JEDDAH, 9 August 2004 — It is the continuous loss of value that constitutes the destruction of the dollar. Because it happens gradually most of us are not alarmed by it. If we take history as a reliable guide, today’s dollar was worth $1.26 in 1985, $2.35 in 1975, $4.31 in 1965, and $7.56 in 1945.
The US constitution, Article I, Section 8, states that “Congress shall have power to coin money, regulate the value thereof.” The National Bank Act of 1863, effectively outlawed private currency. In 1913 the Federal Reserve System was created, when Congress (unconstitutionally) delegated its monopoly currency power to the Federal Reserve Corporation, a private company owned by the major financial institutions, and not the US government.
The founding fathers of the United States of America thoroughly understood currency debasement and how it usually leads to the destruction of civilization. The Coinage Act of 1792 provided the death sentence for anyone convicted of debasing US coins. In 1933 President Franklin D. Roosevelt arbitrarily reduced the amount of gold the dollar represented from one twentieth of an ounce to one thirty-fifth of an ounce. This amounted to a 43 percent devaluation (or debasement) of the dollar — a declaration of bankruptcy stating that the US Treasury would “settle” its debts by paying 57 cents in the dollar. It also meant, in terms of gold, that overnight the government had robbed the American people of 43 percent of their savings. By the standards of our founding fathers this was a crime punishable by death.
In 1934 Roosevelt’s “New Deal” took away the American citizen’s right to own gold, a right Americans had enjoyed since the first pilgrims arrived. This also meant the discontinuation of gold certificates.
In 1963 silver certificates were discontinued. On Nov. 26, 1963, the day of John F. Kennedy’s funeral, the first 50 million “no-promise” Federal Reserve notes were released into circulation.
In 1913 when the Federal Reserve System was established, Federal Reserve District banks were required to maintain a 40 percent gold backing for Federal Reserve notes, and a 35 percent gold backing for deposits. In 1945 the gold backing for both notes and deposits was dropped to 25 percent. In 1965 the gold backing requirement for deposits was eliminated completely. And in 1968 the gold backing requirement for Federal Reserve Notes was eliminated.
Up to 1965, US coins (dollar, half-dollar, quarter, and dime) contained 90 percent silver and 10 percent copper. “Coins” of the same denominations minted since 1965 have a copper core covered with a thin layer of nickel. Are these tokens counterfeit coins? According to Irwin Schiff: “Correctly understood, the US government’s coinage operation violates Article 1, Section 8, of the US constitution. The constitution empowered Congress to “coin money,” not to produce worthless tokens. The government’s coinage operation also violates Title 18, Section 1001, of the US criminal code which reads as follows: “Whoever, in any manner within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact or makes any false, fictitious, or fraudulent statement or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry shall be fined not more than $10,000 or imprisoned not more than five years or both.”
Since the design, composition and structure of US cupro-nickel coins is nothing more than “a trick, scheme, or device” to conceal their true value, character, and composition, all persons who have been and are now involved in their authorization should be prosecuted under this statute.”
“Bankruptcy” means settling with your creditors for less than you owe them. It is a repudiation of your debts and financial obligations.
On Aug. 15, 1971 the US government announced that it was “ending the dollar’s convertibility, closing the gold window, cutting the dollar’s tie to gold, and allowing the dollar to float.” This was a declaration of bankruptcy, a repudiation of the obligation of the US government to redeem its paper IOUs for gold.
On Dec. 18, 1971 the US government raised the “official gold price” from $35 to $38. This was a devaluation of 8.57 percent. Again, this was a declaration of bankruptcy. On Feb. 12, 1973 the “official gold price” was increased to $42.22 — a devaluation of 10 percent. However, both of these devaluations were somewhat strange. Because dollar convertibility into gold had been canceled on Aug. 15, 1971, the new “official prices” of gold were “prices” at which the US government refused to sell gold!
Around 1976 Americans’ right to own gold was restored, with the gold price at about $180 an ounce. Currently the gold price is around $390 per ounce. This means that during the past 60 years the US dollar, in terms of gold, has been devalued by 82.5 percent. Put in another way, only 17.5 percent of the dollar’s value remains.
To make sense of the effects of the great dollar depreciation we can use AIDS (acquired immune deficiency syndrome) as an analogy. Money is to the economy as blood is to the individual. The AIDS virus gets into the blood, but for many years nobody realizes that anything is wrong. The politicians and Federal Reserve bankers get into the money, but hardly anyone recognizes what has happened. In both cases, for a long time there are no observable symptoms. In the case of AIDS this is called stage one.
Then symptoms start to appear. The victim is afflicted with unusual infections. Because the immune system has been considerably weakened, the body struggles with an infection that a healthy body would handle with ease. The illness can be severe, but eventually the victim recovers — in a fashion. This is analogous to the Great Depression of the thirties. It is AIDS stage two.
Eventually the immune system becomes so weak that the patient cannot recover after being struck by an infection. AIDS stage three. The US economy may not yet be in stage three. The 1990’s depression started around 1987. For every sign of recovery there seems to be another sign of regression. And the government “cooks the books” (like not counting as unemployed people who have given up looking for work) to make it look better than it really is.
In 1791 Thomas Jefferson said: “If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied.”
President Abraham Lincoln was assassinated after issuing the greenback, which was a non-interest-bearing note. President James A. Garfield expressed his concern about currency problems just before his assassination.
On June 4, 1963 President John F. Kennedy signed Executive Order 11110 providing him with the authority “to issue silver certificates against all silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption...” This seems like an attempt to bypass the Federal Reserve System by issuing real, silver-backed money to replace counterfeit Federal Reserve Notes. Kennedy was assassinated on Nov. 22, 1963.
There is a rumor that the “Kennedy silver certificates” were actually printed and that one of the first things President Lyndon B. Johnson did after assuming power was to have the “Kennedy silver certificates” destroyed. In 1964 Johnson, serving as the voice of the Federal Reserve bankers, said, “Silver has become too valuable to be used as money.” This amounted to a brazen boast that the bankers would eliminate any money with intrinsic value. On Nov. 22, 1963, the day of Kennedy’s funeral, the first 50 million “no-promise” Federal Reserve Notes were released into circulation. The symbolic celebration of the Federal Reserve bankers?