The Orderly Removal and Replacement (R&R) of the Federal Reserve Bank
Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.
~ Josiah Stamp – Bank of England Chairman, 1920s
It is harder to build up than to tear down. This is about building up.
President Washington, in his 1796 Farewell Address to the Nation, referred to America’s first experiment with the private, First U.S. (central) Bank. Without having to name the only power of Congress Washington as president had acquiesced to “outsourcing”, his condemnation was clear, if you create a private central bank, you have forged your own chains.
Any assignment of the powers of Congress is fatal to a free nation, because such powers will always be delivered to the hands of “cunning, ambitious, and unprincipled men”.
Washington further clarified, “Let there be no change (in Constitutional powers) by usurpation (re-assignment); for through his, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed.”
The Federal Reserve Bank (FED), is that usurper of the constitutional power and duty of Congress to “coin money and regulate its value thereof, and of foreign coin”. The only remedy is for Congress to take back this, and all its powers as laid forth in Article I, Sec 8 & 9 of our Constitution, and restore them back into the Public Forum and the transparency it creates.
This will require the termination of the private Federal Reserve Bank and the creation of a new American Reserve Bank (ARB), publicly traded and partially owned by Congress, all operated within the Public Forum, as the Framers of our U.S. Constitution originally envisioned and provided.
Instead of mandates of jobs and inflation, the banks mandate will be one of solvency enforcement. Instead of economist running the nations bank, it shall employ accountants. Instead of bedlam, it will beget stability, and stability breeds savings. Savings become capital, and capital becomes investment in new companies that have always been the engine of job creation in any economy.
Structure and Objective of a new American Reserve Bank.
Properly structured and organized weeks in advance, the transition is only slightly more difficult than the Fed closing its doors at 4:30 pm on Friday and reopening them on Monday at 8:00 am, as the American Reserve Bank. The following structure will apply, to wit:
Central to the success the American Reserve Bank are:
A new accounting management team will be brought in as a formal board is elected: normal bankruptcy SOP. The banks new mandate is solvency of its member banks and institutionalizing a classical gold currency standard.
The ARB will be a publicly traded central bank, of which the Congress owns 2/5ths of said bank. All commercial and retail banks are required to establish full membership in said bank, as well as all lending entities including private corporate shadow banking and insurance companies, and must be regulated for solvency by the new ARB central bank in their banking operations. The ARB will serve primarily as a regulator of bank solvency patterned after the New England states Suffolk Bank of the early 1800’s.
A new currency will be issued backed 100% by gold. Only the currency, which would be labeled “American Reserve Bank Gold Certificate”, would be backed by gold, not deposits nor electronic funds. Only said currency is redeemable into gold upon demand to the American Reserve Bank or its members within the borders of the United States of America. The purpose of a classical gold standard is to place the regulation of monetary policy directly into the hands of the general public and serves the role of the Public Forum, but only as it relates to money. Gold Reserve status will be for domestic purpose with the objective of regulating credit.
The value of gold reserves are the only means by which lending can be based for any member bank, excluding all other financial instruments as a reserve. In addition to the natural regulation of credit, it also has the happy effect of bringing government spending under control, as government paper is no longer considered a basis of “reserve”, from which to lend.
Glass Steagal must be restored.
All lending entities would come under the regulation of the new ARB, retail, commercial, FDIC, private corporate shadow banking, and insurance company lending. Investment banks will remain outside the ARB and bear sole responsibility for their actions. However, they will continue to be regulated by other appropriate congressional bodies within the Public Forum, and under the control of Congress.
No member bank may be a voting member in more than one district (12 districts), and no one person or cross affiliated group or corporations may own more than .001 of any outstanding stock in said publicly traded ARB bank.
Capital punishment must be subscribed to any attempts to counterfeit gold bar, reserve currency, or coin, both domestically and foreign. All foreign attempts countenanced by a foreign government that might effect to subvert the ARB’s monetary system will be considered an act of war.
First and foremost in setting the stage for a successful return to a classical gold standard, the following are to be excluded so as to neither confuse nor contaminate it,
A “Phony Gold Standard”. This is a bastardization of the gold standard and is defined as strictly the settlement of the balance of debts between nations, generally in 400 troy ounce gold bars. The phony gold standard failed both times it was used during the 20th century, to the lasting detriment of all nations. It is a facade of gold so that governments can continue to steal.
No bi-metallic system: Only one precious metal can represent a reserve. In the western world, this is preferably always gold and only gold as a reserve. Silver, platinum, palladium, even copper may serve as a financial medium, but not as a basis of a reserve, nor in equal standing with gold, as their price must be allowed to float in relation to the set strike price of gold.
The Suffolk Banking System: Central Banking Model for the American Reserve Bank
A Suffolk banking system does not regulate the value of money. This is established by gold and the people’s treatment of it. This leaves the Suffolk system free to do what it does best, and that is to regulate the solvency of its member banks.
Having established this mission statement, the aforementioned ARB would be modeled after the Suffolk Bank of New England, that existed from 1816 to 1860.
The Suffolk was originally created by a core of Boston bankers concerned, 1) over the Charter given to the Second U.S. Bank, after having witnessed the abuses of the First U.S. Bank, whose charter had expired in 1811. And 2), over the creation of script by other outlying banks in New England. The Suffolk was a bank for the banks and lender of last resort to its membership. It guaranteed the script (paper money) of its member banks by requiring members to deposit sufficient specie (gold/silver) in their Suffolk account, to allow the Suffolk to redeem any member’s script for specie, thus establishing the member banks viability as a bank with which to do business.
Originally designed to run outlying banks out of competition with the Boston banks that established the Suffolk, it became the means by which the outlying banks established their solvency and good standing. And because the Suffolk was the lender of last resort, it regulated the solvency of its membership, allowing banks to regulate themselves. This allowd New England business and banking to enjoyed a stable economic environment necessary to the creation of wealth and it began to outstrip the nation.
While the scheme to run outlying banks out of competition was a failure, the Suffolk’s bulkhead against the systematic fraud of the Second U.S. Bank was a rousing success.
By 1818, the entire banking system was caught up in the speculative fever promoted by the irresponsible banking practices of the second private central banking experiment by Congress, the Second U.S. Bank, chartered in 1816.
Interestingly, the sociopath blazing the trail of fraud was a young Congressman operating out of the Baltimore branch of the of the Second U.S. Bank. One James Buchanan, 15th and arguably the worst president of the United States. It was Buchanan’s Baltimore branch that wrote the lion’s share of that era’s sub-prime loans crimes that lead to the Crash of 1819. Proving that as much as things change, they still remain the same.
Over the life of the Suffolk a handful of member banks failed, while across America during this same time span saw thousands upon thousands of banks became insolvent and fail. The difference between the solvency success of New England and the rest of America is that there was no regulator that served to monitor the solvency of the banks of greater America. This left most of the banks without a source of discipline, so bank fraud was outright, and no one in their right mind was interested in insuring the whole mess.
The difference in New England, was that a bank approaching insolvency was required to deposit greater specie into the Suffolk, ensuring its solvency that balanced its script against its specie. So the fraud that occurred throughout the rest of America never had the chance to built to the point of excess in New England, removing the trigger to the cascade of defaults that would devastate the rest of America from time to time.
In New England, a bank either had to tow the line or risk being excommunicated from the Suffolk, which would destroy a bank. In the rest of America, the only answer to complete collapse was the suspension of specie payment by the Federal Government, an unconstitutional act that essentially negated pre-existing loan agreements (without due process), allowing for payment of debt in script, or worthless bank notes, depriving the original lender of the wealth of his specie (gold & silver coin).
Consequently, the shareholders of a member of the Suffolk Bank would take it upon themselves to monitor their banks operations and loans in order to mitigate the risks on their investment, making that bank that much stronger. This is exactly what kept the Suffolk in turn solvent also, it being the lender of last resort.
The Suffolk also had shareholders who monitored the operations of the Suffolk, and in turn securing their investment. The Suffolk Bank was very profitable and its stock was widely sought. It made its margins by serving as a lending window to its member banks, charging minimally to handle all interbank transactions.
In contrast, those banks outside the New England domain of the Suffolk had no restrictions, and the investors in any number of state regulated banks sought to print script in volume, exporting it across state lines hoping to exploit the last fool theory. As the further away from a banks geographical location the script traveled, the lower the value of the issued script became. This made for an enormous secondary market in discounted script and constricted trade due to the unstable nature of currency script, and one was never really certain of their value.
All too often, an explosion in script would ratchet prices higher and as the last fool theory came to its inevitable conclusion, the entire financial house of cards would collapse. Then all too often, the federal government would decree that debts could be paid in script instead of specie. This ran in direct violation of the constitutional guarantee of due process as it is applied to the law of contracts, in that specified payment in specie could be abrogated, thus further depressing and restricting trade, inhibiting the real creation of wealth.
In the first half of the 19th century, the New England Suffolk Bank allowed the northeast to develop into the powerhouse of finance and trade in the United States. America’s objective should be to emulate that model, and restore America to that pinnacle of strength.
Observations Conerning the First U.S. Bank
Washington signed the private First U.S. Banks central bank charter at the behest of Alexander Hamilton, then Secretary of the Treasury, which included 2/5ths of its ownership held by Congress. There was weekly unconditional access to the books and things went well until Hamilton left the government to open a bank in New York City.
The first thing the new Secretary of the Treasury did was to convince Congress to sell its 2/5ths ownership, which ended up in the hands of the same French crooks of the 3rd Estate that had hijacked that Revolution. The 1st US Bank was now European hands and the books were closed. Hamilton went postal and turned on his creation but it was too late, and a financial pestilence was unleashed.
Still, it did serve to sooth Hamilton, in that it made possible a 15,000 man standing army under the control of Hamilton under the pretense of a possible attack by the French against the shores of America.
It was all nonsense of course, as Hamilton was the original Neo-Con, raising a red herring enemy of the state in order to trick the people into granting him unconstitutional powers. With it came the Alien and Sedition Act, together which they finally broke the camels back of a growing central state, and the Federalists were forced to give ground to Jefferson’s Republicans.
This began the formal party system, all pulling at the strings of Congress and dividing the nation, opening the door wider to established factions, like the 1st US Bank.
Understanding the Classical Gold Standard
First and foremost to understanding a classical gold standard is to forget thinking of gold as a value, but to consider it in terms of a constant, like the North Star. Sure, it moves ever so slightly each year, but imperceptibly so. Its purpose is to maintain a benchmark against which all things can be measured. It is a yard stick, the same this year as in the next, and the year afterwards, and onwards ad infinitum.
Gold is the only physical item on earth which can provide this constant. All the gold available today will only make up a cube 65 feet, by 65 feet, by 65 feet. It’s volume by weight increases no more than 1.5% at an escalating cost per ounce of production. It is a constant, a physical atomic second by which man can set his economic timepiece.
This is what allows gold to fill the role as a monetary control. In practice, it’s key value is in turning the control over money and monetary policy to the people of the nation, in affect filling the role of the Public Forum. It serves in the regulation of the availability of credit because gold represents the basis of reserve and therefore, monetary control.
Arguably, the most stable management of America’s money supply are the years from 1821 to 1831, following the Second U.S. Bank’s Great Depression of 1819, and the flood of silver fleeing Santa Anna’s government spending in Mexico in 1830, which flooded American with Spanish dollars and causing inflation. Up until then, the bookish 2nd US Bank president Nicholas Biddle, kept a tight rein on money creation by not only regulating his 2nd US Bank, but who kept redeeming all the script of all the banks in America keeping them honest also, lest they become insolvent themselves.
Only during these 10 years did a private central bank act much as the Suffolk Bank in the proper exercise and operation of a classical gold standard. But then young Mr. Biddle was already rich and neither a banker by trade nor training, altruistic, and for 10 years was able to confine his ego. However, between a rising tide of the inflation of Spanish silver and challenging the re-election of Andrew Jackson, undid both Biddle and the bank.
The Key Point and Objective
As the people take control over the creation of money credit, it institutionalizes and comes to define our economic liberty and freedom, just as the act of ruling over the powers of our government through the Public Forum in the Congress so defines our (political) Liberty.
The objective is to extend Liberty into the creation and credit of the nations money supply. Never has nor will the nations wealth be more insured.
Currency in circulation is printed and regulated by said central bank and can never exceed the sum total value of that set per troy ounce price of the gold reserves of the central and member banks. The official strike price of gold must remain stationary.
How the People Regulate the Money Supply
If John Q. Public starts to get uneasy about the way either the government is spending money, or the public central bank fails to enforce solvency, or if there is uneasiness over regulated trading markets; John or Jane Q. Public can take their demand deposits in dollars and start trading their dollars for gold.
This in turn reduces the total reserves upon which banks can lend, thus reducing their capital bringing them closer to insolvency. This causes the banks to cut back on lending by increasing interest rates. Increasing interest rates drives down credit demand while simultaneously attracting gold back into the banks.
This phenomenon occurs because gold does not pay interest. And as the economy slows and interest rates rise, the threat of an over-heating economy abates and gold is converted into dollars, attracted by the increase in interest paid, and the dollars being deposited in interest bearing accounts.
Then, as reserves rise, interest rates start to fall to attract borrowers and the cycle of growth and contraction, of inflation and deflation begins anew. And the violent market swings that we currently experience go away and financial stability is maintained.
People feel safe in saving again, savings become investment capital, and investment capital creates new businesses. New businesses are the historic job creation machine America no longer possess today, because existing business do not create jobs, they never have. Their job is to create efficiencies, which means job deletion. The history of new job creation has always been found in new businesses, and until these conditions prevail in America, we’ll have little.
Americans will be continually jammed between the ever-quickening cycle of feast and famine caused by the risk on/risk off policies of the Federal Reserve Bank as long as they are allowed to operate.
This is the result of the machinations of the centrally planned economy of the Federal Reserve Bank, Washington D.C., and Wall Street who seek to manipulate the illusion of economic recovery and well being so that they in their insolvency can survive… until it all blows sky high. And the purpose of this study is to introduce the only course available to either “front-run” the explosion, or pick up the pieces, because someday soon it is going to end.
Fractal Monetary Practices Within A Classical Gold Standard and Other Fallacies
Despite what falsehoods and detractors may misrepresent, fractal banking can and does exist within a classical gold standard. The key to a banks survival is to keep their bank solvent, with insolvency being defined as having losses that exceed the capital of a bank, as determined in a marked to market loan portfolio.
Banking fractal margins can generally operate at 12 to 15 times their gold reserve base, which equate to total losses of 8.33% to 6.66%, at which point the banks equity would be gone and either a capital call to the stockholders must be met, or the bank declared insolvent and force an immediate shutdown.
The net effect is that shareholders take a much greater interest in their investment in a bank, its lenders would demand closer scrutiny, and depositors would do the same. Gone would be the sweetheart deals that have become all too common between the Federal Reserve Bank and Wall Street.
No more Maiden Lane, TARP, Maiden Lane II, no Quantitative Easing, no Primary Dealers living off the largeness of a private central bank whose corporate boards they dominate, making decisions over the Nations money supply behind closed doors.
Not only will these banks come under closer scrutiny by their shareholders, so will the ARB, including its major shareholder the United States Congress who has to answer to their constituents.
Thus it becomes easier to understand the role of the Public Forum in providing transparency to the people of the United States, to comprise the Consent of the Governed by which the government must justify its rule by serving under the rule of the people, and so defines Liberty.
Other fallacies of a gold standard declares that there is not enough gold. Total U.S. currency is estimated at $3 trillion and would require an estimated $11,000/troy ounce strike price of for gold.
Illegal drugs and the dollars status as a world reserve currency account for most of the $100 bill production by the Federal Reserve Bank and an easy point of reduction for reserve currency status, being outside the states. Normally the conversion process might span 40 to 50 months, but its inevitability quickly becomes defacto and should be installed quickly as America owns the gold and does not need to build our stocks for conversion.
Markets respond quickly to its promise of stability, for money is a perception, sometimes more than its fact.
The number of times people will vote against the system by exchanging dollars for gold would be extreme, as long as the ARB and Congress do their job. It is the formula that merges the transparency of the Public Forum and a classical gold standard, giving all Americans the means to control credit. It is the application of governance of Liberty to the nations wealth and its monetary equivalent, leading to the true Consent of the Governed as it is directed to the regulation of the nations money.
A gold standard is deflationary, but it is deflation within the economic force of liberty, “a plant of rapid growth” that creates real wealth and real production. If prices drop faster than wages, the result is because of real net creation of wealth, not the illusion of wealth sprung from fiat monetary expansion.
Deflation is no worry for most of Americans, because deflation has already effected the value of their homes, wages, and other assets. In the a case of most Americans, deflation of costs like gas and food would be a blessing.
However, deflation will strip the insolvent 2B2Fail bank bare. Addicted to the endless expansion of Fed monetary policy to maintain their solvency there will never be enough, which is exactly what is killing America.
Now you know how our slavery occurs, how we can stop it and redirect the money that is institutionally stolen by these banks, back into the hands of all Americans.
It is the end of privilege and restoration of the natural balance of income.