Saturday, October 31, 2020

"The Government’s Greatest Trick"

"The Government’s Greatest Trick"
by Brian Maher

"One of the saddest lessons of history is this: If we've been bamboozled long enough, we tend to reject any evidence of the bamboozle. We're no longer interested in finding out the truth. The bamboozle has captured us. It's simply too painful to acknowledge, even to ourselves, that we've been taken. Once you give a charlatan power over you, you almost never get it back." 
- Carl Sagan

"Today is Halloween. The words “trick or treat” will come issuing from millions of youths this evening. Most - we assume - will receive treats. Yet on this Halloween we reveal how the Federal Reserve has tricked the American people through the use of its currency. We begin by referring you to this $10 bank note, dated 1928:
It bears this inscription: “Redeemable in gold on demand at the United States Treasury or in gold or lawful money at any Federal Reserve Bank.”

In those antique days, a fellow could march into a bank, hand the clerk a slip of paper as illustrated above, and demand the denominated amount in gold coin. The system imposed a hard discipline upon banks… and held inflation in checkmate. Federal Reserve banks were required to keep a 35% reserve of “gold or lawful money" on hand, lest they make a liar of the United States Treasury secretary - in this case the Hon. Andrew William Mellon. In effect, the private citizen bound the banking system in golden handcuffs.

But one Great Depression, one New Deal and one world war later… we come now to a 1950 $10 bank note:
In appearance it is nearly a perfect twin to the 1928 model — with one infinitely telling exception. Can you sniff it out?

Recall, the 1928 note bears this inscription: “Redeemable in gold on demand at the United States Treasury or in gold or lawful money at any Federal Reserve Bank.” But reads the 1950 version: “This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank.”

The fine print disguises a vast swindle: The gold provision was stricken from the record. The bankers had slipped their golden handcuffs. No longer could a private citizen hold them to honest account. But what about “lawful money”? What is it?

In 1947, a certain gentleman - A.F. Davis by name - dispatched the following note to the United States Treasury, accompanied by a $10 note: "I am sending you herewith via registered mail one $10 Federal Reserve note. On this note is inscribed the following: "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve bank." In accordance with this statement, will you send me $10.00 in lawful money?" The acting treasurer, M.E. Slindee, responded after this fashion:

"Dear Mr. Davis,

Receipt is acknowledged of your letter of Dec. 9 with enclosure of one ten-dollar ($10.) Federal Reserve note. In compliance with your request, two five-dollar United States notes are transmitted herewith."

Yet these two $5 bills bore the same pledge to redeem in lawful money. And so Mr. Slindee began chasing his tail - what the logicians call circular reasoning. What - again - is lawful money? But this Davis fellow would not be so easily shooed away. He returned one of the $5 bills, once again demanding lawful money in exchange. Finally Mr. Slindee threw up the sponge:

"Dear Mr. Davis:

You are advised that the term "lawful money" has not been defined in federal legislation. It first came to use prior to 1933 when some United States currency was not legal tender but could be held by national banking associations as lawful money reserves.

Since the act of May 12, 1933, as amended by the Joint Resolution of June 5, 1933, makes all coins and currency of the United States legal tender and the Joint Resolution of Aug. 27, 1935, provides for the exchange of United States coin or currency for other types of such coin or currency, the term "lawful money" no longer has such special significance. The $5 United States note received with your letter of Dec. 23 is returned herewith."

Beginning in 1963, all promises to redeem in lawful money were stricken from United States currency. Here, in graphic detail, the devolution of American money:
Thus the American people have been tricked. Yet it was so subtle and gradual that few were alert to the swindle. We nonetheless raise one faint cheer for paper money. In one sense it is redeemable - if you’ll forgive the expression in the present context. That is, it is tangible. A fellow can hold it in his hand, in his wallet, in his mattress. It cannot be erased at the stroke of a key. It is also anonymous. Once out of his hands, it leaves no trace. None of these happy virtues apply to digital money…

Digital money has no tangible existence. It can disappear at a keystroke. The bank can freeze you out of it. And every transaction goes upon your permanent record. Meantime... Digital money is the type of money bound to get itself into mischief.

Wispy as fog, slippery as oil, it is conjured into existence… as if by the magician’s wand. And it can get around the world at electronic speeds. It is also the ideal money for a government swollen to ghastly dimensions - its issue being unlimited in theory.

If paper money invites abuse... what about digital money? Below, Jim Rickards shows you the American people are being “herded into the digital pens” like sheep prior to slaughter. What can you do to protect yourself? Read on."
"The Ongoing War on Cash"
By Jim Rickards

"The global elites have used negative interest rates (NIRP) to do the same thing as inflation = make your money disappear. One way to avoid negative interest rates is to go to physical cash. In order to prevent that option, the elites have launched a war on cash. Specifically, the No. 1 thing standing in the way of negative rates is cash. If citizens can go to cash, that makes it difficult to impose negative rates on digital bank accounts.

The war on cash has two main thrusts. The first is to make it difficult to obtain cash in the first place. U.S. banks, for example, will report anyone taking more than $10,000 in cash as engaging in a “suspicious activity” using Treasury Form SAR (Suspicious Activity Report). Try withdrawing $20,000 in cash from your bank and you’ll be reported to the government on a currency transaction report. That report will be put in a file right next to ISIS and the drug cartels, with the Financial Crimes Enforcement Network. That’s not a lot of fun.

The second thrust is to eliminate large-denomination banknotes. The U.S. got rid of its $500 note in 1969, and the $100 note has lost 85% of its purchasing power since then. If inflation gets moving again, the $100 bill will be reduced to chump change.

Why would central banks impose negative interest rates at all? What was the point of this policy? The whole idea of the war on cash is to force savers into digital bank accounts so their money can be taken from them in the form of negative interest rates. Essentially, negative interest rates are a thinly disguised tax on savers. In theory, savers will be dissatisfied with NIRP and react by spending their money. Likewise, entrepreneurs will find negative interest rates attractive because they can borrow money and pay back less to the bank.

This combination of lending and spending by consumers and entrepreneurs alike supposedly lead to consumption and investment that will stimulate the economy, especially after the famous Keynesian “multipliers” are piled on top. But this theory is junk science. The reality is the opposite of what the elite academics project. Instead of inducing savers to save less and spend more, NIRP causes savers to save more and spend less. It’s a perfect example of the law of unintended consequences.

The reason savers are saving in the first place is to achieve some future goal. It could be for retirement, children’s education or medical expenses. When negative rates are imposed, savers don’t save less; they save more in order to make up the difference and still meet their goals. The other unintended consequence of NIRP is the signal it sends. Savers rightly conclude that if central banks are using NIRP, they must be worried about deflation. In deflation, prices drop. Consumers defer spending in order to get lower prices in the future.

When abstract academic theories are applied in the real world by central bankers with no real-world experience, you get the opposite result of what’s intended. These unintended consequences have already appeared in Japan and Europe. And governments always use money laundering, drug dealing and terrorism as an excuse to keep tabs on honest citizens and deprive them of the ability to use money alternatives such as physical cash and gold.

But the so-called “cashless society” is just a Trojan horse for a system in which all financial wealth is electronic and represented digitally in the records of a small number of megabanks and asset managers. Once that is achieved, it will be easy for state power to seize and freeze the wealth, or subject it to constant surveillance, taxation and other forms of digital confiscation.

But there are also practical reasons for holding cash in a safe place outside the banking system. I’m talking paper money now. Having some cash is like having a battery and flashlights. I used to live in a place that occasionally gets hurricanes and nasty storms, so the power would go out on occasion. But no matter where you live, you want to keep some flashlight batteries around. And that means cash.

Remember, when the power’s out, nothing works. The ATMs don’t work. The gas stations don’t work, etc. It’s good to have some what we used to call in Philadelphia “walking around money.” But you can’t withdraw too much from your bank because the government won’t let you.

The point is, you might think you can get your cash, but you can’t. When you go down to the bank and actually try to, you’ll be treated like a criminal. This is of course part of the war on cash. And it’s dangerous. The American people are being led like sheep to the slaughter. They’re being herded into digital pens, which are the banks.

Most people think we have a cash system. But we really don’t. How much cash do you carry in your purse and wallet? Probably not that much. You use your debit card. You use autopay. You use your online banking account. You use your iPhone if you have Apple Pay. You use your credit card. It’s all digital. You don’t actually have that much cash, and if you try to get it, you can’t get it.

I also recommend you own physical gold and silver. For silver, you might consider a monster box. A monster box has 500 ounces of American silver eagles, one ounce each. They cost about $14,000 on the market. You should find a good dealer that doesn’t charge too much commission. But it’ll preserve your wealth. In an emergency situation, people will take it. Many people will gladly give you some groceries for a solid ounce of silver because no one trusts any other money. I also recommend real estate as part of your portfolio. It’ll still be there if there’s a storm or a power outage or your bank’s shut down.

These are some of the things I recommend before the next great crisis strikes. Today’s markets are faced with a number of potentially destabilizing shocks, from post-election chaos, to more economic lockdowns, to geopolitical instability. You don’t have to be helpless in the face of all this uncertainty. There are definitely steps you can take. I hold significant portion of my wealth in nondigital form, including real estate, fine art and precious metals in safe, nonbank storage. I strongly suggest you do the same."

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