What does it mean when the FED “injects” money into the system? Who pays the price of bailouts?

Need a fix? FED's Money Injection is a Bank Junkie's Dream Come True

What does it mean when we hear that the FED “injects” or “pumps” money into the system? Or when it “bails out” a bank or corporation?

There is a fairly simple answer to that, but first it is necessary to understand a few things in order to frame the answer.

The Federal Reserve

While it is a matter of fact, most Americans are simply unaware and unconcerned that the Federal Reserve (hereafter, the FED) is a private, non-federal banking cartel. It is not owned and operated by We the People, who formed our government as a servant to the People. It is not a part of the federal government at all, nor was it authorized by the Constitution of the United States. It is a twentieth-century construct of our Congress, excusing them of their Constitutional duty and obligation to print and control the value of the nation’s money supply.  The Federal Reserve Act of 1913 created an agreement whereby a private banking institution would oversee the nation’s credit.  In short, it allows Congress to serve another master, namely, banking interests, not We the People.  Many of this country’s founding fathers were opposed to the adoption of such an entity into our representative form of government because it subjects our officials, and therefore our government, to powerful foreign influences, which have been shown throughout history to undermine the liberties and laws of free and just men.  Undoubtedly, our Congress has illustrated this fact over the past several months with the approval of hundreds of billions of dollars in cash injections and massive borrowing by the Federal Reserve, which many see as benefitting the member banks of the FED and increasing the scope of the FED’s hold on our nation’s financial stability, or lack thereof.  In addition, the non-federal FED has absolutely no reserves to speak of.  The paper notes it issues are not backed by anything but a promise, much like an IOU.  There are no vaults of endless piles of gold and silver held in reserve to guarantee the worth of the paper issued. So, isn’t the name, Federal Reserve, sort of misleading? As it turns out, the name is only the beginning of the deception.

At its core, the FED is a central banking system similar to central banks that have been in operation throughout Europe since the 17th century.   The FED operates outside of our government and is both the banker of the government and the banker of bankers.  It is composed of member banks and operates through twelve Federal Reserve Banks situated in various states through the United States.  It is overseen by a seven-member Board of Governors who are not elected by We the People, but chosen by the President and confirmed by the Senate to serve staggered fourteen-year terms.  Many early patriots like Thomas Jefferson, Andrew Jackson and James Madison warned against the adoption of a central bank into our economy, stating in no uncertain terms that it would result in the demise of our liberties.  As Jefferson stated, “The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.”  Conversely, one powerful banker, Mayer Amschel Rothschild (1744-1812) of the Rothschild banking dynasty, is quoted as stating, “Let me issue and control a nation’s money and I care not who writes the laws.” As it turns out, those who control a money supply can, in no small way, end up influencing and controlling the legislation and direction of government as well.

With a little foresight and a lot of history behind them to serve as their guide, the framers of the United States government wanted to prevent this usurpation of power from the people by banking interests, and so gave exclusive right to Congress to issue the nation’s money supply and regulate its value. Because Congress is an elected body, chosen as representatives by We the People, the framers of the Constitution believed this would provide an adequate balance of power and keep the banking interests out of the personal wealth and property of free men. In 1913, however, under intense pressure from large, powerful banking interests and lobbyists, Congress was convinced to give up its Constitutional obligation and hand it over to a private banking cartel now known as the Federal Reserve.

Despite the earlier warnings, Congress passed the Federal Reserve Act in 1913, and President Woodrow Wilson signed it into law, thereby giving birth to the Federal Reserve.  Upon doing so, however, President Wilson revealed his misgivings, suggesting he personally was threatened by intense financial influences:  “A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the Nation, therefore, and all our activities are in the hands of a few men … We have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”  The adoption of the FED was the beginning of the disappearance of our representative form of government as our elected officials found themselves under its financial purse string. As early as a decade later, a popular saying originated with Will Rogers, who stated, “We have the best Congress money can buy.” Unfortunately, you and I, as American Citizens, are not the highest bidder.

In the early years after its adoption, the Federal Reserve printed paper certificates, which were redeemable in gold or silver. These were the early “greenbacks”, which were backed by real, sound currency – precious metals. This meant that a $20 paper certificate could be exchanged for the same amount in gold coin or bullion.  Over the years, however, the certificates were not honored by the banks and eventually were changed to instruments of debt, redeemable for nothing but goods and services. You can learn more about this by researching President Franklin Delano Roosevelt’s Executive Order 6102,  which basically confiscated all the gold from this country under the Trading with the Enemy Act of 1917. Those who did not comply could be held in violation of the act and fined $10,000 and/or imprisoned for 10 years. In exchange for the gold, citizens were given “an equivalent amount” of “legal tender” issued by the United States Treasury, namely, dollars.  Below is an illustration of that order as it appeared in print:

Gold Confiscation by Presidential Executive Order

You may still have relatives alive who remember this happening. Ask them about it.

What is significant about this is the gradual move from real, physical currency to paper currency backed by hard assets, to paper currency backed by nothing.  In the twenty years between the Federal Reserve Act and the 1933 Gold Confiscation, the paper currency issued by banks was redeemable in gold or silver.  After 1933, paper was no longer redeemable in gold.  In 1964, the treasury stopped redeeming silver certificates for for silver dollars, and by 1968 had ceased redeeming silver certificates at all.  This is why the nation’s tender, Federal Reserve Notes, now say, “for all debts” instead of redeemable “in gold coin” or “in silver coin”.   During the past several decades, the gold backing was eventually removed entirely and “Tricky Dick” Nixon stopped altogether the convertibility of paper notes for gold (except for transactions made on the open market) in August of 1971.  Instead, Federal Reserve Notes are now backed by all the assets held in collateral by the Federal Reserve, the goods and services in our economy, and the power of the government to collect taxes on these.

Compare the following images of United States currencies:

1905 Gold Certificate

2003 Federal Reserve Note

As you can see, the above currencies are vastly different. Of most importance is the statement that the Gold Certificate represents an actual deposit of gold coins that is redeemable by the carrier of that certificate. In case you can’t make out the fine print, the Gold Certificate states, “This Certifies That There Have Been Deposited in the Treasury of the United States of America, Twenty Dollars in Gold Coin, Payable to the Bearer on Demand”. That is, the person with the certificate can exchange the paper for gold worth $20 (at 1905 prices). That is certainly not the case any longer.

Federal Reserve Notes (FRN’s), on the other hand, no longer say that because they are not backed by metals like the original certificates – there are simply NO reserves. They are, as they state, instruments of debt. The fact that you hold a dollar in your hand simply means that the Federal Reserve (a private corporation) printed the money on loan to the government at interest. What the dollar represents is debt, not wealth. This is important to understand because the entire banking system we find ourselves in today is a system that perpetuates this debt – to the detriment of We the People, our republican form of government and our way of life. The system has been sharply criticized because there is and never will be enough money to repay the debts because the system generates the money that creates the debt, which is then used to pay back the debt. The more money that is created, the more debt is created – it’s that simple. Furthermore, there is no intrinsic value whatsoever to the American dollar. It is a fiat currency whose only value is what the government says it has. Thus, it is deemed, “Legal Tender.” There is no difference, intrinsically, between a $1 bill and a $100 bill. Both cost about $.04 each to make and the value of each is set by the FED. Therefore, even though both of the bills are backed by nothing and cost the same to produce, you cannot pay for $20 of merchandise with a $1 bill.

Our Current, Fractional Reserve Banking System

The modern banking system is one based upon the notion of fractional reserves, a practice that goes back hundreds of years.  Early bankers realized that people did not want to carry a lot of cumbersome metal coins, so they began the process of holding the coins in their vaults for a small fee, in exchange for paper certificates, which were then redeemable for the same amount in gold as the depositor needed it.  The bankers then realized that many of their patrons simply never came in to claim their deposits, instead choosing to exchange the lighter paper certificates in commerce.  They realizzed that they could increase their profits by writing loans with the money held in reserve.  So, using the depositors own money, the banker would loan another patron the money under contract that the borrower would pay back the amount loaned plus interest.  This was a profitable business for the bankers, and worked quite well for the patrons and the industries springing up in the patrons’ towns and villages.  There was a problem, however, and that was lack of depositor confidence.  If many large patrons suddenly decided to withdraw their money at once, the bank was unable to fulfill it’s obligations (having loaned out the money), and the bank was forced to close its doors and the depositors lost money.  This has happened many times throughout history, and is memorialized in the film classic, “It’s a Wonderful Life”.

Today, the Federal Reserve is in operation with the stated task of protecting individual banks and depositors from such financial catastrophes.  The FED sets a predetermined percentage of deposits that each bank is required to keep “on hand” in the form of reserves.  For example, the Federal Reserve requires banks to hold 10% of their total deposits in the form of reserves.  A bank in Minnesota, which has total deposits of $10B, is only required to keep $1B of that in their bank at any given time.  The other $9B is loaned out.

Today, it is increasingly rare for patrons to deposit actual Federal Reserve Notes into their banks, instead making direct deposits or utilizing other debt instruments like payroll and personal checks which consist merely of electronic entries in a computer system.  Federal Reserve Notes are not actually created until they are needed in the form of withdrawals.   When a bank depletes its supply of FRN’s, it simply orders more.  Then the FED authorizes the Treasury to print off more bills and sends them out to the banks.

As the FED prints more FRN’s, our currency in circulation becomes worth less and less until it is basically worthless and no one will accept it anymore.  This has happened several times in modern civilization and we need look no further than the Weimar Republic in Germany last century, the collapse of which preceded the rise of Hitler.  During this period, Germans saw such extreme hyperinflation that it became necessary for citizens to spend a whole wheelbarrow of paper currency in exchange for such simple commodities as a loaf of bread or a carton of eggs.  In that depression, Germans soon learned that it was cheaper to burn stacks of money that it was to use that money to purchase firewood.  This resultsed from the printing of massive amounts of currency to pay state salaries. As we see in the global economy today, there are some countries who are now dumping their reserves of American dollars, while buying up hard assets like gold and copper. This flooding of American currency back into the economy has a watering-down effect on the face value of that currency, just as the printing of more FRN’s does. This is called inflation. Inflation is a “hidden tax”, which has been eating away the wealth of Americans ever since the creation of the Federal Reserve in 1913. We are in a huge inflation bubble right now, as is indicated by the ever-higher prices for food, gasoline and consumer products. How far does your dollar go today? Not as far as last year? That’s inflation.  Inflation occurs when there is a rise in the amount of currency in circulation without a corresponding rise in production of goods and demand for services.

What continues to happen under the fractional reserve banking system is the continuing devaluation of our currency, resulting in the fleecing of wealth of Americans and involuntary servitude to perpetual debt. Please also be reminded that the 13th Amendment to the Constitution, Section 1, states, “Neither slavery nor involuntary servitude, except as a punishment for crime where of the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction”.  Yet, because we are born into this system of financial control and manipulation, where we are forced to pay ever-increasing taxes on a debt that will never and can never be paid off, we are as slaves by virtue of being United States citizens.  Think about it: the only way to pay our debt, by law, is to use Federal Reserve Notes.  The only way to get Federal Reserve Notes is for the government to borrow the notes at interest.  At any given time, more money is owed in principal plus interest than is ever in circulation.  We only borrow the amount we need, not the amount we need to pay back (which includes interest).  This form of financial involuntary servitude was enabled by the Federal Reserve Act of 1913, which created the printing press for our government to produce an $11.4 trillion national debt, of which every American shares $35,000 (in addition to other debts they owe).

Why would our Congress do such a thing? Why would it allow for the fleecing of American wealth and the destruction of our liberties? The reason is that the FED is a great enabler for Congress towards big government (remember that our Constitution severely LIMITS government). The FED allows Congress to spend more money than it can actually raise in the form of taxes. You see, before the FED sprang into existence, Congress had to convince taxpayers that tax increases were necessary to fund certain projects, endeavors, or wars. If they couldn’t convince the American people, then they didn’t get their funding, plain and simple! Yet, with the adoption of the FED, Congress can bypass that very important step – the taxpayer! Now it simply goes to the FED with a certain amount of government bonds and asks them for more money and the FED gives it to them – with the principal due at a certain time in the future, with interest.  Of course, it isn’t Congress that has to repay these loans, it is this and subsequent generations of taxpayers.

For example, even though the American people, on the majority, are against the war in Iraq and elected a democratic majority to Congress in 2006 with the aim of ending the war, the democrats did not fulfill their promises; rather, they perpetuated the funding for the war.  They have since expanded the war in Afghanistan and are threatening a future conflict with Iran.  Where did they get the money to fund these wars? From the Federal Reserve directly, but through the American people, indirectly. Here we begin to see the destruction of the Republic as funding of the government moved from We the People to a private banking institution, which, incidentally, is more than happy to print more and more money and collect more and more interest!  This is nowhere more evident than with the bailout package passed last year by our Congress even though 80% of Americans were against it!

Follow the Money Trail

What is a government bond? In the simplest of terms, a government bond is a promise from our government to repay a set amount PLUS interest at a future date, and this promise is backed by the good faith and credit of the American people, i.e. the ability of our government to tax us to repay the debt. So, if the government needs more money, it goes to the Treasurer who prints up, say, $1,000,000,000 worth of bonds (think of them as fancy, official IOU’s), who then takes them to the Federal Reserve window and receives a $1,000,000,000 check in exchange. The $1,000,000,000 check is then deposited into the Treasury and the money is spent according to the national budget, which is approved by Congress.  Note that no actual FRN’s are created during this process, which is merely an exchange of debt instruments.

For greater illustration, follow the money trail a little further. Let’s say that Congress has approved $25M of that $1B to go towards rebuilding an area stricken by a natural disaster. The $25M is spent in a variety of ways. The Treasury writes a $10M check to clean up the area, which is paid by to the individual company tasked to do the cleanup. That check gets deposited into the individual company’s bank. At that point in time, the computer system is told that the company now has $10M more in its account, but no actual money has been created. However, as the company issues payroll checks to its employees, those checks are deposited or cashed by the individuals’ banks. When the employee cashes the paycheck, actual Federal Reserve Notes are handed to him or her and this is where physical money is actually created for the first time in the entire process.  As the bank runs out, it simply orders FRN’s from the Federal Reserve regional banks, as long as they keep a certain amount in their vaults as reserve.

Let’s return to the $10M deposit. Now that the company’s bank has $10M more in its vault (not really, of course, the “money” exists as computer entries), the bank is very happy. This is because, by federal banking standards, a bank is only required to keep 10% of the total money it has on deposit actually in the vault. Of that $10M deposit, they only have to keep $1M of it on hand!  Not a bad deal, really, for the banker.  But the deal gets even sweeter.

So where does the other 90%, the $9M go? It is loaned out from the bank in a variety of ways. For example, Joe American wants to buy a house and comes in to get a loan for $200,000. The local grocery store is expanding and asks its bank for a loan of $2.5M for renovations. Two bank patrons come in asking for a $100,000 loan to open a new business.  The bank is able to loan this money to them – which isn’t even theirs in the first place – and is then able to collect interest payments from the loans it has issued because it trusts that all the depositors will not all come asking for their money at the same time. As long as there is money constantly coming into the bank, they are very happy – and, coincidentally, so is everyone else. Joe American is able to get his loan to buy his house. The local grocery store is able to get the money to renovate and generate higher sales and profits. Mom and pop are able to start their new business.  But when the economy is stagnant, people tend to hold on to their money, not spend it. This dries up the banks ability to write new loans very quickly, making it harder for Joe American to get the loan to buy his house. Then we have credit contraction.

Sometimes (and more often than anyone really realizes) the banks make very poor decisions on those loans (some of which are considered “high-risk”) and the loans are defaulted on. When this symptom becomes widespread, we find a situation similar to what we saw happen in the housing market last year. And when individual depositors become alarmed over their money, they oftentimes “make a run on the bank.” Similar to what the movie, “It’s a Wonderful Life”, depicts, such a run has seriously crippling effects on the economy. As the depositors rush the bank to pull out their money, the bank quickly runs out of funds (since it is only required to keep 10% of the funds in the vault and has loaned out the rest). Inevitably, the bank is forced to shut down and file bankruptcy because it cannot pay its obligations. What results is lost wealth for those who were not able to withdraw their funds.  When this problem becomes systemic, as in our economy today, such practices threaten the very financial structure of our nation, and indeed, the world.

One measure put into place in order to prevent this from happening, the Federal Deposit Insurance Corporation (FDIC) was created to insure individual depositors. This insures most depositors to a total of $100,000, which, in theory, means that, even if the bank closes, the FDIC would pay the individual depositor up to that amount. So, if you had $50,000 in the bank when it folded, you’d still get your $50,000 – though you will have to wait for it.

The FDIC functions quite well for financial crises involving individual banks. However, the FDIC’s current total fund for bailing out individual depositors is right at $50,000,000,000 ($50B). That’s not very much money in today’s world. That is only enough money to insure 500,000 people to $100,000. Alarming, isn’t it? Yet, as I mentioned above, individual depositors may also be gigantic corporations. With some of these corporations in debt in the tens of billions, it will not take long for the FDIC’s funds to be depleted if a large enough ripple occurs in the economy. We are no longer seeing merely the early signs of this, but acceleration.  This is the precipice upon which we have been teetering for months, as the FED and our elected officials make promises for improvement and recovery.  Yet their “solutions” are only band-aids, temporary fixes that, in reality, compound the problem even further.

If a large corporation is in trouble because it can’t make its interest payments to the bank, they go to Congress and say, “We can’t let this corporation fold.  There will be thousands of jobs lost! Tens of thousands of people will suffer!” Or, when a third world country can no longer make its interest payments to a large bank in New York, what happens? The bank  of New York goes to Congress and says, “You know, you’d better do something about this because if we have to write that loan off of our books we may be bankrupt!!  Look at the depositors, all the good Americans who have their accounts with us who would lose their deposits!  It’s possible that the FDIC won’t be able to cover it all! We could have a national or global crisis on our hands! If our bank falls maybe other banks will fall , oo, and we’ll have a national depression! Then millions of people will suffer!” This results in what you hear about as “bail outs”.  Central banks have been handing them out left and right for decades.

In the end, it is transnational banking corporations that benefit from this practice, not the People, who ultimately are plundered of their wealth.

Bail-outs and Economic Injections

Last year, the Federal Reserve decided to “bail-out” AIG to the tune of $75B. AIG (American International Group) is a major insurance company, which provides property-casualty, life and auto insurance to customers worldwide. At least one source describes AIG as “the world’s largest insurance and financial services corporation.” Yet, after its stock lost 90% of its worth in September and after posting first-half losses of $13.2B, the company was on the brink of bankruptcy. The Federal Reserve was worried that, if such a large company faltered, it would create systemic problems throughout the global economy (sounds familiar, huh?). So, the FED created a temporary, two-year “credit-liquidity facility” to provide up to $85B in funds to the company as a shot in the arm. Where did it get $85B to fund that “credit-liquidity facility”? You guessed it, by purchasing $85B in government bonds! Do you remember who is on the hook to repay government bonds? That’s right, Joe American taxpayer and his progeny.

On top of this, the FED also decided to “inject” $700B into the U.S. economy through the “Troubled Asset Recovery Program” (T.A.R.P.), which was approved by Congress and President Bush.  By November 6, total FED emergency lending was over $2T.  By December, the FED had increased the total money supply (figured by total bank reserves plus total cash in circulation) from $863B to $1.48T, making an expansion rate of 76% over the previous year.  The reasoning given by the FED and the Treasury was that the extra money was needed to provide liquidity, or more bank lending.  Despite this, credit liquidity did not occur, as banks refused to lend, choosing instead to hold on to the money to cover their own shortcomings.  During this period of three or four months, we all heard of repeated “injections” into the economic system here and around the world.

So what does it mean when the FED “pumps” money into the system? It  basically means that they FED buys bonds and then pays the banks that sold them to it. This “money” then floods into the banks who then can create loans to inspire investor confidence. Bonds come in a variety of forms, and the FED bought large amounts of subprime mortgage bonds following the subprime crisis. It must be understood that bonds are instruments of debt, as they are, in the simplest of terms, a promise to repay at a later date printed on official, fancy paper. Following the revelations of large amounts of “toxic assets” – bad IOU’s – the FED began turning more to the “security” of government bonds.  These bonds are backed by the taxpayers.  In either case, the FED is, in effect, attempting to solve a debt problem with more debt. This is akin to plugging a small hole in the bottom of a rickety boat, waiting for the next leak to spring up. Or, like the game of “Whack-a-Mole”, the FED attacked one area of debt by creating more debt underneath, and there is no telling when or where that pesky, buck-toothed pest (known as debt) will rear its head again. Our economic topsoil rests upon a city of mazes tunneling under the surface, and the whole thing is starting to cave in.

The National Debt

The United States has been in debt since its inception, save for a brief amount of time when Andrew Jackson was President. He is the only President to reduce the debt to zero. He was also vehemently opposed to central banks (the Federal Reserve is one) and the fractional reserve money system they created. He broke apart the central banks established by Hamilton upon becoming President because he recognized the dire threat a central bank poses to our representative form of government. We have not been vigilant enough in understanding and countering this threat.

Fast forward a hundred and seventy-five years to the present:

According to some of the latest figures I could find, in 2003, the national debt, also known as the public debt (because it’s YOURS and MINE), was $6.8 trillion ($6,783,231,062,743.62 as of 9/30/03). In that year, our government collected $1.95 trillion from Americans in income taxes. Of that amount of taxes, $318 billion was paid to the Federal Reserve in interest. This means that 16% of total tax revenue goes to interest payments on the public debt at a 4.7% interest rate. Now, I’m no genius, but I can think of a lot of things that would be better for our country to spend $318B on besides paying interest to bankers who are doing the job the Constitution entrusted to Congress!

Our national debt topped $10 trillion in September 2008, a 43% increase from the 2003 figure above,  In fact, George W. Bush oversaw the single largest increase in national debt in our nation’s history.  At the time of his inauguration in 2001, the national debt was an already staggering  $5.7T.  In eight years of “servitude” to our country, he nearly doubled that amount, increasing the national debt by $4.9T.   This debt has been increasing exponentially even through years when the budget is balanced. You’ll remember how Bill Clinton balanced the budget in his last term and wondered what he should do with the surplus. It wasn’t applied to the national debt because his little surplus would not have made a dent, yet everyone in Congress had an idea on how to spend that money, didn’t they?  Regardless, since 2008, our national debt has been increasing by $3.89 billion every day!  After passing $10T quietly in 8/08, America’s debt eclipsed the next trillion in just seven months, bringing the newest figures to over $11.3T.

Although many believed Obama would take America off of this reckless path, his policies call for increased deficit spending ($1.8T this year!) and many predict that four years under the Obama Administration will increase the national debt at a faster rate that two terms of Bush’s presidency.  This is simply not sustainable and will bring about the destructin of the not only the U.S. economy, but the global economy as well.  Hundreds of millions of people could potentially lose nearly everything they own.

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All of this will continue to increase as bail-outs, injections and new economic policies are put in place to stave off the inevitable crash. And it is inevitable. We cannot continue to heap more debt onto the pile and expect the backs of Americans to hold it up forever.  The economic system is failing now, but everything appears to still be manageable because of the smoke-and-mirror games that are being played and the damage control being done on the part of our President, our Congress, the FED and Wall Street. All fiat currencies have failed eventually, crushed under the weight of their own debt. The weakening dollar and all the signs we are seeing now: hyperinflation, rising prices, credit contractions, bankruptcies and insolvencies are all symptoms of a receding economy entering depression. This depression, however, will be deeper and will impact more individuals on a global scale than the 1920’s depression. Even banks that survived the depression of the 1920’s are falling now. That should worry you a lot. Meanwhile, the talking heads, our President and cabinet in particular, keep telling us that we are not in a recession, and they continue to pump more debt into the system, heaping the burden upon taxpayers and future generations of taxpayers. They think that no one really understands their game – after all, they have seen to it through the socialized school system that any meaningful economic curriculum does not exist in our schools to teach us the “magician’s tricks”.

Eventually, like the straw that broke the camel’s back, even the great U.S. economy will crash under the burden of its own debt. We are already seeing this in individual homes throughout the U.S. where a growing number of Americans can no longer afford to pay for health care, their mortgages, their credit cards, their student loans, etc. The result is an exponential rise of defaults and bankruptcies from individuals and on the larger, corporate scale, investment corporations, banking institutions, and large companies. Our weak economy cannot withstand this for much longer.

What is more, when total U.S. liabilites to other countried are taken into account, we are on the hook for $57T, of which $189,362 is each person’s share.  What happens when other nations no longer accept the devalued dollar and come asking for us to repay?

We’re in for a depression unlike anything the global community has ever seen. Are you ready for it? Will you be waiting in a bread line or unemployment office? How will your family provide for itself? What will your wealth be worth?  Have you made investments into real, sound currency like gold and silver?  Have you begun trading in your shrinking FRN’s for sustainable foods and supplies for the future?

What alarms me is the increasing reliance Americans have on everyone else to provide for them to the point that kids today can’t even cook, let alone grow their own food. When the dollar is worthless, how much bread and meat will you be able to buy? And if you can’t buy it, where are you going to get it?

These are all things to think about, and oddly enough, very few are thinking about it. Very few even understand what is going on and what all of this means. Hopefully, you are now not one of them.

for more information, read G. Edward Griffin’s best-selling book, The Creature From Jekyll Island: A Second Look at the Federal Reserve. At the very least, read Chapter 10, “The Mandrake Mechanism” [link to full chapter].

What is significant about this is the move from real, physical currency to paper currency backed by hard assets to paper currency backed by nothing.  In the twenty years between the Federal Reserve Act and the 1933 Gold Confiscation, the paper currency issued by banks was redeemable in gold or silver.  After 1933, paper was no longer redeemable in gold.  In 1964, the treasury stopped redeeming silver certificates for silver dollars and by 1968 had ceased redeeming silver certificates at all.  This is why the nation’s tender, Federal Reserve Notes, now say, “for all debts” instead of redeemable “in gold coin” or “in silver coin”. During the past several decades, the gold backing was eventually removed entirely and “Tricky Dick” Nixon stopped altogether the convertibility of paper notes for gold (except for transactions made on the open market) in August of 1971.   Instead, Federal Reserve Notes are now backed by all the assets held in collateral by the Federal Reserve, the goods and services in our economy, and the power of the government to collect taxes on these.

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