I debated with myself on what to title this rant. I considered calling it “Brian Brown on the Economy” or “Brian Brown on the Federal Reserve Bank,” but while it about all of these issues, I felt that the subject of the economy was too broad and the Federal Reserve Bank was, actually, too narrow. Here’s what I mean:
The economy, any economy, whether it is the planetary economy, a government’s economy, or your own, personal economy is dependent on more that just the mere currency used in financial transactions.
I did not want to rant merely about that.
The Federal Reserve, as insidiously evil of an institution that it has always been, is just a small “cog” in the proverbial “wheel.” I could also have chosen the more broad term of “bank” or bankers.”
I did not want to rant merely about them, either, although I have, of necessity, included these topics into this rant, if only because they are subsets.
Nope. This rant is about the Dollar. The United States Dollar. Not the Canadian “Loonie” Dollar. Not the Australian Dollar. Not the Hong Kong Dollar. Not even the Suriname Dollar.
The greenback. The buck. A clam. Dough. The samolian (not to be mistaken for citizens of the countries of Samolia or Somalia).
Let’s first have a brief history lesson.
We think of the term “currency” in terms of paper money, but it really refers to any generally accepted medium of exchange, such as coins or banknotes.
Homer used the ox as the base “currency” of goods, for example he valued the bronze armor of Diomedes worth nine oxen, while the golden armor of Glaucus, worth one hundred oxen. As a measure of gold he used the talent, Achilles for example gives half-talent of gold to Antilochus as a prize.
In more recent times, the British Colonies, in what was to become the United States, often issued paper money to facilitate commerce until 1751, when the British Parliament, obviously at the behest of the Bank of England, passed the Currency Act of 1751, which restricted the issuance of paper “fiat” money (money which is based on nothing), also known as “bills of credit” which were used by the Colonies to finance the French and Indian War. Like any fiat money, the currency depreciated in relation to the British pound sterling, resulting in inflation which was harmful to British merchants who were forced to accept it for goods and services.
A 3 Shilling New Jersey Colonial Note
The act limited future issuance of bills of credit to certain circumstances. While it allowed the existing bills to be used as legal tender for public debts (i.e., paying taxes), but disallowed their use for private debts (e.g. for paying merchants).
The Currency Act of 1764 strengthened the Act of 1751 by expanding it to ALL the British Colonies in America, not just New England. This became problematic for the Colonists, since precious metals, such as gold and silver, were in short supply.
This was one of the many ways Britain exerted its control over the American Colonies, and was the primary cause of the Revolutionary War, not the so-called “taxation without representation” as we were taught in school. Why is that? Well, The People Who Control Everything do not want you to know too much about the phony banking system that has been used to control the United States for the last hundred-plus years.
The Stamp Act of 1765 further incensed the Colonists by requiring that most printed materials were produced on special paper manufactured only in London and carrying an embossed revenue stamp. This was a direct tax imposed by the Parliament exclusively on the American Colonies, ostensibly to help pay for the expenses incurred in the Seven Years’ War, of which the Colonists were the principal beneficiaries from the victory. But since it was a public debt, it could only be paid in British pounds sterling.
The hard fact is that the Colonists were forced to pay taxes in British pound sterling (“public debt”) and not any Colony-issued “money” (which, of course, had to be printed on Stamp Act compliant paper). However, in 1773, the Act was amended to permit the Colonists to issue paper currency for both public and private debts, but the damage had already been done. According to historians Jack Greene and Richard Jellison,
…the currency debate was no longer really a “live issue” in 1774, due to the 1773 amendment of the act.”
It was all about control. The nine years of this hardship had worn the Colonists’ patience thin.
According to historian Jack Sosin, the British government had made its point:
After nine years, the colonial agents had secured a paper currency for the provinces. But the Americans had tacitly, if not implicitly, acknowledged the authority of Parliament. And in the final analysis this was all the imperial government wanted.”
In all of the Colonies except Delaware, the Currency Acts were considered a “major grievance.”
The key points to remember her is that Colonial money:
Was not backed up by anything of value, it was a “fiat“ currency
Was practically worthless in England (or anywhere else)
Was not controlled by Britain or the Bank of England
After the United States “won” (note the quotations marks) its independence from Britain, there were three banks and more than fifty different types of currency in circulation, including, English, Spanish, French, and Portuguese coinage as well as scrip issued by states, cities, backwoods stores, and “big city” businesses, with varying exchange rates and of dubious stability.
Step in Treasury Secretary Alexander Hamilton, who in his Report on Public Credit, would suggest that the Federal Government assume debts incurred by the states during the Revolutionary War and, in exchange, allow the Government more control of the financial system in the United States. Hamilton was opposed by [then] Congressman James Madison and [then] Secretary of State Thomas Jefferson, who eventually reached a compromise.
As Madison stated:
I deserted Colonel Hamilton, or rather Colonel H. deserted me; in a word, the divergence between us took place from his wishing to administration, or rather to administer the Government into what he thought it ought to be…”
Hamilton’s most endearing legacy was his pro-federal interpretation of the Constitution, always taking the side of a strong federal government at the expense of the states, taking advantage of the Constitution’s ambiguous delineation of the balance of power between the federal and state governments.
Using the justification of the Constitutional power given to the Congress to issue currency and to regulate interstate commerce, Hamilton established what is now known as the [First] Bank of the United States, which was vehemently opposed by Jefferson who took a stricter view of the Constitution: parsing the text carefully, he found no specific authorization for a national bank. This controversy was eventually settled by the Supreme Court of the United States in McCulloch v. Maryland, which, in essence, adopted Hamilton’s view, granting the federal government broad freedom to select the best means to execute its constitutionally enumerated powers, specifically the doctrine of implied powers. His constitutional interpretation, specifically of the Necessary and Proper Clause, set precedents for federal authority that are still used by the courts and are considered an authority on constitutional interpretation.
Thomas Jefferson, from the southern state of Virginia, promoted a predominantly agricultural economy. Both John Adams and Thomas Jefferson viewed Hamilton as unprincipled and dangerously aristocratic. Its probably a good thing that Aaron Burr killed him in a duel.
There were other, non-negotiable conditions for the establishment of the Bank of the United States. Among those were:
That the Bank was to be a private company.
That the Bank would have a twenty year charter running from 1791 to 1811, after which time it would be up to the Congress to renew or deny renewal of the bank and its charter; however, during that time no other federal bank would be authorized; states, for their part, would be free to charter however many intrastate banks they wished.
That the Bank, to avoid any appearance of impropriety, would:
be forbidden to buy government bonds.
have a mandatory rotation of directors.
neither issue notes nor incur debts beyond its actual capitalization.
That foreigners, whether overseas or residing in the United States, would be allowed to be Bank of the United States stockholders, but would not be allowed to vote.
That the Secretary of the Treasury would be free to remove government deposits, inspect the books, and require statements regarding the bank’ condition as frequently as once a week.
Historians apparently disagree about the bank enabling bill. For instance, Wikipedia conflicts itself when, in its article on the First Bank of the United States, saying:
A myth has arisen about the bank bill. To get it through the Congress, Hamilton supposedly struck a deal with several of its members to support their efforts to move the capital from Philadelphia to the banks of the Potomac. This confuses the bank bill with the Compromise of 1790, which had to do with the assumption of state debts by the United States government.”
While in the Wikipedia biography of Hamilton it states:
Hamilton eventually secured passage of his assumption plan by striking a deal with Jefferson and Madison. According to the terms, Hamilton was to use his influence to place the permanent national capital on the Potomac River, and Jefferson and Madison were to encourage their friends to back Hamilton’s assumption plan. In the end, Hamilton’s assumption, together with his proposals for funding the debt, overcame legislative opposition and narrowly passed the House on July 26, 1790.” [Citing Miller, John (2003). Alexander Hamilton and the Growth of the New Nation. New Brunswick, USA, and London, UK: Transaction Publishers. p. 251.]
Whichever version is accurate, doesn’t really matter. What is important to know is that Hamilton was obviously a puppet of The People Who Control Everything, even back then.
Given a 20 year charter by Congress in 1791, the bank was created to handle the financial needs and requirements of the central government of the newly formed United States and to regulate the coinage of money as mandated by the Constitution. Hamilton’s purported reason for establishing the Bank was to:
Establish financial order, clarity and precedence in and of the newly formed United States.
Establish a mint for the coinage of money
Establish an excise tax
Establish credit– both in country and overseas– for the new nation.
To resolve the issue of the fiat currency, issued by the Continental Congress immediately prior to and during the United States Revolutionary War– the “Continental.”
When the Bank’s charter expired in 1811 under the tenure of [by now] President James Madison, the bill to re-charter it fell short by one vote in the House of Representatives, Madison himself revived it in the the Second Bank of the United States ostensibly owing to the rising debt from the War of 1812 and ineffective state banks.
I wonder aloud how and why Madison’s stance on a national bank changed so drastically in 20 short years.
It concentrated the nation’s financial strength in a single institution.
It exposed the government to control by foreign interests.
It served mainly to make the rich richer.
It exercised too much control over members of Congress.
It favored northeastern states over southern and western states.
Banks are controlled by a few select families.
Banks have a long history of instigating wars between nations, forcing them to borrow funding to pay for them.
Sound familiar? President Jackson got it right!
Not unlike Thomas Jefferson, Jackson supported an “agricultural republic” and strongly felt that the Bank increased the fortunes of an “elite circle” of commercial interests and industrialists at the expense of the farmers and laborers. After a long drawn out struggle, Jackson succeeded in eliminating the Bank by vetoing its 1832 re-charter by Congress and by withdrawing U.S. funds in 1833.
Whatever you may think about Andrew Jackson as an “Indian fighter,” you must applaud him for not succumbing to The People Who Control Everything. The second of two attempts on Jackson’s life was perpetrated by a “lone nut” (sound familiar?) in the person of Richard Lawrence who, among other statements, said that with the President dead,
…money would be more plenty.”
(In a direct reference to Jackson’s struggle with the Second Bank of the United States.)
The important lesson to be learned here is that the First Bank and its successor, were also heavily supported by the moneyed northern/New England merchants and industrialists, and eyed with great suspicion by all of the Southern States, whose agrarian societies economies were not dependent on centrally concentrated banks, but relied chiefly on barter.
“Southerners” had become dubious of northern interests by then, and with good reason. They viewed institutional national banking as an erosion on their rights and the beginning of a strongly northern-dominated Federal Government as usurping their authority and exercising undue control over them. And they were right. After all, the Civil War, to this day called the “War of Northern Aggression” in the southern states, was not about slavery, it was all about states’ rights. The slavery issue was just so much public relations subterfuge that the bureaucrats and politicians have become so adept at spewing forth. And they still teach that in school today!
A United States Note or "Greenback"
During the Civil War, the Congress passed the [First] Legal Tender Act which ordered the Treasury Department to issue two different types of currency, the first being what were legally called “Demand Notes” and were issued between 1861 and 1862 to pay for war expenses, including federal employees and the Untied States military, essentially allowing the government to finance the war on its own credit. The first currency printed on both sides, they came to be known as “greenbacks” because of their distinctive green ink on the reverse side.
But by December of 1861, the rampant inflation that the notes caused led the government to stop redeeming them for coins.
The Second Legal Tender Act discontinued the use of demand notes (in name only), and replaced them with “United States Notes” which were issued from 1862 up until 1971. They, too, came to be known as greenbacks, a moniker inherited from the Demand Notes. As an aside, they are still valid United States currency.
And by 1873 the resulting inflation from this fiat currency started what is known as the Panic of 1873 began what was then called the Great Depression, but is now referred to as the Long Depression. Lasting until 1879, it was followed by the Depression of 1893,
The primary cause of this depression in the United States was the tight monetary policy that was followed to get back to the gold standard after the Civil War. The U.S. was taking money out of circulation to achieve this goal, therefore, there was less available money to facilitate trade. Because of this policy, the price of silver started to fall causing considerable losses of asset values, however after 1879, due to increased industrial productivity, trade and competition, production increased, thus further putting downward pressure on prices. So what we had was inflation caused by the Greenbacks being placed into circulation coupled with a contraction of the money supply..
The crisis was triggered by the failed attempt in October 1907 to corner the market on stock of the United Copper Company. When this bid failed, banks that had loaned money to the scheme suffered runs that later spread to affiliated banks and trusts, leading a week later to the downfall of the Knickerbocker Trust Company. The collapse of the Knickerbocker spread fear throughout the city’s trusts as regional banks withdrew reserves from New York City banks. Panic extended across the nation as vast numbers of people withdrew deposits from their regional banks.
Economic historians usually attribute the start of the Great Depression to the sudden devastating collapse of US stock market prices on October 29, 1929, known as Black Tuesday. However, some dispute this conclusion, and see the stock crash as a symptom, rather than a cause, of the Great Depression. Even after the Wall Street Crash of 1929, optimism persisted for some time; John D. Rockefeller said that ‘These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again.’”
History is again wrong. Let me explain why.
The victor will always be the judge and the vanquished the accused”
— Reichsmarschall Herman Goering.
"Day of the Horns" by Roberta Wesley courtesy Wesley Gallery. Used with permission. Click to visit.
Panics do not just happen. Something triggers them. Here, I am referring to any panic, not just financial panics. When cattle stampede, its a panic of sorts, and is triggered by something that startles them from their normal complacency. Humans, being animals, too, after all, are no different. When cattle stampede, they do so out of fear– real or perceived– that causes them to bolt. What causes this fear is based on the mentality of the animal. Cows are not very bright, so it takes little to cause them to be afraid. Humans, on the other hand, being more intelligent than cows (well, most of them, anyway), require more to cause them to panic. Basically, it boils down to the tolerance for fear. Fear of the unknown. Cattle hear a loud noise and charge because they are afraid of what caused it, because they do not know what caused it.
Human beings can also become frantic when something happens that they do not understand and/or they believe to be beyond the scope of their ability to control. Since the general population of the world is grossly ignorant of matters financial, it stands to reason that they can be easily “stampeded” not unlike a herd of cattle.
The People Who Control Everything are well aware of this and use it in so many ways that I cannot begin to describe them in this rant; I will leave that for another time. Suffice it to say is that what all of these financial panics have in common is that they were deliberately and purposefully engineered.
Look at the 1907 “crisis,” for example. The stock market “crashed,” precipitating a run on the banks. How? Rumor and innuendo undoubtedly promulgated by The People Who Control Everything. But The People Who Control Everything had already safely withdrawn their wealth from the stock markets and financial institutions. And in rides old J.P. on his white horse to save the day. Morgan must have not been keeping his money in his own bank, had he done so, he would have kept paying depositors, just like Jimmy Stewart’s character, George Bailey, did when there was a run on his Bailey Building and Loan Association in Frank Capra’s movie Its a Wonderful Life. [You may think of this as a Christmas movie simply because there was a Christmas tree in it, but in reality it was based on the book, The Greatest Gift, by Philip Van Doren Stern who was trying to get the truth out about engineered financial collapses. Watch it again with more discernment.]
Do you not think that Morgan and his cronies knew what was coming? If they did not participate in the planning and implementation, surely they had enough knowledge of economics to understand what was looming on the horizon.
Take a look at the 1929 “crisis,” generally called the Wall Street Crash of 1929. What Wikipedia and other history books state is that the Great Depression was triggered conveniently omit is the fact that the financial interests managed to convince the Average American that there was money to be made speculating stocks. Recall that this was the era known as the “Roaring 20’s” when the Great War was over and everyone was conditioned to think that prosperity had set in.
It was all phony public relations designed to lull people into complacency and to play on their desire for a better life. Credit was freely flowing and people were taught to live for “the now” and buy on credit.
Of course The People Who Control Everything had advance knowledge of this and were able to shield their wealth. Here’s how:
Congressional Hearings on Stabilization of the Purchasing Power of the Dollar disclosed evidence in 1928 that the Federal Reserve Board was working closely with the heads of European central banks. The Committee warned that a major crash had been planned in 1927. At a secret luncheon of the Federal Reserve Board and heads of the European central banks, the committee warned, the international bankers were tightening the noose.
Montagu Norman, Governor of the Bank of England, came to Washington on February 6, 1929, to confer with Andrew Mellon, Secretary of the Treasury. On November 11, 1927, the Wall Street Journal described Mr. Norman as “the currency dictator of Europe.” Norman, a close confidant of J. P. Morgan, admitted: “I hold the hegemony of the world.” Immediately after this mysterious visit, the Federal Reserve Board reversed its easy-money policy and began raising the discount rate, which precipitated the financial collapse.
All this has been conspicuously omitted in most history books.
Joseph P. Kennedy
One of the “insiders” was Joseph P. Kennedy, father of the late President. It is generally thought that Kennedy made the family fortune by “bootlegging” liquor during prohibition. This is only partially accurate. The money he made from this illegal venture was invested in the stock market and using inside information in ways which were legal at the time but were later outlawed, made his real fortune. Kennedy was associated in the “Bear raid” that precipitated the 1929 crash.
Investors had been allowed to purchase stocks “on margin,” in other words, on credit, with very little down payment and were told that when the stocks went up they would be able to repay those loans. People invested their life savings into this scheme. Once everyone was “hooked,” The People Who Control Everything pulled the plug. The banks contracted credit which caused stock market “margins” to dwindle. People like Kennedy who had inside information then forced down stock prices. Wikipedia says:
A bear raid is a type of stock market strategy, where a trader (or group of traders) attempts to force down the price of a stock to cover a short position. The name is derived from the common use of ‘bear’ or bearish in the language of Market sentiment to reflect the idea that investors expect downward price movement.
“A bear raid can be done by spreading negative rumors about the target firm, which puts downward pressure on the share price. This may be a form of securities fraud. Alternatively, traders could take on large short positions themselves, with the large volume of selling ideally causing the price to fall, making the strategy self perpetuating.”
While not illegal at the time, it was certainly unethical, particularly in light of the participants’ knowledge of how it would destroy millions financially.
Dorothea Lange's "Migrant Mother," March 1936.
Once stock prices had been depressed and people could obtain no more credit, stockbrokers began telling their customers that they would have to increase the amount of cash, or “margin” that they had used to purchase securities on credit. A “margin call” is when the stockbroker, for all intents and purposes, calls in that loan and demands more “margin.” In other words, the broker wants more cash, usually because the value of stock has gone down, but in this case it was just done on purpose. Of course people did not have any more money, so their stock had to be sold to cover the margin. Selling off all of these stocks at one time caused the prices of the sticks to plummet, causing the “crash.”
This is what World War II was really all about. The Federal Reserve Bank on steroids. It was not German, Italian, or Japanese aggression or atrocities. These same bankers were financing Hitler, but that’s a whole other rant. Do your own research.
The Federal reserve had to establish the U.S. Dollar as the World’s Reserve Currency. The de facto standard against which all other money was measured. This allowed them to extend their greedy reach beyond the boundaries of the United States.
In 1963, President Kennedy issued Executive Order Number 11110 which ordered the United States Treasury to again issue currency, bypassing the Federal Reserve System. Kennedy’s order gave the Treasury the power “to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury.” This meant that for every ounce of silver in Treasury’s vault, the government could introduce new money into circulation. In all, Kennedy brought nearly $4.3 billion in U.S. notes into circulation. The ramifications of this bill are enormous. When Kennedy was assassinated just five months later, no more silver certificates were ever issued, despite the fact that this Executive Order was never rescinded and therefore is still in effect to this day.
Why, then, have subsequent Presidents followed up by continuing this practice? They would certainly would he heroes in the eyes of millions of voters. Think about it!
If you are old enough, you may recall the song/narrative History Repeats Itself which was done by Buddy Starcher, reaching #39 in 1966. Cab Calloway also charted with it in 1966, reaching #89 on the Top 100. I was working at a “Top 40” radio station at the time and I remember that it received a lot of airplay. Some of the comparisons were uncanny, such as “Both were shot from behind in the head” and “Their successors both named Johnson” and so forth. You may have heard it.
The Bull in front of the foreign-owned NYSE-Euronext Stock Exchange in New York City. What are the really trying to tell us?
But the one thing that they left out was: Both Presidents tried to issue currency in the name of the United States Government.
Again just like in December of 1861 when the Government stopped redeeming notes for coins, on August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, the Bretton Woods system officially ended and the dollar became fully fiat currency, backed by nothing but the promise of the United States Federal Government. This action, called Nixon shock, for then President Richard Nixon, created the situation in which the United States dollar became the sole backing of currencies and a reserve currency for the member states.
Nixon did this because of spiraling inflation and unemployment (he was up for re-election the following year) the fact that many nations, namely Switzerland and France were making more and more aggressive demands for payment in gold. Switzerland finally withdraw from the Bretton Woods accord.
That’s the thanks we got for rescuing them from the Nazis, I guess.
So what we have now is a pretty piece of paper that we are forced, at the point of a gun, to honor as currency. We, the taxpayers, pay to have it printed, then we give them to the Federal Reserve who loans them back to us at interest. How crazy is that? Not so crazy if you’re one of The People Who Control Everything.
The Dollar. The Almighty Dollar. Not so almighty anymore. Its worthless.