Sean King

My photo
Knoxville, Tennessee, United States

Sunday, October 17, 2010

While I'm bashing banks today...

...I thought I'd post a couple of videos that do an excellent job of explaining money--where it comes from, what it is, and what it isn't. The videos were produced by a friend of a friend, Damon Vrabel, founder of the Council on Renewal. I think that some of Damon's conclusions are a little too conspiratorial, but his explanation of the source of money is dead on.

Here's video 1:



And here's video 2:



More people need to understand that the Federal Reserve is not the same as the federal government, and that our government does not print or "coin" money, despite popular belief to the contrary. In fact, the government gets money the same way that the private sector does: By giving the Federal Reserve an IOU in exchange for it, or by getting it from others who have given the Federal Reserve an IOU in exchange for it. Thus, all money, and I do mean all money, enters the system in exchange for an IOU to the Fed. All the nation's wealth and capital is thus held for the benefit of the Federal Reserve. We are merely all paid portfolio managers!

So long as we manage the portfolio well--that is, so long as we put the money lent to us to productive use, or at least a more productive use than the next guy--money is taken from that proverbial "next guy" and is allocated to our management, and we seemingly prosper. This reallocation of money from unproductive debtors to productive ones keeps the both from seeing that, with the latter's increase in money, he is but now a larger debtor! The latter feels "wealthy" while the former feels "poor", in the same way that the emperor's palace guard feels "wealthier" for living in the palace than those on the street, but ultimately all belongs to the emperor and the guard owes more than the beggar!

Because money represents a claim to property, or at least the ability to purchase property, and because all money is ultimately owed back to the Fed, then the Fed is the ultimately beneficiary of all the nation's assets. This is demonstrably true as a matter of logic and, that being the case, it's easy to see how Damon gets conspiratorial at times. Perhaps he's right!

Not surprisingly, this situation is clearly not what Article 1, Section 8 of our Constitution contemplated or requires. When our Constitution was created, money was real money, not just debt. Money was either coined in gold and silver (i.e., it was "real" money), or at least represented a claim to actual gold and silver held in vault for the bearer's account. Regrettably, neither is any longer the case.

No comments: