed programs and agencies and et cetera. Okay, that’s it. We should focus on that first.
Number four, abolish the Federal Reserve step by step. You probably heard that before we need to abolish the Federal Reserve and maybe it sounded a little bit overboard, a little bit radical. I hope after this presentation you realize not only do we have to do we have to do it quickly. There’s no question it’s ticking. There’s no way it can. Mathematically it can’t work. Federal Reserve issuing paper money is more and more and more and saying the people have to pay the interest on that paper money with paper money that they produce. It’s illogical it doesn’t its going down the drain. So we need to do it.
Now, step by step. We can’t abolish this Federal Reserve tomorrow but it is step by step, we need to be serious about it because it is going to fall and we have to choose to bring it down gently rather than just let it completely crash and suffer the consequences.
Now, State Legislature need to send a resolutions to Congress advocating these measures. We need to stand up [1:11:00] and we need to stand it to be not only sending resolutions to the U.S. Congress but to stand on our own two feet and pass legal tender laws. Say, gold and silver coin. Article 1 Section 10 Clause 1 will be used in this State. We need to start taking measures to stand for principles of freedom.
Lastly, tremendous grassroots effort to educate and not advocate for these changes. Because what we know, what if everyone in this community now, what if everyone in the State, what if everyone in the nation knew it. We build to change things, won’t we? So we hope we can do what the founders do, did. The founders said, look, let’s look back to history.
Paper money doesn’t work. Let’s look back to our own mistakes. In the continental in the revolutionary war we issued the continental dollar. We inflated it to no end. Let’s be humble and let’s say we done this wrong. Let’s get back to the principles of the constitution and restore soundness to our many system in the constitution.
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