The Mandrake Mechanism-(How the Fed Creates Money)

The Creature from Jekyll Island -Book Excerpt ^ | May 1998 | G. Edward Griffin

[zechariah]

I'll be debt free (except for the mortgage on my house) before the end of the year.

Good work!!

[z]

[zechariah]

I agree with you that it is problematic to have our laws become labrythine.

A crack in the wall! A ray of light! Hope springs eternal!!

[z]

[Deuce]

Who will issue our currency?

There was never an entity called the Bank of the United States and there was never any entity that had the constitutional right to "issue" currency. So you are wrong on the facts.

The constitutional grants Congress the right to "coin" money and regulate the value thereof not "issue" it.

[Southack]

"the points I have raised are all things that are completely prohibited are are not allowed in any manner."

Nonsense. You claimed that it was completely illegal to carry a loaded firearm onto a plane, but that's false.

I can legally carry my own gun on my own aircraft all day long. What you want is to be able to carry your gun on someone else's plane instead of buying your own aircraft. Tough luck, kid.

Again, you are confusing being able to do *something* with that of being able to do it in any *manner* that you choose.

You *can* carry a gun onto a plane, so long as you own the plane. Heck, you can even transport your gun on public airlines if you check it through checked baggage in an approved firearms container, as well as carry it with you if you are a pilot on that aircraft who has completed federal safety training.

But you don't want anyone to be federally approved at *anything*, much less aviation safety. You don't want any rules. You want anyone to be able to anonymously fly commercial aircraft, even if they are blind, deaf, linked to terrorists, and insane.

[antidisestablishment]

There are legal ways to purchase (trade) without using FRNs, so let's not banter semantics. The truth is that any monetary system is dependent on the consumer's willingness to participate in the system. The majority of people don't even understand the concept of specie and they trust the government to protect our financial system. (This is the real concept of fiat: it is not the law, but the trust in the issuing government.)

Short of outlawing credit, even a return to the gold standard would make little difference except for those who own gold. Our entire economy is driven by debt and the level of investment that we now have is not possible under a specie system. Our money supply is so inflated that any specie would be set on an exponential path of inflation and regulation—not to mention the problems of supply and market fluxuations.

[Southack]

"By that definition, the citizens of Nazi Germany were free."

Who told you that rubbish?

Citizens in NAZI Germany were *mandated* to work certain hours on certain days. Those citizens were ordered to perform certain jobs. Those citizens were FORBIDDEN from possessing firearms. Those citizens were FORBIDDEN from buying and selling or otherwise trading with Jews. Jewish citizens in Germany were imprisoned and executed.

You've got a lot of nerve, kid. No brains, but a lot of nerve to make the comparsion that you made above.

[zechariah]

Citizens in NAZI Germany were *mandated* to work certain hours on certain days. Those citizens were ordered to perform certain jobs. Those citizens were FORBIDDEN from possessing firearms. Those citizens were FORBIDDEN from buying and selling or otherwise trading with Jews. Jewish citizens in Germany were imprisoned and executed.

And that is exactly my point. While all of this was going on, your average German-on-the-street would have insisted that that Germany was a free country--and to complain that the laws deprived you of liberty was to advocate anarchy:

So long as you follow our society's rules, you are free to go anywhere and do anything.

[z]

[Southack]

You clearly don't understand the phrase "mandated behavior", as in, you are ordered to perform certain actions, regardless of what you want.

A mandated behavior is something like forcing citizens to stand at attention and salute the Fuhrer every morning at 7 AM. Even if you just got off the night shift at 6:45 and can't bear to stand up for another moment, you'll go to jail if you don't stand and salute.

A non-mandated-behavior rule is something like declaring that driving in the left lane is approved for all northbound traffic. You are still free to go North, if you desire, but you will do so in the prescribed manner.

Yet in your sad, uneducated world-view, mandated and non-mandated behavioral rules are both equal, as in equally non-free.

Sigh. You just don't get the difference.

[Billy_bob_bob]

"All laws should have such clauses and we need hard limits on the volume of law. How about a 2 for 1 trade in. Each new law costs 2 old ones."

Boy, do I like that idea! Nothing Congress likes to do more than pass new laws. This way we could insure they simplify the legal code as they went to create new laws. Not a bad idea at all.

[zechariah]

Sigh. You just don't get the difference.

Sadly, you are correct. I am aware of too many instances where "non-mandated-behavior" imposed real restraints and caused real harm. Like the thousands upon thousands of people who have died while the FDA took twice as long to approve drugs than it took for equivalent European agencies to approve the same drugs.

My "sad, uneducated world-view" includes too much personal experience in Latin America, where there is very little of your "mandated-behavior"--they do not have the resources to enforce such things--but quite a lot of your "non-mandated-behavior". "Non-mandated-behavior" laws are piled up on top of more "non-mandated-behavior" laws to the point that citzens of these countries have very little real freedom. True, not much is outright forbidden and even less is positively mandated, but the end effect is not one whit different.

The same thing is happening here in the US and shows little signs of abating. Manufacturing has not left the US because manufacturers are evil, money grubbing, unpatriotic scum bags. We have simply piled "non-mandated-behavior" regulations to the sky, driving manufacturers out of the country.

But you, in the meantime, may feel content to "live like a king" in Alabama. Perhaps some day in the future, when the burden of "non-mandated-behavior" regulations has become so heavy that IBM, BellSouth, and Computer Sciences Corporation are no longer hiring programmers, DBA's, tech writers, and software project managers we will have a common cause.

I look forward to fighting the good fight along side you when that day comes. Until then, goodbye.

[z]

[jd777]

What's the difference between "coining" and "issuing" currency? It seems any currency must have a "bank of issue". Who should coin our currency?

[Deuce]

What's the difference between "coining" and "issuing" currency?

Coining is a process whereby the owner of coinable metal asks the "coining" authority to convert the form of that metal from its current form into one of several standardized coins. "Issuing currency" (i.e., creating from nothing a medium with the capacity to discharge "current" obligations) requires the force of the state. Not only does Congress have no constitutional authority to do this but there is also an implied prohibition against it. Namely, states were expressly prohibited from "emitting bills of credit" (i.e. issuing currency in the parlance of the day). If the states had no such right, they could hardly have ceded such a function to the Federal Government.

However, there was no bank named "The Bank of the US" nor was ANY bank ever empowered to issue currency prior to the Federal Reserve. Indeed, those who foisted it upon us did so based on the fiction that we needed a lender (i.e. money creator) of last resort.

[Deuce]

The majority of people....trust the government to protect our financial system. (This is the real concept of fiat: it is not the law, but the trust in the issuing government.)

Your comments demonstrate a lack understanding of what fiat means. Fiat implies an arbitrary order or decree. Here's a quick history: For 5000 years, money was defined as some standardized commodity (usually gold and/or silver) which served as a standard of value, medium of exchange, and storage of value. Much much later, fiduciary paper money was introduced wherein an issuing authority promised to pay real money in a written promise. 70 years ago (30 internationally), a full-fledged fiat currency replaced both commodity and fiduciary currency. Fiat currency promises nothing to nobody in no particular timeframe. Such a currency serves only the issuer.

[jd777]

Are you against paper money?

[Deuce]

Are you against paper money?

I am against neither paper money, per se, nor electronic money, per se. I AM against any issuing authority that has the power to create and distribute money out of thin air, regardless of the form.

I am still trying to get a firm picture of what you favor. You have made a distinction between the Fed and some prior authority that you refer to as the Bank of the United States. What is the difference between these two authorities and when did the predecessor bank exist?

[jd777]

Let's just get one thing out of the way, duece.

The Columbia Encyclopedia, Sixth Edition. 2001.

Bank of the United States

name for two national banks established by the U.S. Congress to serve as government fiscal agents and as depositories for federal funds; the first bank was in existence from 1791 to 1811 and the second from 1816 to 1836. 1

The First Bank

The first bank was established under the auspices of the Federalists as part of the system proposed by Alexander Hamilton to establish the new government on a sound economic basis. Congress approved a charter for the bank despite the argument that the Constitution did not give Congress power to establish a central bank and the charge that the bank was designed to favor mercantile over agrarian interests. 2

The bank had a head office in Philadelphia and branches in eight other cities. The government subscribed one fifth of the capital of $10 million, but a loan of $2 million was immediately made to the government. In addition to acting as a fiscal agent for the government, the bank conducted a general commercial business. 3

It was well managed and paid good dividends, but its conservative policies and its restraining influence on state banks, through its refusal to accept state bank notes not redeemable in specie, antagonized more exuberant business elements, especially in the West. These interests combined with agrarian opponents of the bank to defeat its rechartering, despite the support given the bank by the Madison administration. The bank concluded its affairs and repaid its shareholders. 4

[jd777]

I will admit that we don't want "the bank of the united states" again. In fact, I suggested it just once, and in a jovial fashion (" bring back the bank of the united states!".) It was not a serious declaration of principle. I was just commenting on the anti-federal reserve tract on this board. Now, could you please just ease up on the point that said "authority" never existed.

Thanks, JD.

[Deuce]

Bank of the United States name for two national banks established by the U.S. Congress to serve as government fiscal agents and as depositories for federal funds; the first bank was in existence from 1791 to 1811 and the second from 1816 to 1836.

Okay, you are referring to the two banks that I have known as "The First U.S. Bank" and "The Second U.S. Bank" but which I, now, acknowledge also go by the names you use.

Moving on to the more substantive issue what is it about these banks that you find appealing vis a vis the Fed.

Specifically, are you aware that these banks did not issue currency? The bank notes they did issue were theoretically redeemable in specie and were not a legally enforceable tender.(i.e., creditors were not legally bound to accept them at par in discharge of a debtor's interest or principal obligations).

[Deuce]

At the time I posted #98 I had not seen your #97. You may now be saying that you favor neither the Federal Reserve nor The First U.S. Bank. If so, we agree. If you are saying that you do like the Fed, then we disagree.

[jd777]

The federal reserve, while presiding over a time of great growth in america's economy, by it's very functioning has created a 6.4 trillion dollar public debt. The "Fed" is unconstitutional (under artice 1 section8). We need a National Bank, owned by the U.S. Government, under congressional supervision, and entirely transparent to the U.S. taxpayer. And yes, you were right, the First U.S. Bank was a private central bank. What good would it do to bring back another version of the Federal Reserve?