Posted on 12/19/2015 11:51:06 AM PST by Jim W N
Correct. It never ceases to amaze me how so-called conservative Patriots are dismissive of the gold standard, which, at the very least, helps curtail deficit spending by government, along with its inflationary side effects.
At same time, many accept fractional reserve banking, one of several "progressive" ideas that were fomented upon the American public a century ago. This also encourages excessive deficit spending by government. Other abominations include the so-called "progressive income tax" and inheritance taxes; all of the above are central planks of the Communist Manifesto.
And yet we have "Patriots" who not only tolerate these Tyrannical measures, but, incredibly, argue for their preservation as some kind of necessity of the "modern" era.
“1) Congress, having NO authority to delegate”
Congress has the authority to charter banks. The Continental Congress charted the Bank of North America in 1781. The US Congress chartered the First Bank of the Untied States in 1791. Congress has the authority to regulate the practices of banks. They have the authority to create a consortium of banks to act as lender of last resort to the banking system.
” ‘creating’ a non-govt entity from which we borrow, with interest, fiat ‘money’.”
We don’t “borrow money” from the Fed. It is impossible to “pay interest” on the money that we use even if someone wanted to do it. You don’t write a check to the Fed. The only payment you make that goes to interest is the one that you write to the IRS. That pays interest on the national debt, which is created by Congress and issued by the Treasury. The Fed doesn’t ‘create’ money, it monetizes Treasury debt. And Americans have always used fiat money, in the 1800s it was issued as currency by private banks.
“2) Presidents, having ZERO authority over the monetary system,”
Congress is involved, the Legal Tender Act. Lincoln issued millions of dollars of fiat currency, Greenbacks. They continued in existence as the US Note issue until 1971 right alongside Silver Certificates and Federal Reserve Notes.
Lol. Uh that is how it works. If you have a gold standard you need enough gold to redeem the dollars. There’s so many dollars out there, 1ounce at Fort Knox needs to redeem 64000 of them.
“Lol. Uh that is how it works”
No, it doesn’t work like that. You’re expressing the fairly common misperception that a gold standard equates to a 100% gold backing for every dollar and that never has been the case.
In America gold certificates were exchangeable for gold. IIRC the smallest denomination was $50 at a time when that was a lot of money. If you’re old enough you’ll recall $1 silver certificates, which were exchangeable for silver. And there were US Notes and Federal Reserve Notes both of which were not guaranteed by specie.
A very large portion of the money supply under the gold standard was ‘bank money’ also known as ‘credit money’ which was not gold backed. In the 1800s this bank money was often issued as private currency by private banks, later it was simply credits to checking accounts.
The role of gold specie and credit money in a gold standard regime is described in von Mises’ “Theory of Money and Credit” if you care to wade through that. James Grant’s “Money of the Mind” is also a good book dealing with both money and banking.
1) Correct. Though, Congress has such powers and authorities, the F. Reserve is NOT a Congressional entity. It is a private institution, whose owners are the banks. Hence, extra-constitutional. The ‘oversight’ Congress placed in the Act is a sham. When has been the last audit?
Fiat ‘Federal Reserve Notes’ are swapped for U.S. bonds (I.O.U.s...which come with interest). Interest on those bonds pays the shareholders (banks). If that isn’t ‘borrowing’ I’d like to know what your definition is in that regards.
2) A1S8 - Congress may only COIN; it does not give the ability to print. A1S10 - States can not coin AND they can’t create fiat (bills of credit) = Only what the Treasury MINTS is legal tender for payment of debts; nothing else can logically be read, IMO.
For all the ideals of the Founders, it sure didn’t take long for them to begin repeating the mistakes of the past (see Whiskey Rebellion). The Legal Tender Act is as phony as the F.R. Notes. Lincoln even worse: the father of the Federal leviathan and the death of a Republic.
As for the ‘authority’ of the Presidents to remove the U.S. from the gold standard. Some penumbra, a nuance, I may have missed??
It doesn’t make a difference. you plan on having a two track system with “ gold” dollars and crap dollars? Before we left the gold standard foreigners could exchange Federal Reserve notes for gold Nixon had to close the gold window because our gold was flowing out because other countries realized we were printing too much money to have gold valued at 32 dollars to the ounce. The same would happen now. Only it’s even worse because when Nixon acted US citizens couldn’t own gold.
” It is a private institution, whose owners are the banks. Hence, extra-constitutional.”
The Fed was chartered by Congress in the same manner as the First Bank of the United States in 1791. It’s as valid as other entities created by Congress, including a US Army that lasts longer than the two year restriction found in the Constitution.
“When has been the last audit?”
There is a weekly report of the Fed’s holdings in every issue of Barron’s. It’s bond holdings. Always has been. Bonds are what the Fed uses to adjust the quantity of high-powered money in the banking system, one of Fed’s primary reasons for being.
“Interest on those bonds pays the shareholders (banks). “
That’s true for private banks. It’s true for anyone who owns a Treasury bond. Unfortunately for your argument the one entity where that isn’t true is the Fed. The interest earned on Treasury bonds held by the Fed is returned to the Treasury. The Fed doesn’t own its bond holdings in the normal sense, they are used to adjust the money supply.
“2) A1S8 - Congress may only COIN; it does not give the ability to print”
Banks have always had the ability to issue their own money. The Bank of North America chartered by the Continental Congress in 1781 issued banknotes. As did both the Bank of New York and the Bank of Massachusetts chartered in 1784. The First Bank of the United States, chartered by the first Congress in 1791, was authorized to issue $10 million in banknotes. Some of this is very basic American monetary and banking history.
“It doesn’t make a difference. you plan on having a two track system with ‘gold’ dollars and crap dollars?”
I simply described the monetary system that we actually had under the gold standard from the date of post Civil War resumption right up to FDR’s 1933 Executive Order. You appear not to be aware that it included credit money, aka bank money, fiat money in the form of the US Notes issue, silver certificates, and finally gold certificates backed by specie.
The post WWII Bretton Woods gold standard that lasted up until Nixon was very different, only foreign governments could exchange dollars for gold. There was a flaw in Bretton Woods that Keynes had warned about which could have been averted by not using the dollar as the world’s reserve currency. But the dollar was used as the reserve currency and this led to more dollars accumulating overseas than we had gold to back them. The first visible sign for the American public was the removal of silver from our coins, a result of a weakening of our dollar. The French didn’t believe that we would defend the value of the dollar and they were exchanging their dollars for gold as fast as they could. This continued until Nixon broke the last link of the dollar to gold in 1973
It would appear we will not see eye-2-eye on this matter, so I’ll leave you with these last points:
- Chartered banks are NOT the Fed. Reserve (the former being under the control of Congress, the latter...no so much)
- The F. R. Notes are created out of thin air, backed by ‘full faith’, nothing else, which leads to the never-ending expansion that is known as ‘inflation’ as more DEBT is created *I’d love to see the source of your ‘Fed bond holdings aren’t REALLY ‘theirs’*.
Fed (air) -> creates $$ -> $$ to banks (near 0%) -> $$ loaned to We/govt ( > 0%) = PROFIT (for them...NOT us).
- The 3 ‘jobs’ of the F. R. (Maximum employment, stable prices, and moderate long-term interest rates) have failed...MISERABLY. Q.E., 0% interest (artificial bubbles), housing/.COM bubbles...
- Fed. Reserve = Loss of Republic. The Socialist programs and $T in debt CANNOT exist w/out a fiat currency (aka Fed. Reserve).
All ones needs to see that the Reserve should NOT exist: Watch Congress and the economy when the Fed. comes before the committee and then tell me whom holds the power over whom.
Lastly, just because Congress does XYZ (even long, long ago) does not make it right, lawful nor Constitutional.
I’m well aware of the zoo of currency we used to have. So what do you consider a “gold standard”? A new Gold dollar redeemable at 1100$ to an ounce? What happens to all the federal reserve dollars in the world? Are the gold and fed dollars exchangeable? Are prices the same in both? Why wouldn’t I trade my fed dollars for gold backed dollars? What happens when people try? We only have enough gold to back about 200 billion in dollars at 1100$ per ounce. That won’t make much of a dent in the amount of currency out there.
I’m not opposed to going to a gold standard, I just think the price of gold in dollars is going to be astronomic compared to the price we have today.
This one might work again:
"What happens to all the federal reserve dollars in the world?"
A lot of it would be credit money, unbacked. Something equivalent to the old US Notes issue. Not everything was backed by gold during the gold standard era nor did it need to be for the system to work.
One thing that the gold standard does is create confidence in the value of the dollar and a willingness to hold them. This was one of the insights of Alexander Hamilton when he was Treasury Secretary, at a time when the US had very little gold on hand. When he became Treasury Secretary dollars were worth little and gold a lot. He announced that the US was willing to take either gold or dollars as payment for tariffs and this bid up the value of the dollar to be equal with gold. The other part of this deal was that interest on Treasury bonds was paid in gold, making the ownership of Treasury paper highly desirable.
The Fed membership is comprised of federal or state chartered banks. The Fed itself was created by an act of Congress.
" *I'd love to see the source of your 'Fed bond holdings aren't REALLY 'theirs'*"
That's easily seen in the treatment of interest earned on their bond holdings. The Fed returns everything above operating expenses to the Treasury, which back in 2000 amounted to $3,752,000,000. You don't give away money like that when you actually own your bonds.
The Treasury And The Federal Reserve
"The Federal Reserve is a nonprofit company. After their expenses are paid, any remaining profits are paid to the Department of the Treasury. The Department of the Treasury then uses that money to fund government spending. It's a relationship that produces a considerable amount of money. The Federal Reserve System contributed in excess of $29 billion to the Treasury in 2006, according to the Federal Reserve Board (FRB). So, the Federal Reserve not only helps to make and implement policies, it also serves as the government's bank and generates a portion of the revenue used to fund the country's activities. "
"- Fed. Reserve = Loss of Republic. The Socialist programs and $T in debt CANNOT exist w/out a fiat currency (aka Fed. Reserve)."
The Federal Reserve doesn't issue one dollar in debt, much less $T. Congress sets the national debt. The Fed operated for decades under the gold standard and played no role in ending it. Your above criticism is a non-sequitur .
"Fed (air) -> creates $$ -> $$ to banks (near 0%) -> $$ loaned to We/govt ( > 0%) = PROFIT (for them...NOT us)."
Evidently that symbolic logic is your attempt to understand what happens when the Fed monetizes Treasury paper by purchasing bonds from banks. That part is correct as far as goes, but "$$ loaned to We/govt ( > 0%) = PROFIT (for them...NOT us)" appears to be nothing more than confused nonsense, assuming that it can be deciphered at all. The Fed makes no profit, as detailed earlier.
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