Hidden Secrets of Money
by: Thomas Lee Abshier, ND

4/25/2015

150430, The Hidden Secrets of Money, reply to John Forster, ver 2

---- Original Message -----

From: John F

To:Thomas Lee Abshier, ND

Sent: Wednesday, April 22, 2015 5:31 PM

Subject: Re: Are you one of the 3 million?

The Biggest Scam In The History Of Mankind (Documentary) - Hidden Secrets of Money 4 | Mike Maloney

https://www.youtube.com/watch?v=iFDe5kUUyT0&noredirect=1#t=904

3 million have seen this video. This might be the best multi-media presentation to clarify how and why new units are created, and the apparent morality of it, especially for 1/2 hour.

Are you yet the 1 in a million that really understands how the local banks 'create' the majority of our money units?  Or are you still denying new money is created and defending its morality?

There are a couple things Maloney says (for simplicity) that are not quite right, technically.

John

To: John F.

From: Thomas Lee Abshier, ND

Date: 4/25/2015

Re: Hidden Secrets of money

John, I watched the video on money you recommended, (The Biggest Scam In The History Of Mankind, by Mike Maloney https://www.youtube.com/watch?v=iFDe5kUUyT0&noredirect=1#t=904 ).

• Thanks for reviewing it, wasn’t sure if it was your first time.

As you note, there are "technicalities" which are not correct, but you did not identify which points were flawed.  To my mind, the video had so many inaccuracies which were fundamental to its message/premise/conclusions, that I must put this "documentary" in the category of propaganda. 

Thanks for reviewing it, wasn’t sure if it was your first time.

• The one I was thinking of was their idea that insufficient money is created to pay interest, as if there was never any money for that. In practice, the bankers spend the profits back in to the money pool, and that much, at least would be available to earn and pay the interest with. There would still be pressure if the bankers are so “fat” as to “save up” substantial interest earnings and not spend them (all) back into the market. This would be pretty sophisticated analysis to offer General Public. I think I’ve only heard it mentioned one time by anybody.
• The other very common inaccuracy is that inflating money to make loans cheaper to the Treasury reduces the cost to taxpayers as if the reduced-purchasing-power-later money could pay off the old higher-purchasing-power-dollars borrowed years ago. In practice, wages (and thus – tax receipts) lag behind rising prices as the money supply increases. This means Government costs are going up, pressured by inflated costs rising, both for its own payroll (which rises higher and earlier than the rest of the market), the military and justice expenditures, and the increasing demands for wealth-transfer/entitlement/welfare payments as rising costs afflict General Public. So there is less gain on taxes coming in at the same time costs are rising. This is counter intuitive and only rarely do I read anyone that has “seen” this and can articulate it. Your imagination will probably clarify this for you if you work on it.

It is true that money units are created by debt to the Fed, and disappear upon the repayment of that loan to the Fed.

• You know me, I would have you prove this to me. I could only admit that they lie and pretend units are created and pretend that they “disappear”. They can/will not tell you what those units are of, and whether they are real or fictitious, true or false, existent or nonexistent. I am satisfied, reading the official publications of the Federal Reserve, and the work of the Austrian Scholars – that they all affirm this, that the whole thing rests on confidence in a lie, although they use gentler and more up-beat words in their descriptions.

Likewise, Fractional Reserve Banking (FRB) can increase the money supply by the allowance of loans that places money in circulation which would have otherwise been sequestered in the case of 100% cash reserves.

• This is the closest I think I have ever seen you come to admitting that fractional-reserve loaning by the Member Banks on the Corner does increase money units being reckoned in the system.

But, the most obvious/egregious and unquestionable dilution of the money supply is QE.

• Maybe. It is hard to tell anymore. When I marked the money supply back in 2006, out of some 15 trillion dollars reckoned in the world, roughly 1 tri was counted as being in the system in early 1970’s, 1 tri had been created by the Fed by loaning to Member Banks under Discount Rates, and 1 tri had been created by the Fed by loaning in the Government’s direction. This leaves about 12 tri to have been created by fractional-reserve loaning.
• When the Fed loaned 16 trillion secretly, (c. 2011) this may be supportive of your thesis, that direct Fed loaning is overshooting what Member Banks are “creating”.
• Another development, I believe is that the Fed can now directly “buy debt”, not just from Government, through Treasury Bills and Notes, but can fiat to virtually anybody: other banks (soaking up the relatively worthless loans they held on the books at face value), or Corporations.

As of 2008, with the acceptance of Quantitative Easing, the Fed can create unlimited monetary units for government expenditure. (Note: such creation of money was explicitly prohibited in the charter of the Fed.)

• QE is like the Social Security Trust Fund. There is no fund, it can’t be trusted, there is no security there, and it is anti social. Similarly, with QE, there are no quantities, and saying they are creating when there are not, and pretending to double, say, 16 trillion to the money supply without telling anyone, is not exactly “easing”.
• “Such creation” is also explicitly impossible in the way God made the universe. Anything that does not exist cannot be truthfully phrased as “created”. The fact that someone says something is ‘there’ or acts like it is there does not constitute proof. Please re-scan “A Beautiful Mind” movie again if it is not fresh in your mind.

The Central Banking System (while following the rules of its charter, i.e. without QE) does not necessarily/naturally/inherently/inevitably lead to collapse as Mike Maloney declares.

• It may be possible to have it not collapse. Only 100% of these experiments have ended this way, so far. If men did not have an old sin nature, if there were no Devil, or the constellation of semi-secret, oath-bound societies that he works through in his faux domination of the nations while the Church is still stumbling. We try to imagine that men could manage the quantity of money or interest rates purely for the Common Good. The problem is that God’s Law governs this area and prohibits Central Bank Function in several ways.
• Given the old sin nature and the goals of the men who set up this type of thing, and the obvious, expected reaction of a Holy God that is jealous about miserable human creatures claiming to do something only He can do, like create something out of nothing, I lack no confidence that the global national currencies we are seeing will all have a miserable end. Not to mention that the US Dollar has already gone through what could warrant the designation of “collapse “in 1900, 1913, 1933, and 1971. To those dates we could add the mythical “past-the-point-of-no-return” day where we realized that under no possible circumstances could the tax-payer manage to ever pay off the national debt.

• The Satanic nature of it can be shown by connecting it with the classic temptation-lies used in the Fall.

o       Has God Said? The world and ignorant Christians will try to tell you that God has not spoken on this subject. He has not mentioned it, or at least not condemned it.

o       You shall not surely die. You will not experience the consequences of violating any moral laws in this area if you are just careful and control it.

o       You shall be as gods, knowing (deciding) good and evil on your own, without God’s Word. As gods, you can create out of nothing. As gods, you can assign a body of men who own and control all the money in the world [they control its purchasing power by increasing or decreasing it’s quantity in the marketplace]. You can decide with your own reasoning powers whether such a plan is good or evil.

• The Satanic nature of it can be shown by how it steals, kills, and destroys. Fiat & Fractional is essential to- and always accompanies Group-Ownership models, like Socialism, Communism, Fascism. These operations cannot fund their programs long-term on taxation alone, they need more cloaking and secrecy. This is provided by the debasing inflation-tax. Both the taxing and the inflation steals, kills incentive, and massively destroys lives by the many wars fomented which the bankers use to encourage acceptance of taxes and debt. “Destroys” is manifested by the failures to responsibly produce, because people are coddled by cheaper debt and transfer payments, plus the massive property destruction of the wars.

Rather, the problems with Central Banking are more subtle: there are unavoidable distortions in the value of money due to the fact that a few men make decisions as to how much money will be loaned into circulation, thus the ratio of the quantity of money to goods/services is based on the whims, judgments, and agendas of men.  

• Unavoidable is not the issue. There are billions of factors affecting the relative price of goods and services that spill over across every nation and every commodity and every type of work. Every patient/client you serve “Inflates” the supply of naturopathic services. An infinitesimally small amount, granted, but push out the though-experiment – double the amount of hungry, capable Naturopaths throughout the civilized world. The hourly consult fees you ask would have to go down somewhat due to the increased competition for customers (other factors being equal). But this could happen without any human violating the spirit or letter of God’s law. It would a God-thing, not a human sin or crime. No one is pretending to have the attributes unique to God, like creating out of nothing. In the same way, if new mining technology was perfected that could detect marketable precious metal deposits in the earth, down as far as economically as miners could mine it – the costs of unearthing silver would go down, quantity of silver in marketplace would go up, and Spot would go down due to that greater supply. Inflate the money, increase the price, inflate the good/services, decrease the price. Either of these could happen w/o sin. But if government breaks God’s law and lobbyists get the government to work up license restrictions, taxes, regulations, etc. providing “barriers to entry” or increasing costs of doing business, the provision of goods/services in a specific sector could decrease, and the price would go up due to “deflation” in what is offered for sale. So changes in “prices” or “value” relationship between money or Stuff is not the point, but whether God’s law is broken. It doesn’t matter whether the changes are wrought by one man, a few men, a majority, or all men, the question is, are they in conformity to God’s law. It doesn’t matter how much money is loaned, provided the ownership of the money, the substance of that money, the measurements of it, and the count of those measurements are not distorted by dishonesty. However, when you say “loaned into circulation” we are specifying our modern version of the failure of the national government to punish the Federal Reserve (central bank) corporation for theft by deceit when they lie in saying there is money there to loan, when there is not, and that the money belongs to them (thus justifying charging interest) when it doesn’t.

Your attempt to make money "honest" must accommodate/include a very important consideration: the value of money is inherently subjective, and it cannot be otherwise.  (Any time the value of one thing is traded in representation for the value of another thing there is an element of subjective/individual-based judgment of the value of each of the things in trade -- both the money and the object of trade.)  You can define the value of the dollar as x grams of gold (as per the coinage act of 1792), but you cannot define the value of gold other than by its subjective value in trade for actual goods and services.    

• It is not like something used as money can be “made honest”. A potential trader is either honest about the ‘something’ he is offering or he is being dishonest about some aspect(QMS) of the money or Stuff he is trading.
• Amen, and amen. We are preaching the same sermon on that attempt at defining “value”. There is no “target” that would be just or righteous to “hit” if you were trying to manipulate the price of any or all goods and services. Just like JP Morgan cannot know how many “paper” ounces of silver, or silver futures contracts to sell so that the right/best spot-price of silver is registered in the “free” market.
• Hopefully, you can see how this would make it impossible and harmful for any governing body to try to control prices. They cannot control what people would trade for something without controlling the people who are trying to trade.
• Your use of the word, “value”, in talking about the coinage act did fulfill what the Constitution means by “regulate the value thereof”. It did refer to quantities of a measure, and nothing about what anyone would willingly trade of any particular amount of gold.
• BTW, the 1792 Act defined the dollar in terms of the substance – silver – not gold. Gold didn’t define the dollar until 1900.

This subjectivity is not eliminated whether using gold or other physical substance with commensurate trade value that has Quantity/Measure/Substance (QMS).

• You are right about this. Our definitions and discussions are not about what people will be willing to trade for either substances or a deceitful impression of a substance that does not exist. Obviously the operations of imaginary, substantial inflation of global money stocks does change the trading decisions about what people will trade for a unit of that depreciating money. But our concern at this level relates to what we are using as money – if the passers and utterers and issuers of this money are being dishonest or not in the technical statements they make and the impressions they give by their actions and vocabulary. If you say “owe” and “borrow” and “pay”, and “deposit” and “out of the bank” – the definite implication is that all of these verbs had a direct object. You are borrowing some thing.

Paper money and electronic money has QMS, but its subjective trade value is not commensurate, thus paper money cannot be so simply dismissed as being "imaginary".

• It is well to remember, at the technical level where we are trying to hammer-out definitions – that the paper representatives or the electronic records are just pointers to the “money”. There is such a thing as a paper representative / claim-slip / certificate for some thing that really exists that could be used for money. The old Silver and Gold Certificates were such a thing. We might refer to them as paper money, but the paper was not the money, but the silver or gold coins. In your sentence above, the paper and arrangement-of-electrons certainly have existence, a definition, and reality, they are THINGS, but we are just using them as a record – a representation or pointer to a quantity owed – But today, since the old redeemable paper money has been defaulted on, there is absolutely no definition of what it is we are counting (quantity) – nothing that we are representing or pointing to -- that we are saying is owed. We are not saying what is owed. Let me say that again. We cannot define/say/put-into-language what is owed because it does not exist. If it did exist and could be defined and the Fed system (I am including the Regional Branches of the Fed, plus all the member banks like the Wells Fargo on the street corner) was creating this out of nothing – that is when we have this huge religious problem because we have a different god.

(The conventional trade value is “imaginary” in the sense that people attribute value to an object that would not have that value without the requirement of law.) But, even in the case of actually valuable goods/services, "value" can never be defined uniquely with any QMS, since value is an inherently metaphysical process determined by the subjective valuation of each man.

• I think you are continually confusing yourself by mixing these two distinct meanings for the word: value. Value can be part of an objective definition of an object. When Constitution said, “Regulate the value thereof” it meant defining the silver dollar as having more or less grains of standard silver for the coin size. In this usage it is tied to units of a measurable substance. But when it comes to the ‘worth’ usage, yes, we are in the subjective realm of human decision. Men can “value” both [substances / definable things that God has created[, or [they can believe a lie and be valuing something (idea only) that is not there, and cannot even be defined by men in language]. There can be a vague, implied idea which – when you drill down, unpack, analyze – you discover that it has no definition or existence. Think back on how people valued the Swiss Franc and the Euro partly because of the lie of the Central Bank that they were going to maintain the trade value between the two. This was a couple days before they defaulted on their promise. Because people had believed a lie, they valued some units and were harmed by it.
• It is always a consideration whether what you are using as money might be affected by future developments in the economy, so that its trade-value will fluctuate more or less. This is not what we are talking about. We are talking about immorality and dishonesty in what we are using for money. I would differ and say that the meaning of value is how much people will trade for what they perceive as money, whether that faith is in truth, or in a lie is a very real thing and not imaginary. It certainly does not have physical mass like many of the things we might use for money, but the belief can be defined and identified as a real thing. It is there (the belief that the USD, or any of the other fiat currencies of the Globe will be accepted in trade by others) or it isn’t. It can be falsified or verified.

When we examine paper/electronic money in terms of its objectivity, it is obviously a poorer representation, more indirect, more metaphysical/subjective representation of value than gold.  

• Given the above discussion, can we agree that “representation of value” is not going to be a useful term. We cannot, ever, accurately represent how a potential trader will value a lie or something true. What we can do, however, is accurately define substance.
• On paper/electronic money: It is well to remember, at the technical level where we are trying to hammer-out definitions – that the paper representatives or the electronic records are just pointers to the “money”. There is such a thing as a paper representative / claim-slip / certificate for some thing that really exists that could be used for money. The old Silver and Gold Certificates were such a thing. We might refer to them as paper money, but the paper was not the money, but the silver or gold coins. In your sentence above, the paper and arrangement-of-electrons certainly have existence, a definition, and reality, they are THINGS, but we are just using them as a record – a representation or pointer to a quantity owed – But today, since the old redeemable paper money has been defaulted on, there is absolutely no definition of what it is we are counting (quantity) – nothing that we are representing or pointing to -- that we are saying is owed. We are not saying what is owed. Let me say that again. We cannot define/say/put-into-language what is owed because it does not exist. If it did exist and could be defined and the Fed system (I am including the Regional Branches of the Fed, plus all the member banks like the Wells Fargo on the street corner) was creating this out of nothing – that is when we have this huge religious problem because we have a different god.

• There is this problem. There is no covenant or contract possible when there is non-existent money. There is nothing promised on the other side of the trade. No promise, no covenant.

• If you are loaning or borrowing, or trading a substance, you know what you are working with, and can measure it, and can verify or falsify whether or not the contract has been fulfilled or violated. With fiat/imaginary money, none of these is possible.

• You also might consider it has is value before people because of faith in a lie. You shall not know the truth, and that ignorance will make you a slave. Or you shall know the truth and the truth shall make you free.

Gold, when used as a measure of the money unit, has a trade value that seems tied into man’s deeply held sense of value (not unique and identical for all men, but sufficiently so as to easily converge in trade). Gold has a solidity of value that cannot be equaled by fiat money.  

• To say “Gold, when used as a measure of the money unit” is to say, “Substance when used as a measure of one unit of the substance”. I can’t make sense out of it, if you are meaning gold is the substance. If gold is not the substance, we need to define what substance we are using for the money. Originally, gold was given a face value relative to the silver substance we were defining as money in 1792. There was a fixed relationship at one time, and perhaps you were referring to an arrangement like that. It did prove to have some disadvantages, as it turned out. But the fact that folks are willing, at various times, to trade certain amounts of non-gold-substance money for gold, does nothing to inform us about the substance we are using for money.
• The discussion is not about the value of anything, but the substance. Value will orient to substance just fine without our help. Our concern is the tell the truth. We cannot know or publish value, because we are not omniscient over men. This is why your Global Accounting Team tracking all prices of everything worldwide to feed to the NWO Enforcement Team so that they can spank all the bankers that create too much money or not enough money and so let overall prices rise or drop – get punished properly, so that men might hear and fear…..it is why that will never work. In truth, men value the substance of gold fairly consistently, but primarily because the quantity in the marketplace only increases slowly similar to the general rise in productivity. Big mining discoveries can cause local, temporary distortions, as we have already observed.

The problem with fiat/paper/electronic money is that there is no labor expenditure commensurate with its trade/face/nominal value.  

• You are missing the problem, that the fiat/paper/electronic “sayings” or “writings” that point to-, or represent what we are using as money, is that there is nothing we are using as money for these to point to.

• If you are loaning or borrowing, or trading a substance, you know what you are working with, and can measure it, and can verify or falsify whether or not the contract has been fulfilled or violated. With fiat/imaginary money, none of these is possible.

• Also, be very careful, about tying labor to the substance we are using as money. This is an old, long-debunked Communist trick that obscures helpful reasoning. We have already proven that men value things differently. Labor is valued off the charts hi or lo even more than commodities. I have never worked with anyone who was ‘worth’ the same amount, as far as their labor was concerned.

In other words, paper money is not inherently scarce.  As such, paper/digital currency is not an economic good in itself, whereas, gold (with weight defined as the unit of money) is an economic good by its own existence.  Paper/electronic money is scarce, only when artificial restrictions are applied to its production/circulation, according to men's will.  Trading a scarce item for a potentially non-scarce item is obviously fraught with potential for inequity in the trade of value for value.  The use of fiat or token money adds an additional layer of uncertainty in the trade, as there is both subjective valuation of the object of trade, and the thing being used as the intermediate carrier of value.  

• The additional risk, is that you are facing the threat of your trading partner, or his trading partners discovering – before you want them to – that the money you think you are trading is not there. It is also true, as you say, that token money does present an element of risk that it will not be redeemed for the thing it represents when you desire it to. See History of Money In the Human Race for details.

>>Prior to the acceptance of QE as a legal Fed monetary policy, the Fed could not expand the money supply by loaning to the government directly.  

• Not sure why you say this. The Fed could loan money to the Treasury out of nowhere anytime between the Reserve Act of 1913 up to the “acceptance of QE”. One thing that IS different is the legal freedom the Fed now has to conjure money for anyone besides the Treasury (like 16 trillion to EU banks).

Now that this restriction has been accepted as an acceptable Fed monetary intervention, the system can allow the government to easily spend more than its tax revenues and economy-funded bonds, a policy which could create collapse by hyperinflation.  

• Certainly helps. But remember, the Fed can also create loans to banks under Discount Rate operations. I don’t think these are reported on their “balance sheet” which has grown from 900 billion to 4 trillion in the last few years. The fractional-reserve loaning by member banks which inflates the money supply (which you still deny, I know) is certainly not included in the balance sheet. You never have explained how we had 1,000 Billion dollars in the early 70’s, and have tens of trillions of dollars in circulation now with under 5 trillion known to have been hypothecated into existence by Fed Central NY.

But, QE is not the issue raised by the video.  Nor is it your consideration of the morality of debt-based money.  I am totally in agreement with the concept that fiat currency has within it the potential for men to manipulate its perceived value. And, that such manipulation can be done to benefit a person or group, and if so done, there is moral culpability.

• Morality is the key. At this stage of affairs, self-interest consideration in this environment is so strong, the population will never do the things that pull out of the “dive” unless there is a moral imperative to do it. There has to be a “must”. A tiny minority will have to suffice. If there are 10, Sodom might be saved……for awhile. We are talking about sin and crime. God is creator and judge, He has a law. His universe will function in a lawful way according the nature of what He has made. This is true morally as well as physically. Crime covers an area where we share social responsibility to kill, divest, and coerce other men when they do certain behaviors. We are not just talking about some philosophy that might be a good idea, or one path might be better than another. There are real consequences if we refuse to participate in killing the right capital criminals, forcing the right thieves to pay their appropriate restitution to the victims of theft, and recompense tooth for tooth appropriately for the miscellany that doesn’t obviously fit in the capital & theft areas. What will God do to us if we refuse to participate, if we shrug off our duties and allow the innocent to be hurt and the guilty to be rewarded without proper consequences to their evil actions?
• And there are two fields of moral issues. One before God. One among men. Only God can create out of nothing. To think/talk/act like sinful men can do this, such as creating money, is to deify man and thus offend the creator. In away, misusing any part of Creation, or violating His law with our person and our stuff – is theft against God. Against men, are all the other obvious crimes visible to all men, that the alternative media scream about, day upon day, without ever hinting at societal responsibility or consequences of judgment from a good God.
• Manipulating the quantity, and thus ‘price’, of money is offense against God because of the creation issue, and against God because of how its operation aggregates the global control over nations and families in a way only becoming our Lord Jesus Christ. You should be able to deduce from the scale of our own NY Fed operations worldwide, to recognize that this is a “god-class” offence.
• Jiggering with the purchasing power of money by violating God’s laws is also an offense against man, because is steals from men, and confers such powers of a small group of men over media, communications, education, law, military, medicine; that even more damage than simple theft of money or property ensues in the form of wars and economic disruptions. Once an operation like this allowed to start and grow, it is also unknowable and untraceable by any but God.

If there is honest misjudgment of the effect associated with a rise or fall of rates of interest, the moral significance of the Fed and its policies falls more toward the natural consequences of ignorance, foolishness, error, and idiocy. The answer is, yes, there are potential and inherent effects of operating a system without a commensurate value QMS money.

One point of contention raised by the video is the morality of the Fed and Primary Lenders extracting an interest fee for loaning money that was created out of thin air.  This is a valid criticism.  The basis for declaring such a practice "immoral" is the fact that the Fed and the Primary Dealers are able to acquire monetary units without engaging in competition for those units.  

• Correct. There is this legal term “consideration”. When there is a trade, the Fed gives up something, as if it had money of it’s own that it is going to lose the use of during the term of the loan, and the customer gives up something the Fed earns: Interest. Since the Fed is giving up nothing, because it does not “have” the money it loans – it is giving no “consideration”. It is getting something for nothing. Yet you deny this is also happening under fractional-reserve loaning at the local-member-bank level. I believe it is.

In effect, the morality of this fee is based upon fairness, choice and free-market based pricing of a service.  If the process of issuing monetary units was left up to the free market, the interest/fees charged by the Fed and Primary Dealers would quickly drop to vestigial levels, as competitors willing to take less interest/fees for their service would quickly lower the price of newly printed money.  

• Remember how anyone else who tries to loan money out of nothing goes to jail for stealing. The only reason Fed employees do not, is because Congress claims [WE OWN EVERYTHING] therefore, we can turn over that title to the FED if we want to. This is an offense against the Person and Work of our Lord Jesus Christ Who owns all things by virtue of Creation, Redemption, receiving gifted inheritance from His Father, and winning it from the enemy in a fair fight.

The interest fees charged by the Fed/Primary Dealers are a distortion in pricing enabled by the government enforced monopoly of the Fed in allowing it sole authority in the assigning of interest rates to the loaning of new monetary units into circulation.  The current Central Banking system of controlling the expansion/contraction of money by changing the cost of money, results in an economy with hybrid of prices controlled by government and free market valuation.  QE aside, monetary policy based upon the control of the Fed's rate of interest is not a type of market distortion (of the public trust in the value of money) that will (within normal rates and excursions) create a hyperinflation collapse of the monetary system.  Rather, other factors such as government policy/rule/law that mandate/enforce distortion of the market (with a subsequent rapid renormalization of valuation to reflect actual market sentiment) are required to precipitate such disastrous economic conditions.

We could simplify this entire discussion by noting that the market would not support many of the decrees of government:

1) the declaration of the interest rate for loaning new money into existence,

2) the restriction of primary dealers to an authorized list,

3) the declaration of a particular currency as bona fide,

3a) criminalizing the production of monetary units containing actual gold/silver...  

• I think what you mean is that Justice would not support this, or that it is contrary to God’s Law. Obviously the market is tolerating all of this.

We can call it unfair that the Fed is getting paid huge amounts of interest for creating money out of nothing by loaning it into existence, noting that other people must work hard and long to come into possession of the same number of monetary units.  But, we may remove all reference to absolute judgment of the Fed (i.e. God's morality and judgment of their acts as theft) by simply noting that the interest on money that they loan into existence can be scarcely justified by any free market valuation of that service.  (In this case, both the market and God roughly agree.)

• Because of the “consideration” reference above. The Fed System (including Member Banks) never has to do anything or trade anything to acquire the money it loans. When it loans, it does not have to give up the use of anything during the course of the loan. It does not have to consider how much less the money will trade for after the principle is paid back. When anyone else loans anything, all these factors must be considered.
• Another thing beyond what we are talking about: If we had followed the proscription against a “brother” receiving interest on the loan from a brother, as the Torah prohibits, we would not be in this mess. If a Christian loans money to another Christian, no interest could be charged. This is not-at-all fair in an inflationary environment, but it Christendom would have obeyed this, we would not have fiat money and fractional-reserve banking. A Christian would not have borrowed money from a non-Covenant-Member business, called a bank, at interest, because it would be a greater offense for a Christian to be bearing the symbol of slavery to unbelievers. Interest, is what non-Christians pay to Christians in order to be a witness to the spiritual slavery they are under, and to bring them under a healthy spiritual influence with a view to their conversion. If this principle would have been followed, the world’s banking houses would never had taken over the nations.

In contrast to the interest charged by the Fed, the interest the primary dealers charge for money that they borrowed from the Fed is somewhat market-based.  Still, the Primary Dealer club is restricted to those authorized by the Fed, and as a result, the interest charged for loans would probably be much different if regulated by free market competition for rendering that service.  At each step in the loaning process, the loaned money acquires more reality and market-based justification for the interest/fees charged. As the money gets farther from the Fed and the Primary Dealers, more actual services must be rendered to justify the fees/interest charged: e.g. sales, accounting, management, collection, ownership of physical plant to support the operation, etc.  

Even FRB has a free market equivalent.  The bank which wishes to loan out a larger portion of its deposits will be less secure, and therefore attract fewer depositors willing to trust their savings and income to the bank for its care.

• True, if anything was deposited, or anything was loaned out. What really happens is that what is called a loan, is actually a deposit that is reckoned into a checking or savings account credited to the borrower. When you consider all the Member Banks as a unit, the loaning-out never decreases anyone’s checking or savings account, but only increases someone’s checking or savings account. So what does it decrease? Nothing. The decrease happens as the borrower pays back the loan. That is where the money disappears. I will soon need to take out a bridge loan to break ground on our new house, because our house will not sell quick enough. I can borrow from someone who will give up the use of their money until I can pay it back, or I can get it from a bank who will just add $20,000 to my checking account so I can pay contractors and thus increase the money supply and help rob all the other dollar-holders in the world. But the bank will be so much cheaper. I will probably have to pay my private borrower at least 7% (Shadowstats.com) just so he doesn’t lose purchasing power until I can sell my house and pay him back.

But, Maloney does not present a Free Market issue.  Rather, he uses alarmist, and unrealistic models to declare that FRB is the source of the potential collapse of the monetary system.

• I think what collapse means is that a critical mass of users will finally stop trusting in the lies and start believing other lies, or the truth about a new quantity of measurable substance that will be used for money, like the 600 or thousands of ideas that have been used for money in the past.
• A person could argue that the monetary system did already collapse in 1971, or in 1933. If it is illegal to have a dollar (1933), what good is the money?
• If it is not possible to have a dollar (1971), get a dollar from the bank, or deposit a dollar in the bank – What good are the banks?

He notes, that on a theoretical level, where all depositors deposited all their money in the banking system, and kept it there forever once receiving it, that the amount of money loaned out would increase 10x with a 10% reserve requirement.  

• The multiplier effect is an imaginary upper limit that could be reached if all the banks loaned out all the money they “could” under the reserve requirements. Having worked through the logic multiple times on how this works, both for the loaning branch, as well as the Federal Reverse System as a whole – there were some surprises. Only rarely will you read someone who has caught this implication. Maloney may know this, but uses the lesser explanation so as not to scandalize and offend. If the home bank makes you a loan it works like this: If loaning you the money puts them over their reserve limit based on how much reserves they have vs. loans, they will have to borrow from another bank or the Fed to meet requirements at midnight when the banks talk to each other. But at midnight, the deposits are reckoned as well, not just the loans. So the question is, If they have loaned you the money, is that money not counted as a deposit on your account? As such, it will be either in the home bank, or you, or the person you have traded it to, will have deposited it in another bank. The instant the loan is made, a deposit is also made.
• Your phrase was “kept it there forever”. My point is that dollars can’t not be kept in the bank. If the bank doesn’t say they owe you on a statement of your account with them – you do not have a dollar. When you are holding FRN’s, Fed Central has an account that was increased when home bank “bought” the notes. Those dollars represented by your bills are in a bank, just not any of the member banks, they are “at” the Fed. Whichever bank sends them back down the chain to Fed NY, they can redeem the dollars used to purchase the bills in the first place.
• Your loan consists of the increased balance on one of your accounts. You cannot take this money “out” of any bank, you can only have your bank boost how much they (or another bank) say they owe someone else while they decrement how much they say they owe you. The “switch” does change the “Owe-Say”, but you didn’t take any dollars “out”.

Obviously, this scenario is unrealistic.  The banks, by regulation, may only loan out 90% of the money that is left in each account.  Obviously, it is unrealistic to assume that the money supply will expand 10x by the deposit of every dollar into the bank. Likewise, it is the balance left on deposit, not the amount that flowed through a bank that can be loaned out.  More realistically, the amount of money in circulation increases due to the FRB loaning of the residual amount of money left in savings for long periods of time.

• If you followed the above logic, you will recognize that, after every loan, there are more deposits which increases the reserves, which increases the amount that can be loaned. This means there can be limitations on an individual branch, or Member Bank, but not on the system as a whole. One man’s debt is always represented by his own, or another man’s deposit somewhere in the system. Not only is every loan, a deposit somewhere, there is no dollar anywhere except that our present banking system (since 1971) has loaned it somewhere and it hasn’t been paid back yet. Obvious we can’t trace any particular dollar – we can only speak in generalities of the total dollars on accounts in world banks.

The alternative solution is often presented, to return to gold-as-money (currency redeemable by gold, physical gold as units of trade, dollar pegged to the gold in reserve, etcetera).  Such a solution would prevent government from spending more than it receives in taxes and bonds, and prevents banks from loaning more than they have in deposit.  In a physical-money-based system, money can only be expanded at the rate at which gold (for example) is physically extracted. This is only significant because it slows down the rate of money expansion to the rate of increase corresponding to energy/work expended.  

By contrast, fiat money has no limit to its expansion, other than men's will and the associated laws he imposes upon himself.  On the other hand, gold-money places a natural restriction on the rate of expansion of money, as the ability to dedicate resources and energy to extraction of gold is driven by market forces, (e.g. as money becomes scarce, the price of money/gold rises, and more resources will be dedicated to extracting it).  Thus, with a gold-based economy, we have a natural market-based governor placed on both the price of money and goods/services.  If Maloney et al were to argue for the beneficial nature of gold-based money, I would applaud.  But, as he presents it, his arguments are half-fact emotional phantoms that will harm the movement toward the establishment of actual commensurate-value-based money.

• I never have understood what you mean by “value-based” money. What is wrong with being honest about the substance? Isn't honest-based money sufficient? We don't need more technology, we need honesty and justice, double-restitution enforced for theft. I don't think we will get it until the prostitute gets out of bed from the civil government and returns to Her Husband, re-embracing Him and His laws.
• Malony professed to have a project now to develop some kind of exchange of honest measures, but I haven't checked it out yet. Don't think it will be for real.

The problem with public debt is that the government takes control of expenditures in the market, and skews the productive capacity of the market.  The type of demand on the market changes when government makes expenditures; the market responds by devoting more productive resources to meeting the demands of government vs. satisfying the demands of the individual. The problem with such skewing of the market is that people may not be motivated to work and be productive to purchase such goods and services – i.e. malinvestment.  

• Heavy on the “may not be motivated”. You know my solution: get Christians to refuse the dishonest gain. If Taxing Authority is offering a handout, protection, regulation, subsidy, a job or anything that is not legitimate use of tax money – they need to refuse to become partner with a thief. If everybody wants the Taxing Authority to tax everybody else, just so that they can get a perceived benefit, you cannot stop the whole system from being destroyed.
• This would all be true even if every dollar collected went to a “worthy” recipient who needed it and the wages of the bureaucrats who distributed it. But when you consider the “morally-neutral”, massive amounts of waste and the positively harmful operations (like the damage to productive motivation) – boggles the mind.

There is a spectrum of desirability in government expenditures.  As per the Constitutional intent, government devotes small amounts of the total economy’s productive capacity toward provision of justice and defense.  Few object to such expenditures.  But, the progressive/liberal agenda of directing men to be equal in terms of income and opportunity results in more social activism-expenditures.  As a result, the market suffers a distortion.  Men become addicted to the transfer of wealth from producers to consumers, and government-authorized expenditures: e.g. research, public works, large projects (NASA...) education, healthcare, welfare, retirement, etc…  

When the tools of production are directed toward producing goods and services not requested by the public in the market, the allocation of productive capacity suffers a distortion von Mises calls "malinvestment".  

• Money, time, resources are wasted. They guess wrong about what customers are willing to pay for. This is sad and doesn’t glorify God as well. But as long as it doesn’t steal….Does it steal?

While government policy may not appear to be the basis for shaping the economic forces of collapse and an immoral (non-market-based value of money), the most pernicious effect of government is its power to direct expenditures, and shape all social institutions and the minds of all who populate its borders by edict.  

• First, people have to imagine that the created government has such authority and power, which they must if they refuse Messiah.

Collapse by hyperinflation in a fiat-money based economy can come by:

1)      QE: QE is the general terms for printing money by the government to directly purchase goods/services in the economy. In this scenario, the Fed prints (loans into existence) unlimited fiat money to directly monetize government deficit spending.[Note: the seeds for collapse (significant inflation) by this scenario have already been planted and only need to come to maturity. The trillions that have been put into the monetary system, by QE 1/2/3 need only come into the marketplace to significantly lower the value of the dollar. The sequestration of that newly printed money inside the banking system (i.e. not loaning it into the public because of the higher rates that could be made by keeping it as excess reserves), has prevented the rapidly increased supply of money from collapsing its value in relationship to the supply of available goods/services.]

• Wish I could persuade you to more accurately refer to the corporation which increases the money supply. You come by the inaccuracy honestly. Almost everybody says it this way, along with that other Bane of My Existence: “printing money”. Even Ron Paul shocked me the other day:

"Frankly, bankers are just as helpless as anyone else to stop the government from printing money."

• If your audience knows you mean that you are classing the FED as a government agency, and that Congress is responsible for their creation -- this might be partly excusable. But I think it is all wrong. The 1913 Congress that voted in the Federal Reserve Act had long been a wholly-owned subsidiary of the international bankers. The Fed is not under Congressional control. Government does not own the Fed. The Treasury does get any crumbs of any profits left over of profits the Fed makes (after they have recorded all the unaudited expenses they want to make). It should be very obvious to anyone watching the media in the last decade that there is no accountability by the Fed to Congress. When I heard Ron Paul say this, I am seeing Hank Paulson, threatening Congress with economic Hell if they refuse to pass the bill authorizing the Treasury to borrow $787 billion dollars in order to bail out the banking system, which was obviously short of funds at the moment. Wiki says, “The Secretary of the Treasury earns $191,300 per year.” And that Paulson was averaging 6 million per month as CEO of Goldman Sachs in one of the last of his 32 years with that outfit. I wonder where the loyalties of Henry Paulson really lay. I wonder where the Treasury borrowed the extra money from.
• Point of fact is, Only the Fed System can “create” money to loan. The Treasury can borrow money from anyone it wants, but only at the interest rate the loaner demands. They all have to keep in mind how much that money will buy when the government has to go deeper in debt in order to pay them back. They had better be charging pretty steep interest to compensate for the inflation of the money supply which is pushing costs to rise about 7-8% a year. “Allow”, is not quite the right word, when the Fed offers credit to member banks and their selected partners at 0-1.75%, and the Treasury can borrow through the help of the Fed anytime: no wonder folks can only get 2%, at best, on a ten-year Treasury note. Don’t you believe the Fed can loan cheaper when it is the only player that does not have give up the use of money that it has, in order to loan out (and by “fed” here, I mean the entire system, including Member Banks)?

2)      Excessive debt: Excessive is subjective concept, but real in the sense that it occurs when those who loan believe/perceive an inability of the government to pay the interest on its loans. In a normal market scenario, there is a rise in interest rates associated with increased risk, and an associated reduction of the ability of the government to fund its debt by the sale of notes. But, Fed Policy, Reserve Currency status, agreement between central banks, habit, etc… have allowed the continued large borrowing from other economies, to fund deficit spending. Faith in the US economy and currency have made US debt a desirable/perceived-secure asset. But, a number of scenarios could result in a sudden shift: a) loss of status as reserve currency, b) EMP/war/terrorism, c) a debt bubble collapse – housing, student loans, unfunded liabilities. As the % of debt to GDP, or Debt to Tax Base increases, there is the potential for a trigger to precipitate a sudden phase change (i.e. rapid loss of confidence in the exchange value of the dollar). If the world’s economies perceive that the interest on money they have loaned would not be paid, the exchange value of the dollar could suddenly drop. Given the peg of the world economy to the value of the dollar, it could create world economic upheaval. While the peg of the dollar to gold was probably responsible in part for the Great depression.

• Remember what happened in 1933. Suddenly, it became a crime to have money. Citizens had to turn it in for “notes” that said the bank owed them those units of the money legal at the time (dollar = 1/20^th of an ounce of gold, or so). You could henceforth be owed money, but you could not have money. If you scale the then-extant fine of $10,000 and take 500 oz of gold today at $1200/oz, that is something like $600,000, but of course, the purchasing value of what $10,000 could buy then could translate very differently than that today. Or you could get 10 years in jail or both. Only after every one had stopped thinking of money-as-substance, and were comfortable with it just being an “owing”, was this decriminalized. Seems like no one being able to have money might cause depression.

(2      Cont.)A free market, and a gold-based money, would prevent many collapse scenarios. Since fiat money has no inherent trade value, only value by agreement/contract, a loss of faith in the ability of the contractee to honor its terms, reduces the value of the note – money in this case represents trust in the honor of contract.]

• My responses here have to refer you back to our conversations where I recommended many questions to help you think through how all this “contract to produce” is not related to the fiat mechanics nor to the essence of loaning and repaying. What you borrow and repay is what I am talking about. I still don’t see why what you do with the extra owing the banks say they are doing to you – has any bearing on the perceived effect of more “money” in circulation and how it affects purchasing power, ownership, and substance. You need to more thoroughly think through this yourself, or get help from others. I have done my best to offer helpful questions to help you think this out better.

3)      Market Distortion: The dictates of governmental law can create much economic mischief by distorting the market. Laws cause the market to reallocate resources far removed from those naturally exerted by the market. Such misdirected government laws and their associated expenditures include: a) regulatory mandates, b) taxes to pay for the lifestyle of people who are not producing, c) wars (for ego/pride/expansion/oppression…), d) etc. When government mandate becomes far removed from the undisturbed market pressures, the populace may lose motivation/incentive to produce, resulting in stagnation, deflation, and recession/depression. Government’s intervention in the market can produce both inflationary and deflationary scenarios. In general, market disturbance sufficiently removed from market pressure is bad/invasive/intrusive, and the market responds with disinterest to the goods/services produced by such malinvestment.

T.

• I think every man who can both think and walk at the same time has already figured out the Treasury can never “pay its debts” except by incurring new debts. But there is another loss of confidence I am trying to point out to you. Right now there is confidence that a deposit means putting something in the bank that was outside the bank, and that it can later be taken out of the bank again. People will stop believing this when they realize there is nothing in or out of the bank, that it is all pretending.
• There is confidence that when they bank says they owe them something according to the numbers on their bank statement, that something could be later paid to them. They will realize there is nothing there to be paid.
• When the direct object does not exist, people are going to lose confidence in all the verbs we use about the nothing we think is our money: earn, deposit, borrow, loan, pay, owe, give, invest, tax.