Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The United States of Fiat Money and the Federal Reserve System

Politics / Fiat Currency Jun 23, 2008 - 12:52 AM GMT

By: Darryl_R_Schoon

Politics

Best Financial Markets Analysis ArticleFiat 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 is—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 possessors' bidding for better or worse. Wealth can exacerbate suffering or alleviate it and its power to do both— usually the former—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 don'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 wrongdoers—in this case, the central banks.

Central banks are the mechanism by which society'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 don't have and bankers get to collect interest on money that is not theirs—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 “moneyness” 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 “value” of fiat money. The continual issuance of fiat credit money expands the amount of fiat “money” 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 “services” companies, e.g. Goldman Sachs, JP Morgan Chase, BofA, Morgan Stanley, Lehman Bros, Wachovia, etc. —their only “service”, of course, is a uniquely destructive and deadly form of “self-service”.

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 America—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, America 's fortunes declined.

THE FIAT MONEY 3-STEP

CREDIT (step forward) DEBT (stumble) DEFAULT (fall)

It'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 world'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 America '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, America '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 aren'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 it's been sounding more and more like a time bomb.

It is hoped the election of a new president will save America . It won't. Democracy, once the hope of the world, is now its greatest disappointment. Money—and fiat money at that—has subverted the democratic process everywhere; and today, in all nations, politicians from both conservative and liberal parties dance to fiat money's funereal beat—in a mockery of democracy's original intent.

DEMOCRACY—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 4 th 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.

Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com
blog www.posdev.net

About Darryl Robert Schoon
In college, I majored in political science with a focus on East Asia (B.A. University of California at Davis, 1966). My in-depth study of economics did not occur until much later.

In the 1990s, I became curious about the Great Depression and in the course of my study, I realized that most of my preconceptions about money and the economy were just that - preconceptions. I, like most others, did not really understand the nature of money and the economy. Now, I have some insights and answers about these critical matters.

In October 2005, Marshall Thurber, a close friend from law school convened The Positive Deviant Network (the PDN), a group of individuals whom Marshall believed to be "out-of-the-box" thinkers and I was asked to join. The PDN became a major catalyst in my writings on economic issues.

When I discovered others in the PDN shared my concerns about the US economy, I began writing down my thoughts. In March 2007 I presented my findings to the Positive Deviant Network in the form of an in-depth 148- page analysis, " How to Survive the Crisis and Prosper In The Process. "

The reception to my presentation, though controversial, generated a significant amount of interest; and in May 2007, "How To Survive The Crisis And Prosper In The Process" was made available at www.survivethecrisis.com and I began writing articles on economic issues.

The interest in the book and my writings has been gratifying. During its first two months, www.survivethecrisis.com was accessed by over 10,000 viewers from 93 countries. Clearly, we had struck a chord and www.drschoon.com , has been created to address this interest.

Darryl R Schoon Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in