Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Who is Spreading the Virus? UK Coronavirus 2nd Wave Analysis - 30th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part II - 30th Sep 20
The Only Thing Systematic Is The Destruction Of America - 29th Sep 20
Fractional-Reserve Banking Is The Elephant In The Room - 29th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part I - 29th Sep 20
Stock Market Short-term Reversal - 29th Sep 20
How Trump co-opted the religious right and stacked the courts with conservatives - 29th Sep 20
Which RTX 3080 GPU to BUY and AVOID! Nvidia, Asus, MSI , Palit, Gigabyte, Zotac, MLCC vs POSCAPS - 29th Sep 20
Gold, Silver & HUI Stocks Big Pictures - 28th Sep 20
It’s Time to Dump Argentina’s Peso - 28th Sep 20
Gold Stocks Seasonal Plunge - 28th Sep 20
Why Did Precious Metals Get Clobbered Last Week? - 28th Sep 20
Is The Stock Market Dow Transportation Index Setting up a Topping Pattern? - 28th Sep 20
Gold Price Setting Up Just Like Before COVID-19 Breakdown – Get Ready! - 27th Sep 20
UK Coronavirus 2nd Wave SuperMarkets Panic Buying 2.0 Toilet Paper , Hand Sanitisers, Wipes... - 27th Sep 20
Gold, Dollar and Rates: A Correlated Story - 27th Sep 20
WARNING RTX 3080 AIB FLAWED Card's, Cheap Capacitor Arrays Prone to Failing Under Load! - 27th Sep 20
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelerting Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

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

6 Critical Money Making Rules