The United States Fiat Money & The Federal Reserve System

The United States Fiat Money
& The Federal Reserve System
by Darryl Schoon


"Fiat money is an oxymoron. Traditionally, money has been both a
storehouse of value and a medium of exchange. Fiat money exists by
mimicking both; but when its ability to do so ends, fiat money exposed for
what it is, reverts to what it isâ??government issued coupons with
expiration dates printed in invisible ink.

Fiat money distorts the time value of money and in so doing destroys both
money and the economies that use it. Real money like gold and silver has
value over time, the greater its value and the longer it endures, the more
likely it will be accepted as money.

Throughout history, gold and silver have demonstrated such utility and as
a consequence both have been used as money for thousands of years.
Unfortunately, throughout history governments have either debased, sic
diluted, the amount of gold and silver in their coins or attempted to
circumvent gold and silver entirely by mandating the use of paper money,
sic fiat.

This is why:

Wealth, e.g. money, is power in a stored state. Unleashed, wealth is
capable of doing its possessorsâ?? bidding for better or worse. Wealth can
exacerbate suffering or alleviate it and its power to do bothâ?? usually
the formerâ??has been coveted by governments since governments existed.

While productivity is doing more with less, fiat money allows governments
to do more with nothing. Fiat currencies are a way for governments to
spend what they donâ??t have; and while counterfeiting by individuals is a
crime, passing government coupons off as money is legal because governments
make the laws.

WHOSE LAWS
WHOSE BENEFIT

The issuance of fiat money by governments is, in truth, a white collar
crime; and, as happens when white collar crimes are discovered, a highly
visible paper trail leads directly back to the wrongdoersâ??in this case,
the central banks.

Central banks are the mechanism by which societyâ??s productivity is
drained and indebted. Credit-based money issued by central banks turns
into debt, debt which immediately begins to accrue compounding interest
paid by productive members of society, e.g. workers, businessmen, farmers,
savers and taxpayers. The interest, of course, is paid to bankers,
non-productive members of society.

The motives for the co-conspirators in this crime are different but
equally fulfilling. Governments get to spend what they donâ??t have and
bankers get to collect interest on money that is not theirsâ??a win/win
for the governments and bankers and a lose/lose for citizens and savers.

FIAT MONEY IS A CANCER ON THE ECONOMIC BODY

The longer a fiat money system exists, the greater the odds of economic
collapse. Over time fiat credit money destroys economies because time
exacerbates the systemic flaws of credit-based, sic capital, markets.

Capital is but the polite word for credit and that is why it is used.
Capitalism sounds so much better (and more like money) than creditism. The
word capital implies a â??moneynessâ?? that does not exist.

Credit turns into debt and over time in fiat money systems the growth of
debt overwhelms the ability of producers and savers to service it. This is
why debt markets, e.g. bond markets, are now so much larger than equity
markets and why defaults involve increasingly larger and larger amounts.
In the current fiat money system, time is running out.

COMPOUNDING DEBT + TIME = INCREASING DEFAULTS

Time also contributes to the destruction of the â??valueâ?? of fiat money.
The continual issuance of fiat credit money expands the amount of fiat
â??moneyâ?? in circulation and thereby lowers the value of all previously
issued currency.

This is why savers are penalized in fiat credit based economies. Savings,
measured in terms of constantly declining dollars, are worth less over
time. In the 95 years since the creation of credit based money by the
Federal Reserve, the US dollar has lost 95 % of its purchasing power.

In fiat credit-based economies, savers are penalized and speculators are
rewarded. And while this is welcomed by Wall Street, it is a death warrant
for Main Street. In the US over the past twenty years, while Wall Street
has expanded, Main Street has contracted.

The shift in America from a productive to a speculative economy is
evidenced by the recent growth and dominance of financial â??servicesâ??
companies, e.g. Goldman Sachs, JP Morgan Chase, BofA, Morgan Stanley,
Lehman Bros, Wachovia, etc. â??their only â??serviceâ??, of course, is a
uniquely destructive and deadly form of â??self-serviceâ??.

Over time, parasites will kill the body on which they live and this can be
seen in the current decline of the United States. The decline of America
was not caused by outside forces, e.g. communism, terrorism, illegal
immigration, currency manipulation or product dumping as the US corporate
controlled media would have Americans believe. The decline of America was
an inside job.

The collapse of the US came from within. In 1913, the US replaced its
savings based currency with fiat debt-based money issued by the Federal
Reserve System, a consortium of European and US private banks whose intent
was to profit from the growing productivity of Americaâ??and profit they
did but to the detriment of America.

Since 1913, the Federal Reserve System has helped Wall Street bankers
leach and indebt the productivity of American businesses and workers until
America is now but a shadow of its former self. As the fortunes of Wall
Streets rose, Americaâ??s fortunes declined.

THE FIAT MONEY 3-STEP
CREDIT (step forward) DEBT (stumble) DEFAULT (fall)

Itâ??s been 95 years since the Federal Reserve System and its credit based
money took over the US economy. Now, the United States, once the worldâ??s
only creditor is by far its largest debtor. A report from the Federal
Reserve in 2006 stated the US is technically bankrupt with $65.9 trillion
in irreconcilable obligations. Currently, the US can only pay its debts by
issuing new debt. Default comes next.

THE US CENTENNIAL CELEBRATION OF FIAT MONEY

In 2013, in only five years the Federal Reserve System will celebrate its
100th birthday in America, the celebration of 100 years of bankers,
financiers and corporate CEOs dismantling the productivity of America for
personal gain.

It is my belief the next five years will determine Americaâ??s destiny.
Once seen as a beacon, it is now distrusted and feared and rightly so.
Those who bled this nation dry are still in control and the American
people, Americaâ??s only hope, are not even aware of what has happened;
and, if America is to be saved, there is not much time left in which to do
so.

The odds arenâ??t good and Americans, heavily indebted and addicted to
credit, are still hoping the Federal Reserve can save them, much as a
patient hopes doctors will provide the right medicines, not knowing the
doctors are getting kickbacks from the pharmaceutical companies and are
skimming prescriptions for their own benefit.

In fiat based economies, time is the enemy and 95 years have passed since
fiat money was introduced into the US. In America and elsewhere time is
passing and the clock is ticking and recently itâ??s been sounding more
and more like a time bomb.

It is hoped the election of a new president will save America. It wonâ??t.
Democracy, once the hope of the world, is now its greatest disappointment.
Moneyâ??and fiat money at thatâ??has subverted the democratic process
everywhere; and today, in all nations, politicians from both conservative
and liberal parties dance to fiat moneyâ??s funereal beatâ??in a mockery
of democracyâ??s original intent.

DEMOCRACYâ??A CONTROLLED DANCE
REQUIRING TWO PARTIES TO PERFORM

Nations, as well as people, can pass away in their sleep; and unless the
American people wake up and wake up soon, their slumber will be the death
rattle of what was recently the greatest nation on earth.

In just two weeks, on July 4th 2008, the United States will celebrate its
232nd birthday. But during its last 95 years, fiat money courtesy of the
Federal Reserve System has steadily eroded the economic foundations of
America. Once the wealthiest nation in the world, it is no longer. The
cause is clear. So is the cure. "<<

http://www.financialsense.com/fsu/editorials/schoon/2008/0623.html

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