10-03-2019, 01:41 PM
(This post was last modified: 10-04-2019, 08:32 PM by Steve.)
Fraudulent Mortgages ...
The High Court has been hearing a £600m claim, brought by over 5000 investors, against Lloyds Bank and five former directors, seeking compensation for huge losses incurred during the financial crisis....
01-25-2020, 12:03 PM
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08-15-2020, 02:23 PM
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The Evolution Of Fiat Money, Endless War, & The End Of Citizenship (Part 1)
Part one of a two-part series.
One topic missing from historians’ analysis of the West’s transition from a physical gold and silver based money system to a fiat money system is the defining events that facilitated and enabled this transition. One can find no detailed and critical political / historical assessment of this transition, and it would be not for lack of effort. The transition is always presented as if it is prima facie the refined and evolved state of things that warrants no investigation other than superficial praise followed with dogmatic platitudes. But has this transition away from the “barbarous relic” money system actually made mankind more refined and evolved, or has it instead plunged mankind into an even more heightened and efficient state of barbarism?
One encounters additional blank pages when searching for any attempt at correlating the evolution and spread of fiat money to the prevalence and severity of war. A collective learned silence descends when attempting to identify why it is, as money evolves, that war become more ideological, destructive, widespread, and prolonged. We are all familiar with the endless adulations describing the global spread of “democracy”, but why is it so many are unwilling converts and it became imperative to spread “democracy” via war and regime change? And closer to home, as our own nation “evolves” from a Constitutional Republic into pure “democracy”, how is it we as “citizens” feel more and more disenfranchised rather than empowered despite even greater doses of “democracy” at home?
This essay attempts to identify the defining events that facilitated and enabled the West’s transition to a fiat based money system, examines cause and effect between the evolution of money and the prevalence and severity of war, and binds together money evolution with the history of warfare by demonstrating cause and effect between money’s evolution, the rise and necessity of endless war, and the inevitable transition from “citizens” to subjects.
Physical Money, the Limits of War, and the Ancient World
For centuries following the Dorian Invasion, the Greek peninsula in the context of contemporaneous civilizations was of minor influence. Limited wars between city states, the rise and fall of tyrants within these city states, a Lawgiver here and there, and a steady outflow of residents to the Mediterranean and Black Sea colonies were the main stories for 600 years until a rich silver deposit was discovered in southern Attica. The wealth derived from these mines was initially distributed to the citizens and used for the great public building projects we see still standing today. The flow of silver was also used to not only hold the Persians at bay and confine them to Ionia – and thus preserve Western Civilization as we know it today – but to also purchase slaves to work the silver mines, purchase imported goods, produce manufactured wares for export, commission triremes to transport manufactured wares, and hire highly paid rowers to man the triremes. Trade and prosperity flourished and the Greek world rose quickly in the context of comparative global civilizations, all due to the abundant supply and liberal distribution of silver.
Then in 483 BC, soon after the discovery of a particularly rich silver deposit, the Athenian archon Themistocles convinced his fellow citizens to commission 200 triremes to fight the Persians and in 479 BC the Greek confederacy defeated Persia once and for all at the Battle of Plataea. Rid of the Persian menace, fresh off defeating the world’s most formidable military force, and armed with 200 triremes with nothing to do, that silver now went more and more into Athenian empire building throughout the Aegean. The cycle of conquest funded with silver was set – newly mined silver went into funding expeditions of conquest, tribute was extracted from the vanquished and flowed into Athens, and the combined silver from mined and tribute went to defending the city against jealous rivals and towards mounting even larger expeditions of conquest to extort even more tribute. That is, until the reliable source of silver from the mines began to run out.
Just as silver mining output went into decline, and the tribute became harder and more expensive to extract, in 415 BC the Athenians made the disastrous decision to invade Syracuse at an eventual loss of 10,000 hoplites, 30,000 oarsmen, and over 100 triremes. Thousands of captured Athenians held as prisoners of war were ransomed by the Syracusians at great expense to their families and effectively drained nearly all Attica’s surplus financial resources. Most poor Athenians, unable to raise a ransom, permanently lost heads of household to enslavement and death in the Syracusian quarries. Revolts from tribute paying vassals immediately followed and tribute dried up, and in 404 BC these accumulating losses saw Athenian empire and Aegean hegemony ceded to Sparta. Thus when the silver ran low, the empire was lost as limited resources were concentrated more and more on defending against Attica’s immediate neighbors. And that is the main point– when a nation in the ancient world could no longer fund wars of empire with physical money, it could no longer prosecute wars of empire and thus some form of peace attempted to descend. It is as if a law of economics was at work and in a sense, the exhaustion of silver supplies was ancient empire’s built-in self-destruct mechanism.
We also learn from ancient Attica between the victories over Persia, to the rise and loss of empire, to its eventual defeat by Philip II and incorporation into the Hellenic League, that as the wealth of Attica rose and then declined, the reason its citizens fought wars changed. Although the Greek city states are referred to by historians as democracies, of practicality only Greek men of means could participate in government to the extent they could afford the time required to build influence. The average Greek man had to work and earn a living and had no time for civics until a tyrant needed overthrow or war threatened from outside aggressors. What we observe before the Persian Wars is a nation of modest means and substantial freedom where citizens fight for kinfolk, land, and shared history with their alternatives being death, confiscation, and enslavement. This is the nature of defensive war, embodied in that which the Athenian / Spartan coalition fought to defeat the Persians. As Attica increased silver production and extracted more tribute via empire, we see a change in the reason for fighting war, with war then assuming a mercenary objective for many of its citizens. Citizens were now incentivized to fight wars of conquest with high pay when there was no immediate threat from outside aggressors and instead of citizen soldiers defending kinfolk, land, and shared history, citizens became hired rowers and hoplite combatants. Thus, as war transitioned from defensive to offensive as wealth increased, a citizen’s motivation for participating in war transitioned from patriot at the start of empire, to mercenary by choice at peak empire, to mercenary by necessity after the collapse of empire.
Ancient defensive wars continued until the threat was eliminated, the food supplies or health of the combatants were exhausted, or one side was vanquished. Ancient mercenary war, on the other hand, generally continued so long as there was ample silver. It was as if silver could conjure armies and armaments at will until it ran out, and then in that instant these same armies and armaments dissolved away. For a powerful ancient nation that had not been subject to invasion for some time, the mercenary incentive became the primary reason citizens fought wars, as all wars, absent any outside threat, became wars of conquest. As Attica’s wealth and influence waned between the end of the Peloponnesian War and its defeat at the hands of Macedon, more and more of its citizens turned to mercenary expeditions commanded by whomever was paying. Eventually many formerly powerful cities were depleted of its fighting fit men and lay open to conquest from outside aggressors and tyrants within. Combined with sustained decline in silver production and its resulting decline in foreign influence, after the final conquest at the hands of Macedon we find Attica’s transition complete – nearly all wars were henceforth fought by mercenaries on campaigns unrelated to Attica as the resulting collapse in trade due to depleted silver resources left few other means for young men to earn a living.
When there is total collapse of resources, and then influence, the citizens then become nothing more than mercenaries, and it was these legions that made up the entirety of Alexander’s forces. But as mercenaries, they fought for pay, in physical money, and maybe for a bit of glory thrown in – but they did not fight for ideals.
Rome’s history initially followed a similar path to that of Attica regarding why its citizens waged war in its early days – immediate enemies necessitated over 450 years of continuous defensive war and civil uprisings to fend off or overthrow foreign rule. The small state of Latium despite all odds managed to eventually defeat its surrounding aggressors, and when it realized it was a truly formidable fighting force it decided to put an end to outside aggression once and for all. Thus began a protracted series of conquering wars throughout the Italian peninsula. But Latium had no silver mines and their system of physical money extraction from the vanquished differed from the Greek system of tribute. Rome instead integrated its vanquished states and, with the exception of Carthage, granted select families Roman citizenship, contracted many of these families as magistrates to maintain internal order on behalf of Rome, and enacted a system of tax farming on the provincial non-citizens. It was this system of taxation that played the same role as the silver mines of Attica, and the more territory Rome conquered the more taxes it could collect to embark on further wars of conquest.
Once Roman territorial expansion had engulfed both Iberia and Anatolia, it controlled the only sources of gold and the richest silver mines in the Mediterranean. From about 200 BC to 230 AD, this gold and silver, together with ever increasing tax collection from its expanded portfolio of conquered and integrated provinces, funded a standing professional army with career soldiers paid in silver. Rome had entered its period of “endless war”, funded by supplies of gold and silver obtained from mining, conquest, and taxes. However, the immense size of the Roman standing army – about 450,000 troops under Severus in 211 AD – and the tremendous cost of endless war guaranteed expenses always exceeded income to the imperial treasury. So starting around 60 AD the Romans embarked on a policy of currency debasement and pay raises for soldiers that triggered severe price inflation for basic goods and plunged much of the populace into poverty but did not slow the pace of endless war. The inflation suffered by the people financed the continuous prosecution of endless military campaigns as the only wages that increased in step with Roman inflation were those paid to soldiers. It was empire regardless of cost at this point. Mutinies, civil wars, border incursions, and insurrections were now added to the expense of wars of conquest and endless war didn’t end until 410 AD when the Visigoth king Alaric sacked a nearly bankrupt Rome. But by that time the empire’s boundaries and tax base and mine holdings had shrunk so considerably that Rome could not finance a defense against the German invaders, and thus we see again another example of ancient empire’s self-destruct mechanism at work – the process of building empire depletes the resources of the nation, and the depleted resources preclude securing that empire indefinitely. Thus all ancient wars of conquest were ultimately futile.
Unlike the early days of Roman conquest, during their period of endless war Rome dropped the property ownership requirement for military service and the ranks were opened up to landless peasants. We observe in this period a shift in the allegiance of the soldiers away from the state – whereby the state represents the combination of kinfolk, land, and shared history – towards allegiance to the generals who commanded and paid their respective legions. But as professional soldiers, they fought for pay, in physical silver, held allegiance to the general who paid them, and maybe received a bit of glory thrown in here and there – but they too did not fight for ideals.
Transition to Fiat Money, Constant War, and the Rise of the Freemen
After the wave of German invasions subsided and with their annexation of the Western Roman Empire complete, the conquering Teutonic armies continued the core Roman system of allegiance to the generals. The state, as embodied in the king and his noble lieutenants, now existed as the means of extorting revenue to wage war so to secure territorial boundaries and prerogative for the ruling class from a wholly disenfranchised populace.
One major German difference to the deposed Roman system was the elimination of citizenship and the establishment of military service obligations upon a class of peasants who were permanently disenfranchised through heredity. With citizenship eliminated by the advent of serfdom, nearly all Western Europe’s inhabitants were subjugated and entirely without rights. These serfs owned little or no property and gained no benefit from existence of the state yet owed taxes and military service to the state. Thus in early medieval Europe the citizen soldier of the ancient Mediterranean was transformed into a servant soldier, who defended only royal prerogative, by the coercion of military obligation and elimination of property ownership inherent within serfdom. With no allegiance to this wholly extractive and inimical state, we observe the medieval rise in peasant allegiance to the Catholic Church, replacing the former allegiance to kinfolk, land, and shared history embodied in citizenship with a surrogate “citizenship” comprised of the “righteous” in the “Kingdom of Heaven”. This marks the beginning of the transition from an outward allegiance to physical things (e.g., kinfolk, land, and shared history) to an inward allegiance towards abstract ideals (e.g., belief, righteousness, piety) and thus lays the collective psychological groundwork for the coming Wars of Ideals in the 18th through 20th centuries.
This new relationship between absolute rulers and abject subjects, together with the collapse of intra-European trade, the loss of gold and silver mines, and the cessation of upward mobility significantly reduced the amounts of physical money going into the royal Germanic treasuries across Western Europe. Although war continued unabated, its scale and severity never reached the intensity and wide distribution of the Roman Empire and these reduced scale conflicts prevented the establishment of vast, lasting empire by the various Germanic sovereigns. Thus Europe entered a phase of “Balkanization” into petty fiefdoms connected through confederations of language and culture, held loosely together by the descendants of the invading Germanic tribes and the machinations of the new Papal Empire.
But not all was plague, malnutrition, and misery. The European medieval period saw great technological advances in agricultural production – e.g., three field crop rotation system, ridge and furrow, horse replace ox, the horse collar, iron ploughs and horseshoes, et cetera. Over the centuries after western Roman collapse, as these improved farming methods spread, a reliable crop surplus was produced and slowly, trade throughout Western Europe revived. It was this trade revival that underpinned the eventual rise of the class of freemen within the Third Estate, and it was these freemen that built cities throughout formerly rural Western Europe that provided central hubs for the practice of trades, crafts, and commerce. Fewer serfs were needed to produce agricultural surplus so people began to fill these cities, and we see some freemen transition into rentiers and creditors whereby the physical money derived from rents could support a new form of pseudo-money in the form of credit “produced” independently from the sovereign.
Along with increasing prosperity of the growing class of Bourgeoisie / Burghers / Borghese and craftsmen rose the increase in the tax base, not only for the state but for the Catholic Church which by the 13th century had established itself as Europe’s first Federal state as it held taxation jurisdiction via tithes over the entirety of Roman Catholic Europe. For the first time we observe a multi-tiered taxation system where paying taxes to the state keeps the mortal physical body from going to jail, and paying tithes to the Church keeps the immortal spiritual soul from going to purgatory. Thus the physical / spiritual duality of rule in Europe is established for future exploitation by the proponents of 19th and 20th century ideal based “revolution”.
It is no coincidence that this period of increased population, trade, and tax take saw the reformation of powerful super-states – Spain, France, Britain, Sweden, and Papal – as the revived flow of taxes in physical gold and silver could once again pay soldiers to fund wars of conquest, put down rebellion, and for the first time since the fall of the Roman Empire, fund the commission of Navies. Colonial conquest and wealth extraction consolidated this growth and wealth of super-states.
As the wealth generated from proto-industrialization and colonialization grew, the rentier, creditor, and now merchant classes grew to be the wealthiest freemen in Europe, and this class together with other nobles were the core providers of credit to the sovereign needed to fund its wars and growing opulence. As the sovereign grew to rely more heavily on credit to prosecute these projects of ego, it commissioned proto- central banks within its administration serving to facilitate its credit needs and its needs alone. Some in this new creditor class began to serve full time as “executives” to the crown forming the genesis of the modern “central banker”. Royal defaults on its domestic creditors were common, as it was royal prerogative to default, so these nascent central banks had to turn more and more to cross border lending agreements with the nascent central banks of other countries. Thus by the end of the 18th century, Europe had “evolved” into another phase of endless “Classical” war but this time, funded not by silver but by credit provided by cross border proto-central banks managed by a nascent “central banker” class drawn from the increasingly wealthy and powerful rentier / creditor / merchant pool that grew to maturity out of the freemen of the medieval period.
It did not take long for these nascent central bankers to realize the power that the extension or withholding of credit and setting of interest rates granted to those in control of credit. But if it weren’t for the intervening sovereign, the power this credit held would be tantamount to the power to choose winners and losers in war and opulent society. The prime example before these nascent central bankers was the conquest, subjugation, and material strip mining of entire overseas civilizations using almost nothing but credit. So if this model of conquest by credit could work in faraway foreign lands, it could also work on European soil and creditors could, potentially, usurp the sovereign. But a direct assault on the sovereign would require a large professional army paid in silver, and these nascent central bankers did not yet fully control the royal treasuries. They needed to create their own army that was paid in credit, and to do that they needed the assistance of the only group that would accept payment in credit – the peasants.
Some description here is warranted regarding the evolution of professional armies in Europe during the transition from medieval to Classical periods. The ancient mercenary Greek hoplite and Roman centurion were close quarter fighters requiring great strength, training, and endurance. One’s rank and pay level was directly contingent upon these qualities. For the most part, this relation between physical strength and pay rate carried into the medieval period up to the advent of cannon – physically fit peasants of fighting age were hired and provisioned as substitutes to fight in place of the wealthy freemen. As the technology of the instruments of war advanced, many military occupations transitioned into technicians who were increasingly responsible for the maintenance, transport, and operation of cannon, muskets, and siege engines. Physical strength played less of a factor as weapons technology advanced. Thus the professional armies of the Classical period were “democratized” and peasants with no special physical attributes comprised the bulk of military campaigns. And still, these mercenary substitutes held allegiance to the paymaster, and were paid in silver as were their predecessors in antiquity.
This traditional payment in silver was a great obstacle to the nascent central bankers who had eyes on usurping the sovereign. But as they did not command the amounts of silver required to mount a successful revolt, some other form of payment had to be devised and a new class of soldier created that would fight against his sovereign for this new form of payment. The democratization of Classical armies left no scarcity of supply of soldiers, but their demands for payment in physical silver did. Thus enter the series of religious and later, democratic wars that would sweep across Europe as cover for the usurpation of the sovereign by these nascent central bankers...
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In Part 2 we discuss the "victory of fiat money" in enabling "endless wars", "Where is this all going?" and "What is to be done?"...
Authored by ICE9 for Burning Platform blogspot
The Evolution Of Fiat Money, Endless War, & The End Of Citizenship (Part 2)
The Victory of Fiat Money, Endless War, and the Rise of the “Citizen Soldier”
The stage was now set for the victory of fiat money after the series of bloody religious wars that plagued Europe over the 16th and 17th centuries. For the first time some combatants would, at least initially, fight for religious “ideals” rather than pay or feudal obligation and this marks the beginning of the end of the Classical phase of European warfare. This phase of endless war was funded by ever increasing amounts of silver borrowed on credit which, together with an endless series of tax decrees, initiated severe price inflation, economic depressions, and peasant revolts that became larger and more expensive to quell (on credit). With both political and economic chaos spreading across Europe, it was at this time its intelligentsia began to espouse the “Universal Rights of Man” which, for its time, was nothing short of extreme radicalism as it demanded an end to the centuries old divine rights of the sovereign over his increasingly taxed subjects.
These tenets of the “Universal Rights of Man” were quickly adopted and championed by the Bourgeoisie / Burghers / Borghese, skilled craftsmen, and lesser nobility as a means to not only elevate their social status, but also to break free from their centuries old and ever increasing taxation and military funding obligations to the sovereign. The Reformation and subsequent religious wars proved that rebellion could, albeit at an extreme loss of (peasant) life, extricate a people from its taxation obligation to the Papal Empire. By the latter half of the 18th century, simmering peasant rebellions began to flare into outright revolution as the “Social Contract” between the sovereign and subject disintegrated, prices for basic necessities skyrocketed due to the increasing taxation and coin debasement needed to fund wars and extreme opulence. Sovereign default became state policy as by sovereign right, and the creditor class began to suffer heavy losses as the wars had no effect other than spawn new wars and drive the state further into debt, upon which it would eventually default, all while the state court played parlor games and gambled (on credit).
Mounting losses by the creditor class presented an existential threat to this now highly powerful group and put at risk the profitable flow of credit to the merchant class, so near the end of the 18th century these groups vowed to depose the debtor sovereigns and assume outright control of the nascent central banks and operate the state for the sole purpose of generating profits to themselves through the monopoly of state credit issuance. But the millennial old condition of raising an army funded with silver was an impossibility, as this not only presented a high probability of suffering staggering losses, but the sovereign, by his rights, could simply decree the provision of credit to rebels as treason and enforce punishment by death. The answer to the creditors’ monetary dilemma lie in extending these “Universal Rights of Man” to the peasants, and thus framing the obtainment of these “rights” contingent upon successful “revolution” and overthrow of the sovereign. Therefore, an army could be raised composed primarily of irregular foot soldiers that would fight for “ideals”, not silver, and thereby free up what silver could be raised for the purchase of munitions, the logistics of battle, and professional mercenary officers. And to create the fervor required to sustain the “revolution” and replace the continual loss of foot soldiers, these “Universal Rights of Man” were elevated to the status of quasi-religion – “Liberté, Égalité, Fraternité”, et cetera. So what we witness during this period of glorified history is not the emancipation of the people from the chains of sovereign prerogative, but the secret usurpation by the creditor class of the means of operating the state via proxy revolts against the insolvent creditor state and thus, the creditor class gain control of the state through the monopoly issuance or withholding of credit to the state.
This or is important as described below.
It is no coincidence that the establishment of privately owned central banks during the 19th and 20th centuries followed after the fall of sovereigns, and it was this creditor class that financed the overthrow of each sovereign. History’s interpretation of this period is wrong – the primary driver behind these revolutionary centuries was not the rise of the people against the sovereign, but instead was the secret overthrow and usurpation of the sovereign by the creditor class using the people as their proxy army. The seminal moment where incorporation of a privately owned central bank followed a successful people’s “revolution” was the rise and financing of the professional mercenary officer Napoleon and his establishment of the Bank of France in 1800. Now for the first time in Europe, we see two rival empires – Great Britain and France – whose privately owned central banks share an overlapping ownership within the great families of European finance – e.g., the Rothschild’s of Paris and London – and share common ownership between those royals sharing lineage on both sides of the English Channel that got out of agricultural feudalism and became creditors. This overlapping ownership was a great bonanza to the private central banks as nations could now be pitted against one other, war bonds issued by both sides of a conflict, and the price of these bonds manipulated during the prosecution of war by altering its outcome through the issuance or withholding of credit to one side or the other.
For example, Country A and Country B’s war bonds are issued from each respective private central bank, sold to investors including themselves, and at the beginning of the war are of equal value. Then Country A is given advantage through the issuance of additional credit, and Country A’s war bonds increase in value as it accumulates victories on the battlefield where Country B’s war bonds decrease in value with every setback. It is at Country B’s nadir that these same private central banks buy up its war bonds at huge discounts, sell their Country A war bonds at high prices, and then begin to withhold further credit to Country A while issuing large amounts of additional credit to Country B. The tide of battle eventually turns as the reversed credit flow takes effect, and now Country B’s war bonds, acquired at great discount, begin to appreciate where Country A’s war bonds, sold at high prices, begin to depreciate. Thus the progression and outcome of war can be controlled by the issuance or withholding of credit and tremendous profits extracted by the shared ownership of both country’s central banks regardless of which country wins or loses. Thus the early 19th century now saw incredibly expensive wars of attrition prosecuted not for the purpose of empire building, but instead for the profits derived from the issuance of and trade in war bonds.
It didn’t take long for the peasants to realize that the promised “Universal Rights of Man” delivered nothing more than conscription, subsistence wages from the growing number of industrialized factories, and yes, taxes. Some new “ideal” was needed to motivate these peasants and make them a part of “something larger than themselves”, and the answers were found in “democratic” revolution and the labor union movement. Now, the central banks had an endless pool of young men that would fight for the “ideals” of “democratic enfranchisement” embodied in “citizenship” and these newly minted aspiring “citizen soldiers” would accept fiat money offered in exchange for combat. Thus, for the first time in history, not only could money be conjured out of thin air, but so too an army that would fight under this notion of “democracy”. This quasi-religion surrounding the “Universal Rights of Man” matured into full religious zealotry under the banner of “democracy”, and like all religions this “democracy” had to be spread to the infidels through war. But why? Because the promise of the “Universal Rights of Man” failed to establish a privately owned central banks within Europe’s key empire – Germany.
The rise of Marxism and the labor union movement in the mid-19th century were put to work by the creditor class to operate where the democratic “citizen soldier” armies proved ineffective against the powerful Prussian professional army. These “democracy” foot soldiers were not deployed to the rural battlefields but instead to the streets of major industrial cities with the objective to ferment political agitation and societal discord in order to weaken the German state from within prior to “democratic” invasion from without. The German Wars of Unification and later founding of the state controlled Reichsbank (1876) starts a 70 year interval where the primary objective of western European history is the destruction and overthrow of the powerful and efficient German state with its state controlled central bank, the imposition of “democracy”, and “empowering” the German people to replace the state controlled Reichsbank with a privately owned central bank having similar overlapping ownership structure to those already established. Thus at the onset of the 20th century we observe the establishment of truly endless war, funded entirely by fiat money, waged by “citizen soldiers”, and fought on the basis of political “ideology” that has attained the status of religion.
But the German state proved to be an implacable foe. Through a combination of strategic offensive wars, prudent foreign policy, sound finances, liberal labor reform concessions to the working class, and unparalleled martial ability of its professional army, Germany managed not only to fend off the assault of “democracy” but also to expand its territory and influence and negate the influence of its communist agitators. And German leadership had a true philosophical vision – the End of History starting with the consolidation of all Germanic peoples under the single rule of the German Emperor. This meant eventual state control over the privately owned central banks in Great Britain, France, Scandinavia, and the Low Countries and stood as a direct threat to the creditor class’ own growing vision of the “End of History”.
For the creditor class, the solution to this existential crisis was to first establish a reliable overseas creditor of significant means that was not directly threatened by German land based military power and had the ability to create and adsorb large quantities of fiat money. This financial act of “guarding the rear” resulted in the 1913 Federal Reserve Act in the United States and its transfer of both monetary issuance and policy from the Corporation of the United States to the privately owned Federal Reserve System. Thus with the Federal Reserve System established and in private ownership hands the flow of credit to the anti-German combatants could be guaranteed despite any opposition of the (primarily) German-American people. Concurrent with this effort was the consolidation of a nexus of inescapable mutual defense pacts between European countries both with and without private ownership control over their central banks. This nexus would draw both sides of the central banking ownership split into a war, weaken all countries equally, and leave no major power remaining to contest the outcome. Thus any “victory” to the Western European creditor class became contingent upon mutually assured destruction of all combatants, but only the privately owned central bank side would be back-stopped by credit issued from the United States to rebuild military capability after hostilities ended.
With both an independent credit supply and mutual defense nexus secured, the final act was to goad Germany via false flag into a super war of attrition – the war to begin all endless war – that would not only completely defeat and enervate the German state, but generate tremendous profits to the New York and London client banks via their financing of hostilities, supply of armaments, and provision of logistic services. And last, coalition member states that did not yet operate under control of privately owned central banks would be weakened to the point where the communist insurgents could be effective in prosecuting street level “revolutions”, at little cost, and these “revolutions” used to construct an existential threat to “democracy” occupying the position of Anti-Christ within this new politico-religious ideology and require never ending debt financing of military armaments and the excuse needed to conscript large standing armies.
World War I went according to plan with Germany defeated, the last viable Goldmark extracted, economic collapse across the Weimar Republic, and no state owned Reichsbank to thwart the eastward expansion of private central banks. With martial victory complete but only a bankrupt and worthless now privately owned Reichsbank left to show for their efforts, the creditor class set to devise a second round of wartime wealth “creation” and transfer via Germany through financing the rise and succession of the Nazis, as one could not build a Wehrmacht from stolen wedding rings and extracted gold teeth alone. Client banks in New York, London, and Stockholm – cities in countries never invaded by the Nazis – showered the new Thousand Year Reich with the international credit facilities needed to buy the massive amounts of steel, copper, lead, zinc, tin, rubber, fuel, et cetera that it did not possess within its own territories, and buy these commodities primarily from countries it would soon face in battle. From out of both the physical and financial ashes of World War I, between 1933 and 1939 the greatest military power Europe had ever assembled was conjured out of thin air by international fiat money that itself was conjured out of thin air. Like WWI, this second phase of endless war ended with Germany’s total defeat and absolute destruction, its financial system under complete submission to the victors, huge private profits created and transferred to New York and London, and a new major player on the world stage – the US Dollar.
The end of World War II marked the unequivocal victory of fiat money. The most significant post-WWII finance shifts were the creditor class giving up on private ownership of the German central bank and the nationalization of both the Bank of England and Bank of France. The BoE and BoF were insolvent due to their ownership of huge quantities of war bonds that would never be repaid so these losses were dumped onto the British and French taxpayers. Thus with the BoE and BoF off their hands these same central bankers could focus their attention towards their ownership in the Federal Reserve System and use the United States as their proxy army for the global spread of US Dollar financing. With the Soviet Empire left battered but intact, the post-WWII world was not only split along political systems and ideology, but was also split along competing fiat money systems – the “Free World” Dollar versus the “Red Menace” Ruble. The antagonism between these two systems played into the hands of both sides, as each gave the other the excuse to commit vast quantities of national resources towards their respective militaries, expand their international political and intelligence operations, terrorize unaligned countries into both compliance with one system or noncompliance with the other, and commit all manner of atrocity in their politico-religious campaigns to force all countries of the world into one fiat system or the other. Thus descended upon the world an endless series of overt and covert international wars and coup d’états and rigged elections to progress the urgent spread of “democracy”, denominated in US Dollars, against the spread of the “Red Menace”, denominated in Rubles. In its simplest analysis, this was the essence of the Cold War – the fight between competing fiat systems for world domination.
The primary post-WWII profit motive for the creditor class came now not so much from the usurpation of state owned central banks but instead from the relentless spread of “democracy” via coercion, subterfuge, and military force throughout the non- and semi-industrialized nations with the installation of pliant and reliable “growth” friendly juntas and regimes. With international “growth” came accelerated US Dollar financing for the purchase of military hardware and civil infrastructure projects and ever increasing profits from the accompanying “skim” taken in fees, interest, and contract awards to controlled entities. As these new US Dollar converted countries had no power to issue fiat money of influence and could not print their way out of economic trouble, and as “growth” rarely followed within their own borders but corruption and waste did, mechanisms were established to cover potential losses to the creditor class by expanding the mission of post-WWII extra-governmental financing institutions (IMF, World Bank, Asian Development Bank) to include the “international community” and back-stop all losses with “contributions” from “Free World” taxpayers. War now was waged not for the profits generated from war bond issuance and trade, but for this zero risk “skim” taken from the spread of “democracy” and facilitation of international “growth” financing. “Citizen Soldiers” were now not only tasked with risking their lives to impose “democracy”, but also for footing the bill when “democracy” couldn’t pay its tab.
The number one recipient of this international “growth” was the United States itself. As the holder of the world’s international reserve currency it was insulated from inflationary pressure due to the massive issuance of US Dollar denominated fiat relative to the combined value of its national resources and productive output. This insulation was effected when the amount of fiat increased, the “value” via inflation of the underlying national resources and productive output denominated in US Dollars also increased and provided an additional layer of “growth” in the United States to be taxed via capital gains and skimmed through mortgage financing. And as inflation raised this underlying “value” of goods and services, it also raised the “value” of labor inputs to these same goods and services, so wages increased as inflation progressed as money and labor inputs were not yet divorced. For 25 years post-WWII the United States “citizen” actually saw purchasing power increase with the increasing issuance of fiat money around the world, as inflation was exported to non-US Dollar economies and US Dollars returned to the home country to be re-invested in growing US exports. This insulation from inflation and increasing purchasing power was, in a sense, the “rights of the victor” granted to the United States “citizen soldier” and was the “carrot before the rod” that secured the blasé indifference to the prosecution of the endless overt and covert wars on foreign soil need to secure US Dollar financing hegemony. And it all worked until August, 1971.
During the mid- to late 1960s, oil producing countries along with other producers of US Dollar denominated commodities began to return their excess US Dollars and demand their conversion into gold. Gold outflows from the United States via the US Treasury’s Gold Window soared and became a major problem for US Dollar hegemony as it was this promised gold convertibility – but never expected to be exercised convertibility – that gave the US Dollar its illusory “value”. As US gold supplies depleted, the US Dollar began to depreciate in purchasing power at home and the domestic standard of living stagnated, as did profits generated by international “growth” to the creditor class. Thus the late 1960s and early 1970s saw a period of stagnant domestic “growth” via reduced exports combined with domestic inflation fueled by the conversion of US Dollars into gold – stagflation – and the limits of US Dollar denominated international “growth” within the post-WWII model had been reached. So in response to the cessation of international “growth” in financial profits, the creditor class devised a way out that would generate even greater profits to themselves, but was also the financial self-destruct mechanism that would eventually end US Dollar hegemony and money itself.
This new profit model entirely eliminated gold convertibility and moved the history of money from the fractional reserve fiat system to true fiat – money backed by nothing more than political coercion, military force, and outright fraud. And this new system would tolerate no opposition – i.e., the Soviet model – as its extreme instability, utter worthlessness, and complete absence of underlying natural economic laws made it highly susceptible to failure. Thus the competing fiat system – the Soviet system – had to be destroyed and all nations of the world brought under the unipolar suzerainty of the US Dollar. Welcome to the modern age – the age of endless-endless war waged by the United States in the service of unipolar “Globalism”.
The End of Money, Endless-Endless War, and the Coming Age of Subjugation
The conversion to pure fiat money in August, 1971 was money’s defining moment since it first appeared as electrum coins in 7th century BC Lydia as this divorced money from any representation of, and true measure of, value. During its existence, money had gone from value in of its self in the form of coins, to the (progressively fading) representation of value during its fractional reserve paper money phase, to a completely abstract replacement for “value” backed only by future taxation and additional US Dollars “hypothecated” from ever increasing issuance of Treasury bills. Thus its journey from “barbarous relic” to “refined abstraction” was complete.
Taxation is the fiat “value”, but future Treasury bill issuance is its hedge since future purchases cannot be guaranteed and may not materialize, and when they don’t materialize that triggers either massive tax increases, national default, or both. Thus the system either “works” when nations buy Treasury bills, or it implodes spectacularly when they don’t. To ensure the system “worked”, nations captured by the US Dollar fiat system were “persuaded” to “invest” their US Dollars not in gold but in US Treasury bills through this newly re-routed “virtuous cycle”. Thus the prosecution of endless-endless war was the failsafe continuously operating to ensure the fiat system “worked” and that nations did not stray to gold or other fiat and thus trigger systemic US Dollar collapse. War, regime change, US Dollar fiat imposition – lather, rinse repeat.
Adoption of this new purely fiat money mandated that United States federal debt continually increase ad infinitum as debt was required to maintain operation of the fiat system through ad infinitum issuance of new Treasury bills – i.e., the repatriated US Dollars that went to new Treasury bill issuance always had to exceed the sum of Treasury bill interest and redemption payments. Any budget surplus now was an indicator that either the tax take was too low or not enough Treasury bills were issued, and if budget surplus arose the system would revert to either higher tax take or new wars to impose more nations under US Dollar fiat. To safeguard these continually increasing budget deficits through Treasury bill issuance and preservation of the global US Dollar fiat system, in the mid-1970s the United States embarked on a policy of de-industrialization using a combination of regulatory excess and high interest rates that discouraged new capital investments in production at home and drove up the domestic cost base until the laws of economics forced productive capabilities to cheap overseas destinations with little regulatory oversight.
This de-industrialization ensured that when US Dollars arrived home from overseas via the “virtuous cycle”, these dollars, if they did not go to purchase military hardware, went to purchase US Treasury bills instead of US manufactured goods and services. Therefore de-industrialization ensured no federal budget surplus would ever arise, removed the inflationary cushion that US Dollar fiat provided during the 1950s and 1960s export boom, and guaranteed ever increasing budget deficits would follow in the wake of never ending Treasury bill issuance. It is this purposeful redirection of US Dollar inflows away from the purchase of manufactured goods and services towards the purchase of Treasury bills that is the core nature of what is today termed “financialization”, as a high volume of these US “virtuous cycle” Dollars returning to purchase manufactured goods and services would starve the US Treasury market and implode the US Dollar fiat system. Thus the US Dollar fiat system demands the destruction of the US manufacturing export base because Treasury bills, on which fiat survives, cannot tolerate competition from the purchase of US exports no more than it can tolerate competition with another fiat system abroad.
With the removal of the inflation cushion and the imposition of forced de-industrialization, American domestic purchasing power was now locked into a permanent and inescapable downward spiral. This was driven partly by the fiat system’s hedge component that necessitated ever expanding quantities of federal debt to create the Treasury bill issuance that funded the growing amounts of future interest payments and redemptions. The other driver was with the removal of a large portion of the US industrial export market, labor began to produce goods of lower value and drifted more towards services whereby wages began to stagnate as they contributed less and less to the combined “value” of underlying US goods and services and wages began to be eclipsed by “financial profits”.
During frequent periods of economic downturn US Dollars start to purchase gold and threaten the fiat system as gold begins to operate as a transparent and true indicator of value that does not exist in a fiat system and therefore, gold prices rise in all comparisons – e.g., the amount in tons of gold required to purchase the total stock market capitalization, et cetera. So gold price fixing and outright bailouts when tax confiscation declines as unemployment rises and trade collapses become the norm as lack of value transparency drives underlying systemic instability to the surface. So at this phase of fiat, bailouts are in reality an extreme measure to suppress the price of gold in US Dollars and thus keep hidden the absence of fiat’s worthlessness as a transparent and true indicator of underlying “value” in anything.
Karl Marx defined money as the “abstraction of undifferentiated social labor” – by this, he saw money as the representation of some unit labor input into goods and services, and thus the price in money for goods and services was equal to the sum of these unit labor inputs along the entire value chain that created and distributed them. What gave gold its value was the large amounts of labor input to discover, mine, process, and smelt that gold. Paper money was the mere representation of this value inherent in gold held in reserve, and was a promissory note for its convertibility into gold – a true measure of labor input value. When money became no longer convertible into gold, labor inputs were removed and it no longer had bearing on the price in money for anything. Thus the price in paper money for goods and services – e.g., gold and labor – could now be entirely manipulated for the benefit of the creditor class at the expense of the working class and divorce money from any natural laws of economics. Money had now transformed from its ancient representation of value in of its self into an almost zero cost tool (in unit labor inputs) of potential infinite quantity used to grant political and social privilege and thus, money was transformed from a finance instrument into a political instrument controlled by a new power amalgamation between the creditor and political classes. Thus it is no surprise that wages measured in constant dollars have not risen since 1973, and when measured relative to a realistic CPI have declined substantially. This is a direct effect of the creditor / political class, using this newly weaponized money, revoking all privileges formerly granted to the working class and handing these privileges to the corporate class, as the corporate class were now responsible for more and more of the rise in debt financing and tax take needed to support interest payments and redemptions on a never ending deluge of Treasury bill issuance.
To ensure success and control of this new highly unstable form of worthless money, one of the two competing fiat systems first had to be destroyed and a unipolar fiat “world order” imposed on the entirety of the globe. And like after Bretton Woods, the creditor class turned again to the United States as its proxy army for the prosecution of now endless-endless war in pursuit of infinite “growth” via “nation building” funded with US Dollar fiat money of no underlying value. To set the groundwork for this phase and the eventual consolidation of political power after fiat collapse, in the 1960s many of the noble families of finance and their high level operatives “magnanimously” answered the call to enter into the unelected realms of politics through funding and ascension into the upper echelons of global extra-governmental agencies and policy formulation think tanks. These globally focused organizations, after these key placements were effected, began to wield greater political influence on the US Dollar fiat denominated world transacted under the gateway guise of lofty aspirations like “universal peace” and “shared prosperity”, but with the malevolent end objective of eventually usurping the governing power of nations and transferring that power to this newly amalgamated creditor / political class. This influence was spread internationally using bribes in the form of “foreign aid packages”, “humanitarian aid”, and lucrative extra-governmental sinecures to key second and third world figures so to establish a chain of US military bases across the globe. Thus through extra-governmental policy “recommendations”, the United States was granted the “moral authority” to prosecute endless-endless global war against the Soviet fiat system and establish and maintain this coming single fiat “world order”, all under the appearance of some kind of reputable extra-governmental “global consensus”. At the same time, the think tanks and their allies in academia began to ferment social discord in the United States to dilute and discourage political participation by the white working class and foster indifference to creeping extra-governmental influence at home through such things like the manufacture of counter culture, the promotion of drug use and homosexuality, feminism and women’s liberation, the Civil Rights movement, and the concept of “diversity”.
With the American people dazed and confused during the 1970s after hit with everything from a 24/7 televised humiliating retreat from Vietnam to a quintuple in energy prices to Watergate to the introduction of the metric system and rise of disco, the creditor / political class effected a silent transition from the old profit motives embodied in the Korean / Vietnam Wars to the new war motives embodied in the ascendency of the Neo-Conservatives – the “End of History” and total subjugation of humanity.
But rather than cultivate acceptance of a new religious zealotry in support of endless-endless war, the creditor / political class instead formulated a temporary phase of debt based material “success” and exhalation of hedonism that facilitated its plans through mass public indifference to these plans. While America partied like it was 1999, the US military machine was greatly expanded during “peacetime” and prosecuted multiple overt and covert proxy wars on all continents simultaneously, each of which warranted an equally expensive response from the competing Soviet fiat system. It was the “moral equivalent of our founding fathers” versus the “Evil Empire” until one side or the other ran out of credibility to its fiat system.
The Soviets succumbed first and suddenly half the world became the political and fiat vacuum necessary for the Neo-Conservative prosecution of the “New World Order”.
10-07-2020, 04:19 PM
(This post was last modified: 10-07-2020, 04:48 PM by Steve.)
Among the first bankers in the Western world were the Knights Templar. They were given enormous riches by Christians supporting the crusades and by legacies from people who were often hoping to buy a place in heaven. They were the wealthiest organisation in every country in which they established themselves, and their temples in Paris and London became financial centres.
Eventually, King Philip IV of France, in league with Pope Clement V, destroyed the Templars and stole their fortune to pay debts and, possibly for other reasons, too. The Templars’ Grand Master, Jacques de Molay, was burned at the stake and the Order then went underground to work and plot secretly within other organisations.
The Christian world had a strict ban on usury (the charging of interest on loans) but as the centuries passed this was forgotten, and the banking system which today controls humanity began to develop.
The currency of that time was precious metals (such as gold and silver) and, for safety reasons, the owners began to deposit their wealth with the goldsmiths, who had suitable strong rooms to ensure its safekeeping. The goldsmiths would issue paper receipts for the gold and silver deposited with them, and the owners would pay their debts by withdrawing portions of their ‘deposits’, as necessary.
It was obviously an unwieldly process to move all those metals around and the paper receipts slowly became accepted as currency. The gold and silver were rarely moved, but the ownership of it changed with the issuing of receipts (‘money’) to pay off debts.
In the same way today, vast fortunes are made by simply moving numbers between one computer file and another. The goldsmiths and other owners of the strong rooms began to realise that, at any one time, only a fraction of the gold and silver was being withdrawn by the owners. “So,” they thought, “why don’t we issue notes (money) to other people who don’t own the gold and charge them interest on the notes?”
The only way the ruse could fail was if they issued too many notes and everyone came along at the same time to cash them in for gold and silver. They began to issue notes for the ownership of the gold and silver greatly in excess of the amount of gold and silver they had deposited in their vaults.
Most of the notes they lent (and earned interest on) were related to gold and silver which the ‘banks’ did not even have. But since only a small amount of the metals was being withdrawn at any one time, they were in the clear. They could issue lots of bits of paper for gold and silver that didn’t exist and charge interest for doing so!
There, in one sentence, you have a description of today’s banking system, which controls the world. People and governments are submerged in debt and desperately trying to pay interest on money that has never, does not, and will never exist.
It is reckoned that on average, for every £1,000 a bank receives from customers, it lends (and charges interest upon) at least £10,000! It is able to do this through a fractional reserve system, which means they only have to keep a fraction (say, one-tenth) of their total deposits in the bank, or ‘reserve’.
They count on it not being called for (demanded) by its customers all at the same time. In most countries where banks are regulated, there are rules or laws which allow a bank to shut its doors if too many people want their money out at the same time. The bank creates this money out of thin air by typing numbers onto a computer screen.
A large slice of our taxes goes to the banks to pay interest on money created in this way when those taxes could be used to ease poverty and hunger, and create greater opportunity. Indeed, if the money system was restructured to serve people and not banks, there is a good case for saying that all taxation could end.
NESARA / GESARA:
GESARA: Global Economic Security and Reformation Act.
NESARA: National Economic Security and Recovery Act.
1. Cancels all credit card, mortgage, and other bank debt due to illegal banking and government activities. Many refer to this as a “jubilee” or complete forgiveness of debt.
2. Abolishes income tax.
3. Abolishes the IRS, with employees of the IRS will be transferred into the US Treasury national sales tax area.
4. Creates a 17% flat rate non-essential new items only sales tax revenue for the government. In other words, food and medicine will not be taxed; nor will used items such as old homes.
5. Increases benefits to senior citizens.
6. Returns Constitutional Law to all courts and legal matters.
7. Reinstates the original Title of Nobility amendment.
8. Establishes new Presidential and Congressional elections within 120 days of GESARA's announcement. The interim government will cancel all National Emergencies and return us back to constitutional law.
9. Monitors elections and prevents illegal election activities of special interest groups.
10. Creates a new U.S. Treasury rainbow currency backed by gold, silver, and platinum precious metals, ending the bankruptcy of the United States initiated by Franklin Roosevelt in 1933.
11. Forbids the sale of American birth certificate records as chattel property bonds by the US Department of Transportation.
12. Initiates new U.S. Treasury Bank System in alignment with Constitutional Law.
13. Eliminates the Federal Reserve System. During the transition period the Federal Reserve will be allowed to operate side by side of the U.S. treasury for one year in order to remove all Federal Reserve notes from the money supply.
14. Restores financial privacy.
15. Retrains all judges and attorneys in Constitutional Law.
16. Ceases all aggressive, U.S. government military actions worldwide.
17. Establishes peace throughout the world.
18. Releases unprecedented prosperity with enormous sums of money for humanitarian purposes.
19. Enables the release of over 6,000 patents of suppressed technologies that are being withheld from the public under the guise of national security, including free energy devices, anti-gravity, and sonic healing machines.
20. Eliminates all current and future nuclear powered weaponry on planet earth.
QFS Updated Special Thanks to David Jackman -
How do Banks actually create money ? Professor Richard Werner ...
In the 5000 yr history of banking no-one has ever done an imperical study of banking to show where the money comes from- until now. Step up the rock star economist Professor Richard Werner. His amazing qualifications and held positions makes the eye water. He is truly the authority on this subject. Banks are thought of as deposit taking entities who lend money - but that is just wrong.
His assessment - Banks dont lend money but they misrepresent (lie) to their customers and say that they do.
12-11-2021, 10:26 AM
(This post was last modified: 12-11-2021, 10:30 AM by Steve.)
How is this Leal? Compounding value in Metals -
02-24-2022, 10:21 AM
(This post was last modified: 02-24-2022, 10:22 AM by Steve.)
Prof Richard Werner on PROMISSORY NOTES AND MONEY CREATED OUT OF THIN AIR
04-27-2022, 08:54 AM
(This post was last modified: 04-29-2022, 06:23 PM by Steve.)
05-01-2022, 12:21 PM
(This post was last modified: 05-01-2022, 03:24 PM by Steve.)
US National Debt Clock - see falling Credit Card Debt under ‘Unfunded Debt / Interest’ heading !!!