classical economics
for analysis,  forecasting
and policy design

Sound Money +

SOUND MONEY & BALANCED TRADE
Vs.
Fiat Currency & Deficit Spending


By Wayne Jett © June 24, 2018

     The Federal Reserve took only 20 years to destroy the “good money” U. S. dollar that existed before the Fed was created in 1913. That “good money” dollar entitled the holder to exchange it for a stated amount of gold ($20.67/oz) at any bank. Promptly after taking office as president in 1933, Franklin Roosevelt ordered every American owning gold to surrender it in exchange for $20.67/oz, thereby ending “good money” and creating the paper dollar.

FDR Creates A Monster

     On January 31, 1934, Roosevelt devalued those paper dollars by declaring the price of gold to be $35/oz, which was 69.3% higher than the price paid to Americans who had owned the gold before confiscation. So that proportion of wealth owned by Americans was taken from them and secretly transferred to a clandestine entity created by federal law called the Exchange Stabilization Fund.

     ESF still operates today, reportedly bigger than ever, from beneath the U. S. Treasury building in Washington, D.C. By Congressional statute, ESF is entirely exempted from all laws of the U. S. or any state (much like the entity known as “City of London” exists within London, but is exempt from all laws enacted in Britain).

     Thus, by FDR’s cunning action taking Americans’ gold first and then devaluing the dollar, a very substantial portion of the hard-earned wealth of private citizens was taken from them and given to a clandestine organization permitted to act as it would choose. By this design, FDR funded ESF as a major, secret tool of the shadow government dedicated to causing the collapse of constitutional republican government in America.

Paper Dollar’s Evil Design

     When Roosevelt took office in March, 1934, he promptly ordered an end to the right of Americans to exchange each dollar they earned for a stated weight of gold. Since then the Fed has been permitted to issue “notes” making illusory promises to pay unstated value, while the value of each Fed “note” now is sufficient to purchase only 1.37% of the amount of gold one dollar would buy before 1933.

     This precipitous decline in the dollar’s value has resulted from the fact that the Fed has been permitted to operate in secret. The Fed has never permitted an independent audit of its operations. The Fed has issued dollars in unknown quantities to unidentified parties, presumably including its owners. And the Fed has never demonstrated the capability to deliver actual value in exchange for its promissory “notes” called dollars.

     Since the outset of FDR’s presidency, the paper dollar (now with undeclared value) has remaining only about 1.63% of its purchasing power relative to gold. This is true even at the deceptively low “spot price” of gold in 2018 set by reference to prices in contracts containing options to buy or sell gold.

     These derivative contracts purport to deal in much larger amounts of gold than are actually available for delivery. Practically, they must be settled by cash payments rather than delivery of gold. Therefore, the prices stated in these contracts do not truly define the market price of gold for actual delivery. The derivatives trading price is used as a deceptive mechanism for suppressing the reported price of gold, while giving the dollar a false image of greater purchasing value.

Bottom Line: Wealth Stolen from Working People

     To be clear, the 98.37% of “lost” purchasing power in the dollar since FDR took power and took the gold has not really been “lost” – it has been stolen. Those who create the paper dollars – the central bankers – have stolen the purchasing power.

     The central bankers steal purchasing power partly by secretly issuing dollars to their owners, but never permit an audit to prove this is so. Their paper dollars have been exchanged for the labor, products, land and other assets of working people, who are required to accept dollars as “legal tender” for all debts. But now those dollars are worth less than one-fiftieth of their original value. And one day – perhaps soon – they will be worth one-fiftieth of today’s value, presuming the Fed is permitted to continue its operations.

     That is the fraud of fiat currency and the central bankers. Yet, thus far, they have been successful in keeping the hard assets they have acquired, while knowing their paper currency will one day be worthless. But consider the reasons to believe the Fed will be ended and America will return to sound money soon.

Why Bother With Balanced Trade?

     The BRICS alliance of nations (Brazil, Russia, India, China, South Africa and numerous other “me-too” sign-ons) is already far along in implementing a trading system which uses a selected currency which can be reliably converted to gold at a state price. They have done this for good reason: they wish to borrow and to trade based on reliable currency exchange rates, rather than be whip-sawed by unfavorable exchange rates when repaying loans or selling their products. In other words, the Fed’s fiat dollar is being abandoned in significant amounts of international trade.

     When the currency used to buy foreign products is sound money backed by assets with known value (such as gold), a nation paying that money for foreign goods must be careful to sell abroad as much as it buys abroad. A nation which buys more foreign products than it sells abroad must transfer the difference (in gold or other pledged asset) to its trading creditors to balance its foreign trade account each year.

     Of course, President Trump is well aware of all this, and he knows the U. S. presently buys from abroad about $800 billion more than it sells abroad annually. Thus, in order to balance its foreign trade account, the U. S. must buy $400 billion less from abroad and sell $400 billion more annually. This explains why the U. S. president is threatening tariffs and re-negotiating foreign trade agreements.

     Briefly stated, the world is moving back towards sound money, and President Trump is preparing for the U. S. to make the same move. He sees sound money will be far better for Americans than the Fed’s fiat currency, but also sees that international trade arrangements must be set right very promptly or much of America will be foreign-owned in short order.

Draining the Swamp – Defeating the Elitist Cabal

     Sound money is one of the central issues working its way towards resolution in the process loosely called “draining the swamp.” Unsurprisingly, the swamp’s masters are the same elitist cabal which owns the central banks of the world. Uprooting this cabal is proceeding apace primarily by means of President Trump’s executive order effective December 21, 2017, which declared a national emergency caused by human trafficking and corruption, and ordering a freeze of all assets of named offenders.

     To date, since President Trump was sworn into office, more than 35,000 sealed indictments have been filed in U. S. federal courts. Defendants and charges cannot be determined until each indictment is unsealed, but they are believed to be related to the national emergency arising from human trafficking and corruption. The cabal of ruling elite is known to engage in human trafficking, and the central banks engage in corruption. Therefore, their very great stores of assets are subject to freezing and seizure provisions of Trump’s December executive order.

     The Fed central banking scheme of fiat currency has concentrated much wealth in few hands (i.e., cabal families), while enabling unlimited borrowing by U. S. government for deficit spending to create even greater burdens on taxpayers. The economic power and political influence of the elitist cabal – coupled with their explicit plans to topple all representative governments, to destroy the middle class and to exterminate most of humanity -- are simply intolerable and ought to be eradicated in the interests of preserving ideals of western civilization and human progress.

Equal Justice Under Law + Sound Money

     Individual culprits ought to be tried and punished for their crimes without regard to their previous status and influence, as any accused among the common people would be. Equal justice under law, including military tribunals for treason and attempts to destroy constitutional government, should be applied as required to protect the public interest.

     Ridding ourselves of the fiat dollar will be a challenge (i.e., dangerous), as other nations have learned by hard experience during past decades. The ruling elite who own the Fed (principally the Rothschilds) prefer to continue owning and controlling all currencies. However, the election of President Donald Trump apparently has placed the U.S. military solidly on the side of the American people as opposed to serving as muscle to require every nation’s compliance with elitist demands. This makes a currency reset (away from the Fed’s paper dollar to gold-based money) immensely more doable.

World War Against Ruling Elite

     Most certainly, the ruling elite who own the central banks (including the Federal Reserve) will not go quietly. They are entirely capable of false flag attacks against America that would make the false flag 9/11 attacks on the World Trade Center and the Pentagon seem minor by comparison. No question such attacks have already been tried, but our defensive efforts have succeeded, so far very well. Military and intelligence services loyal to the American Constitution are being challenged, perhaps as never before.

     The survival of the Federal Reserve and the dollar since 1933 as fiat currency is a bad thing, because it means the Fed has had many years to rob working people of the value of their productive labor. We now have our first realistic opportunity to bring that ignoble record to an end, and we should be very thankful for this chance.