The Switch From Wealth to Debt

ince 1792, our money has been "switched' from wealth to debt. By changing our money back to wealth, we can reverse the tide of ever increasing prices, taxes, debt , bankruptcies and economic ills that are destroying America and her people. How money is put into circulation is the most important principle. The real issue is not gold and silver vs. paper, not commodity money vs. fiat money, but wealth vs. debt, honesty vs. fraud. Let's follow the trail of United States money, from when it was gold and silver commodity money, put into circulation as a wealth to the people, by the people, to what it has become - a monetized debt, put into circulation by the banks, as interest bearing debts to the people, for the personal profit of bankowners.

The real reason gold and silver coinage initially worked well as money for the people, is that the people produced the gold and silver, a raw resource of the earth, through their labor. The 1792 Coinage Act allowed anyone to take that resource to the United States mint and have it monetized (coined) free of charge. We, the people, furnished our own money, based on our production, as a wealth to ourselves and spent it into circulation as a benefit to all of society with no debt attached to it.

Gold and silver are very heavy metals and not as convenient to carry as paper money. If we didn't want to carry the gold and silver coins around with us we could take them to the United States Treasury's National Bank and store/deposit the coins. The Treasury would issue depositors gold and silver certificates as receipts. They stated on their face that there was X amount of gold or silver coin on deposit in the Treasury, payable to the bearer on demand. Now, we had paper money. As long as just this principle was followed you still had good, honest, wealth money with no debt, no excessive profit, nor excessive purchasing power to anyone.

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This 1922 series ten dollar gold certificate is a good example of honest money. The note states on it's face "THIS CERTIFIES THAT THERE HAS BEEN DEPOSITED IN THE TREASURY OF THE UNITED STATES OF AMERICA TEN DOLLARS IN GOLD COIN PAYABLE TO THE BEARER ON DEMAND" Fully backed and redeemable paper money that was as good as gold.

However, when someone deposited their gold and silver coins in private non-governmental reserve banks, a totally different principle went into action. The private banks held the coins as a reserve for making new paper money to issue as loans, expanding the paper money supply. Making the new paper money loans equal to 10 times the face value of the coins deposited. This fractional reserve system seemed well and good as the banks raked in huge sums of interest and shared some of the earned interest with depositors. At that point, money switched from wealth to debt. The expanded money supply now had a fiat backing (only a fraction of the paper money was really backed by gold or silver coin).

Private Bank Note Money. Click on the images to enlarge.

Because of the popularity and tactics of these private non-governmental banks the United States National Bank established in 1791 by congress was unable to compete and had to be shut down in 1832. From the beginning private banks have been lobbing congress and congress has been deceived into making laws allowing private banks to take control of our money.

Americans have lacked this understanding. Lack of understanding is why America is the world's greatest debtor nation with over $26 Trillion in public and private debt at the end of 1990.

On January 24, 1939, Robert H. Hemphill, credit Manager of the Federal Reserve Bank of Atlanta stated:

"If all the bank loans were paid no one would have a bank deposit and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous: if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture the tragic absurdity of our hopeless position is almost incredible, but there it is. It (the banking problem) is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."

At first glance, private non-governmental banking looks like a good deal for everyone. The banks get more profit. The people can get quicker and easier loans. More capital is available to engage in commerce. Production picks up. But, sooner or later, more and more people can not make their loan payments. An unseen by-product of fractional reserve banking is: it makes a few people very rich, and leaves everyone else constantly in debt (even if you are personally out of debt the taxes you pay are your interest payments on an unpayable public debt). Fractional reserve banking creates compounding, unpayable public and private debt, which causes the cost of living to constantly go up for all Americans.

Throughout the nineteenth century, larger banks worked to get laws passed that would consolidate all paper money issuance under the control of just a few. After years of hard lobbying and manipulation, The banking �lite made a major leap forward under the guise of a standardized national money. They were successful in 1863 with the passage of the National Banking Act. It allowed newly chartered (privately owned) national banks to create new uniform national bank notes. A few years later their efforts payed off again, getting the federal government to tax state bank notes out of existence. Then in 1873 another triumph in getting the government to stop all free coinage of metals. To fully establish this newly nationalized form of fiat (fraud) money it's creators began switching the backing of paper money from gold and silver to United States Certificates of indebtedness "United States Bonds". Forcing the government to create certificates of debt as security for the paper currency. Real money was removed from circulation first by government mandated confiscation in 1933 then by revaluation in 1973. Our "We the people" owned money was completely replaced with fiat money distributed by the unconstitutional and privately owned Federal Reserve Bank.

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This 1914 series one dollar note is a good example of fiat (fraud) money. The note states on it's face "THE FEDERAL RESERVE BANK (A private banking corporation) WILL PAY TO THE BEARER ON DEMAND ONE DOLLAR" However, it does not say what this dollar when demanded will be made of, if anything. It also says "SECURED BY UNITED STATES CERTIFICATES OF INDEBTEDNESS" You can now clearly understand why our government and private sector are so deeply in debt. All we use for money is (monetized) DEBTS. The switch from wealth based money to debt-based money was in the final stage of completion. All that was left was to remove all gold and silver based currency out of circulation.

"I cannot morally blame all Americans for allowing, for instance, the birth of the Federal Reserve System (a private cartel with full control over the issuance of national debt) and the money destruction that has followed. They are simply ignorant about it and don't know what happened or what is happening. They think that prices go up rather than that dollars go down. Unsound money imposes an environment of immorality, which in turn makes people behave in different ways for reasons they know not. Sometimes you can blame immorality for the imposition of bad structures (bad people do it with full knowledge of what they are doing), but sometimes it is simply stupidity. People revere democracy, but democracy ends in plunder by the majority. Are people immoral for supporting democracy? I think rather that they lack a deep understanding of its essence. At a very deep level, I would say that the reason such structures are created is due to both a lack of knowledge and a false morality, which in turn is due to a lack of knowledge."

President of Elliott Wave International

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