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How the Government and the Fed are Looting Your Accumulated Wealth

News_Letter / US Debt May 24, 2014 - 09:07 AM GMT

By: NewsLetter

News_Letter The Market Oracle Newsletter
May 14th , 2014 Issue # 11 Vol. 8


The Market Oracle Newsletter
May 14th , 2014            Issue # 11 Vol. 8

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Real Gems

How the Government and the Fed are Looting Your Accumulated Wealth

Greetings,

We have just obtained an engaging -- and perhaps even an enraging -- new report that chronicles 200 years of ineptitude, 100 years of theft and failure, and 50 years of economic regression by the Fed and the U.S. government -- committed against YOU.

The government and the quasi-governmental bank, the U.S. Federal Reserve, do not want you to read this report we are about to share with you, because it uncovers the devastating impact they have had on the nation's money (YOUR money), as well as the U.S. economy and financial markets.

Operating under a government mandate and a carefully maintained perception of transparency, the Fed works with the government to actually "hide behind technicalities in cleverly crafted laws, which shroud the effect of their acts." "The reality ... is that the government, while claiming to do good works, has conspired with the Fed to loot the country," reveals Robert Prechter, author of the new report and founder of Elliott Wave International, the world's largest market forecasting firm.

As you know, threats are much less dangerous when you can prepare for them in advance. So, before you learn how to protect your accumulated wealth from this unprecedented threat, we want you to know these four things:

  1. Who is perpetrating the theft of your money
  2. How they are doing it so that you barely notice
  3. Why it matters to you and your portfolio right now
  4. How a market professional who's been around the block a few times expects it to play out in the immediate future -- so that you can protect yourself and even prosper now, as well as when the government's secret strategy ultimately crumbles and comes to light

Only the savvy traders, investors and entrepreneurs who understand how these threats will play out can hope to turn them into serious moneymaking opportunities.

Those who remain in the dark ... well, we don't like to think about what will happen to them and their money. It will not be pretty.

Don't be one of those who is in the dark. Read the 10-page report I just read from Robert Prechter. It's a quick read with dozens of insights we have not seen elsewhere.

If nothing else, you will come away with an expert-level understanding of the past 200 years of government intrusion into the U.S. money supply, economy and investment markets.

An excerpt from the 10-page report available for free download here :

Hidden Erosion of Corporate Worth Since the Government Abandoned Money

By Robert Prechter

For 173 years, the United States used money as a medium of exchange. In 1965, it switched to using a floating accounting unit. This change coincided with a dramatic yet hidden reversal in the net trend of worth for U.S. corporations.

The Money Era: 1792-1964

In 1792, Congress passed the U.S. Coinage Act, which defined a dollar as a coin containing 371.25 grains -- equal to 0.7734 Troy oz. -- of silver (plus some alloy). Congress did not say a dollar was worth that amount of metal; it was that amount of metal. Conversely, an ounce of silver was $1.293.

The same act declared that a new coin, the Eagle, would consist of 247.5 grains of gold (plus some alloy). It valued this coin at 10 dollars, meaning 3712.5 grains of silver, a value ratio of 15:1. This ratio valued gold at $19.39 per oz.

In 1834, Congress passed another coinage act, valuing gold at $20.69 per ounce, thus tweaking the gold/silver value ratio closer to 16:1. In 1837, another law edged the gold content of an Eagle to 232.2 grains, meaning gold was now valued at $20.67 per ounce. A dollar, however, was still 0.7734 oz. of pure silver.

The silver standard ended in 1873, when a new Coinage Act scrapped the definition of a dollar as a certain amount of silver and adopted a new definition based on gold, maintaining the formula of $1 = 1/20.67 ounce of gold. The Gold Standard Act of 1900 confirmed this definition.

In 1913, Congress passed the Federal Reserve Act. This act created a new banking corporation and gave it monopoly power to issue dollar-denominated banknotes and checking accounts backed by bonds issued by the Treasury. In other words, it gave the Fed the power to use government debt as backing to create spendable dollar-denominated credits to benefit the government.

The Fed issued its notes on dollars it never had. The Fed's activities diluted the supply of dollar-denominated credits, reducing their value relative to gold. The government decided it did not want to pay its creditors. In January 1934, Congress passed the Gold Reserve Act, under which the government seized Americans' gold, canceled all business contracts in gold, outlawed citizens' possession of gold and reduced the amount of gold that would define a dollar. President Franklin D. Roosevelt personally dreamed up a new value for the dollar, which he pronounced to be 1/35 of an ounce of gold, thus raising the "price" of gold to $35.00 per ounce. In one stroke, the government seized 41% of the value of everyone's dollars. Because the Act prohibited U.S. citizens from trading in gold, this new, lower value of a dollar was thereafter applied only to international transactions.

Incredibly, however, the U.S. remained on a money standard, because Congress simultaneously reinstated the silver standard for domestic transactions. It authorized the Treasury to issue paper dollar "certificates" redeemable in silver at the rate of $1.29/oz., the same statutory value the dollar had in 1792. With the silver price still low from the Great Depression, this was, briefly, a "fair" price. Congress passed the Silver Purchase Act of 1934 to allow the Treasury to acquire silver to back the notes.

This scheme failed to last even three decades. With the government's continued borrowing and the Fed's monetization of much of it, the government's bills soon outnumbered the dollars of silver backing them. Smart people began redeeming the bills for silver, and the Treasury's supply of silver began to dwindle. In 1961, it plummeted by 80% as redemptions ballooned. That year, President John F. Kennedy issued an Executive Order to halt the redemption of silver certificates and urged Congress to let the Fed take over the nation's currency. In 1963, Congress obliged by passing Public Law 88-36, which revoked the Silver Purchase Act and authorized the Federal Reserve to issue banknotes unbacked by money. For a time, however, an enterprising citizen could still trade the Treasury's paper notes for silver coins at par, and the U.S. mint continued to make silver coins through 1964 with what silver it had left.

The Watershed Year: 1965

By 1965, the Fed had issued enough Federal Reserve notes to replace the circulation of silver-backed U.S. Treasury notes. On July 23, Congress passed the Coinage Act of 1965, which declared that commonly used U.S. coins would henceforth be tokens containing no precious metal.

Through these maneuvers, Congress ceased exercising its Constitutional "power to coin money, and regulate [make regular] the value thereof." Instead it outlawed money and replaced it with an elastic, non-regular unit of account.

The year 1965, then, marked the official end of money usage in America. That's when the Fed's notes and the Treasury's tokens became the official currency, unredeemable in anything. The dollar became merely an accounting unit. The government was now fully free to extract value from its citizens' savings accounts through the process of issuing debt and having the Fed turn it into checking accounts.

The gold standard for foreigners lasted only another six years, during which time the Treasury shipped most of its gold overseas at $35 per ounce. Finally, in 1971, President Nixon issued Executive Order 11615, which reneged on the government's obligation to pay out gold to foreign creditors. From then on, the dollar was only an accounting unit internationally as well as domestically.

* * * * * *

You can get the whole story when you download Prechter's full 10-page report here.

As you know, threats are much less dangerous when you can prepare for them in advance. This report will help you prepare.

Sincerely,

EWI

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

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