Ron Paul Bill Seeks Coin and Bullion Tax Ban

http://www.coinnews.net/2009/12/14/ron-paul-bill-seeks-coin-and-bullion-tax-ban/

Congressman Ron Paul [R-TX] on Wednesday introduced legislation that would, if signed into law, end taxes on coins and bullion and repeal legal tender laws. The bill’s lofty goal is to reintroduce a system of competing currencies.

"At this country’s founding, there was no government controlled national currency. While the Constitution established the Congressional power of minting coins, it was not until 1792 that the US Mint was formally established," Rep. Ron Paul said.

"In the meantime, Americans made do with foreign silver and gold coins. Even after the Mint’s operations got underway, foreign coins continued to circulate within the United States, and did so for several decades.

H.R. 4248, or the Free Competition in Currency Act of 2009, includes several measures to end government controlled currency. One is to repeal Section 5103 of Title 31 of the United States Code which includes legal tender language that, according to Ron Paul, should not exist.

"There is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender."

Federal law currently mandates short-term capital gains rates of up to 35 percent for coins and long-term capital gains taxes of 28 percent, which Ron Paul argues is a hindrance to competitive currencies. H.R. 4248 would eliminate taxes on "any coin, medal, token, or gold, silver, platinum, palladium, or rhodium bullion" as well as restrict states from assessing taxes and fees "on any currency."

Finally, the legislation would eliminate laws that prohibit the operation of private mints, and retroactively end prosecutions and convictions of citizens who have been charged with such. Ron Paul specifically discussed this aspect of the bill as well as the raids on Liberty Dollar when he introduced the legislation. (See Liberty, Ron Paul Dollars Seized in Raid.)

"Evidently the government felt threatened, as Liberty Dollars had all their precious metal coins seized by the FBI and Secret Service in November of 2007. Of course, not all of these coins were owned by Liberty Services, as many were held in trust as backing for silver and gold certificates which Liberty Services issued. None of this matters, of course, to the government, which hates competition. The responsibility to protect contracts is of no interest to the government."

The bill has been referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, and the Judiciary.

For any legislation to become law, it must pass in the House, Senate and get signed by the President.

GATA sues Fed to disclose gold market intervention records

http://www.gata.org/node/8192

2p ET Wednesday, December 30, 2009

Dear Friend of GATA and Gold:

GATA today brought suit against the U.S. Federal Reserve Board, seeking a court order for disclosure of the central bank's records of its surreptitious market intervention to suppress the monetary metal's price.

The suit was filed in U.S. District Court for the District of Columbia and targets Fed records involving gold swaps, exchanges of gold with foreign financial institutions. In a letter dated September 17 this year to GATA's law firm, William J. Olson P.C. of Vienna, Virginia, (http://www.lawandfreedom.com) Fed Board of Governors member Kevin M. Warsh acknowledged that the Fed has gold swap agreements with foreign banks but insisted that such documents remain secret:

http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf

The lawsuit follows two years of GATA's efforts to obtain from the Federal Reserve and the U.S. Treasury Department a candid accounting of the U.S. government's involvement in the gold market. These efforts parallel those of U.S. Rep. Ron Paul, R-Texas, who long has been proposing legislation to audit the Fed. The Fed has wrapped in secrecy much of its massive intervention in the markets over the last year, and Paul's legislation recently was approved by the U.S. House of Representatives.

The Fed claims that its gold swap records involve "trade secrets" exempt from disclosure under the U.S. Freedom of Information Act.

While GATA has produced many U.S. government records showing both open and surreptitious intervention in the gold market in recent decades (see http://www.gata.org/node/8052), Fed Governor Warsh's letter is confirmation that the government is surreptitiously operating in the gold market in the present as well. That intervention constitutes a huge deception of financial markets as well as expropriation of precious metals miners and investors particularly. This deception and expropriation are what GATA was established in 1999 to expose and oppose.

Of course GATA's lawsuit against the Fed will take months if not years to resolve. We think we have a good chance of winning it in court. But we can win it outside court, and much sooner, if the suit can gain enough publicity from the financial news media and market analysts and prompt enough inquiry from them and from the public, the mining industry, and members of Congress.

So GATA urges its friends to publicize the suit and to urge journalists, market analysts, mining companies, and members of Congress to join us in seeking disclosure of the Fed's gold market intervention records. If enough clamor is directed at the Fed about these records, the gold price suppression scheme will lose its surreptitiousness and fail.

Unfortunately the World Gold Council, which each year collects tens of millions of dollars in membership fees from mining companies in the name of representing them and gold investors, refuses to question governments about their surreptitious interventions in the gold market. These interventions powerfully influence not only gold's price but the prices of government bonds and currencies, as well as interest rates generally and the value of all capital and labor in the world. There is no more important issue in the world economy than gold price suppression.

So what should have been the World Gold Council's work has fallen to GATA, a non-profit educational and civil rights organization that operates from month to month on donations from people who share its objective -- free and transparent markets in the precious metals and fair dealing among nations generally. As we prosecute our lawsuit against the Fed, we'll be grateful for your support. We promise to do something with it.

For information about supporting GATA, please visit:

http://www.gata.org/node/16

GATA's lawsuit against the Fed is listed in federal court records as civil case No. 09-2436 ESH, the letters being the initials of the district court judge assigned to it, Ellen S. Huvelle.

You can find the lawsuit here:

http://www.gata.org/files/GATALawsuitVs.Fed-12-30-2009.pdf

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Ron Paul on Ben and the Fed

If Joe Scarborough was aware of what Ron Paul said about the economic ills that were to befall this country later into the decade, why wasn't he speaking with Ron and why wasn't he supporting Ron during the 2008 election season? Did he forget about the comments Paul made back in 2003 or was it that he was never made aware of it until recently? Paul is correct to criticize the Federal Reserve institution as evil, but he plays gatekeeper when he doesn't describe Ben Bernanke as being evil as well. Paul is also incorrect in saying that Ben Bernanke is the most powerful man in the world. Not to take away from the guilt that Bernanke bears himself, but there are other players involved here, like the members of the Bank of England who are so conveniently left out from the scathing criticism. Also, why isn't Paul talking about the findings of the Gold Anti-Trust Action Committee? It's very concerning to me that he hasn't said anything.

I'm turned off by these corporate newscasters who try to play themselves off as trustworthy when for 8 years during King Bush's reign they parroted state propaganda. It means that things are going to get worse as they try to lull people back to sleep from their wake-up so that they can resume their program of deception. Yes, that means you, Glenn Beck, and I don't care if you rewrote Thomas Paine's Common Sense.

Oh, and here's something I didn't know. Obviously Murray Rothbard and Pat Buchanan were friends from way back. Eustace Mullins has some information on both Rothbard and Mises in his book The World Order. I'll post the passage in another blog article.

Federal Reserve Policy Audit Legislation ‘Gutted,’ Paul Says

Oct. 30 (Bloomberg) -- Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been “gutted” while moving toward a possible vote in the Democratic-controlled House.

The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.

“There’s nothing left, it’s been gutted,” he said in a telephone interview. “This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.”

The Fed, led by Chairman Ben S. Bernanke, has come under greater congressional scrutiny while attempting to end the financial crisis by bailing out financial firms and more than doubling its balance sheet to $2.16 trillion in the past year. The central bank is also buying $1.25 trillion of securities tied to home loans.

Paul, a member of the House Financial Services Committee, said Mel Watt, a Democrat from North Carolina, has eliminated “just about everything” while preparing the legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee.

Keith Kelly, a spokesman for Watt, declined to comment and said Watt wasn’t immediately available for an interview. Watt’s district includes Charlotte, headquarters of Bank of America Corp., the biggest U.S. lender. (Mister Goldbug - well this certainly makes sense why Watt would elimite "just about everything" in Paul's bill. He either works unofficially for Bank of America, who may or may not have put him in office, and this is something that needs to be researched, or he is doing the Federal Reserve a mere favor. But really what's the difference? Mel Watt is a whore.)

Original Language

Paul said he intends to introduce an amendment to the bill when it comes to the House floor for a vote restoring the legislation’s original language.

Representative Barney Frank, a Democrat from Massachusetts and chairman of the committee, said in interview that he intends to ensure legislation would provide a time lag between FOMC actions and the reporting of them.

Such a provision would “lessen the market impact,” he said on Oct. 20. “The importance is to see that there are no abuses and to judge what they did.” (Mister Goldbug - I've always loved the way defenders of the Fed have argued time lag transparency. There's another word for time lag and its usually associated with people who are drunk -- slow response time.)

The legislation will probably be included in a broader Democratic package of financial-regulation changes in the House, Frank said.

http://www.bloomberg.com/apps/news?pid=20601103&sid=atc2o1ijLRno

Federal Reserve Admits Hiding Gold Swap Arrangements

11p Tuesday, September 22, 2009

Dear Friend of GATA and Gold:

The Federal Reserve System has disclosed to GATA that it has gold swap arrangements with foreign banks that it does not want the public to know about.

The disclosure contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.

The Fed's disclosure came this week in a letter to GATA's Washington-area lawyer, William J. Olson of Vienna, Virginia (http://www.lawandfreedom.com/), denying GATA's administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks. (See the International Monetary Fund's treatise on gold swaps here: http://www.imf.org/external/bopage/pdf/99-10.pdf.)

The letter, dated September 17 and written by Federal Reserve Board member Kevin M. Warsh (see http://www.federalreserve.gov/aboutthefed/bios/board/warsh.htm), formerly a member of the President's Working Group on Financial Markets, detailed the Fed's position that the gold swap records sought by GATA are exempt from disclosure under the U.S. Freedom of Information Act.

Warsh wrote in part: "In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."

When, in 2001, GATA discovered a reference to gold swaps in the minutes of the January 31-February 1, 1995, meeting of the Federal Reserve's Federal Open Market Committee and pressed the Fed, through two U.S. senators, for an explanation, Fed Chairman Alan Greenspan denied that the Fed was involved in gold swaps in any way. Greenspan also produced a memorandum written by the Fed official who had been quoted about gold swaps in the FOMC minutes, FOMC General Counsel J. Virgil Mattingly, in which Mattingly denied making any such comments. (See http://www.gata.org/node/1181.)

The Fed's September 17 letter to GATA confirming that the Fed has gold swap arrangements can be found here: http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf

While the letter is far from the first official admission of central bank scheming to suppress the price of gold (for documentation of some of these admissions, see http://www.gata.org/node/6242 and http://www.gata.org/node/7096), it comes at a sensitive time in the currency and gold markets. The U.S. dollar is showing unprecedented weakness, the gold price is showing unprecedented strength, Western European central banks appear to be withdrawing from gold sales and leasing, and the International Monetary Fund is being pressed to take the lead in the gold price suppression scheme by selling gold from its own supposed reserves in the guise of providing financial support for poor nations.

GATA will seek to bring a lawsuit in federal court to appeal the Fed's denial of our freedom-of-information request. While this will require many thousands of dollars, the Fed's admission that it aims to conceal documentation of its gold swap arrangements establishes that such a lawsuit would have a distinct target and not be just a fishing expedition.

In pursuit of such a lawsuit and its general objective of liberating the precious metals markets and making them fair and transparent, GATA again asks for your financial support and that of all gold and silver mining companies that are not at the mercy of market-manipulating governments and banks. GATA is recognized by the U.S. Internal Revenue Service as a non-profit educational and civil rights organization and contributions to it are federally tax-exempt in the United States. For information on donating to GATA, please visit here:

http://www.gata.org/node/16

You can also help GATA by bringing this dispatch to the attention of financial news organizations and urging them to investigate the Fed's involvement in gold swaps particularly and the gold (and silver) price suppression schemes generally.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

http://www.gata.org/node/7819

Gold Is Pale Because It Has So Many Thieves Plotting Against It

“GOLD IS PALE BECAUSE IT HAS SO MANY THIEVES PLOTTING AGAINST IT”

Antal E. Fekete*
Professor of Money and Banking
San Francisco School of Economics

* The title is a quotation from Diogenes Laertius (fl. 2nd century A.D.)
This was the favorite quotation of the late Chicago economist and gold expert Melchior Palyi.

25 years ago I visited Comex at the World Trade Center, watching the feverish activity in the gold pit from behind the glass wall in the gallery. A gentleman standing next, unknown to me, remarked: “One day this make-believe charade will come to a bad end. All that these guys are doing down there is creating ever more claims to the same lump of gold — just as governments have been doing before they met their ignominious fate.”

Later that day I went to see the Director of Research of Comex. During our chat that lasted about an hour he intimated that he was greatly disturbed by the mystery that the gold basis has been steadily declining year in and year out. Perhaps it was the fact that he could not solve the puzzle that bothered him so much that he quit his job a few months later.

I must confess that I could not solve that puzzle myself until the Twin Towers of the World Trade Center came tumbling down many years later. For me it was a symbolic event, conjuring up the unknown gentleman and bringing back his cryptic remark. We are watching a game of musical chairs. When the music stops, paper claims to gold will be dishonored, and the gold futures markets will tumble down just like the Twin Towers.

In my earlier article The Dress Rehearsal for the Last Contango I observed that “a very strange phenomenon has been manifesting itself during the past thirty-five years, since the inception of gold futures trading. The basis as a percentage of the rate of interest, rather than remaining constant, has been vanishing and, by now, it has dropped to zero.” In the rest of that article I drew attention to the apocalyptic consequences of the prospect of permanent backwardation in gold threatening the world, which is completely ignored by the makers of monetary policy, as I had opportunity to convince myself during my recent encounter with Paul Volcker, the Chairman of President Obama’s Economic Recovery Advisory Board. As I see it, the Debt Tower will topple, just as the Twin Towers of the World Trade center have, when hit by permanent gold backwardation. The reason is that the availability of gold is absolutely indispensable for maintaining our system of irredeemable debt. Only then will bondholders, like the participants of the game of musical chairs, be satisfied that there is a goodly number of vacant chairs available, so let’s get on with bond trading, gold futures trading, and let the music roar on.

But once permanent backwardation in gold establishes itself, gold is no longer available at any price. Bondholders will scramble to sell their irredeemable bonds before they lose all their remaining value. There is no other way to pacify bondholders than letting the game of musical chairs go on, that is, continue the charade of gold futures trading putting ever more claims on the same lump of gold.

The response to my article was overwhelming. I have never realized how many people out there are following my writings on the internet so closely. I want to thank every one of you and assure you that I take this responsibility most seriously. Even if I cannot answer every message I get from you individually, I will continue to do my best to explain the results of my research in simple, understandable terms.

Let me spell out for my readers what the vanishing of the gold basis means from the point of view of the puppet-masters of the gold futures markets. It means that they are fighting a losing battle. They are desperately trying to coax gold out of hiding by offering ever higher bribes — not in terms of the price but in terms of the basis. A low basis means that they offer to take your cash gold and let you have gold futures in exchange at a discount price. (The discount is contango minus the basis, so that the two are inversely related: as the basis falls, the discount increases.) This will allow you to invest an amount equal to the price of gold (less five percent, the margin on the gold future) in any way you want and, having paid the reduced contango, you can keep the profits. The point is that you will still benefit from any advance in the gold price, same as you would if you owned cash gold. You can have your cake and eat it. Remember, in a full carrying charge market, such as the gold futures markets were at inception, no such bribe money was offered.

But, lo and behold, people who are willing to take the bribe are few and far in between. So the pot is sweetened. The basis is lowered. Maybe at one point gold will be coaxed out of hiding, once the bribe is high enough.

No such luck. When the basis gets as low as zero, it means that the discount on gold futures has gone so high that it is equal to the opportunity cost of holding gold. Therefore, again, if you give up your cash gold in exchange for gold futures, you can invest an amount equal to the price of gold (less five percent) in any way you wish, but now they let you keep your profit in its entirety. And you can still benefit from any advance in the gold price, same as you would if you had the cash gold in your hands.

This is where we are now. Indications are that the game fish still does not bite. What now? Where do the futures markets in gold go from here? Well, the pot can be further sweetened. The basis can be pushed down into negative territory. Gold could be forced into backwardation. Let’s see what that means. It means that you can sell cash gold and buy it back for future delivery at an outright discount. Somebody wants your gold so badly that he is willing to pay you for the privilege of holding it for a few days, few weeks, few months paying your storage and insurance fees. You get your gold back at a cheaper price. You make a risk-free profit on this deal. If the gold price goes up in the meantime, you benefit fully, just as if you have held on to the cash gold.

Now risk-free profits are a promise of unlimited profits because, if you are nimble enough, then you can make any number of round trips. However, opportunities to earn risk-free profits from arbitrage do not last. Other nimble speculators would jump in and their unlimited action would close the spread that gave rise to the risk-free profit in the first place. Yet I predict that, after a period of initial vacillation between backwardation and contango (due to action by misinformed traders) gold will settle in permanent backwardation.

Wouldn’t that be loverly? Risk-free profits galore. No need to bother with storage charges and insurance premiums. Just sit back and enjoy the ride to riches.

But hey, wait a minute! Is the arbitrage really risk-free? You give up your cash gold, but what if your gold futures contract expires and they refuse to return your gold? Commodity markets can change the rules of the game mid-stream. They just declare ‘cash settlement only’ for outstanding contracts. Unsaid and unstated, not even mentioned in small print, is the fact that the trap door may be slammed shut. The investor who has taken the bribe is neatly separated from his gold when the hairy godfather waves his magic wand. “Gold is pale because it has so many thieves plotting against it.” There are all too many trap doors, sprung wide open, ready to devour gold belonging to the unweary.

That’s it. That’s why more people do not fall for the bribe even when tickled with promises of risk-free profits. The promise is mendacious. There is a risk: the risk that you lose your gold and you may never be able to buy it back at any price. There is no other explanation for the fact that the promise of risk free profits does not eliminate the discount on the futures price of gold. This is the true explanation for the coming permanent backwardation in gold.

Gold futures trading is clearly a con-game, but it is in a symbiotic relation with the regime of irredeemable currency and irredeemable debt, on which our ‘democracy’ is based. So we have a double con-game. We have a smaller con-game of gold future trading inflicted upon gullible people who want to have their cake and eat it and, then, we have the much bigger, all-embracing con-game of irredeemable currency, inflicted upon the rest of us, innocent bystanders. It is inflicted by the United States government that stoops so low as to trample on the Constitution mandating a metallic monetary system for this country precisely in order to outlaw all Ponzi-schemes. The government could never muster the moral courage to propose an Amendment that would make the Constitution conform to its monetary system — as it would open Pandora’s box. Rather, it would live with the onus of being in contempt of the Constitution. The government of the United States had looted gold from its own subjects in 1933. It looted even more gold from people not under its jurisdiction in 1971. It continues to operate in the same tradition.

The larger con-game of the irredeemable dollar could not have gone on so long, but for the smaller con-game of gold futures trading from which it takes its strength. Historically, every regime of irredeemable currency has met its Nemesis in no more than 18 years. The present experiment with irredeemable currency has been going on for twice that long. Of course, gold futures trading is a relatively new invention that was not available to the managers of the assignats, mandats, or the Reichsmarks. Nor was it available to the managers of the most recent experiment with the Zimbabwe dollar. But, as the relentless fall in the gold basis clearly shows, people cannot be conned forever. The clock is ticking. Sand in the hourglass keeps dropping. When it runs out, the present experiment with fiat dollar will also meet its Nemesis, as all the earlier experiments have. That’s the good news.

The bad news is that the government of the United States persists in continuing the double con-game and Ponzi-scheme through thick and thin. It is callous to the economic damage it is causing world-wide, and it disregards the danger of permanent gold backwardation that would inflict utter economic pain on the innocent people of this country, to say nothing of the people of the rest of the world. As explained above, it would make the runaway debt-tower of Babel topple, burying people under the rubble as the Twin Towers of the World Trade Center buried people working inside.

When that happens, the government of the United States will not have the excuse that it has not been warned. I have delivered the message in person to the Chairman of President Obama’s Economic Recovery Advisory Board, Paul Volcker, when we met at the Santa Colomba Conference last July. I also consider it my moral duty to warn all the people who are willing to listen of the danger lying ahead. It is incredibly naïve to believe that gold can be removed from the international monetary system with impunity at the stroke of a pen, as they pretended to do it in 1973. The gold corpse still stirs. When it rises from its prostrate position it will, like Gulliver, dust off the Lilliputians who like ants have been scurrying all over his body. The day of reckoning will have dawned.

Keynesian and Friedmanite economists bear a special responsibility for the disaster. They dug in and monopolized their positions at universities and research institutes. They never allowed a free discussion on the gold standard. They did everything to aggrandize and perpetuate their own power as the sole advisors on government policy. They will not be able to live down this shame in a thousand years.

Masters Gold Fund

In my previous article More Dress Rehearsal of the Last Contango (see References below) I mentioned the unique Masters Gold Fund, soon to come on stream, structured to take advantage of the permanent backwardation in gold when it comes, which would ground all other gold funds. I have acted as advisor from inception and during the incubation period. In that article I listed seven exclusive features spelling out how the Masters Gold Fund would operate in these perilous times. It would take its clues, not from the gold price that is open to manipulation, but from the gold basis which is a pristine indicator telling you about the willingness of gold holders to carry on in playing the game of musical chairs and putting their gold at stake.

In response to subsequent inquiries that I have received, I provide the name and e-mail address of the manager of the Masters Gold Fund, who will be happy to send the prospectus to interested parties upon request:

Sandeep Jaitly (Sandeep.Jaitly@soditic-cbip.co.uk)

If you come to our Seminar in Canberra, Australia, in November, then you will be able to meet Mr. Jaitly in person, and ask him questions directly.

Disclosure

I have not been paid by Masters Gold Fund or its parent company for writing this article, or any other article representing it. My interest in the project is purely intellectual. I want to demonstrate that, under the regime of irredeemable currency, it is possible to have gold locked up in a vault and still make it bear a return in gold — to disprove Aristotle’s dictum: pecunia pecuniam parare non potest (gold does not beget gold).

What we have here is an historical anomaly. Never before could one earn a return on gold in gold unless one surrendered control, thus incurring a risk. The risk in investing in the Masters Gold Fund is that the gold price stabilizes, that is, the world willy-nilly goes back to a gold standard. However, this is a risk that anybody should be glad to take.
August 29, 2009

Barney Frank Says House Will Pass HR1207 in October

source

Medvedev Unveils “World Currency” Coin At G8

http://www.prisonplanet.com/medvedev-unveils-world-currency-coin-at-g8.html

In a highly symbolic moment at the G8 summit in Italy today, Russian President Dmitry Medvedev unveiled to reporters a coin representing a “united future world currency”.

“We are discussing both the use of other national currencies, including the ruble, as a reserve currency, as well as supranational currencies,” the Russian leader said at a news conference.

However, those who have downplayed the formulation of a world currency by dismissing it as merely a progression of SDR’s (Special Drawing Rights) and not something that would physically be used by citizens in a system of world government, were contradicted when Medvedev clearly outlined that the new currency would be “used for payment” by citizens as a “united future world currency”.

“This is a symbol of our unity and our desire to settle such issues jointly,” Medvedev said.

“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it,” reports Bloomberg.

The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.”

Press images released to the Yahoo photo wire did not show any close up shots of the coin and little was known about it, except that it had been minted in Belgium and bears the words “unity in diversity”. An RIA Novosti report noted that the coin represented an example of a “possible global currency”.

China and Russia have repeatedly called for a new global currency to replace the dollar.

When confronted about plans to supplant the dollar with a new global currency, both Federal Reserve chairman Ben Bernanke and Treasury Secretary Timothy Geithner denied that such an agenda existed.

However, just days after he told a Congressional hearing that there were no plans to move towards a global currency, Geithner sought to please the elitist CFR by assuring them that he was “open” to the notion of a new global currency system.

The scandal-ridden and highly secretive Bank For International Settlements, considered to be the world’s top central banking power hub, released a policy paper in 2006 that called for the end of national currencies in favor of a global model of currency formats.

The global currency would be a key central plank of a future system of world government. Earlier this week, Pope Benedict called for a “world political authority” to manage the global economy.

The Erosion of the Dollar and the Rise of the East

http://jessescrossroadscafe.blogspot.com/2009/06/erosion-of-dollar-and-rise-of-east.html

The outcome of the push for globalization is a severe decline in the median standard of living in the US and an erosion of those individual liberties and freedoms which has made the US somewhat unique on the vast historical sweep of world history.

Few understand this. One cannot be completely sovereign when the push for 'competitiveness' is used to consistently erode the commitment to individual freedom.

David Rockefeller, and Sam Walton, and Bill Gates, looked at the social and economic structure of the People's Republic of China and saw the new American paradigm. Not in the evolution of China to democracy and freedom, but in the subjugation of the United States to huddled masses docilely wearing the yoke of debt subservience to the ruling elite.

Too much speculation in this? The pattern of behaviour of those who promote this canard of globalism is too obvious to ignore.

The banks must be restrained and balance must be restored before a sustained economic recovery can be achieved.

The rest of Jesse's piece can be read at his website, provided in the link above the text.

Obama Regulatory Reform Plan Officially Establishes Banking Dictatorship In United States

An article worth reprinting in spite of the Alex Jones stain.

Paul Joseph Watson & Steve Watson
Prison Planet.com
Thursday, June 18, 200

President Obama’s plan to give the privately-owned and unaccountable Federal Reserve complete regulatory oversight across the entire U.S. economy, which is likely to be enacted before the end of the year, will officially herald the beginning of a new form of government in the United States - an ultra-powerful banking dictatorship controlled by a small gaggle of shadowy and corrupt elitists.

The new rules would see the Fed given the authority to “regulate” any company whose activity it believes could threaten the economy and the markets.

This goes a step further than the centrally planned economies of the Soviet Union or Communist China, in that the Federal Reserve is not even accountable to the U.S. government, it is a private entity that according to former Fed chairman Alan Greenspan, is accountable to nobody but the banking families that own it.

Obama’s regulatory “reform” plan is nothing less than a green light for the complete and total takeover of the United States by a private banking cartel that will usurp the power of existing regulatory bodies, who are now being blamed for the financial crisis in order that their status can be abolished and their roles handed over to the all-powerful Fed.

According to an Associated Press report today, Democratic leaders have committed to enacting the plan before the end of the year and Republicans in both the House and Senate have indicated that they won’t stand in the way of the overhaul.

“The final plan….is expected to sidestep most jurisdictional disputes and simply impose across the board standards to be applied by all financial regulators, according to administration and industry sources, ” reports the Washington Times.

In other words, the Fed, which is already totally unaccountable to Congress, is to be placed in complete control of the entirety of the U.S. financial system, to do as it wishes without repercussion.

As the LA Times reports, the government, in conjunction with the private Federal Reserve, would effectively have the clout to simply seize and take over any company it desires.

In order to appease those opposed to the plan, such as Sen. Christopher J. Dodd, chairman of the Committee on Banking, Housing and Urban Affairs, the Obama administration has agreed to create a “watchdog” council of regulators to “advise the Fed”.

However, as former chairman Alan Greenspan has most recently pointed out, given that the Fed is an independent entity, and therefore accountable to no one, it will have the power to simply reject and overrule any advice it is offered.

Pointing out the flagrant conflict of interest in empowering the Federal Reserve to essentially regulate itself, Professor of public affairs at the University of Texas at Austin Robert Auerbach writes, “The Federal Reserve has massive conflicts of interest that make it ill suited for its present regulatory functions and certainly for an expanded regulatory reach. The officials leading the Fed today preside over an organization that is run in substantial part by the bankers they regulate. Bank regulation begins at its 12 district Federal Reserve Banks, each governed by a nine-member board of directors, two-thirds of whom are elected by the bankers in the district.”

As economic author Nomi Prins highlights, Obama’s plan does nothing whatsoever to fix the excesses of financial institutions blamed for the financial collapse, it only ensures their continued operation and an expansion of the practices that contributed to the economic crisis in the first place.

“The ’sweeping overhaul’ of the financial system detailed by Geithner on behalf of the Obama administration does not overhaul the system at all,” writes Prins, “giving the Fed a bigger role, creating a ‘council of regulators’ to oversee the existing oversight bodies and allowing the biggest Wall Street players to maintain their status, leaves the system intact.”

“The Federal Reserve is not a fully public entity. It has amassed a set of $7.87 trillion worth of facilities and other entities through which it has lavished cheap loans in return for questionable collateral from the banking system. It has kept the true nature of these transactions a secret despite numerous FOIA requests. And, it has actively promoted the creation of bigger institutions in a chaotic environment, rather than putting the brakes on the creation of these giants,” concludes Prins.

Proof that the agenda of implementing overt financial dictatorship is being carefully coordinated can be seen in the fact that an almost identical scheme is also being set up in the United Kingdom, where “The governor of the Bank of England has called for greater powers to allow it to fulfil its new role of promoting financial stability,” according to a BBC report.

Just as in the U.S., King is calling for traditional independent regulatory bodies to be all but abolished and replaced by the Bank of England itself, which just like the Federal Reserve is a private outfit with no accountability to the government whatsoever.

The mainstream media, for the most part, has reported the oversight plan as a much needed regulatory crackdown on those responsible for the financial crisis. However, the details of the plan constitute almost exactly what lobbyists for leading bankers have been pushing for over the past few weeks.

“All derivatives contracts will be subject to regulation and all derivatives dealers subject to supervision,” Treasury Secretary Timothy F. Geithner said at a Time Warner Economic Summit in New York on Monday, also noting “When you have too many people involved, there’s an accountability problem.”

As we reported earlier this month, heads of nine of the biggest banks in the derivatives market, including JP Morgan Chase, Goldman Sachs, Citigroup and Bank of America, secretly lobbied to keep derivatives under Federal Reserve “oversight” and away from real scrutiny.

As reported by The New York Times, they all met secretly to discuss how to use the lax regulation and institutional secrecy of the NY Fed to shield their credit-default swaps business from prying eyes and attempts at regulation.

The banks formed a lobby– the CDS Dealers Consortium– only weeks after accepting TARP funds in October 2008 to protect its interests. Heading this effort was Edward Rosen, who previously helped fend off derivatives regulation. Rosen wrote and circulated a “confidential memo” to the Treasury Department and leaders on Capital Hill, making their agenda clear, the Times reported.

Rosen and his backers propose that derivatives be “traded in privately managed clearinghouses, with less disclosure,” according to the Times. The clearinghouse of choice for the big banks in Rosen’s CDS Consortium is ICE U.S. Trust, which is in turned regulated only by the Federal Reserve system.

So the upshot of all this is that the bankers get what they want, are allowed to carry on as they were, while at the same time the fractional reserve banking system and the federal government are both greatly expanded and empowered, and the compliant corporate media ludicrously tells us that a strict crackdown is underway.

This kind of activity is exactly what some leading representatives have warned of in recent weeks.

A fortnight ago, the Democratic Chairman of the Agriculture Committee, Collin Peterson, announced to the press that “The banks run the place,” in reference to the US Congress.

While Peterson is also pushing for legislation to regulate derivatives trading, his proposed bill would limit derivatives trading to public exchanges, rather than private clearinghouses, which are managed by banks.

Peterson’s warning mirrors that of Democratic Senator Dick Durbin, who just a few weeks before uttered the same rarely acknowledged truth.

“And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place,” Durbin said.

How simultaneously dangerous and ridiculous it is that the Federal Reserve is given more authority to oversee the economy. This is the same privately run entity that refused to comply with congressional demands for transparency and disclose the destination of trillions dollars in bailout funds. It is the same privately owned entity that has withheld internal memos, in spite of freedom of information act requests. It is the same private entity, run for the most part by European banking elites, that has arrogantly refused to tell Senators and Congressmen which banks were in receipt of government loans.

The government is ready to hand over everything to a monolithic private corporation and a gaggle of bastard banker offspring, that have gobbled up an amount close to the entire GDP of the country in taxpayers’ money and figuratively stuck the middle finger up regarding questions over where that money has gone.

It can be no more apparent than at this time that legislation to audit, repeal and eventually end the Federal Reserve, must be supported by Americans if they want to see their children and their grandchildren grow up without indentured debt and entrenched servitude to a fascistic marriage of private banks and hugely inflated government.

BRIC, SCO Discuss "Super-Sovereignty" Currency, USD Alternatives

A little insight into the internal mechanics of China's changing financial policies. What does this mean?

BRIC, SCO Discuss "Super-Sovereignty" Currency, USD Alternatives

China continued to consider a “super-sovereignty” currency among the countries of Shanghai Cooperation Organization (SCO), an intergovernmental mutual-security organization that met today in the Russian city of Yekaterinburg, in the Urals at the division of Asia and Europe. Members include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, with India as one of its four observers.

Right after the SCO meeting, the BRIC country (Brazil, Russia, India and China) leaders met formally for the first time. It is not merely coincident that three of them have expressed a desire to adjust their foreign exchange reserve portfolios by reducing the share or volume of US dollar assets.

China has just halted the increase its holding of US Treasury debt. By the end of April, China held $763.5 billion of it, a fall of $4.4 billion, month on month, the first time China has reduced its Treasury holdings. Since May, 2008, China has increased its holding by $260 billion.

Inside China, USD is a hate-more-than-love story. Analysts have long argued that China should be very cautious on buying US government bonds since dollar is bound to weaken. Others hold that US treasury debts are still the best and first choice for China's near $2 trillion foreign exchange reserve.

In March, Madam Hu Xiaolian, the chief of China's State Administration of Foreign Exchange and a deputy governor of the People's Bank of China, China's central bank, said that investing in US national debt is an essential part of China's reserve management. But while continuing to buy US national debt, China is concerned about the risk of the fluctuation in value of its assets.

China has announced that it would buy up to $50 billion in bonds issued by the International Monetary Fund (IMF). Meanwhile, Russia and Brazil have said they are planning to buy up to $10 billion in IMF bonds, which would mean selling Treasury bonds. India has expressed the same interest. In April, China, Russia, and Brazil all reduced their holdings of US treasury debt.

China now believes that a long-term dollar decline is inevitable, and the risk to the value of its $2 trillion foreign exchange reserve has become realistic, if not imminent.

China has been a huge beneficiary of the order of the world economy and a monetary system with the US dollar as the reserve currency. China's economy has been anchored by a stable dollar exchange pegged by China's currency, RMB.

But the financial crisis has given China a wake up call that the present monetary system is not sustainable, and neither is China's foreign exchange regime and mode of economic growth, which has been largely based on relentless exporting.

What, then, is the role RMB can play in the future? Russia has been urging China for years to settle their bi-lateral trade in their respective currencies. Brazil intends to trade with China by RMB and the real. Recently Russia suggested making RMB convertible to become an international reserve currency.

China can not challenge US directly. The BRIC summit is a convenient platform for China and the other BRIC powers, set to become the 4 of the 6 largest economic entities by 2050, to put a bit of pressure on the US. Held before the first China-US Strategic and Economic Dialogue in late July in Washington DC, the BRIC summit may give China some leverage in dealing with the US.

Russia is ready to use its exchange reserve to buy securities issued by BRIC countries. In return, Russia hopes the others will be willing to buy financial instruments issued by Russia. The leaders discussed increasing of the share of settlement currencies for trade among them. They also discussed adjusting their reserve assets portfolio in a coordinated way.

At the SCO meeting held just before the BRIC summit and attended by China, Russia and India, China proposed to research the feasibility of using a super-sovereignty currency among SCO member countries.

Kazakhstan president Nursultan Nazarbayev proposed that trade among SCO countries be settled by currencies of member countries. He also suggested that a super-sovereignty currency used inside the SCO eventually become a SCO reserve currency. Russian President Dmitry Medvedev also supported the idea.

Federal Reserve Hires PR Firm to Fight Audit

NERVOUS THAT ITS BACKROOM money dealings may soon come under public scrutiny, the Federal Reserve is reportedly bringing in the big guns in an effort to quash Rep. Ron Paul’s landmark “Audit the Fed” bill (H.R. 1207), which has garnered 208 cosponsors as this issue goes to press—nearly half the members of the House of Representatives.

A national news wire service reported in early June that Linda Robertson, who currently heads up public relations for Johns Hopkins University in Baltimore, has been brought in by the United States’ private central bank to polish its image.

Previously, Ms. Robertson served in top spots in both Republican and Democrat Treasury Departments. She also had a brief stint at the infamous energy company Enron, the Houston-based corporation that through fraud and deception, managed to fleece investors of billions of dollars.

Most notably, Ms. Robertson worked in the Treasury Department while Robert Rubin was secretary during the time in which the Glass-Steagall Act of 1933 was rolled back. Rubin’s Treasury worked with Congress to formulate legislation, which allowed banks to form massive financial institutions by merging with investment firms and insurance companies.

These same megabanks, which formed as a result of the new rules, have now cost U.S. taxpayers trillions of dollars in bailout money.

“Members of Congress have chafed at the Fed’s bold use of its emergency powers and in particular its multi-billion-dollar bailouts of investment bank Bear Stearns and insurer American International Group,” Reuters reported in an article that broke the news about the Federal Reserve’s new hire.

“Critics also bristle at the Fed’s practice of maintaining the confidentiality of the companies that borrow directly from the central bank on the grounds that divulging their names would risk runs on those institutions.”

As a result, says Reuters, the Fed will be bringing on Ms. Robertson to act as its point man when it comes to dealing with Congress.

In May, the federal government’s Inspector General for the Federal Reserve Elizabeth Coleman testified before Congress that she does “not have jurisdiction to directly go out and audit Reserve Bank activities specifically.”

Rep. Paul has already stated that the intention of his bill is to open “all Fed operations to a GAO audit and calling for such an audit to be completed by the end of 2010, the Federal Reserve Transparency Act would achieve much-needed transparency of the Federal Reserve.”

Federal Reserve Hires PR Firm to Fight Audit

Wall Street's Toxic Message Carried in the Winds of Change

Thought I'd post this to the blog. Jesse is always good as a source of information.

This has to do with piece former World Bank President Joseph Stiglitz wrote recently.

Jesse's post follows

Joe Stiglitz writes an important essay, and it is suggested that you take the time to read it. It helps to explain many of the things we have been saying, including the forecast that 'a new school of economics will rise from the ashes of this crisis, as Keynesianism rose from the Great Depression.'

These are changes of an historic nature, and as such they will progress slowly, and be largely unnoticed by those going about their daily business.

But the tides of change have been loosed, and what we have known, and relied upon, and expected will be shaken to its foundations.

Wall Street's Toxic Message by Joseph Stiglitz - Vanity Fair (pdf)

Jim Sinclair on CNN Your Money

Finally, they interview this man.

What's that Tonya Tucker song? It's a Little Too Late To Do The Right Thing Now?



"The degree of amoral sociopathic individuals are more on Wall Street than anywhere else on the planet. And you can't grow a conscience if you don't have one. I've lost sight in one eye. I tell you that blindness is not seeing dark, its simply not seeing. That's similar to the condition of a sociopath whose only purpose in life is to make money at any cost and to do any damage, and actually to enjoy the fact that you're doing that. That's what's called 'ripping faces off'. All laughing and filling up their wine glasses. Now its come home to roost." - Jim Sinclair

Two Senate Republicans Neutralize Rep. Paul's Audit the Fed Bill

I'm surprised by this story found over at Huffington Post.

Wow. Some truth.

The story follows in bold:

Legislation to give Congress greater oversight of the Federal Reserve was severely watered down on the Senate floor Wednesday in private negotiations between two powerful Republican senators.

Thanks to an overlooked document posted on the website of Sen. Charles Grassley of Iowa, the top ranking Republican on the Finance Committee, voters can virtually watch the water being dumped into the brew that Grassley had hoped to force the Fed to drink. (See the document at the bottom of this story.)

On page five of Grassley's amendment, he intends to give the Comptroller General of the Government Accountability Office power to audit "any action taken by the Board under...the third undesignated paragraph of section 13 of the Federal Reserve Act" -- which would be almost everything that it has done on an emergency basis to address the financial crisis, encompassing its massive expansion of opaque buying and lending.

Handwritten into the margins, however, is the amendment that watered it down: "with respect to a single and specific partnership or corporation." With that qualification, the Senate severely limited the scope of the oversight.

On the Senate floor, Grassley named the top Republican on the banking committee, Richard Shelby of Alabama, as the man pouring the water.

"Although I would have preferred to include all of the Fed's emergency actions under 13(3), in consultation with Senator Shelby I agreed to limit my amendment to actions aimed at specific companies," said Grassley.

"This modified version of the amendment does not give GAO authority to look at all of that additional taxpayer risk. It is much narrower than the one I originally filed, but it is a reasonable step in the right direction, and it does not threaten monetary policy independence."

The original version of the amendment also scratches out congressional authority to oversee Fed actions as they relate to the TARP bailout or "similar authority that the Board exercises under urgent and exigent circumstances."

The Senate walked right up to the edge, thought about auditing the Fed, and with the stroke of a pen, backed off. (Or maybe it was a pencil.)

The action the Senate took, however, is not meaningless.

Grassley entered into the congressional record a list of Fed actions that do fall within the limits of the language in his amendment (which could still be eliminated in conference committee negotiations):

1. Actions related to Bear Stearns and its acquisition by JP Morgan Chase, including:

a. Loan To Facilitate the Acquisition of The Bear Stearns Companies, Inc. by JPMorgan Chase & Co. (Maiden Lane I)

b. Bridge Loan to The Bear Stearns Companies Inc. Through JPMorgan Chase Bank, N.A.

2. Bank of America -- Authorization to Provide Residual Financing to Bank of America Corporation Relating to a Designated Asset Pool (taken in conjunction with FDIC and Treasury)

3. Citigroup -- Authorization to Provide Residual Financing to Citigroup, Inc., for a Designated Asset Pool (taken in conjunction with FDIC and Treasury)

4. Various actions to stabilize American International Group (AIG), including a revolving line of credit provided by the Federal Reserve as well as several credit facilities (listed below). AIG has also received equity from Treasury, through the TARP, which would also be captured in amendment #1020.

a. Secured Credit Facility Authorized for American International Group, Inc., on September 16, 2008

b. Restructuring of the Government's Financial Support to American International Group, Inc., on November 10, 2008 (Maiden Lane II and Maiden Lane III)

c. Restructuring of the Government's Financial Support to American International Group, Inc., on March 2, 2009

5. TALF -- finally, amendment #1020 would expand GAO's authority to oversee the TARP, including the joint Federal Reserve-Treasury Term Asset-Backed Securities Loan Facility (TALF)

*Neither* Amendment #1021 nor #1020 would include short-term liquidity facilities:

1. Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility
2. (AMLF)
3. Commercial Paper Funding Facility (CPFF)
4. Money Market Investor Funding Facility (MMIFF)
5. Primary Dealer Credit Facility and Other Credit for Broker-Dealers (PDCF)
6. Term Securities Lending Facility (TSLF)

Grassley and Shelby. Two bought and owned by Wall Street politicians.

The Aldrich Plan

I haven't continued my "debunking Federal Reserve debunkers" series since March and I sincerely apologize. It seems I'm making apologies alot.

But better late than never right?

If you haven't read my first blog article, The Jekyll Island Hunt Club, on the Federal Reserve Conspiracy, you can read it here.

Let's review. B.C. Forbes wrote an article on the Jekyll Island meeting ten months before the Magazine was established in 1917. This was six years after the Jekyll Island meeting occurred which means that it was never read during the time it could have had a crucial impact on the turnout of what became the Federal Reserve.

The gestation period lasted between its conception period (1908) to the birth of the Fed (1913). After his European trip to learn about banking reform there is no evidence that Aldrich ever made a report on the results of his trip, nor had he offered any plan of banking reform. It was a waste of money at the taxpayers expense.

The first mention of the Jekyll Island meeting appeared in Nathaniel Wright Stephenson's biography on Aldrich, Chapter XXIV, "Jekyll Island", which was written in 1930. T.W. Lamont three years later stated in Harper that Henry P. Davison was the arbitrator of the Jekyll Island meeting. This was exactly 20 years after the Federal Reserve came into being, 23 years after the meeting itself.

Jekyll Island was chosen for its isolation and privacy as well as being the property of the very same millionaires who frequented the island for recreational purposes. In these instances when the island wasn't being used for hunting, the club's members were asked to not appear, so this became a conventional method of choice and was ideal for the preservation of secrecy that was needed in drafting the plan.

The agreement was made by the participants of this meeting to refer to each other by their first names only because their last names were too well known. The meeting lasted for two weeks with the "new servants brought in from the mainland for this occasion who did not know the names of any of those present," and was to be a one-time only outing because a second meeting would've raised public suspicion.

Paul Warburg created the title of the bank to conceal the reality of it being a privately-owned banking cartel that had control over the general direction of the economy, meaning that it could cause the stock market to rise and fall at whim.

Warburg established a Federal Reserve Board of Governors whose members would be appointed by the President but the real work would be handled by the Federal Advisory Council who would meet with the Board of Governors. The members of the Federal Advisory Council itself would be chosen by the directors of the twelve Federal Reserve banks.

Next, Warburg introduced the illusion that the Federal Reserve System wouldn't be dominated by the New York money markets by setting up the regional reserve system. As Mullins said in his book:

Few people outside the banking world would realize that the existing concentration of the nation's money and credit structure in New York made the proposal of a regional reserve system a delusion.

His most nefarious idea came last. The proposal that the bank should be subjected to executive approval by the President.

This meant the Federal Reserve was unconstitutional from its very inception. Ed Winston asks "Since when is the Federal Reserve Act unconstitutional?" Because Ed, it was drafted by a banker, Paul Warburg, when the constitution expresses that a bill originates in the house and is drawn up by a Congressman. Senator Aldrich shouldn't even have been in the meeting. Secondly it removes Congressianal control by subjecting the banks to the executive approval by the President. This deprived Congress of its sovereignty and destroyed the checks and balances of power set up by Thomas Jefferson.

Refer to Article 1, Sec. 8, Par. 5 of the Constitution. It says "coin", not "print".

Warburg never once made a mention of Jekyll Island in his 1,750 page length tome on the Federal Reserve.

Warburg however did admit on page 60 of his tome: The results of the conference were entirely confidential. Even the fact there had been a meeting was not permitted to become public.

On May 7th, 1910, Harper's Weekly noted:

Finance and the tariff are reserved by Nelson Aldrich as falling within his sole purview and jurisdiction. Mr. Aldrich is endeavoring to devise, through the National Monetary Commission, a banking and currency law. A great many hundred thousand persons are firmly of the opinion that Mr. Aldrich sums up in his personality the greatest and most sinister menace to the popular welfare of the United States. Ernest Newman recently said, 'What the South visits on the Negro in a political way, Aldrich would mete out to the mudsills of the North, if he could devise a safe and practical way to accomplish it.'

The participants in the Jekyll Island conference returned to New York to direct a nationwide propaganda campaign in favor of the "Aldrich Plan". Three of the leading universities, Princeton, Harvard, and the University of Chicago, were used as the rallying points for this propaganda, and national banks had to contribute to a fund of five million dollars to persuade the American public that this central bank plan should be enacted into law by Congress.

Woodrow Wilson, governor of New Jersey and former president of Princeton University, was enlisted as a spokesman for the Aldrich Plan. During the Panic of 1907, Wilson had declared:

All this trouble could be averted if we appointed a committee of six or seven public-spirited men like J.P. Morgan to handle the affairs of our country.

In his biography of Nelson Aldrich in 1930, Stephenson says:

A pamphlet was issued January 16, 1911, 'Suggested Plan for Monetary Legislation', by Hon. Nelson Aldrich, based on Jekyll Island conclusions.

Stephenson says on page 388:

An organization for financial progress has been formed. Mr. Warburg introduced a resolution authorizing the establishment of the Citizens' League, later the National Citizens League . . . Professor Laughlin of the University of Chicago was given charge of the League's propaganda.

It is notable that Stephenson characterizes the work of the National Citizens League as "propaganda", in line with Seligman's exposition of Warburg's work as "the education of the country" and "to break down prejudices".

Much of the five million dollars of the bankers slush fund was spent under the auspices of the National Citizens' League, which was made up of college professors. The two most tireless propagandists for the Aldrich Plan were Professor O.M. Sprague of Harvard, and J. Laurence Laughlin of the University of Chicago.

Congressman Charles A. Lindbergh, Sr. notes:

J. Laurence Laughlin, Chairman of the Executive Committee of the National Citizens' League since its organization, has returned to his position as professor of political economics in the University of Chicago. In June, 1911, Professor Laughlin was given a year's leave from the university, that he might give all of his time to the campaign of education undertaken by the League . . . He has worked indefatigably, and it is largely due to his efforts and his persistence that the campaign enters the final stage with flattering prospects of a successful outcome . . . The reader knows that the University of Chicago is an institution endowed by John D. Rockefeller, with nearly fifty million dollars.

In his biography of Nelson Aldrich, Stephenson reveals that the Citizens' League was also a Jekyll Island product. In chapter 24 we find that:

The Aldrich Plan was represented to Congress as the result of three years of work, study and travel by members of the National Monetary Commission, with expenditures of more than three hundred thousand dollars.

In 1911, the Aldrich Plan became part of the official platform of the Republican Party.

Testifying before the Committee on Rules, December 15, 1911, after the Aldrich plan had been introduced in Congress, Congressman Lindbergh stated:

Our financial system is a false one and a huge burden on the people . . . I have alleged that there is a Money Trust. The Aldrich plan is a scheme plainly in the interest of the Trust . . . Why does the Money Trust press so hard for the Aldrich Plan now, before the people know what the money trust has been doing?

Lindbergh continued his speech:

The Aldrich Plan is the Wall Street Plan. It is a broad challenge to the Government by the champion of the Money Trust. It means another panic, if necessary, to intimidate the people. Aldrich, paid by the Government to represent the people, proposes a plan for the trusts instead. It was by a very clever move that the National Monetary Commission was created. In 1907, nature responded most beautifully and gave this country the most bountiful crop it had ever had. Other industries were busy too, and from a natural standpoint all the conditions were right for a most prosperous year. Instead, a panic entailed enormous losses upon us.

Wall Street knew the American people were demanding a remedy against the recurrence of such a ridiculously unnatural condition. Most Senators and Representatives fell into the Wall Street trap and passed the Aldrich Vreeland Emergency Currency Bill. But the real purpose was to get a monetary commission which would frame a proposition for amendments to our currency and banking laws which would suit the Money Trust. The interests are now busy everywhere educating the people in favor of the Aldrich Plan. It is reported that a large sum of money has been raised for this purpose. Wall Street speculation brought on the Panic of 1907. The depositors' funds were loaned to gamblers and anybody the Money Trust wanted to favour. Then when the depositors wanted their money, the banks did not have it. That made the panic.

Edward Vreeland, co-author of the bill, wrote in the August 25, 1910 Independent (which was owned by Aldrich):

Under the proposed monetary plan of Senator Aldrich, monopolies will disappear, because they will not be able to make more than four percent interest and monopolies cannot continue at such a low rate. Also, this will mark the disappearance of the Government from the banking business.

Edward Vreeland's fantastic claims were typical of the propaganda flood unleashed to pass the Aldrich Plan. Monopolies would disappear, the Government would disappear from the banking business. Pie in the sky.

Nation Magazine, January 19, 1911, noted:

The name of Central Bank is carefully avoided, but the 'Federal Reserve Association', the name given to the proposed central organization, is endowed with the usual powers and responsibilities of a European Central Bank.

After the National Monetary Commission had returned from Europe, it held no official meetings for nearly two years. No records or minutes were ever presented showing who had authored the Aldrich Plan. Since they held no official meetings, the members of the commission could hardly claim the Plan as their own. The sole tangible result of the Commission's three hundred thousand dollar expenditure was a library of thirty massive volumes on European banking.

Typical of these works is a thousand page history of the Reichsbank, the central bank which controlled money and credit in Germany, and whose principal stockholders were the Rothschilds and Paul Warburg's family banking house of M.M. Warburg Company. The Commission's records show that it never functioned as a deliberative body. Indeed, its only "meeting" was the secret conference held at Jekyll Island, and this conference is not mentioned in any publication of the Commission. Senator Cummins passed a resolution in Congress ordering the Commission to report on January 8, 1912, and show some constructive results of its three years' work. In the face of this challenge, the National Monetary Commission ceased to exist.

With their five million dollars as a war chest, the Aldrich Plan propagandists waged a no-holds barred war against their opposition. Andrew Frame testified before the House Banking and Currency Committee of the American Bankers Association. He represented a group of Western bankers who opposed the Aldrich Plan:

CHAIRMAN CARTER GLASS: Why didn't the Western bankers make themselves heard when the American Bankers Association gave its unqualified and, we are assured, unanimous approval of the scheme proposed by the National Monetary Commission?

ANDREW FRAME: I'm glad you called my attention to that. When that monetary bill was given to the country, it was but a few days previous to the meeting of the American Bankers Association in New Orleans in 1911. There was not one banker in a hundred who had read that bill. We had twelve addresses in favor of it. General Hamby of Austin, Texas, wrote a letter to President Watts asking for a hearing against the bill. He did not get a very courteous answer. I refused to vote on it, and a great many other bankers did likewise.

MR. BULKLEY: Do you mean that no member of the Association could be heard in opposition to the bill?

ANDREW FRAME: They throttled all argument.

MR. KINDRED: But the report was given out that it was practically unanimous.

ANDREW FRAME: The bill had already been prepared by Senator Aldrich and presented to the executive council of the American Bankers Association in May, 1911. As a member of that council, I received a copy the day before they acted upon it. When the bill came in at New Orleans, the bankers of the United States had not read it.

MR. KINDRED: Did the presiding officer simply rule out those who wanted to discuss it negatively?

ANDREW FRAME: They would not allow anyone on the program who was not in favor of the bill.

CHAIRMAN GLASS: What significance has the fact that at the next annual meeting of the American Bankers Association held at Detroit in 1912, the Association did not reiterate its endorsement of the plan of the National Monetary Commission, known as the Aldrich scheme?

ANDREW FRAME: It did not reiterate the endorsement for the simple fact that the backers of the Aldrich Plan knew that the Association would not endorse it. We were ready for them, but they did not bring it up.

Andrew Frame exposed the collusion which in 1911 procured an endorsement of the Aldrich Plan from the American Bankers Association but which in 1912 did not even dare to repeat its endorsement, for fear of an honest and open discussion of the merits of the plan.

Chairman Glass then called as witness one of the ten most powerful bankers in the United States, George Blumenthal, partner of the international banking house of Lazard Freres and brother-in-law of Eugene Meyer, Jr.. Carter Glass effusively welcomed Blumenthal, stating that "Senator O'Gorman of New York was kind enough to suggest your name to us." A year later, O'Gorman prevented a Senate Committee from asking his master, Paul Warburg, any embarrassing questions before approving his nomination as the first Governor of the Federal Reserve Board.

George Blumenthal stated, "Since 1893 my firm of Lazard Freres has been foremost in importations and exportations of gold and has thereby come into contact with everybody who had anything to do with it."

Congressman Taylor asked, "Have you a statement there as to the part you have had in the importation of gold into the United States?" Taylor asked this because the Panic of 1893 is known to economists as a classic example of a money panic caused by gold movements.

"No," replied George Blumenthal, "I have nothing at all on that, because it is not bearing on the question."

A banker from Philadelphia, Leslie Shaw, dissented with other witnesses at these hearings, criticizing the much vaunted "decentralization" of the System. He said:

Under the Aldrich Plan the bankers are to have local associations and district associations, and when you have a local organization, the centered control is assured. Suppose we have a local association in Indianapolis; can you not name the three men who will dominate that association? And then can you not name the one man everywhere else. When you have hooked the banks together, they can have the biggest influence of anything in this country, with the exception of the newspapers.

To promote the Democratic currency bill, Carter Glass made public the sorry record of the Republican efforts of Senator Aldrich's National Monetary Commission. His House Report in 1913 said:

Senator MacVeagh fixes the cost of the National Monetary Commission to May 12, 1911 at $207,130. They have since spent another hundred thousand dollars of the taxpayer's money. The work done at such cost cannot be ignored, but, having examined the extensive literature published by the Commission, the Banking and Currency Committee finds little that bears upon the present state of the credit market of the United States. We object to the Aldrich Bill on the following points:

Its entire lack of adequate government or public control of the banking mechanism it sets up.

Its tendency to throw voting control into the hands of the large banks of the system.

The extreme danger of inflation of currency inherent in the system.

The insincerity of the bond-funding plan provided for by the measure, there being a barefaced pretense that this system was to cost the government nothing.

The dangerous monopolistic aspects of the bill.

Our Committee at the outset of its work was met by a well-defined sentiment in favor of a central bank which was the manifest outgrowth of the work that had been done by the National Monetary Commission.

Glass's denunciation of the Aldrich Bill as a central bank plan ignored the fact that his own Federal Reserve Act would fulfill all the functions of a central bank. Its stock would be owned by private stockholders who could use the credit of the Government for their own profit; it would have control of the nation's money and credit resources; and it would be a bank of issue which would finance the government by "mobilizing" credit in time of war. In "The Rationale of Central Banking," Vera C. Smith (Committee for Monetary Research and Education, June, 1981) writes:

The primary definition of a central bank is a banking system in which a single bank has either a complete or residuary monopoly in the note issue. A central bank is not a natural product of banking development. It is imposed from outside or comes into being as the result of Government favors.

Thus a central bank attains its commanding position from its government granted monopoly of the note issue. This is the key to its power. Also, the act of establishing a central bank has a direct inflationary impact because of the fractional reserve system, which allows the creation of book-entry loans, and thereby money, a number of times [greater than] the actual "money" which the bank has in its deposits or reserves.

The Aldrich Plan never came to a vote in Congress, because the Republicans lost control of the House in 1910, and subsequently lost the Senate and the Presidency in 1912.

Ladies and Gentlemen: The US is Insolvent

A blog post Jesse submitted to his site on the 23rd.

So it's been a while. And I'm just trying to catch up with the posts here as much as I can.

Just some of my thoughts first.

This was kind of a "duh" moment for us here at the blog when President Obama said we were out of money. But this kind of statement has that inherent influence that is always carried down to mainstreet in a huge way. The Gold Anti-Trust Action Committee knew this back when Greenspan was Fed Chairman. Comptroller General David Walker of the Government Accountability Office has known about this as well. You have to wonder (at least I do) if this was politically timed for some reason yet unknown to the uninitiated. We can certainly see the fine hand of the conspirators in September of last year.

So here's the following piece from his blog: "We are out of money." Barack Obama May 23, 2009

Obama openly says what anyone with common sense has known for quite some time: the US is broke, and will not be able to honor its financial and fiduciary obligations.

The question remains how the US restructures that debt and how big a haircut the debt holders will take.

20%? 30%? More like upwards of 50% at least in real terms.

And who are these debt holders?

Anyone who hold Treasury debt obligations and financial assets, from the Long Bond to the US Dollar, and assets guaranteed by the Federal Reserve and the Treasury.

Technically the debt will be serviced and the interest paid according to the terms of the agreements, with devalued US dollars.

The process will continue until the debt is restructured and the dollar is replaced with a new dollar. This may take some years.

Didn't you just know they would spill it over a long holiday weekend?

Don't be too concerned, there will be more spin and denials after this trial balloon has been floated, and life will go on.

"Oh, that's not what Obama meant. He means we have a problem but there are the means and the time to address and repair it before it becomes too great."

People have an enormous capacity for delusion bordering on selective amnesia. Go back and read the posts on this blog starting in September 2008. Then reflect on what has been said recently on Wall Street and you will see what we mean.

We are now in the endgame of an historic credit bubble that will result in a currency crisis of epic proportions.

5/13: Rob Kirby - Forensic Examination of the Gold Carry Trade

by Ron Kirby

Forensic Examination of the Gold Carry Trade

Is There A Supply Deficit?

If you ask the World Gold Council or their “official numbers keeper” - GFMS – they’ll say there is no persistent gold supply deficit. If you ask the folks at GATA – they’ll claim there is an annual 1,000 – 1,500 tonne gold supply deficit.

So who’s telling the truth?

What’s interesting to note in this regard – the World Gold Council and GFMS haven’t always shared the same view regarding gold supply / demand aggregates. Empirically their positions, at times, have been ambiguously at odds with each other and have lacked continuity. Here’s how GATA consultant Frank Veneroso explained the disparity back in 2005;

“As I explained in the Gold Book, gold demand had been understated for years by GFMS, the ‘official’ keeper of the global gold statistics, as has been the flow of official sector gold. Official stocks were falling faster than the GFMS data would suggest. I presented abundant statistical information to make that case. We believe that the trend in the official data since then simply flies in the face of obvious facts and this discredits it further.

People ask us where we think supply and demand are now. Our standard response is that we don’t know, because the data available to us has become ever less reliable. In the old days, the World Gold Council produced a data series on gold demand for most (but not all) of the world. It was based on extensive survey data and it had no reason to be biased. It clearly showed a stronger trend in the growth of gold demand (excluding Western investment) than did the GFMS supply/demand statistics. For us it was an anchor that allowed us to see a growing error in the GFMS data (see the Gold Book).

In the 1990s GFMS was faced with a problem. From the late-1980s to the late-1990s, there was a growing flow of borrowed gold associated with speculative short sales, the hedging of central bank options and commercial inventory hedging, in addition to the well recognized producer forward selling. There were also some official sector liquidations that were not reported. These totaled to extremely large official supplies. For some strange reason GFMS refused to acknowledge most of these official supplies, particularly those associated with speculator short sales. This resulted in a gross understatement of annual supplies.

Unlike the World Gold Council, which tried to only come up with an estimate of demand, GFMS estimated both supply and demand. In the end GMS had to make their estimates of demand and supply balance. Because they were underestimating supplies to an increasing degree, they had to underestimate demand to an increasing degree to make these accounts balance. That is why the World Gold Council survey showed a stronger gold demand trend in the 1990s than the GFMS statistics.

Several years ago the World Gold Council decided to merge its statistical efforts with GFMS leaving us, in effect, with only the GFMS supply/demand estimates. It has been my opinion that the GFMS balances became so flawed by the end of the 1990s that they had become virtually worthless. Therefore, I’ve regarded the new World Gold Council/GFMS statistics in recent years as basically useless. We no longer have any anchor for estimating gold demand and supply.”

That Central Banks “swap” and “lease” gold is an undeniable matter of public record. The extent of this activity is not acknowledged by GFMS or the World Gold Council. We do know that it necessarily has been responsible for filling any and all recurring gold bullion supply deficits.

The bottom line is that Central Banks claim to “officially” have somewhere in the neighborhood of 30,000 metric tonnes of gold bullion in their vaults. However, the reality is that Central Banks possess LESS physical gold than they officially report – how much less is a matter of speculation and a closely guarded secret.

The following formula explains the mechanics of the Gold Carry [lease] Trade:



** Do not confuse the Gold Forward Rate [GOFO] with the Gold futures price – they are not related.

Now, we shall apply our lease rate formula to a “real world” case study where there is plenty of irrefutable evidence that gold leasing occurred; namely, in the aftermath of the Sept. 26, 1999 announcement of the first Washington Agreement on Gold – which was “sold” [as in a bill of goods, perhaps?] to the world as being ‘gold friendly’.

In the aftermath of the announcement of original Washington Agreement [WAG], announced Sept. 26, 1999, the World Gold Council reported:

“Lease rates jumped to 10% in the first few days after the agreement, and though they have fallen back, they remain at a still high level of 4-5%, more than two times the rate the 1-2% the market is historically used to. The market remains tight, with very little gold coming onto it.”

What Happens When Gold Is Leased?

When Central Banks lease gold, it PHYSICALLY leaves the vault and the recipient / borrower sells the physical metal into the marketplace to raise cash – to invest or to finance capital expenditures. In this regard, we can say that “GOLD LEASING” is a means by which physical bullion is made available in the market place – thereby lowering the gold price. After the gold physically leaves the vault of the Central Bank, it is replaced with an I. O. U. and the Central Bank, for accounting purposes, “double counts” by continuing to claim that they still possess the same amount of physical bullion in the vault. It is notable that fraudulent accounting practices relating to gold is promoted by lawmakers the world over. This is contrary to generally accepted accounting practices and promotes market opacity instead of the much talked about need for transparency. Explicitly, it serves to promote the supremacy of the fiat U.S. Dollar as the world’s reserve currency.

I’ve circled the 10 % spike in lease rates on the chart below:

Ladies and gentlemen, what the spike in lease rates above depicts is the INDUCEMENT that was required to get BULLION BANKS to accept the “ELEVATED COUNTERPARTY RISK” inherent in arranging further bullion loans since, in the days following the Washington Agreement, the subsequent rise in the price of gold weakened existing bullion borrower’s financial position and made repayment of their physical bullion loans a trickier proposition:



(Mister Goldbug - There is a table in the article that I can't figure out how to reproduce here so I'm leaving it out and skipping to the next part. Its a minor part of the article and I'm sure the author of the piece, Ron Kirby, would think it is important since after all he wrote it. Its for this purpose I'm including his website in this article so that the reader can, if so desired, sign up to his website.)

Now, let’s stop and consider WHO did the lending of metal in Sept. 1999 – expelling physical precious metal, intentionally at a loss, in the face of a RISING PRICE of GOLD. Remember folks, 3 month GOFO [the gold forward rate] is the return “earned” by the lender of bullion:


So ask yourself WHO would lend physical gold bullion to ANYONE with a guarantee that you would get LESS bullion back in 3 months????????????

Sir Alan of “I-looted-the-free-world” Greenspan gave us a good hint as to who might do such a thing when he twice testified before Congress in 1998 that "central banks stand ready to lease gold in increasing quantities [read: lose money] should the price rise."

Coincidentally, it is the lack of transparency concerning Central Bank gold leasing and the existence of double counting of gold stocks that, in Dec. 2007, prompted GATA to launch a freedom of information request campaign to wrest all documents from the Fed and U.S. Treasury in their possession that have been generated since 1990 and mention swaps of gold involving the U.S. government. Heck, even the I.M.F. admits that Central Banks double count gold, excerpted from I.M.F. issues paper # 11, April, 2006;

7. The current statistical treatment of gold swaps should be consistent with that of repos. The guidance of paragraph 85 (iii) of the Guidelines, which is applied to gold swaps by paragraph 101, results in overstating
reserve assets because both the funds received from the gold swap and the gold are included in reserve assets. While the gold is swapped, it cannot be the case that both the claims and the gold are simultaneously liquid and readily available to the monetary authority.

The United States of America claims to possess a little more than 8,100 metric tonnes of sovereign gold stored principally at Fort Knox, Kentucky, West Point, N.Y. and The New York Fed. The sovereign U.S. gold reserve has not been independently audited since the 1950’s during the Eisenhower Administration. GATA’s freedom of information requests are all about ensuring that the 8,100 metric tonnes of U.S. sovereign gold is still owned the U.S. and is where it is purported to be.

In April, 2008 the Federal Reserve responded to GATA’s request, releasing part or all of hundreds of pages of worthless information, but also claiming that it was withholding all or part of the information of about 400 pages of documents. The status of the withheld documents is currently under appeal.

These stonewalling tactics – with holding details - are eerily similar to those employed by Messer’s Bernanke, Paulson and Geithner refusing to divulge frank details as to “who” the beneficial recipients were of TARP and TALF funds.