WHO REALLY OWNS YOUR MONEY? Part Two: Inherent National Bankruptcy

Part Two: Inherent National Bankruptcy

(Article by Jim Carter – jscarter@fairpoint.netwith – with links added.

See Jim’s comments and more details at the end of this article.)

We are all familiar with a Ponzi scheme. The basic principle is to promise investors that money put into control of the operators will return high interest on the principal invested. Unfortunately, the confidence game promises to pay more interest than the principal generates, if the scheme generates any interest or gain whatsoever. The scheme will last as long as more investors are found whose invested principal will pay for the inflated interest due and payable to earlier investors.

The Federal Reserve operates a Ponzi scheme. Congress can pay for federal expenses with funds collected from taxes, imposts, and duties, but congress is never satisfied with this amount. The desire to buy votes from special interest groups, and financially assist politically connected friends (or is this redundant?), compels congress-critters to spend more, and this is identified as deficit spending. To finance this deficit, the Federal Reserve will create on their accounting books a line of credit equal in the amount of the bills, bonds, or notes the congress will authorize; i.e., the Fed receives the interest-bearing obligation on the full faith and credit of the United States and in return checks written by government agencies will be honored by the banking system. The accumulated deficits are identified as the national debt…

It must be observed the amount of money in circulation is increased by the amount of the principle (actually it is a line of credit that is generated) but the amount promised to be repaid is the principal and the interest. The interest is never created but it is promised to be repaid. It is impossible. The scheme will last only as long as more principle is generated to pay the interest. If all of the “dollars” in the world were used to buy back the bills, bonds, and notes, a national debt would still exist and be accumulating compound interest—but no “money” would exist outside of the Fed‘s vaults to repay the debt. The holders of federal debt would have a claim on the wealth of the United States citizens, but the citizens have no money to pay the debt. Confiscation of all real assets pledged as collateral would be in order. A feudal society with the Fed owners owning the land would be created.

To make the scheme appear legitimate, the Fed sells a large percentage of the bills, bonds, and notes, with the help of the U.S. Treasury, to remove much of the currency generated by the scheme (multiplied by fractional reserves) from circulation. Japan and China hold debentures for approximately 25% of the total U.S. debt. How much of this debt holding has been required by financial and government policies to gain approval of trade status for the past 40 years is unknown. It should be apparent that if Japan and China attempt to sell the obligations to support their economy, it would precipitate a world wide tsunami. How much purchase of the US debt is required of various other nations to gain favorable trade status is unknown, but it ties all nations into a global economy. The recent invasion of Iraq is theorized by some sources as retaliation for an economic policy designed to remove the dollar as the international reserve currency.

As many have written, the new creation of money by deficit spending is the source of inflation. Those closest to the money printing press will live better than those further away, and the farmers, as a class, are the most distant from the new money. This new money (VIDEO) is a way the wealth of the nation is confiscated from the people, and the people are for the greater part, completely unaware of their loss.

Some sources suggest the Fed has never been audited. That is not totally accurate. My 360 page copy of the 1996 Annual Report to Congress by the Board of Governors obtained after several calls to D.C., contains considerable information on the financial status and revenue transfers of the banks, branches, and the system, including interest earned from holdings of national debt. It is audited and signed by Price Waterhouse, LLP, page 275. All federal government entities are audited by the GAO, are they not?

It is also known that real estate owned by the Fed (including district branches) is subject to local property taxes and the tax bills can be verified at the county assessors office; real estate owned by the federal government is not subject to local property tax. Salaries of employees are, with few exceptions, set by the Fed with paychecks drawn on the Fed; they are not government civil service employees paid from the U.S. Treasury. The Fed also has their own private retirement program. The Fed is a privately owned, nationally incorporated for-profit business. The window-dressing of government appointed governors is from a pre-approved list.

No information is found that suggests an audit of any specie holdings, nor is there any information as to who owns controlling stock (Class A). Congressman McFadden went to his grave unsuccessful in his attempts to determine who owns the fed.

When faced with litigation, the Fed can choose, for their benefit, the mantle of a government agency or that of a private business. An entity that can select the most advantageous identification is not controlled by the law; it is above the law.

How long will the Fed be able to continue the Ponzi scheme? A common measure of the solvency of a corporation is the ratio of profit to the cost of debt service. A company that makes 30 times what they must pay for interest on long term debt is much more stable than one with a ratio of 3. Every year the US debt service cost increases, and the increase is exponential. Interest on the national debt now consumes 20 to 25% of the taxes collected by the federal government. It is only a matter of time before taxes will not be able to service the national debt. 

National bankruptcy is inevitable. Of course, people who do not pay taxes, or terrorists, will be blamed for causing the problem just as the stock market collapse was blamed for causing the depression of the 30’s.

The Fed was pulling currency out of circulation in the late 1920’s and the stock market was the first to feel the impact with margin calls. Local banks were compelled to call notes that were normally rolled over from year to year to meet increased reserve requirements and the stock market was the most liquid. When the economy appeared to be stabilizing, the Fed repeatedly tightened the money supply to deepen the depression. 

Gold backed currency was withdrawn. When the economy was expanded to pay for (the contrived) WW II, debt-bearing currency (with interest payable to the Fed) replaced the previous gold backed interest-free money. The Fed had installed their Ponzi scheme. Your grandfather who lost his farm during the depression probably never knew what hit him.

Today, the Fed is selling government debt at one to two percent. Is the government getting a bargain? Currency is available but demand is low. Major capital investments by businesses are being deferred as production facilities are being located overseasto escape oppressive taxation levied upon employees and operations, in addition to avoiding government regulations, restrictions and fines for variances. The price of a low interest rate for government debt is the destruction of the tax base. (In reality, congress does not care what interest rate is paid. Congress does not have to make a profit to stay in business—let the people pay whatever. However, interest earned by the Fed and financial institutes holding government debt is reduced.) 

The economic rape of the public will be perpetuated as long as possible. Ever increasing deficits are necessary to pay the interest and make the economy look good. The increasing deficits will escalate the cost of debt service exponentially. Congress-critters will not complain of the system or threaten not to pay the interest—the Fed might not honor their pay checks. The Fed controls the testicles of congress.

Deficit spending to pay for the interest is now sold to the public as the cost of a war. How long can the illusion be maintained??

Rampant inflation is already being seen in the price of fuel and the price of steel. It is not unrelated that fuel and steel are two prime essentials of the conflict in Iraq.

How long before the citizens realize the government’s ravenous economic appetite will not be sated short of a complete economic collapse (AUDIO) ?? (AUDIO Part II).

But then again, the collapse is inherent by the design of the economic system; it is only a matter of time. 

History is full of economic systems (VIDEO) based upon the government’s ability to confiscate the wealth of the citizens that inevitably result in self-destruction.