The Creature from Jekyll Island

Seventh Reason to Abolish the Fed

What has any of this to do with the Federal Reserve System? The answer is that the Federal Reserve is the starting point of the pessimistic scenario. The chain of events begins with fiat money created by a central bank, which leads to government debt, which causes inflation, which destroys the economy, which impoverishes the people, which provides an excuse for increasing government power, which is £n on-going process culminating in totalitarianism. Eliminate the Federal Reserve from this equation, and the pessimistic scenario ceases to exist. That is the seventh and final reason to abolish the Fed: It is an instrument of totalitarianism.

If the optimistic scenario is too optimistic and the pessimistic scenario is too pessimistic, then what is the scenario that we should hope lies in our future?

There is a middle course that lies between optimism and pessimism. It is called realism. Calling it a realistic scenario is not meant to imply that it is predetermined to happen, nor that it is even likely to happen. It is realistic only in the sense that it can happen if certain conditions are met. The balance of this chapter will be devoted to an analysis of those conditions.

Let us begin by allowing our opponent, Cynicism, to state the problem we face: Is it realistic to believe that the current trends can actually be reversed? Isn’t it just fantasy to think that anything can be done at this late date to break the CFR’s hold over government, media, and education? Do we really expect the gum-chewing public to go upstream against the indoctrination of newspapers, magazines, television, and movies?

Apathy joins in: Forget it. There’s nothing you can do. The bankers and politicians have all the money and all the power. The game is already over. Make the most of it, and enjoy life while you can.

Do not listen to Cynicism and Apathy. They are agents of your enemy. They want you to quietly get in line and submit without a struggle. However, they do make a point that must not be overlooked. The battle has progressed far, and our position is not good. If we are to reverse the present trends, we must be prepared to make a herculean effort. That does not mean Write your Congressman or Vote on Tuesday or Sign a petition or Send in a donation. That is far too easy. Those measures still play an important role in the battle plan but they fall far short of the need. Armchair campaigns will no longer do it.

Before turning to the question of what kind of effort will be required, let us first be clear on what it is we want to accomplish.

What Must Not Be Done

Let us begin with the negatives: what must not be done. The most obvious item in this category is that we must not turn to government for more of the same cures that have made us ill. We do not want more power granted to the Fed or the Treasury or the President, nor do we need another government agency. We probably don’t even need any new laws, with the possible exception of those legislative acts which repeal some of the old laws now on the books. Our goal is the reduction of government, not its expansion.

We do not want to merely abolish the Fed and turn over its operation to the Treasury. That is a popular proposal among those who know there is a problem but who have not studied the history of central banking. It is a recurrent theme of the Populist movement and those advocating what they call Social Credit. Their argument is that the Federal Reserve is privately owned and is independent of political control. Only Congress is authorized to issue the nation’s money, not a group of private bankers. Let the Treasury issue paper money and bank credit, they say, and we can have all the money we need without having to pay one penny in interest to the bankers.

It is an appealing argument, but it contains serious flaws. First, the concept that the Fed is privately owned is a legal fiction The member banks hold stock, but it carries no voting weight. No matter how large the bank or how much capital is paid in, each bank has one vote. The stock cannot be sold or traded. Stockholders have none of the usual elements of control that come with ownership and, in fact, they are subservient to the central board. The seven members of the Board of Governors are appointed by the President and confirmed by the Senate. It is true that the Fed is independent of direct political control, but it must never be forgotten that it was created by Congress and it can be extinguished by Congress. In truth, the Federal Reserve is neither an arm of government nor is it private. It is a hybrid. It is an association of the large commercial banks which has been granted special privileges by Congress. A more accurate description would be simply that it is a cartel protected by federal law.

But the more important point is that it makes no difference whether the Fed is government or private. Even if it were entirely private, merely turning it over to the government would not alter its function. The same people undoubtedly would run it, and they would continue to create money for political purposes. The Bank of England is the granddaddy of central banks. It was privately owned at its inception but became an official arm of the British government in more recent times. It continues to operate as a central bank, and nothing of substance has changed. The central banks of all the other industrialized nations are direct arms of their respective governments. They are indistinguishable in function from the Federal Reserve. The technicalities of structure and ownership are not as important as function. Turning the Federal Reserve over to the Treasury without at the same time denuding it of its function as a central bank — that is, its ability to manipulate the money supply — would be a colossal waste of time.

The proposal of having the Treasury issue the nation’s money is another question and has nothing to do with who owns the Fed. There is nothing wrong with the federal government Issuing money so long as it abides by the Constitution and adheres to the principle of honesty. Both of these restraints forbid Congress from issuing paper money that is not 100% backed by gold or silver. If you are in doubt about the reasoning behind that statement, it would be a good idea to review chapter fifteen before continuing.

It is true that, if Congress had the power to create as much money as it needs without the Federal Reserve System, interest would not have to be paid on the national debt. But the Fed holds only a small percentage of the debt. Over 90% of those bonds are held by individuals and institutions in the private sector. Terminating interest payments would not hurt those big, bad bankers nearly as much as it would the millions of people who would lose their insurance policies, investments, and retirement plans. The Social Credit scheme would wipe out the economy in one fell swoop.

And we still would not have solved the deeper problem. The bankers would be cut out of the scam, but the politicians would remain. Congress would now be acting as its own central bank, the money supply would continue to expand, inflation would continue to roar, and the nation would continue to die. Besides, issuing money without gold or silver backing violates the Constitution.

The JFK Rumor

In 1981, a rumor was circulated that President Kennedy had been assassinated by agents of the hidden money power because he had signed Executive Order #11110 instructing the Treasury to print more than $4 billion in United States Notes. That is precisely the kind of money we are discussing: paper bills without gold or silver backing issued by the government, not the Federal Reserve. According to the rumor, the bankers were furious because they would lose interest payments on the money supply. When the Order was tracked down, however, it involved Silver Certificates, not United States Notes. Silver Certificates are backed by silver’ which means they are real money, so the rumor was wrong on that point. But there is no interest paid on Silver Certificates either, so the rumor held up on that point. There was a third point, however, which everyone seemed to overlook. The Executive Order did not instruct the Treasury to issue Silver Certificates. It merely authorized it to do so. There is no evidence that this was ever done. If the Certificates were printed at all, they never found their way into circulation. In 1987, the order was rescinded by President Reagan.

The Treasury did print a small supply of United States Notes in 1963, but these were authorized by an 1878 act of Congress to replace Civil War Greenbacks which had been retired from circulation. JFK did not initiate that issue. The greatest quantity of those Notes to be in circulation since their last printing in 1969 was $322 million — not a significant figure compared to Federal Reserve Notes. Most of them are now collectors’ items.

The persistent rumor regarding the bankers’ role in JFK’s death was reinforced by several books circulated in conservative circles. They contained an ominous passage from Kennedy’s speech at Columbia University, just ten days before his assassination. He is quoted as saying: The high office of President has been used to foment a plot to destroy the Americans’ freedom, and before I leave office I must inform the citizen of his plight. However, when Columbia University was contacted to provide a transcript of the speech, it was learned that Kennedy never spoke there — neither ten days before his assassination nor at any other time! Ronald Whealan, head librarian at the John Fitzgerald Kennedy Library in Boston, provides this additional information: Ten days prior to the assassination he was at the White House meeting with, among others, the ambassador to the United States from Portugal.

It is possible that the President did make the remarks attributed to him on a different date before a different audience. Even so, it is a cryptic message which could have several meanings. That he intended to expose the Fed is the least likely of them all. Kennedy had been a life-long socialist and internationalist. He had attended the Fabian London School of Economics; participated in the destruction of the American money supply; and engineered the transfer of American wealth to foreign nations. There is little reason to believe that he had suddenly seen the light and was preparing to reverse his life-long beliefs and commitments.

Monetarists vs Supply-Siders

But we are off the topic. Let us return to those unworkable theories regarding monetary reform. Prominent in this category are the Monetarists and the Supply-Siders. The Monetarists, adhering to the theories of Milton Friedman, believe that money should continue to be be created by the Mandrake Mechanism of the Federal Reserve, but that the supply should be determined by a strict formula established by Congress, not the Fed. The Supply-siders, represented by Arthur Laffer and Charles Kadlec, believe in formulas also, but they have a different one. They want the quantity of money to be determined by the current demand for gold. They are not talking about a true gold standard in which paper money is fully backed. By following what they call a gold-price rule, they would simply observe the price of gold in the free market and then tinker with the dollar by expanding or contracting the money supply to keep its relative value, compared to gold, fairly constant.

These groups are alike in their underlying philosophy. Each has a different goal and a different formula, but they agree on method: manipulation of the money supply. They share the same conviction that the free market will not work without assistance; the same faith in the wisdom and integrity of politically-created formulas, bureaus, and agencies. The Fed remains unscathed throughout all these debates because it is the ultimate mechanism for intervention. These people don’t really want to change it. They just want their turn at running it.

Occasionally a truly original proposal appears that captures one’s attention. Addressing a prestigious gathering of conservative monetary theorists in 1989, Jerry Jordan suggested that the monetary base could be expanded by holding a national lottery. The government would pay out more dollars in prize money than it received in ticket sales. The excess would represent the amount by which the monetary base would expand. Presumably, if they wanted to contract the money supply, they would pay out fewer dollars than taken in. It was an intriguing thought, but Mr. Jordan was quick to add: The problem, of course, is that there would not be any effective institutional restraint on the growth of the monetary base. Indeed, that is the problem with all schemes involving monetary control by men.

Balanced-Budget Amendment

A so-called balanced-budget amendment to the Constitution is not the answer either. In fact, it is an illusion and a fraud. Some of the biggest spenders in Congress are supporters. They know that it is popular with the voters but would not cramp their spending style in the least. If they were not permitted to spend more than they receive in taxes, they would have a perfect excuse for raising taxes. It would be a way of punishing the voters for placing limits on them. The voters, on the other hand, would collapse under the burden of higher taxes and demand that their Congressmen circumvent the very amendment they previously supported. And that would be easy. Most versions of the balanced-budget amendment have an escape hatch built for just that purpose. Congress shall balance its budget except in cases of emergency. Who decides what constitutes an emergency? Congress, of course. In other words, Congress shall balance its budget except when it doesn’t want to. So what else is new?

A serious amendment would have to tackle, not balancing the budget, but limiting the spending. If that were done, the budget would take care of itself. But even that would be a waste of time considering the present composition of Congress. Instead of generating political pressure for a Constitutional amendment, we would be better off directing that same effort toward throwing the big spenders out of office. As long as the spenders are allowed to stay in there, they will find a way to get around any law — including the Constitution itself.

Another flaw in most versions of the balanced-budget amendment is that it would not affect the off-budget expenditures called entitlements. They now represent 52% of all federal outlays and are growing by 12% each year. A strategy that ignores that back-breaking load is not worth even considering. Furthermore, even if Congress could be forced to stop deficit spending, the balanced-budget amendment would not solve the problem of inflation or paying off the national debt. The Federal Reserve can now inflate our money supply by using literally any debt in the world. It does not have to come from Congress. Unless we zero in on the Fed itself, we will just be playing political games with no chance of winning.

Every year, a few concerned Congressmen submit a bill to investigate or audit the Federal Reserve System. They are to be commended for their effort, but the process has been an exercise in futility. Their bills receive little or no publicity and never get out of committee for a vote. Even if they did receive serious attention, however, they could actually be counterproductive.

On the surface, it would appear that there is nothing wrong with a Congressional investigation or an audit, but what is there to investigate? We must assume the Fed is doing exactly what it says and is in total compliance with the law. A few minor improprieties probably would be discovered involving personal abuse of funds or insider profiteering, but that would be minor compared to the gigantic fraud that already is out in the open for all to see. The Federal Reserve is the world’s largest and most successful scam. Anyone who understands the nature of money can see that without a team of investigators and auditors.

The danger in a proposal to audit the Fed is that it would provide an excuse to delay serious action for several years while the audit is going on. It would give the public a false impression that Congress is doing something. It also would give the monetary technicians an opportunity to lay down a smoke screen of verbiage and confusing statistics. The public would expect that all the answers will be forthcoming from the investigation, but the very groups and combines that need to be investigated would be conducting, or at least confounding, the investigation. By the time fourteen volumes of testimony, charts, tables, and exhibits finally appear, the public would be intimidated and fatigued. The bottom line is that we do not need a bill to audit the Fed. We need one to abolish it.

A Plan for Eliminating the Fed

So much for things not to do. Now let’s get down to the business at hand. To abolish the Federal Reserve System would be quite simple. All that would be required is an act of Congress consisting of one sentence: The Federal Reserve Act and all of its amendments are hereby rescinded. But that would wipe out our monetary system overnight and create such havoc in the economy that it would play right into the hands of the globalists. They would use the resulting chaos as evidence that such a move was a mistake, and the American people would likely welcome a rescue from the IMF/World Bank. We would find ourselves back in the Pessimistic Scenario even though we had done the right thing.

There are certain steps that must precede the abandonment of the Fed if we are to have a safe passage. The first step is to convert our present fiat money into real money. That means we must create an entirely new money supply which is 100% backed by precious jQnetal — and we must do so within a reasonably short period of ime. To that end, we also must establish the true value of our present fiat money so it can be exchanged for new money on a realistic basis and phased out of circulation. Here is how it can be done:

1. Repeal the legal-tender laws.
   The federal government will continue accepting Federal Reserve Notes in the payment of taxes, but everyone else will be free to accept them, reject them, or discount them as they wish. There is no need to force people to accept honest money. Only fiat money needs the threat of imprisonment to back it up. Private institutions should be free to innovate and to compete. If people want to use Green Stamps or Disney-ride coupons or Bank-of-America Notes as a medium of exchange, they should be free to do so. The only requirement should be faithful fulfillment of contract. If the Green-Stamp company says it will give a crystal lamp for seven books of stamps, then it should be compelled to do so. Disney should be required to accept the coupon in exactly the manner printed on the back. And, if Bank of America tells its depositors they can have their dollars back any time they want, it shouJd be required to keep 100% backing (coins or Treasury Certificates) in its vault at all times. In the transition to a new money, it is anticipated that the old Federal Reserve Notes will continue to be widely used.
2. Freeze the present supply of Federal Reserve Notes,
   except for what will he needed in step number eleven.
3. Define the real dollar in terms of precious-metal content,
   preferably what it was in the past: 371.25 grains of silver. It could be another weight of silver or even another metal, but the old silver dollar is a proven winner.
4. Establish gold as an auxiliary monetary reserve
   which can be substituted for silver, not at a fixed-price ratio, but at whatever ratio is set by the free market. Fixed ratios always become unfair over time as the prices of gold and silver drift relative to each other. Although gold may be substituted for silver at this ratio, it is only silver that is the foundation for the dollar.
5. Restore free coinage at the U.S. Mint
   and issue silver dollars as well as gold pieces. Both dollars and pieces will be defined by metal content, but only coins with silver content can be called dollars, half-dollars, quarter-dollars, or tenth-dollars (dimes). At first, these coins will be derived only from metal brought into the Mint by private parties. They must not be drawn from the Treasury’s supply which is reserved for use in step number six.
6. Pay off the national debt with Federal Reserve Notes
   created for that purpose. Creating money without backing is forbidden by the Constitution; however, when no one is forced by law to accept Federal Reserve Notes as legal tender, they will no longer be the official money of the United States. They will be merely a kind of government script which no one is required to accept. Their utility will be determined by their usefulness in payment of taxes and by the public’s anticipation of having them exchanged for real money at a later date. The creation of Federal Reserve Notes, with the understanding that they are not the official money of the United States, would therefore not be a violation of the Constitution. In any event, the deed is already done. The decision to redeem government bonds with Federal Reserve Notes is not ours. Congress decided that long ago, and the course was set at the instant those bonds were issued. We are merely playing out the hand. The money will be created for that purpose. Our only choice is when: now or later. If we allow the bonds to stand, the national debt will be repudiated by inflation. The value of the original dollars will gradually be reduced to zero while only the interest remains. Everyone’s purchasing power will be destroyed, and the nation will die. But if we want not to repudiate the national debt and decide to pay it off now, we will be released from the burden of interest payments and, at the same time, prepare the way for a sound monetary system.
7. Pledge the government’s hoard of gold and silver
   (except the military stockpile) to be used as backing for all the Federal Reserve Notes in circulation. The denationalization of these assets is long overdue. At various times in recent history, it was illegal for Americans to own gold, and their private holdings were confiscated. The amount which was taken should be returned to the private sector as a matter of principle. The rest of the gold supply also belongs to the people, because they paid for it through taxes and inflation. The government has no use for gold or silver except to support the money supply. The time has come to give it back to the people and use it for that purpose.
8. Determine the weight of all the gold and silver
   owned by the U.S. government and then calculate the total value of that supply in terms of real (silver) dollars.
9. Determine the number of all the Federal Reserve Notes in circulation and then calculate the real-dollar value of each one by dividing the value of the precious metals by the number of Notes.
10. Retire all Federal Reserve Notes from circulation
    by offering to exchange them for dollars at the calculated ratio. There will be enough gold or silver to redeem every Federal Reserve Note in circulation.
11. Convert all contracts based on Federal Reserve Notes to dollars
    using the same exchange ratio. That includes the contracts called mortgages and government bonds. In that way, monetary values expressed within debt obligations will be converted on the same basis and at the same time as currency.
12. Issue Silver Certificates.
    As the Treasury redeems Federal Reserve Notes for dollars, recipients will have the option of taking coins or Treasury Certificates which are 100% backed. These Certificates will become the new paper currency.
13. Abolish the Federal Reserve System.
    It would be possible to allow the System to continue as a check clearing-house so long as it did not function as a central bank. A check clearing-house will be needed, and the banks that presently own the Fed should be allowed to continue performing that service. However, they must no longer receive tax subsidies to operate, and competition must be allowed. However, the Federal Reserve System, as presently chartered by Congress, must be abolished.
14. Introduce free banking.
    Banks should be deregulated and, at the same time, cut loose from protection at taxpayers’ expense. No more bailouts. The FDIC and other government insurance agencies should be phased out, and their functions turned over to real insurance companies in the private sector. Banks should be required to keep 100% reserves for demand deposits, because that is a contractual obligation. All forms of time deposits should be presented to the public exactly as CDs are today. In other words, the depositor should be fully informed that his money is invested and he will have to wait a specified time before he can have it back. Competition will insure that those institutions that best serve their customers’ needs will prosper. Those that do not will fall by the wayside — without the need of an army of bank regulators.
15. Reduce the size and scope of government.
    No solution to our economic problems is possible under socialism. It is the author’s view that the government should be limited to the protection of life, liberty, and property — nothing more. That means the elimination of almost all of the socialist-oriented programs that now infest the federal bureaucracy. If we hope to retain — or perhaps to regain — our freedom, they simply have to go. To that end, the federal government should sell all assets not directly related to its primary function of protection; it should privately sub-contract as many of its services as possible; and it should greatly reduce and simplify its taxes.
16. Restore national independence.
    A similar restraint must be applied at the international level. We must reverse all programs leading to disarmament and economic interdependence. The most significant step in that direction will be to Get us out of the U.N. and the U.N. out of the U.S., but that will be just the beginning. There are hundreds of treaties and administrative agreements that must be rescinded. There may be a few that are constructive and mutually beneficial to us and other nations, but the great majority of them will have to go. That is not because we are isolationist. It is simply because we want to avoid being engulfed in global tyranny.

Some will say that paying off the national debt with Federal Reserve Notes amounts to a repudiation of the debt. Not so. Accepting the old Notes for payment of taxes is not repudiation. Exchanging them for their appropriate share of the nation’s gold or silver is not repudiation. Converting them straight across to a sound money with little or no loss of purchasing power is not repudiation. The only thing that would be repudiated is the old I monetary system, but that was designed to be repudiated. The monetary and political scientists who created and sustained the Federal Reserve System never intended to repay the national debt. It has been their ticket to profit and power. Inflation is repudiation on the installment plan. The present system is a political trick, an accounting gimmick. We are merely acknowledging what it is. We are simply refusing to pretend we don’t understand what they are doing to us. We are refusing to play the game any longer.

Measuring the Size of the Hangover

So those are the sixteen steps, but what are their effects? It should come as no surprise that there is a price to pay for a return to monetary sobriety. A hangover cannot be avoided, except by continuing the binge, which is the road to death. Lef s take a look at what this binge has already cost us. We will measure that by calculating how much each Federal Reserve Note will be worth when the new money appears.

The following figures are presented for illustrative purposes only. The data are drawn from public sources and from the Federal Reserve itself, but there is no way to know how accurate they really are. In addition to the question of accuracy, there are some statistical items which are so obscure that not even the experts at the Fed are certain what they mean. When the time comes to apply this program, it will be necessary to assemble a task force of experts who can audit the books and assay the metals. Nevertheless, based on the best information available to the public, this is what we get:

Bad, but Not That Bad

That will be a bitter pill to swallow, but it sounds worse than it really is. Remember that the new dollars will have more purchasing power than the old. Coins will play a larger role in everyday transactions. The nickel phone call and the ten-cent cigar will have returned. In the beginning at least, the price of these items probably will be less than that. As explained in Chapter Seven, any quantity of gold or silver will work as the foundation for a monetary system. If the quantity is low — as certainly will be the case at the time of transition — it merely means the value of each unit of measure will be high. In that case, coins will solve the problem. Pennies would be used for a cup of coffee; one mill (a tenth of a cent) would pay for a phone call, and so on. New, small-denomination tokens would fill that need. In a relatively short period of time, however, the monetary supply of gold and silver would increase in response to free-market demand. When the supply increases, the relative value will decrease until a natural equilibrium is reached — as always has happened in the past. At that point, the tokens will no longer be needed and can be phased out.

An inconvenience? Yes. Vending machines will have to be retrofitted for the new coins, but that would be no more difficult than retrofitting them to take paper bills or plastic debit cards, which is what will be required if we do not adopt these measures. It is a small price to pay for an orderly return to real money.

Another possible solution would be to redefine the new dollar to contain a smaller quantity of silver. The advantage would be that we could continue to use our present coinage. On the negative side, however, is the fact that it would create headaches after the transition, because coinage then would be too cheap. Instead of changing over now, we would merely be postponing the task for later. Now is the time to do it — and do it right. The original value of a silver dollar was determined after centuries of trial and error. We don’t have to reinvent the wheel. We know that it will work in the long run.

In the past, the banks have enjoyed a bountiful cash flow from interest on money created out of nothing. That will change. They will have to make a clear distinction between demand deposits and time deposits. Customers wilJ be informed that, if they want the privilege of receiving their money back on demand, their deposit of coins or Treasury Certificates will be kept in the vault and not loaned to others. Therefore, it will not earn interest for the bank. If the bank cannot make money on the deposit, then it must charge the depositor a fee for safeguarding his money and for checking services. If the customer wants to earn interest on his deposit, then he will be informed that it will be invested or loaned out, in which case he cannot expect to get it back any time he wants. He will knowingly put his money into a time deposit with the agreement that a specified amount of time must pass before the investment matures.

The effect of this practice on banking will be enormous. Banks will have to pay higher interest rates to attract investment capital. They will have to trim their overhead expenses and eliminate some of the plush. Profit margins will be tightened. Efficiency will improve. They used to offer free services which actually were paid out of interest earned on their customers’ demand deposits. Now they will charge for those services, such as checking and safe storage of deposits. Customers probably will grumble at first at having to pay for those things, and there will be no more free toasters.

Electronic transfer systems will probably become popular for their convenience, but they will be optional. Cash and check transactions will continue to play an important role. Government monitoring will be illegal. Although there will be fewer dollars in circulation than there were Federal Reserve Notes, the value of each one will be correspondingly greater. Each person will end up with the same purchasing power he had before the conversion. For a short period, both the old and the new money will circulate together, and some people will have difficulty making the necessary calculations to determine their relative values. But that is a routine operation for people who live in Europe or for anyone who travels to a foreign country. There is no reason to think that Americans are too stupid to handle it.

Some Bad News and Some Good

We should not delude ourselves into thinking that this will be an easy transition. It will be a very difficult period, and people will have to get used to a whole new way of thinking and doing. The freeze on the current money supply may trigger panic in the stock market and the business community. Stock prices could tumble, causing paper fortunes to disappear back into the computers from which they came. Some businesses may fold for a lack of easy credit. Weak banks will be allowed to close rather than be bailed out with taxes. Unemployment may worsen for a while. Those who have been used to a free ride will now have to walk or push or pay their way. The masses on welfare will not give up their checks and food stamps quietly. The media will fan the flames of discontent. The Cabal will be at every switch to derail the train.

This will be the moment of our greatest danger, the moment when the people could tire of their hard journey in the desert and lose interest in the promised land. This is the time when they may long for a return to captivity and head back to the slave pits of Pharaoh.

The important point, however, is that most of these problems would be temporary. They would be present only during the period of transition to a new money. As soon as free coinage is available at the Mint, and as soon as people see how much demand there is for silver and gold coins, there will be a steady stream of miners and jewelers who will add great new stores of precious metal to the nation’s monetary stock. Foreigners undoubtedly will add to the inflow. Old silver and gold coins will also reappear in the market place. Very quickly, as the stores of precious metal respond to supply and demand, the quantity of money will increase and its per-unit value will drop to its natural equilibrium.

Won’t that be inflation? Yes it will, but it will be significantly different from inflation by fiat money on four counts: (1) instead of being caused by politicians and bankers attempting to manipulate the economy to enhance their personal agendas, it will be caused by natural economic forces seeking an equilibrium of supply and demand; (2) instead of being harmful to the nation, leading to the destruction of the economy, it will be part of a healing process, leading to prosperity; (3) it will be less severe than what we will experience if we do not make the transition; and (4), instead of being part of a continuum that is designed to go on forever, it will have a built-in termination point: the point of natural equilibrium where the human effort to mine gold and silver equals the effort to create those things which gold and silver can buy. When that point is reached, the money supply will cease to expand, and inflation will stop — once and for all. The hangover will be gone. From that point forward, prices will begin a gradual descent as advances in technology allow improved efficiency in production. With the arrival of lower prices, better job opportunities, and increasing prosperity, the voices of discontent will gradually fade. After the storm is over, America will have an honest money supply, a government with no national debt, and an economy without inflation.

No matter what scenario unfolds in the future, there is white water ahead. We had better tighten our straps and prepare for the rapids. We owe it to ourselves and our families to take measures which will increase our chances of coming out at the other side. If the pessimistic scenario is played out, it will make little difference what we do, because there will be no other side. But in the realistic scenario, there are certain precautions that will make a big difference in our economic well being.

To fully appreciate the wisdom of some of these measures, it is well for us to pause and consider the possibility that a transition to economic safety and sanity will not be orderly. Another variant of the realistic scenario is that our entire system could collapse, including the international structure being assembled at the UN. If that should happen, we won’t have to worry about an orderly transition to a sound monetary system, because it won’t happen. Our primary concern will be basic survival.

Economic chaos and civil disorder would not necessarily have to be the prelude to world government. If a sufficient number of people were well enough informed to know in advance what the enemy’s game plan is, and especially if they were in the right places within the system, they might be able to provide leadership at the critical moment. If there is blood in the streets and long periods of anarchy, it is theoretically possible that groups of enlightened individuals who have prepared in advance could move into the power vacuum and take charge. That may sound like another pessimistic scenario, but it is not. In the final analysis, it may be the most realistic one of all. But we should not hope for it. All we can do is prepare for it should it come to pass.

How to Prepare

What can we do to prepare financially? To avoid making this a lengthy dissertation, let’s use the outline form. Elaboration should not be necessary.

1. Get out of debt.
   A mortgage on one’s home is a logical exception, provided the price is right. Borrowing for one’s business is also an exception if based on a sound business plan. Speculative investments are not a good idea in these times unless they are made with money you can afford to lose.
2. Pick a sound bank.
   Maintain accounts at several institutions. Do not keep over $100,000 in any one bank. Remember that not all types of accounts are covered by FDIC. Some institutions now offer private insurance. Make sure you know to what extent you are at risk.
3. Diversify your investments
   among blue ribbon, over-the-counter, growth, income, large, small, mutuals, bonds, real estate, bullion coins, mining stock, and tangibles. Industries that do well in hard times are gambling, alcohol, and escapist entertainment. Study the fields and companies in which you invest. Personal knowledge is indispensable.
4. Avoid the most recent best performers.
   Their great track records are historical. They have no bearing on future performance. To the contrary, they may now be overpriced and poised for a fall. See how an investment fared over the long run — at least fifteen years — and particularly how it performed during periods of economic downturn.
5. When investing in coins,
   avoid those with high numismatic value — unless you are prepared to become an expert. As with other types of investments, seek advice but don’t depend on it. The same is true for diamonds, art pieces, and other collectibles. Stay with what you know. Otherwise, you will be vulnerable in shark-infested waters where even the most experienced traders can lose money.
6. Maintain a stash of cash,
   including some old silver coins. The currency should be enough to provide your family with necessities for about two months. The coins are for more severe and prolonged conditions. There is no correct quantity. It is a matter of personal judgment and financial ability.

Profiting from Disaster

All of this is aimed at surviving the storm and preparing ourselves to offer leadership in troubled times ahead. That is a rather negative view. There is a more positive outlook for those who are looking for good news, as Adlai Stevenson said. It is the exciting prospect that we can turn this calamity to our advantage. We can actually profit from the coming collapse. That thought has spawned hundreds of books and newsletters offering advice on how to get rich while others are being destroyed. There is even one that gives advice on how to cash in on the environmental-industry boom. The pitch is how to make a fortune on the downfall of America.

There is no doubt that opportunities exist to profit from investment decisions based on a realistic appraisal of current trends. Most of those opportunities/ however depend on making market-timing decisions. One must know precisely when to buy, when to self, and at what price. To know all that, the investor must become expert on the nature of the industries involved and must monitor the daily shifts in market forces. He must attempt to complete his analysis and reach his conclusions in advance of the crowd. And, of course, he must be right Most investors are not prepared to do that, so they must depend on the services of professionals, usually the same experts who are encouraging them to invest in these kinds of enterprises. If the investment is profitable, the analyst receives an income. If the investment turns sour, the analyst still receives an income.

That relationship is not unique to the profit-from-crash group, however. It is to be found at every level of the investment business as well as within the legal and medical professions. The customer pays for the advice regardless of its quality. What is disturbing about this investment concept is that it actually may help to make matters worse. By focusing on finding clever ways to avoid the effects of inflation or of making a profit from it, we are doing nothing to stop it and, thereby, encouraging its continuation. Those who are gaining from inflation are not likely to offer serious resistance to it. As they watch their profits pile up, they may become its most ardent supporters — even though they know deep in their hearts that it will destroy them in the end.

There is nothing wrong with trying to preserve one’s capital on the way down, but the only real solution is to use one’s capital to stop the present trends. In the long run, there is no way to profit from a destroyed America. There is no refuge from a collapse. There is no way to protect your assets, your home, your job, your family, your freedom. As Henry Hazlitt phrased it, There is no safe hedge against inflation except to stop it.

An Educational Crusade

The best investment one can make at this time is to finance an educational crusade. Americans have allowed their nation to be stolen from right under their noses because they did not understand what was happening. There is no hope for the future as long as that condition remains. The starting point for any realistic plan for survival and beyond is the awakening of America.

What does that entail? These are the tasks:

1. Become self-informed.
   That’s not as easy as it sounds. It involves a major commitment of time and money for books, recordings, and seminars. Do it
2. Become a pamphleteer.
   Develop a mailing list of friends who you think would be most receptive to learning more about these issues. Send them something every month that is informative and not too long to read. See the end of this chapter for information on how to obtain suitable publications.
3. Join forces with others of like mind.
   There is strength in numbers. Three people acting alone are a force of three. When working together, however, they multiply their efforts and equal a force of nine. That is the power of organization. When choosing an organization, look for experienced and principled leadership which has proven that it understands the deeper issues and cannot be sidetracked by the Cabal.
4. Form an educational study group.
   Give it an enticing name such as The Reality Club or The Awareness Lunch Bunch. Make the meetings interesting and short. Use local speakers, ask members to give book reviews, show videos, have mock debates, throw parties. The goal is to reach new people, not to preach to the choir.
5. Form ad-hoc committees,
   along with other like-minded friends, to promote specific projects and programs. Here are a few hypothetical examples covering a range of issues: The Committee for Sound Money, Parents for Better Education, Americans for Tax Relief, North-Bay Residents for Private Property. That is an excellent way to bring pressure to bear on the political structure and, at the same time, attract the support of new people who share your common objective.
6. Expand your influence within the community.
   People seldom follow strangers. Become known and respected for your knowledge. Join groups which are influential within your city or profession. Political groups are particularly important, regardless of party. Volunteer for work and seek a leadership role. Personally visit your city and county politicians and maintain ongoing communication. Send them books, articles, baseball tickets — anything to make sure they don’t forget who you are. This is doubly important for political candidates. If you have the talent and the aptitude, consider running for some kind of public office yourself.
7. Use politics, don’t be used by it.
   We got into our present mess through politics and we must get out the same way; but getting out is a lot harder than getting in. The strategy, however, is simple: remove the big-spending internationalists from office and replace them with men and women dedicated to sound money and national independence. The way to remove the spenders is to expose their voting records to their constituents, most of whom have no idea how they vote on key issues. The way to get better candidates elected is to volunteer to work in their campaigns. Work within party organizations where possible but beware! Never allow loyalty to the party to override loyalty to principle. Political parties are always controlled from the top, and the major parties are controlled by the very forces we must oppose. It is imperative that you and your candidate remain independent of party control. Otherwise, your money and your effort eventually will be used against you.

With that warning aside, we should be encouraged by the fact that the task is not as overwhelming as it seems. The power to reverse the present trend rests in the hands of only 535 people. There are 435 Representatives and 100 Senators. To control a majority, all we have to do is influence the election of 268 people. In reality, if we began to come even close to that figure, we likely would see a wave of sudden political conversions among those who remain in office. It is possible that we could achieve our goal by influencing the election in only 100 Congressional districts! By using the political freedom that yet remains in our system, we can overthrow the government of the United States every two years without firing a shot! But we had better get going on it. Time is running out.

Conclusions and Summary

We have finally come to the end of this book. It was not a textbook on banking theory. It was a who-dunnit, and by now you know the answer.

We have covered a vast expanse of history and have wandered yfar afield from our main topic. It was necessary. Without the larger TOew, the case against the Federal Reserve System would have been weak. It would have omitted the elements of war, revolution, [depression, and fraud. Without that long journey, we would be limited to a sterile discussion of interest rates, discount policies, and reserve ratios. That is not where the body is hidden.

In the foreword, it was stated that there were seven reasons to abolish the Federal Reserve System. It is time to repeat them here:

• It is incapable of accomplishing its stated objectives.
• It is a cartel operating against the public interest.
• It is the supreme instrument of usury.
• It generates our most unfair tax.
• It encourages war.
• It destabilizes the economy.
• It is an instrument of totalitarianism.

The purpose of this book has been to demonstrate the accuracy of those assertions.

A plan for recovery was finally presented which involves sixteen steps, each based upon lessons which emerged from history. These lessons were mingled with a large amount of theory which is traceable only to the mind of the author himself. Which is to say there is no guarantee the plan will work. But it is a plan. It is better to fail trying than to do nothing. Like men on a sinking ship, we must risk the water. We cannot stay where we are.

There undoubtedly are technical flaws in these proposals, for the mechanism is merely a prototype. Someone surely will discover a gear that will not mesh or a lever that is disconnected. It will need the additional work of specialists in many diverse fields. Even then, the job will not be complete, for it must finally be handed over to those who are skilled in drafting legislation. Their task will be two-fold. First, they must make it workable in the real world of politics. Secondly, they must prevent loopholes and vagaries which could eventually subvert the plan.

But none of these considerations should deter us from beginning the process. We may not have answers to all the technical questions, but we do have an answer to the big question. We do know that the Federal Reserve System must be abolished. Let us, therefore, begin.

The Creature has grown large and powerful since its conception on Jekyll Island. It now roams across every continent and compels the masses to serve it, feed it, obey it, worship it. If it is not slain, it will become our eternal lord and master.

Can it be slain? Yes it can.

How will it be slain? By piercing it with a million lances of truth.

Who will slay it? A million crusaders with determination and courage.

The crusade has already begun.