Honest Money

Henry Ford once said, “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Are you confused by all the talk about monetary policy, fiat money and inflation? You’re not alone. Bankers and politicians have worked hand in hand for many decades to obscure their activities from the public. They hide behind elaborate structures designed to inflate the money supply while creating the false impression that they are looking out for our best interests.

Inflation is a very simple concept to understand: More money = less value. It may seem contradictory but it’s very straightforward.

For illustration purposes, join me on a brief journey of the imagination. One beautiful morning, you wake up and realize that you own twice as much cash as you had just last night. Magic money elves entered your home and bank account and simply doubled your entire cash assets. You’re now twice as wealthy (or half as poor as the case may be).

But you soon realize that the same thing happened to everyone else in the country. The money supply (total amount of money) has doubled! It’s just a one-time event and your regular income remains the same… you just got lucky this one time. It’s okay to dream, so stay with me.

What happens next? If you’re like most people, you probably start spending. You buy things you always wanted to buy but couldn’t afford. You pay back some debts. You buy stocks. In other words, you put the new money into circulation. So do most other people in the country.

Demand for many products increases because a lot more people can afford them now. Consumers are buying so much stuff that some shortages occur. To protect themselves against these shortages, shops and businesses decide to increase their prices. They know that once prices go up, fewer people will be competing to buy the same products, and the situation will be back to normal.

As a side effect of these higher prices, shop owners start earning higher profits than usual. They have more money in their bank accounts, which allows them to increase their spending. They will invest in new stock or expand their business. They might pay out dividends to their investors and bonuses to their employees, allowing these people to buy more products as well. This additional demand puts even more pressure on other shops to increase their prices.

A few months later, prices of almost everything have gone up. Suppliers and manufacturers are faced with the same threat of too much sudden demand from their clients so they too decide to start charging more.

You went on a one-time buying spree and look what happened! Your income stayed the same, but after a few weeks you can suddenly no longer afford the products you used to buy all the time because all prices in the economy have gone up.

Naturally, you demand a higher salary from your employer. If you’re self-employed or in business, you have to charge your customers more money just so that you can maintain your standard of living. Everyone else is in the same situation. Higher prices keep spreading throughout the entire economy, and it’s getting more and more difficult to make a living.

Can you see how this lucky one-time incident which at first seemed so exciting was extremely harmful not just for you but for the entire country? You briefly had a good time but now you’re worse off than before. In our story there are now twice as many dollars in circulation, but your income remains the same and each dollar you earn is worth only about half as much as it used to be. You’re really hoping for those money elves to come back.

As a matter of fact, some people, companies and banks have managed to develop an inside connection to the “money elves”, allowing them to receive new money into their bank accounts whenever they want to. The money is officially a loan (credit), but they know they never have to pay it back… they just “roll it over”, i.e. take up even more debt. With all that easy money in their accounts, and after hearing on TV that stocks only go up and that real estate prices will continue to rise forever, they tend to get a bit lightheaded and start making bad investment decisions. They know that if anything happens to their investments they will be bailed out by the government, so they do not hesitate to take huge risks with their new found “wealth”.

Let’s stop dreaming and look at the reality of things. What if I told you that these “money elves” do exist and that they spring into action not just once in a lifetime, but every couple of weeks? And that they repeatedly give money to their closest friends, but not to you? That prices are going up because the total amount of money in circulation increases, but that you’re missing out on all the fun?

Well, that’s inflation at work. Who benefits from inflation? Only those who are at the top of the pyramid and receive all that new money directly from the source. As you might have guessed by now, the source is the Federal Reserve, and its recipients include the government which “borrows” a lot of new money each year, without any intention of ever paying it back. Another beneficiary these days are failed banks that are being “bailed out” for the good of the “economy”, or defense contractors that receive money to build up our military so we can have a constant presence all over the world and fight never-ending and unnecessary wars. There was even a huge number of small-time beneficiaries who received consumer loans and sub-prime mortgages they would never be able to pay back.

What, then, is fiat money? It’s exactly what we just talked about: money that can be inflated or increased at the push of a button at the say-so of a powerful person or organization. Nowadays most dollars are just blips on a computer screen and it’s extremely easy for the Federal Reserve to create money out of thin air whenever they want to.

If our money were backed by gold and silver, people couldn’t just sit in some fancy building and push a button to create new money. They would have to engage in honest trade with another party that already has some gold in their possession. Alternatively, they would have to risk their lives and assets to find a suitable spot to build a gold mine, then get dirty and sweaty and actually dig up the gold. Not something I can imagine our “money elves” at the Fed getting down to whenever they feel like playing God with the economy.

As you can see, inflation and fiat money are very seductive and beneficial to those at the top, and very dangerous to everyone else and the nation as a whole. That’s exactly what Henry Ford was talking about. He knew that every country that relies too much on fiat money is ruined sooner rather than later.

There is only one possible solution to the inflation problem: Stop creating money out of thin air. But we’re already in such a mess that the only way to have a real impact on the money supply is to increase interest rates so that people pay back their loans and borrow less money from the banks, which decreases the amount of money in circulation. However, higher interest rates might very well crash the economy. So the Fed’s current “solution” to overcoming inflation is… creating even more of it.

Fiat money is a dangerous addiction. Even if the Fed found a way to stop inflation, as long as the current system persists the temptation will always be there to resume pushing the easy money button. That’s why we need to get back on the gold standard and eliminate the Federal Reserve altogether.

But that won’t happen “before tomorrow morning”, as Henry Ford said, or even this year. Ron Paul believes that the first step towards monetary freedom is to allow open competition in currencies. Once gold and silver are allowed as legal tender and can be sold without sales tax, everyone can use them to store their wealth and to pay for the things they want to buy. The Federal Reserve will finally have a very compelling motivation to stay honest and maintain the value of the dollar because if they don’t, they will simply lose all their customers.

Ron Paul has been an advocate of the gold standard and open competition in currencies for many years. He is the Federal Reserve’s most outspoken opponent in Congress and has frequently questioned Alan Greenspan and Ben Bernanke about the Fed’s actions.

Join the Ron Paul Revolution and help us put the Fed where it belongs: into the history books and out of our financial lives.

More Information

Thomas Jefferson and Andrew Jackson understood “The Monster”. But to most Americans today, the Federal Reserve is just a name on the dollar bill. They have no idea of what the central bank does to the economy, or to their own economic lives; of how and why it was founded and operates; or of the sound money and banking that could end the statism, inflation, and business cycles that the Fed generates.

Dedicated to Murray N. Rothbard, steeped in American history and Austrian economics, and featuring Ron Paul, Joseph Salerno, Hans Hoppe, and Lew Rockwell, this extraordinary new film is the clearest, most compelling explanation ever offered of the Fed, and why curbing it must be our first priority.

In this 1988 interview, Ron Paul talks about money, banking and the Federal Reserve, and predicts the current financial crisis.

Show: American Power Structure
Date: August 1988

Explanation of Fiat Money:

Here’s an amazing introduction to the history of the US dollar:

The American Dream Film:

Ron Paul Money Lecture Series — “What is Money?”

  • 357 Mag

    “I care not who controls a nation’s political affairs, so long as I control her currency” – Mayer Amschel Rothschild

    These parasitic jooo money-changing idiots must be bushwacked, just saying!

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  • Collin

    The south was fighting for freedom ! the north did not free the slaves they made us ALL slaves with the 13th and 14th amendments by creating a FEDERAL CORPRATE CITIZEN ! That we all unknowingly claim to be a U.S. citizen (PROPERTY OF THE FEDERAL GOVERNMENT) The 13th amendment should have read “Neither slavery nor involuntary servitude OR VOLANTARY SERVITUDE shall exist in these United States” So the Confederate flag IS THE FLAG OF FREEDOM FOR ALL ! WAKE UP !

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  • Collin

    “WICKED DEBT FRAUD” (REVISED) The one and ONLY answer to the debt problem is to declare it null and void because of FRAUD! It is fraud because it is mathematically impossible to repay! It cannot be repaid because the interest is never created on the loan and that is fraud and fraud voids all! If we don’t void all out of thin air debt, the bankers will own almost EVERYTHING! We will be homeless slaves! They have a license to counterfeit! Can I counterfeit the money to repay the loan? Why not? They counterfeited it to lend it to me? If we even attempt to repay an impossible debt (All out of thin air debt) all we do is show our ignorance! The way to fix this mess is so simple a 3rd grader can figure it out! We void the fraudulent debt and everyone keeps ALL the items they have so called debt on! Then we can start to use a debt free currency and / or gold and silver! Then we will have a robust economy like never before — OR WE LET THE BANKERS STEAL EVERYTHING!
    I was in about the third grade when the news was talking about the national debt and I asked my dad “who do we owe money to? And who could possibly be richer than the United States? And where did they get the money?” And then my dad took a gulp off his beer and said “we owe it to ourselves!” I said “that’s the dumbest thing I’ve ever heard of!” That’s like me borrowing from my right pocket and setting fire to the interest and putting the rest in my left pocket! This was about 1972! But Dad was wrong! We owe it to international Bankers running the biggest Ponzi scheme on earth called The Federal Reserve System! And yes it really is this simple! The bankers have a shoe-in on ALL loans they make! All they have to do is stop lending and then start foreclosing on ALL debts! -meaning they now own everything that has a debt by having a license to counterfeit! So we #1 keep getting fleeced by continuing to pay this fraudulent scheme! OR #2 We declare ALL out of thin air debt NULL AND VOID because of FRAUD! And we keep everything we have so called debt on! MOST people don’t get this part! Every car, boat, house, machine, tool, farm,etc. has already been paid for by the fraudulent paper! So no one loses! (except the fraudsters) WE sure as hell can’t give it to the banksters! (let them steal it) AND IT DOESENT MATTER IF THE BANKERS FORGAVE THE DEBT BY 99% ITS STILL UNPAYABLE! (BECAUSE THE INTREST DOES NOT EXIST ) So when we void the FRAUD This will be the ultimate FRESH start for everyone! Share this if you want THE solution to the WORLD’S problems! If not, everything will continue to get worse until we have HONEST DEBT FREE MONEY and / or GOLD AND SILVER! And there is plenty of gold and silver! Just Divide the paper money (FRN) by the gold /silver and you have the value of them! NO MATTER WHAT IT COMES TO per OZ! Then we would be happy to work for SAY A ONE OZ. SILVER COIN A day ! Because a one OZ. silver coin (REAL MONEY) will buy what $100 – $200 or more did before the reset! THINK ABOUT IT! This is what Scripture calls the jubilee! “WICKED” Debt And the amount and size of the debt has nothing to do with it being mathematically impossible to pay! This fraud is so “WICKED” that even a $10 loan is a Ponzi scheme here’s how it works! I’m the new banks first customer, I borrow $10 @ 1% interest I now owe the bank $10.10 but ALL the money in the world is $10 the .10 cents doesn’t exist (BECAUSE THE INTREST IS NOT CREATED) so some one else has to borrow some so called money and I have to find a way to get .10 cents from them so I can repay my loan! Now say they borrowed $10 also now I somehow get .10 cents from them to pay my loan back! But now he is short .20 cents to pay his loan! Now you can see how a $100,000 house that will cost you $265,000 to pay off because you have to pay $165,000 in interest (THAT DOES NOT EXIST) is a GIGANTIC PONZI SCHEME! Now multiply that by millions of people in the U.S. and you can see how It turned into the monster debt we see today! And for the loans that do get repaid multiple people have to default on there loans for you to pay off your loan! NOW you can understand why we have a rapidly growing homeless problem! Now that is a WICKED debt money system that we must declare Void!

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  • Robert Kleijn

    I live in the UK and follow the financial crises in Greece. Considering that also in the European Union the banks failed the people, yet the governments bailed them out, and the IMF is a private bank (so why should governments have to repay them?) Do you think that Greece will be better of ditching the Euro and the European Union. I think the same should happen in the UK and we should stop the austerity and stop repaying the banks and the IMF.

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  • Luke Ellis

    All the economists are not really concerned with the national debt. They say our employment and GDP are robust enough to handle that. I wish I could use that logic to pay my personal credit card debt by getting another credit card to make the payments and just kick the can down the road. If it is no big deal, why not just print a whole lot more money, borrow more and give free college to all, cut the work week to 32 hours, and give free health care to all.

    What if more and more companies were to accept Bitcoin as a valid currency? It comes down to who, or what, do you trust to give you something of value for your goods and services. Bitcoin eliminates the central banks, there is a FIXED amount of Bitcoins that can be in circulation (around 21 million) since it is virtual and based on a mathematical formula. A Mexican migrant worker could send less than a dollar’s worth of a Bitcoin to a family member in Mexico for around two cents. A country running rampant with inflation should should not be surprised to see such a currency conversion by its people.

    »crosslinked«

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  • http://peristeriaelata.org David McNight

    Presently what doesn’t concern me about the Federal Reserve is the 6% dividend that is paid out to the 12 Federal Reserve Banks; all of whom have a 3% buy in of their total capital. What concerns me about the Federal Reserve is allowing them to take Government securities and offer them on the open Global Market!

    For all of you concerned with a particular private banking family in Europe buying in through 1 of these 12 Reserve Banks by holding their ‘stocks’ is looking at this picture incorrectly. I’m concerned about such an authority purchasing through Foreign Country Banks our Government securities. Do you understand? That’s (2013) 17.2 Trillion dollars that makes up our National Debt. Out of that National Debt, Foreign interest accounts for shy of 6 Trillion Dollars.

    By the way are People considered a commodity? Your Family and you are the commodity backing the National Debt. Paul is changing the commodity really the problem here? Be that Gold, Silver, etc. Is there any substance to Executive Order 11110?

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