The American System protected domestic labor & industry from super-cheap, foreign labor. Under this policy of protection, the U.S. “manufacturing economy” became the most successful engine for prosperity the world has ever known.

BEFORE U.N.FREE TRADE:

• U.S. industry was “the growth-engine” for international trade. In the post-war years, the country’s robust manufacturing-base produced between 40% and 42% of ALL finished goods on earth.

• America was the greatest creditor-nation of all time. The U.S. Treasury held title to 4/5^ths of the world’s officially-held gold reserves (“the greatest stack of pure gold ever accumulated” exceeded 20,000 tons).

Our economy was de-industrialized under a U.N. system of Free Trade. The U.S. “consumption economy” has not run a trade surplus in more than 45 years.

AMERICA 2020
STATE OF THE UNION

Today, America is the greatest debtor-nation in world history. The U.S. is now dependent on foreign nations for most manufactured products. Only 10% of the workforce are involved with manufacturing (public employees out-number manufacturing employees by 2 to 1). We mainly export raw materials such as wheat, coal, meat, tobacco and soybeans. 

THE PRINCIPLE OF PROTECTED
TRADE IN AMERICAN HISTORY

Under the British Free Trade system, American Colonies exported raw materials and depended on “Mother England” for most finished goods (1620—1776). From the start, the Founding Fathers knew manufacturing was the key to economic independence. They established a new trade policy for the fledgling Republic.

Founders such as George Washington (Father of the nation), Alexander Hamilton (first Secretary of the Treasury), and James Madison (Father of the Constitution) introduced an American System of protection for domestic labor and industry. In 1789, the first Congress of the United States passed the “TARIFF ACT.” 

Why did our forefathers establish protective tariffs
on foreign merchandise; and what were the results? 

Their strategy to shield U.S. industry changed the way Americans did business. People decided to produce the goods themselves, rather than pay the import tax. The legislation created a production-boom for ‘infant’ industries that competed with England. As a result, inter-state commerce sky-rocketed.

PROTECTIVE TARIFFS WORKED.

• U.S. manufacturing grew by leaps & bounds. By the mid-1870s, America was an industrial power-house and the world’s #1 economy.

• For more than 150 years, U.S. customs duties produced 50% to more than 90% of all federal revenues (the duties funded infrastructure). 

MANUFACTURING IS A
WEALTH-MULTIPLIER.

From sea to shining sea, tremendous wealth was created by manufacturing high-quality, MADE-IN-USA products, using local raw materials. The protective trade system elevated living standards for the “common man” (the entire society).

“Our past experience shows that great prosperity in this country has always come under a protective tariff….” President Theodore Roosevelt, 1902 State of the Union Address.

PHENOMENAL INDUSTRIAL DEVELOPMENT

Equipment was invented to save work, save time, and save money. Competition was fierce to develop better products for America’s burgeoning middle class.

The U.S.A. was “the land of opportunity.” Back then, just about everything in America was sewn, grown, logged, mined, manufactured or made by Americans. The burden of import duties fell mainly on wealthy consumers of foreign goods.

VERY HIGH TARIFF RATES:

• Secured the U.S. market for U.S. producers.

• Provided the foundation for economic development.

• And upheld a high standard of wages for U.S. workers.

In those days, the U.S. dollar was “as good as gold” & American industry produced 40% of the world’s finished goods. Gold-backed money & highly-paid manufacturing jobs created history’s fastest-growing middle class.

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” John Maynard Keynes, The Economic Consequences of the Peace, St. Martin’s Press, pp. 148-149, 235-236, London Royal Economic Society, 1971 (McMillan, 1919).

UNITED NATIONS • BRETTON WOODS
(the history of globalism)

In 1944, “The United Nations Monetary and Financial Conference” convened at Bretton Woods, N.H. to establish a U.N. banking system: the WORLD BANK (Int’l Bank for Reconstruction & Development) and the IMF (Int’l Monetary Fund). National currencies were un-pegged from gold, and pegged to the U.S. dollar.*

Conferees adopted a global trade system. The “White Plan” laid the groundwork for centrally-managed trade within a framework of United Nations Governance. Under the governance of U.N. agencies, the economies of independent countries would become increasingly “integrated” and “inter-dependent.”**

At the close of the U.N. Conference, the U.S. Treasury Secretary (Henry Morgenthau, Jr.) said the establishment of the United Nations banking system marked “the end of economic nationalism.” And he was right. 

IMPLEMENTING GLOBAL GOVERNANCE

National economies were integrated in phases, beginning with the 22,000-page “General Agreement on Tariffs & Trade” (effective Jan. 1, 1948). The U.N.GATT Treaty legally reduced U.S. protective tariffs. Over the next 5 decades, 8 rounds of trade negotiations removed tariffs and other barriers to “inter-dependence.”***

The U.S. policy of protection was dismantled incrementally. As protective tariffs were removed from industry, America’s powerful “manufacturing economy” was gradually transformed into a “consumption economy.”****

UNITED NATIONS “FREE TRADE”
(U.N. managed-trade)

In 1994, the “North American Free Trade Agreement” was “fast-tracked.” The U.N. NAFTA Treaty signaled an exodus by local manufacturers to foreign lands (millions of U.S. industrial jobs vanished).

Why did corporations leave? SUPER-CHEAP LABOR; no employee healthcare or retirement benefits; no unions; fewer environmental regulations; lower prices & taxes; lower quality & safety standards.

In 1995, a sweeping United Nations Management System called the “World Trade Organization” (U.N.WTO Treaty) replaced the U.N.GATT Treaty.***

Leading up to the 2008 crash, high-tech manufacturing began to disappear & the exodus accelerated. About 60,000 U.S. manufacturing plants with 500 or more employees moved operations off-shore (China, Mexico, India).

Image courtesy of “The Atlantic.”

U.N. Free Trade gives foreign products the advantage over domestic products by cheapening labor. As U.S.-based corporations moved production to “low-wage” nations, highly-paid job opportunities rapidly diminished in the United States.

 A CONSUMPTION ECONOMY
IS A DYING ECONOMY.

Until credit collapsed on Aug. 9, 2007 and markets crashed in 2008, Americans enjoyed the illusion of growth and prosperity as a result of easy credit at low rates. Years of Quantitative Easing, low interest rates, and various government programs have helped to disguise the structural increase in unemployment:

The United States now has the lowest labor participation rate in 40 years. More than 95 million Americans are no longer counted in the work-force; and an all-time-high number of young, eligible workers do not have jobs.

The fundamental transformation of America is an economic catastrophe:

• Every year from 1870 to 1971, the U.S. manufacturing economy produced trade surpluses (from 1792, all trade imbalances were settled with gold). 
• Since 1971, the nation has financed enormous trade deficits with “money printing.” The Federal Reserve creates credit (U.S. debt) by the $ trillions.*

It is not an accident the United States is now economically dependent and indebted beyond belief. Lawmakers ignored the Constitution, debased the dollar, and hitched America’s wagon to U.N. Global Governance.

U.N. “FREE TRADE” IS
PRODUCING ECONOMIC RUIN.

The United States became a manufacturing dynamo by elevating and protecting the dignity and worth of individual wage-earners. Today, our rich heritage is being squandered; and the middle class is shrinking:

• Wages are stagnant.
• The average person’s standard of living is falling.
• America’s preeminent position among the nations has slipped.

In Abraham Lincoln’s day, slave-holders were among the “Free-Traders.” Lincoln did not believe economic progress requires a permanent peasant-class (a feudal rationale for slave-labor). He campaigned to retain protective tariffs:

“I… try to show, that the abandonment of the protective policy by the American Government… must produce want and ruin among our people.” Abraham Lincoln, 1846.*****

Today, Lincoln’s warning is a reality in America’s “Rust Belt” and other “hollowed-out” areas of the country that were once centers for heavy industry and manufacturing. We need statesmen who understand the principles that produced U.S. independence and a thriving middle class.

AN ESSENTIAL PRINCIPLE
OF THE AMERICAN REPUBLIC

Thomas Jefferson was one of the authors of “The Declaration of Independence.” When he outlined “the essential principles of our government,” the great patriot emphasized the danger of entangling, international alliances: 

“…peace, commerce, and honest friendship with all nations – entangling alliances with none….” President Thomas Jefferson, “Inaugural Address,” March 4, 1801.

George Washington was America’s greatest statesman. He was chosen by the Founders to preside over the framing of the Constitution and Bill of Rights, and unanimously elected President (two times). In his famous “Farewell Address,” he warned leaders to “steer clear” of foreign alliances:

“The great rule of conduct for us in regard to foreign nations is in extending our commercial relations… our commercial policy should hold an equal and impartial hand… It is our true policy to steer clear of permanent alliance with any portion of the foreign world….” President George Washington, 1796 “Farewell Address.” 

United Nations treaties are un-American.
Any permanent alliance with a supra-national
government violates the Founders’ original intent.

END NOTES.

* The systematic debasement of the reserve currency enabled U.N. central banks (IMF, World Bank) to provide currency liquidity to the rest of the world. After the dollar was debauched in 1971, U.S. trade deficits grew exponentially. The flood of fiat dollars enabled the development of “low-wage” economies (China).  

** The “White Plan” adopted at the U.N. Bretton Woods Conference laid the foundation for a world monetary system with centrally-planned trade. According to its author, Harry Dexter White (Assistant to the U.S. Treasury Secretary), independent countries would become inter-dependent states:

“…the change will be in the direction of increased control over industry, and increased restrictions on the operations of competition and free enterprise.” Harry Dexter White, “Political-Economic Int. of Future,” The Princeton Archives (1944 unpublished essay) cited by the “Moynihan Commission on Gov’t Secrecy,” Washington, D.C., 1997 (U.K “Daily Mail” #2288294).

*** The U.N.GATT Treaty was an interim step toward globalism. It provided the necessary management to implement a system for “Mutually Assured Economic Destruction” (if one industrialized nation collapsed, all would collapse).

*** The U.N.WTO Treaty gives the U.N. power to overrule America’s legal system. According to the World Court of the United Nations, WTO decisions have  the legal force to override the authority of the courts of the United States.

The U.S. House of Representatives alone has Constitutional authority to regulate U.S. commerce with foreign nations (Article I, Section 8). The “Treaty Provision” requires 2/3^rds Senate approval (Article II, Section 2).

**** U.S. CONSUMPTION ECONOMY: From 1998 through the 3^rd quarter of 2007, U.S. exports plus business investment accounted for only 3% of real growth in Gross Domestic Product (GDP); consumer spending (81.3%) plus government spending equaled 96% of GDP growth. In the 25 years leading to the 2008 crash, U.S. consumer spending accounted for 82.5% of real growth in GDP (each year, Personal Consumption Expenditures grew 3.5% continuously compounded).

William Emmons Jan 2012 Federal Reserve Bank of St. Louis.
http://www.stlouisfed.org/publications/re/articles/?id=2158

***** Abraham Lincoln, The Collected Works of Abraham Lincoln, Roy P. Basler, Editor, 1846 “Discussion of Protective Policy,” Vol. I, p. 415; 1859 “Address to the Wisconsin State Agricultural Society,” Vol. III, pp. 478-479; Rutgers University Press, New Brunswick, N.J., Abraham Lincoln Association, copyright 1953.

Bretton Woods U.N. Monetary Conference

The groundwork for the managed-decline of the United States was laid in 1944. Delegates to the United Nations Conference adopted a world trade and monetary system designed to reduce inequality among nations.

Mao Zedong sent the 2^nd largest number of un-elected bankers (to represent Communist China): 

Hsiang-Hsi, Central Bank of China Governor; Executive Yuan V.P.
Tingfu Fuller Tsiang, Executive Yuan Chief Political Secretary; Ambassador to U.S., Washington, D.C.; Permanent U.N. Representative
Ping-Wen Kuo, Vice Minister of Finance
Victor Chi-Tsai Hoo, Vice Minister Foreign Affairs; Delegation Secretary-General, U.N. Commissioner and U.N. Under Secretary-General
Yee-Chun Koo Finance Vice Minister; Treasurer, Executive Director IMF
Kuo-Ching Li, General Manager Wah Chang Trading Corporation, New York, N.Y.; Adviser to Ministry of Finance
Te-Mou Hsi, Ministry of Finance Representative, Washington, D.C.; Alternate Executive Director World Bank
Tsu-Yee Pei, Bank of China Director
Ts-Liang Soong, Manufacturers Bank of China General Manager; World Bank Alternate Governor
Advisers:
Hu Shih, Ambassador to United States, Washington, D.C.
Kia-Ngau Chang, Executive Yuan High Adviser; Central Bank of China Deputy Governor
Ming Li, Chekiang Industrial Bank Chairman
Ting-Sen Wei, Legislative Yuan Member
Chao-Ting Chi, Secretary-General Foreign Exchange Control Commission, Ministry of Finance Director, Central Bank of China
Edward Lee, Chinese Republic Weekly Editor
Technical Experts:
Chi-Ling Tung, Foreign Trade Commission Vice Chairman
Y.C. Wang, Central Bank of China Secretary, IMF Official
Cho-Ming Li, Southwestern Associated Universities Economics Professor
Chih Tsang, Shanghai Commercial and Savings Bank Director
Tsung-Fei Koh, Directorate-General of Posts (International Department)
Vung-Yuen Woo, Ministry of Finance (Monetary Section Chief)
C.T. Yen, Central Bank of China Department Director
Technical Consultants:
Arthur Nichols Young, American Financial Adviser to China; later Adviser to Saudi Arabia; brother of John Young of Conference Secretariat
Carl Neprud Ministry of Finance Customs Commissioner
Secretaries:
Yen-Tsu Chen, Central Bank of China
Daniel S.K. Chang, Central Bank of China
Ping-Yeh Tcheng, Central Trust of China
Bing-Shuey Lee, First Secretary Chinese Embassy Washington, D.C.
Kien-Wen Yu, Chinese Embassy Washington, D.C.
I.C. Sung, Universal Trading Corporation Assistant Treasurer
Wan-Sen Lo, Ministry of Finance Representative, Washington, D.C.
Ta-Chung Liu, Chinese Embassy, Washington, D.C. (Office of Commercial Counselor); Cornell University Economics Professor; IMF Official
Yu-Chung Hsi, Ministry of Finance Representative, Washington, D.C.
Shun-Hsin Chou, Central Bank of China
C. L. Hsia, Adviser to Foreign Affairs Minister; Chinese Representative on United Nations Economic and Social Council.

Staff: P.F. Hsia, Marion Brooks, Augusta Chang, Ann Collican, Pearl Dorain, Jane Foley, Anna Koo, Chin-Kwan Koo, Mun-So Leung, Kuo-Ching Li, M.C. Li, Ming Li, Mousheng Lin, Louise McConnell, Evelyn Neworth, Kai-Kwan Tsien, A.A. Young, and Yin C. Yu. From Who Was at Bretton Woods? by Kurt Schuler and Mark Bernkopf, 2014.

Mao Zedong was responsible for the greatest, man-made horror of the 20^th century (1958-1962). Today, the same totalitarian regime is still in power.

MAO’S GREAT FAMINE: https://www.youtube.com/watch?v=EcKOZTLLoWc

Submitted by Denise Rhyne

WEIGHTS, MEASURES & BALANCING SCALES:
http://www.youshouldbuygold.com/weights-measures-and-balancing-scales/

CONTENTS: Ancient Monetary System; CARAT Weights; KARAT Purity; TROY Weights; METRIC Weights; MILLESIMAL Fineness; FAR EAST Weights; British POUND (Pennyweight, Pound Sterling, Sovereign); DOLLAR (Old U.S. Gold Coins); Historical GOLD-to-SILVER-RATIOS (U.S. 90% Silver Coins, Gold & Silver American Eagles); BIBLE Weights: TALENT, MANEH, SHEKEL, GERAH, BEKAH (Conversion Table); WORLD COINS (Gold Contents).

WHAT ARE CAPITAL CONTROLS?
http://www.youshouldbuygold.com/what-are-capital-controls/

REAL MONEY vs. FUNNY MONEY:
http://www.washingtongoldexchange.com/2018/funny-money-vs-real-money/

“At the age of 20, Charles Dupont inherited the handsome amount of 1 million French francs (about $193,000). On the advice of a very wise man, he exchanged his inheritance immediately for 50,000 gold Napoleons (coins), which were official legal tender at the time, gold content .1867 Troy oz (worth 20 French francs each at that time). In other words, Charles Dupont was the owner of 50,000 French gold pieces (9,335 oz. gold).“From that day onwards (January 2, 1920), he sold one gold Napoleon each day to finance his clothing, accommodations, amusements, and food.

“In 1980, Mr. Dupont died at a grand age in an apartment not far from the heart of Paris.

“His nephew moved into the apartment and one day found the notes and diaries of his dead uncle. In these diaries, Mr. Dupont had written how, over the past 60 years, he had been able to live simply, but well, on one “Napoleon” a day.

“He also described the war, mentioning the black market and the fact that in those difficult times pieces of gold fetched very good prices. In addition, he told how the price of the 20 franc gold pieces appreciated substantially after currency manipulations.

“Some months ago (1988), his nephew was searching around in the attic in old chests, boxes and books that belonged to his uncle. He found two chests that were extraordinarily heavy and when he opened them he found they contained a treasure of 28,000 Napoleons. A few weeks ago, the nephew exchanged them at his bank for the sum of 13.9 million French francs (more than S2,000,000).

“For 60 years, Charles Dupont sold one Napoleon a day. He had used 21,900 Napoleons, and with the remainder, he made his nephew a rich man.

“This story has not failed to have an effect on people and firms who have been managing money for decades, or even centuries. That’s why I am convinced that if you are dealing with a reputable asset manager, you will still find gold coins – both now and in the future – in your portfolio.”

Adapted from the Gold News, Nov. – Dec 1988.

Charles Dupont

1900: Born near Paris

1920: Inherits 1 million French Francs (about U.S. $193,000). Purchases 50,000 Napoleon Gold coins (for 20 French Francs each). He spends 1 Napoleon per day for rest of life.

1980: Charles dies after a long well-lived life.

1988: An heir finds chest with 28,000 Napoleons in the attic (worth more than $2 million then).

2015: (April) Now worth: $6.3 million

FUNNY MONEY vs. REAL MONEY:
http://www.washingtongoldexchange.com/2018/funny-money-vs-real-money/

Things You Probably Didn’t Learn in School about Gold & Silver:
http://www.youshouldbuygold.com/2017/GOLD-SILVER-pdf

The Federal Reserve will turn the money spigots wide open to mitigate the paralyzing effects of deflation on the U.S. consumption-economy. For now, the dollar is strong because the yen and the Euro are weakening FASTER; but the true value of the dollar is declining.

Die Weimarer Republik

There are striking parallels between the U.S. economy [since 2007] and the economy of the German Weimar Republic [1920s]. When recession hit the German economy, the central bank printed massive amounts of currency to stimulate business activity and pay debt. The cost of living was rising, the middle class was getting poorer, and debt was growing.

Although core fundamentals in the economy were deteriorating, industrial magnates benefited from money-printing. Easy credit enabled business leaders to wipe out their debts with cheap money. They expanded plants, bought companies, and speculated in foreign exchange with borrowed money.

Germany’s booming stock market was the envy of Europe. But all of a sudden, market psychology changed. One minute the rich were borrowing like crazy. Overnight, no one wanted to buy the debt. There were no warning signals before credit collapsed.

Just months before credit crashed, Germany’s economics Ph.D.s had insisted money printing by the central bank was not a problem. They said inflation was low and manageable –even healthy– and proved it by documenting the country’s low inflation numbers.  

In 1921 and 1922, politicians and eminent economists maintained there was no inflation in the Weimar Republic; but a sudden loss of confidence triggered the madness of hyperinflation. By 1923, one U.S. penny equaled 42 billion marks (ℳ).

The following gold and silver charts demonstrate how quickly the paper mark (ℳ) lost value as the destruction of hyperinflation swept over the highly civilized society. The small minority who had the foresight to exchange their paper marks for gold early saved their capital. The state quickly imposed restrictive currency laws and rigid capital controls.

Weimarer Republik – Papiermark ℳ
Price of Gold in German Marks:

1919
Jan                                                     170
Sept                                                    499
1920 

Jan                                                   1,230
Sept                                                  1,201
Price deflation after Feb. 1920:
prices on imported goods fell 50%;
mark strengthened against other currencies.

1921
Jan                                                   1,349
Price stability;
April rate of price inflation 6%;
price inflation after May.
Sept                                                  2,175
Dec. mark regained ¼ of Nov. value

1922
Jan                                                   3,976
May                                                  6,012
Sept                                                 30,381
Price inflation in the autumn.

1923
Jan                                50,000 → 372,477
Emergency Aug.
Sept                                           269,439,000
Oct 2                                       6,631,749,000
Oct 9                                    24,868,950,000
Oct 16                                   84,969,072,000
Oct 23                              1,160,552,882,000
Oct 30                            1,347,070,000,000
Nov 5                              6,700,000,000,000
Nov 30                         97,000,000,000,000

From 4.2 marks per 100% gold-backed US $1
To 4.2 trillion marks per gold-backed US $1.

Price of Silver in German Paper Marks:

1919
Jan                                                   12
May                                                 17
Sept                                                 31
1920
Jan                                                      84
May                   Deflation                  60
Price deflation after Feb. 1920:
prices on imported goods fell by half;
mark strengthened against other currencies.

1921
April rate of price inflation was 6%.
Sept                                                 80

1922
Jan                                                  249
May                                                375
Price inflation after July.
Sept                                              1,899

1923

Jan                                               23,277
Price stability in the spring.
May                                              44,397
June 5                                           80,953
July 3                                          207,239
Aug 7                                        4,273,874
Sept 4                                     16,839,937
Oct 2                                    414,484,000
Oct 9                                 1,554,309,000
Oct 16                               5,319,567,000
Oct 23                               7,253,460,000
Oct 30                               8,419,200,000
Nov 5                             54,375,000,000
Nov 13                         108,750,000,000
Nov 30                         543,750,000,000

Finally, one U.S. Silver Dollar = 4.2 trillion marks ℳ
[About 3/4 of one ounce of pure silver cost 4.2 trillion marks.]

After money velocity took off, Germans could no longer exchange their paper marks for gold or silver on the black market. No one would sell gold for paper marks at any price.

Does any of the following sound familiar?

Germany ran huge deficits and lived far beyond its means. The country had little manufacturing for export, extremely high taxation, and staggering debt (for war and social reforms). The purchasing power of the currency was decreasing steadily (gold-backing was removed in 1914); and the tax-base was shrinking. As revenues declined, spending accelerated on welfare, education, and national healthcare.

The Weimar government financed the vast majority of its expenditures by borrowing. The government issued notes (promises to pay); the Reichsbank in Berlin issued money on the ‘security’ of the promissory notes. The central bank was the back-stop, keeping interest rates artificially low and monetizing debt.

Leaders said money-printing was necessary for jobs. During the inflationary boom, Germany had over-employment. The government was padded with bureaucrats; and industry was heavily subsidized by the state. Low-skilled workers were employed in make-work and short-time jobs, with excessive redundancy.

The Reichsbank frequently intervened in the foreign exchange market to defend the mark, squashing investors who were speculating against the currency.

• As credit expanded, a speculative bubble grew, and the stock market soared→ 1920, 1921, 1922.

• Stability existed as long as market participants believed it would last a little longer.

• Speculators did not realize the stock market was going up because the German mark (ℳ) was going down.

DETERIORATION OF FUNDAMENTALS

The economy looked good on paper. However, the falling value of the currency took its toll on everyone but the rich. Living standards for average people and those on fixed incomes declined. To protect against rising prices, people began to stock up on groceries and other necessities. Workers demanded higher wages to compensate for their loss of purchasing power. 

RECESSION CAUSED DEBTS TO RISE. When the economy stalled, the government wildly expanded the money supply to pay debts, avoid civil unrest, and stave off bankruptcies. But once stagnation took hold, easy money could not stop fundamental economic deterioration.

Suddenly, lack of faith in the currency triggered ferocious money velocity (see charts above).

Price inflation out-paced the printing press: No matter how much money the bank printed, there was never enough! Businesses paid suppliers and employees with IOUs/ coupons; municipalities issued their own currencies; neither banks nor government could honor checks. Hungry people resorted to barter. By August, many villages had no food. 

THE FARMER WAS KING.  A loaf of bread cost 200 billion marks at the end of the currency collapse. But prices for commodities remained steady for those who paid in silver marks. When Germans purchased bread with silver, the price was about the same in Weimar as it was in America [measured in ounces of silver].

The Chancellor declared martial law at the end of September, 1923. After the collapse of the paper mark, a new currency was re-set at 1,000,000,000,000 papiermarks to 1 Rentenmark.

A life’s savings could by one stamp for a letter. Pensioners and bond-holders were ruined utterly.

Submitted by Denise Rhyne

END NOTES

After 1924, societal destruction and mass-unemployment ushered in Hitler’s reign of NATIONAL SOCIALISM [NAZI]. Adolf Hitler got his 19% support from the disenfranchised workers and millions in the lower class who lost their jobs when the inflationary boom ended in depression. 

Heinz Habedank, Die Reichsbank in der Weimarer Republik: Zur Rolle der Zentralbank in der Politik des deutschen Imperialismus 1919-1933; Steven B. Webb, The Supply of Money and Reichsbank Financing of Government and Corporate Debt in Germany, 1919-1923, “The Journal of Economic History,” Vol. 44, No. 2, The Tasks of Economic History (June, 1984), pp. 499-507, Cambridge Univ. Press.

WE ALREADY HAVE HYPER-CREDIT: www.washingtongoldexchange.com/2017/we-already-have-hyper-credit/

WHAT ARE CAPITAL CONTROLS? http://www.youshouldbuygold.com/what-are-capital-controls/

Things You Probably Didn’t Learn in School About Gold & Silver-pdf :
Includes articles on NAKED SHORTING.

Until August 15, 1971, the dollar was REAL MONEY because it represented tangible value. Today, U.S. currency has no intrinsic value (. When gold-backing was completely removed on August 15, 1971, the dollar is FIAT MONEY: U.S. currency has no intrinsic value (gold-backing was completely removed on August 15, 1971).

On August 15, 1971, the dollar became FIAT MONEY. Before that date, the dollar was REAL MONEY because it represented tangible value. The $1,000 bill above was “as good as gold.” It reads: “One thousand dollars in gold coin payable to the bearer on demand.”

Before the U.S. dollar was first debased, it was possible to exchange paper dollars for gold dollars at the bank. For almost 150 years, the dollar was 100% redeemable in gold. According to organic U.S. law [1792], $1 was equivalent to 1/20th oz of gold. Anyone could have demanded a $20 Gold Piece for a $20 bill [U.S. $20 coins below]:

A $20 coin now costs $1,340, instead of $20. It takes more than 60 times as many dollars to buy the same amount of gold. That means our grandparents and great-grandparents could have purchased at least 60 times more goods and services than we can in 2017 (with the same number of paper dollars).

Over time, gold retains purchasing power: The gold dollars above [$1 coins] can buy about 68 times more ‘stuff’ than the paper dollars in your pocket!

From 1792 until 1971, the value of the dollar was stable throughout the world. Before the green-back’s tie to gold was severed, the United States had trade surpluses and balanced budgets. During the era of sound money, trade imbalances were settled with gold. Today, America settles staggering trade deficits with ‘printing-press-money.’ 

FEDERAL RESERVE DOUBLE WHAMMY

Money-printing is a double whammy for savers. Not only is the dollar continually losing purchasing power, the Federal Reserve’s artificially low interest rates have destroyed people’s ability to achieve yield. For 100 months, holders of U.S. Treasury Bonds have been unable to earn enough interest to compensate for the eroding value of the dollar. Yield-starved retirement funds are on their way to needing a bail-out.

The Federal Reserve’s Zero Percent Interest Rate Policy [ZIRP] is made possible by massive money-printing. In today’s “globally synchronized environment,” financial repression is coordinated (with Negative% Interest Rate Policy in Europe and Japan). The chart below illustrates why the life-span of fiat money (currency backed by nothing) is predictably short:

Image of Federal Reserve Adjusted Monetary Base courtesy of ZeroHedge.

The French philosopher Voltaire wisely noted that all fiat currencies end up returning to their intrinsic value: ZERO. Since the day credit froze around the globe [Aug. 9, 2007*], U.S. debt has more than doubled and the dollar has fallen dramatically against gold.

On the first day of the worldwide debt-crisis [Aug.9, 2007], the spot price of gold was $662/oz [London p.m. fix]. The price of 1 Troy oz of physical gold is now $1,335 [new American Gold Eagle and Canadian Maple Leaf below]: 

The high price of gold is signaling the world’s declining confidence in the dollar-reserve system. We named our website “YouShouldBuyGold.com” because there is no better way than gold to protect your savings from currency debasement. Before money-printing shifts into high-gear, exchange paper currency for “monetary metals.” There is no third-party risk when you take possession of physical silver and gold coins.

Submitted by Denise Rhyne

END NOTES

* Schumpeter blog at economist.com; Aug. 9, 2012, Associated Press.

Gold-backed currencies are “hard” currencies. “Fiat” currencies have no intrinsic value. In the past, the existence of national hard currencies discouraged countries with fiat currencies from wildly inflating their money supplies. When nations debased their money, people could flee from the fiat currencies, and flock to available hard currencies. That changed with the bombings of Iraq and Libya [U.S./ NATO invasion of Libya, March 19, 2011]. For the first time, not one national hard currency exists anywhere in the world.

Since gold convertibility was suspended in 1971, the dollar has retained its reserve-currency status because of the dollar’s forty-year monopoly in settling OPEC oil trades – THE PETRO DOLLAR SYSTEM: http://www.youshouldbuygold.com/gold-the-petro-dollar-and-us-foreign-policy/]. 

WEIMAR – first DEFLATION then INFLATION:http://www.youshouldbuygold.com/weimar-first-deflation-then-inflation/

“Inflation: An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices. The rise in prices is caused by an increase in the volume of paper money issued.” Webster’s New Twentieth Century Dictionary, George W. Ogilvie, unabridged, USA, 1904.

Things You Probably Didn’t Learn in School about Gold & Silver: YouShouldBuyGold.com/2017/GOLD-SILVER-pdf

FORMATION OF THE GREATEST CREDIT MONOPOLY

Before and after this meeting, Democratic Morgan and Republican Rockefeller clashed. But in 1910, banking competitors and adversaries came to an amicable agreement. Along with Rockefeller and Morgan agents, representatives of the oldest European banking Houses framed the structure for the world’s greatest credit-monopoly. They named their new bank the “United Reserve Bank of the United States” [now Federal Reserve Banks].

Although the agreement for their “United Reserve System” was made in secret, details of the conclave were disclosed after 1913 [after the “Federal Reserve System” became U.S. law]. Articles, interviews, and books began to appear in which the emissaries of banking dynasties described the nine-day event.

who forged the alliance.

DR. ABRAM PIATT ANDREW represented Rockefeller and Morgan interests. He edited and framed publications for the United States National Monetary Commission. Dr. Andrew was Assistant Treasury Secretary.

FRANCIS A. ‘Frank’ VANDERLIP, Sr. was a representative of the financial interests of William Rockefeller and Kuhn-Loeb & Co. Vanderlip was President of Rockefeller’s National City Bank of New York [largest U.S. bank]; he was Assistant Treasury Secretary under President McKinley.

HENRY POMEROY DAVISON represented Morgan interests [Morgan’s personal assistant]. He was Senior Partner at JP Morgan & Co, President of Liberty National Bank and First National City Bank of New York. Davison was John Davison Rockefeller cousin; founded Bankers Trust Co.

CHARLES D. NORTON represented Morgan interests. He was Vice President of Morgan-controlled First National Bank of New York [later President].

BENJAMIN STRONG, Jr. represented Morgan interests [Morgan’s personal auditor]. He was head of Morgan’s Bankers Trust of New York. Strong became first Governor of the New York Federal Reserve.

PAUL MORITZ WARBURG was Senior Partner Kuhn Loeb & Co [later Shearson Lehman American Express]; liaison for MM Warburg & Co [Germany, the Netherlands]; representative of House of Rothschild [England, France]; Chairman Manhattan Co [JPMorgan Chase & Co]; Director American IG Chemical Corp [wholly-owned U.S. subsidiary of German cartel IG Farben].

“Paul Warburg met Nelson Aldrich in 1907… they became a team after Warburg proposed his “United Reserve System” at a meeting of the Academy of Political Science in 1910. With Aldrich in the audience, he outlined this plan for a central bank with a regional flavor.” Federal Reserve Bank of St. Louis*

SENATOR NELSON ALDRICH represented Rockefeller interests and was allied with House of Morgan. The former banker was father-in-law of John Davison Rockefeller, Jr., grandfather of Vice President Nelson Aldrich Rockefeller and David Rockefeller.  

Senator Nelson Aldrich

Paul Warburg was not yet a U.S. citizen, so his plan for a central bank with regional branches was called the “Aldrich Plan.” Senator Aldrich was Chairman of the “National Monetary Commission” which made recommendations to Congress for banking reforms. On Jan. 11, 1911, the Chairman of the National Monetary Association recommended Warburg’s “National Reserve Association” to Congress. However, a Congressional majority rejected the monopolistic scheme.

THE MONEY TRUST

In those days, the public and the press were ‘up in arms’ about monopolies. The “New York Times” reported a vast and growing concentration and control of money and credits in the hands of a few men [Jan. 12, 1912].

For the next year, the U.S. Congress held public hearings to investigate the small group the press called the ‘Money Trust.’ In their Pujo Report [Feb. 28, 1913], a Congressional committee said a handful of financiers had formed a “cartel.” The Committee to Investigate Money and Credit Control Concentration unanimously named Paul and Felix Warburg, Jacob Schiff, William Rockefeller, Benjamin Strong Jr., J. P. Morgan, and others as a cabal of financiers.

QUESTION: How could the Money Trust possibly sell their “United Reserve System” to alarmed citizens who were vehemently opposed to a central bank?
ANSWER: They waged a brilliant and expensive public-relations campaign in favor of a Regional Banking System.

Regionalism was stressed to win over businessmen in America’s heartland. Bankers in the Midwest were told a twelve-bank Regional-Reserve-System would disperse banking power across the nation. To convert Democrats, promotional literature emphasized the decentralization of banking. From East to West, leaders were assured power would no longer be concentrated in New York City.

Across the country, respected businessmen (rather than bankers) led so-called “grassroots” organizations to study the new banking reforms. Groups such as the “National Citizens’ League for the Promotion of a Sound Banking System” sprang up to promote the new regional plan. Trusted ‘experts’ in economics wrote editorials about the need for a regional system.

When negative sentiment began to turn, the Money Trust chose Democrats to sponsor banking legislation. Then they distanced themselves from the “Glass-Owen Bill.” The “Glass-Owen Bill” added restrictions to the international banking agreement the cartel had forged in 1910. But in essentials, the Federal Reserve System mirrored Warburg’s original plan for the central bank.

In order to get the bill passed, Rockefeller-Republicans Aldrich and Vanderlip spoke out in strong opposition to their own plan. Senator Aldrich attacked the bill, calling it socialism, fiatism, and populism. Rockefeller opposition was all that was needed to turn the tide. Former opponents decided the new Federal Reserve System really was for the working man. Congress hailed the Federal Reserve Act as a democratic victory over the Money Trust!

The 1913 Federal Reserve Act legalized the private credit-monopoly of an international cartel.

“Cartel:  An association between financial interests for establishing a national or international monopoly by the fixing of prices, a trust.”  [Webster’s New Twentieth Century Dictionary, George Ogilvie, USA, 1904.] It is common for financial interests to form partnerships with governments. For example, the Organization of Petroleum Exporting Countries [OPEC] is an oil cartel that formed a partnership with the U.S. government to peg the price of oil to the dollar [1961]. 

Congress does not [may not] audit the Federal Reserve because the private bank is not a government agency. The international cartel has the appearance of a governmental organization because the Federal Reserve has a legal partnership with the government; U.S. law backs the cartel. Over the years, additional laws have removed the original restrictions and re-enforced the partnership.

AN “ELASTIC MONEY SUPPLY” MEANS MORE WAR.

Governments go into partnership with banking cartels so politicians can spend without set limits. War is an expensive business. Since 1913, Federal Reserve credit creation has made war-financing easy.

The U.S. was involved in war one out of every four years in the last century. In this century, warfare has been non-stop: Twenty-one years in Iraq; eleven years in Afghanistan; ten years in Vietnam/ Southeast Asia; Libyan invasion; covert operations in Ukraine, Syria, Yemen, Iran, Pakistan, South America, Central America, and Africa; the Dept. of Homeland Security, CIA, TSA, FEMA, NSA; foreign/ domestic drone-surveillance; 700+ military bases in 140 countries.

Before Congress gave the Federal Reserve exclusive control over the money and credit of the United States, America was the greatest creditor-nation. Today, the U.S. is the greatest debtor-nation in world history. As our national debt grows, the cartel is getting richer, and Americans are getting poorer. Solution: END THE FED.

Submitted by Denise Rhyne

END NOTES

* From the Federal Reserve Bank of St. Louis: A Foregone Conclusion, Chapter Two, Banking Reform 1907-1913, (Degen, American Monetary System, 25); Robert Craig West, Banking Reform and the Federal Reserve (Ithaca, 1977), 76-77, 82, 84-85; Paul Warburg, The Federal Reserve System; Its Origin and Growth (New York, 1930), II, 201-214.

“Some people think the Federal Reserve Banks are United States Government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers…. When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here. A super-state controlled by international bankers and industrialists… acting together to enslave the world …Every effort has been made by the Fed to conceal its powers but the truth is– the Fed has usurped the government.” [Pennsylvania Congressman Louis McFadden, Chairman of the “House Committee on Banking and Currency for the United States,” May 23, 1933]

“The 12 regional reserve banks are not government institutions, but corporations nominally ‘owned’ by member commercial banks.” [Federal Reserve Bank of Chicago, p, 27, “Modern Money Mechanics”] “The Federal Reserve Board and the Federal Reserve Banks are private Corporations.” [June 10, 1932, Congressional Record, p. 12595] “Examining the organization and function of the Federal Reserve Banks… we conclude that the Reserve Banks are not federal instrumentalities… but are independent, privately owned and locally controlled corporations.”  [Lewis vs. United States, 680F. 2d 1239, 9th Circuit, 1982]

First Board of Governors of the Federal Reserve: Paul M. Warburg was President of the Federal Advisory Council until 1927 and set policy for the Board (his brother-in-law was Jacob Schiff of Kuhn-Loeb & Co, Director Wells Fargo Bank, National City Bank of New York, Associate EH Harriman Company); George Skelton Williams; W.P.G. Harding (Director War Finance Corporation); Adolph C. Miller; Charles Sumner Hamlin (Asst.  Secretary Treasury); William G. McAdoo (President Wilson’s son-in-law.); and Rockefeller man Frederic A. Delano (Franklin Delano Roosevelt’s uncle, Brookings Institution, Carnegie Endowment Trustee).

UBS WARBURG: Union Bank of Switzerland and Swiss Bank Corp [SBC] were predecessors of UBS [Warburg]; UBS merged with SBC; Crédit Suisse was integrated into SBC Warburg Division [renamed SBC Warburg Dillon Read]; SG Warburg & Co merged into Swiss Bank Corp [1995]. EM Warburg & Co is now Warburg Pincus [Timothy Geithner, former U.S. Treasury Secretary, is now President of Warburg Pincus]; UBS owns Warburg Pincus Asset Mngmnt Div.

European banking families such as the House of Warburg and the House of Rothschild became dynasties by financing wars and collecting interest on war debt. Paul Warburg, the “Father of the Federal Reserve,” was portrayed as “Daddy Warbucks” [WAR $] in the Broadway musical “Annie.” 

Banking “reforms” always consolidate power. A ‘Fox’ was in charge of the hen-house in 1913 when Sen. Aldrich led the National Monetary Commission; Sen. Chris Dodd was ‘Head Fox’ in 2010: The “Dodd-Frank Financial Reform Bill” guarantees future bail-outs for the too-big to fail banks, and serves to eliminate regional bank competition. The onerous regulations in Dodd-Frank put regional banks at a disadvantage; the cartel can easily conform to the costly reforms with the bailout money they got from Congress.   

After the 2008 crash, the big banks received billions from the Troubled Asset Relief Program [TARP]. They used the money to buy up “troubled assets:” regional banks, investment firms, and about $1.3 trillion of “Mortgage-Backed Securities” [making the Federal Reserve the largest private holder of residential real estate in the United States]. 

WHAT ARE CAPITAL CONTROLS?: http://www.youshouldbuygold.com/what-are-capital-controls/

G. Edward Griffin, The Creature from Jekyll Island, American Media, 1994. In 1976, the U.S. House of Representatives investigated the ownership of the Federal Reserve and published “A Study of Corporate and Banking Influence.”

In 2013, gold futures had the first annual drop since 2000.

Take a look at what happened in
markets that traded actual gold and silver. 

2013 PHYSICALS Market

Worldwide, demand for gold coins and bars surged 28% in 2013. Record-demand for bullion resulted in high premiums, delayed deliveries, gold and silver shortages:

Premiums above the spot price for PHYSICAL silver coins, medallions, and bars got very high – as much as $10 per Troy ounce. However, people were happy to pay the high premiums, and glad to get silver in almost any form. Customers were not concerned about brands, shapes, or sizes of silver bars, or denominations of U. S. 90% silver coins. They just wanted real silver bullion.

STAGFLATION
America was almost in a depression during the 1970s. Economists called it stagflation. We had high unemployment and sky-high fuel costs. And, inflation was terrible. The U.S. economy was in pretty bad shape; but not in the shambles it is today [since the 2007/ 2008 crash].

After the U. S. abandoned a gold standard in 1971, people began buying gold and silver coins to protect themselves from the dollar’s loss of purchasing power. Most coin and bullion buyers were not looking for paper dollar profits. They wanted tangible assets to hedge against a crumbling dollar.

SILVER SHORT-SQUEEZE
Silver was $1.95 per ounce in the early 1970s, when Nelson Bunker Hunt, William Herbert Hunt, and other wealthy investors began accumulating physical silver. They informed the public they would be systematically building physical positions in silver. Dealers understood they were buying the actual metal -taking delivery of silver contracts- rather than speculating in the futures market with paper silver. Over a period of years, silver moved from $5 to about $11 per ounce mid-1979. Silver was more than $30 per ounce at the end of 1979.

The Hunt brothers’ long position was 100 million ounces of silver. On each delivery month, the Hunts and other investors paid off their contracts and were taking delivery of the silver [5,000 oz of silver per contract]. Until then, there never had been so much demand for so much PHYSICAL silver on the exchanges.*

As silver began moving sharply up in 1979, the bullion banks were facing “fails to deliver” on their open contracts. It was rumored nine directors of the COMEX held massive short positions in silver. The situation was called a silver short-squeeze.

At the end of the squeeze, the market was near collapse and the shorts were almost broken. The short-squeeze threatened the very viability of the exchanges. The rules for trading silver on the COMEX (Commodities Exchange New York) and CBOT (Chicago Board of Trade) were changed many times until the squeeze came to an end.

WHEN THE EXCHANGES HALTED SILVER TRADING
The exchanges stopped trading silver several times during the  silver short-squeeze (and during its aftermath). There were “limit up” days, “limit down” days, and “liquidation only” days. There was uncertainty in the exchanges, tremendous price volatility, and extraordinarily wide spreads (big percentages between bid and ask). Locking in prices over the phone became risky for customers, wholesalers, and dealers.

In those frantic days, people stood in lines half-way around city blocks at coin shops throughout the country, hoping dealers would not run out of silver. People even traded with each other while standing in lines. Supplies of silver bars and silver coins were strained to the breaking point.

COMEX SILVER: LIQUIDATION ONLY
Time after time, exchanges such as the COMEX and the CBOT raised margin requirements in an attempt to drive the price of silver down, and make it too expensive for investors to stay “long” in the silver market.

Then, they limited the number of contracts investors could buy. In New York, customers were limited to 10 million ounces of silver; the CBOT put on a limit of 3 million ounces. In March 1980, the CFTC (U. S. Commodity Futures Trading Commission) finally broke the back of the silver short squeeze.

Silver was on its way to $50/oz. The final game rule was changed to stop the price advance. The CFTC banned all purchases of silver contracts, allowing liquidation only.  

Silver tumbled 50% in four days.
The total decline was 78% in two months.

After the silver market plummeted, it remained in the tank for more than twenty years. The shorts made fabulous profits. And, those on the other side of the trade lost their shirts. With the price of silver in the $20s, the Hunts were unsuccessful in their efforts to raise capital to pay margin calls. The Hunts declared private bankruptcy in 1980. In the end, Hunt liabilities were $2.5 billion and their assets had been reduced to $1.5 billion.

The Hunt brothers were not big enough to fight the financial insiders bankrolled by the Federal Reserve; or powerful enough to counter the actions of the CFTC. 

In August 1988, the Hunts were convicted and heavily fined for “conspiring to manipulate the market.” The Hunt brothers were not the conspirators. They were the victims of the same short-sellers who manipulate the prices of precious metals to this day.    

HAS ALMOST FORTY YEARS OF SHORT-SELLING BEEN NAKED? YES. Short-selling has prevailed since the 1980 squeeze. Industry watchdogs believe naked-short-selling (with the help of a few central banks) collapsed the silver market in 1980. They also believe naked-short-selling has effectively managed gold and silver prices for the last thirty years. However, it appears gold and silver prices have not been as effectively managed since the real estate bubble burst in 2007.

TAKE A LOOK AT REAL POWER AND REAL MARKET MANIPULATION.  Compare the Hunt brothers’ 1980 long position of 100 million ounces with recent short positions held by a small number of banks. A November 2009 CFTC report said just two banks held 68% of all commercial net short positions in silver, and 43% of all commercial net short positions in gold.  

At the time of the report, seven commercial banks held a combined total of 65,000 open contracts, representing 325 million ounces of silver (short). The seven bank combined total is the largest concentration of short contracts in history.

* In 1997, Warren Buffet (Berkshire Hathaway) had a long position in silver of about 130 million ounces – initially at about $4.50 per ounce.

Although Buffet was long 130 million ounces (scheduled to take delivery of March silver contracts), he had also sold July future contracts of silver short. His silver buying strategy seems to have been more of a paper trade… However, there is speculation he was compelled to sell his silver delivery contracts because the silver bullion sold for delivery did not exist. The 130 million ounces had been sold naked short.

By Denise Rhyne

NAKED SILVER SHORTING: http://www.youshouldbuygold.com/naked-silver-shorting/

TEN COMPELLING REASON TO BUY SILVER NOW:
http://www.washingtongoldexchange.com/2014/ten-compelling-reasons-to-buy-silver-now/

WEIMAR: First DEFLATION Then INFLATION (See what happened to the price of silver in Germany):  http://www.youshouldbuygold.com/weimar-first-deflation-then-inflation/

On the other hand, the majority of those who buy/ sell gold and silver derivatives are short-term speculators [Exchange Traded Funds such as SLV and GLD, options, and futures contracts— NYCOMEX, Euronext, etc.].

Buying or selling on margin gives speculators tremendous leverage (margin requirements vary).  

The usual gold or silver buyer is not interested in acquiring actual bars, but in making a quick profit. The buyer of one silver contract is long 5,000 ounces of silver. The buyer of one gold contract is long 100 ounces of gold. To complete the transaction, what is purchased must be sold. The buyer profits if he sells the contracts at higher gold/ silver prices.

Commodities investors/ traders can also take negative positions. A short-seller sells what he does not own. To fill the contract, he must buy back what he originally sold. A short-seller makes a profit if he can buy the commodity back when the market drops.

Whether buying long or selling short,
transactions are not complete until the
corresponding transaction is executed.  

The shorts profit if they can buy the commodity back when the market drops. If they misjudge, and the market goes up, they either cover their shorts, and take huge losses; or they pay margin calls, and hold on to their contracts with their teeth gritted. They are leveraged- with a certain percentage down, controlling 5,000 Troy oz of silver per contract, or 100 Troy oz of gold per contract.

There is a delivery month when a commodity contract expires. In theory, all buyers can pay for contracts in-full and take delivery of the silver/ gold. In the past, it was possible for anyone to take delivery of silver on the delivery date of the contract. That is no longer always the case. 

FAILS TO DELIVER 
Shorts are squeezed during rising markets when covers are impossible to find to close out their short positions. It is called fails to deliver when bullion houses are unable to secure the silver (gold) to fill delivery orders. (The COMEX can limit delivery of silver to 1.5 million ounces to any individual.) When demand overwhelms supply, the exchange has a clause that allows for a cash settlement, instead of delivery of the physical metal.  

The default-mechanism for fails to deliver is cash-settlement. Since 2011, delivery contracts have been quietly settled in dollars rather than in precious metals. Industry watchdogs say cash-settlements are getting larger and more frequent. It is rumored buyers who are legally contracted to take physical silver delivery, instead, are paid dollar premiums as high as 20-30% as an incentive to settle. 

A commodity short-sale is “naked” if the seller does not have the goods to fill the contract. If he sells silver or gold without insuring it can be borrowed or secured, the corresponding half of the transaction cannot be fulfilled. The naked short-seller cannot fill the order because the commodity is not available.

Naked short-selling drives down prices to levels that do not reflect true supply and true demand.


BULLION BANKS

Bullion banks are members of the London Bullion Market Association (LBMA). Bullion banks are investment banks that function as clearing banks – wholesale suppliers of gold and silver bullion. The banks conduct the financial transactions and ownership transfers of precious metals from central bank inventories — most often, gold and silver that has been leased, swapped, rehypothecated.

• J P Morgan Chase Bank
• HSBC Holdings Bank PLC
• Barclays Bank PLC
• ScotiaMocatta (Bank of Nova Scotia)
• Deutsche Bank AG
• SocGen.

Banks such as JPMorgan and HSBC perennially hold massive short positions in gold and/or silver. There are no COMEX limits on speculative positions except in the spot delivery month. An unlimited number of contracts can be sold short.

Currently, JPM, HSBC, and other bullion banks control the open interest on the COMEX with an unprecedented number of silver short positions (number of incomplete transactions). Billions of dollars worth of silver must be purchased or delivered to complete the outstanding transactions.  

Credible industry experts believe the banks
owe more silver than exists above ground.  

Since 2007, global central banks (especially in Asia) have been gradually unloading dollars on the exchanges. Instead of taking their profits in dollars, mega-buyers have been paying off contracts and taking delivery of massive tonnage of physical metal. When silver (or gold) breaks to the upside, the bullion banks increase their naked short positions to suppress the price. 

The on-going tug-of-war between the naked shorts
and big players who are unloading billions of dollars
for gold and silver is causing tremendous volatility.  

We are just one crisis away from a run on PHYSICAL silver and gold. All it would take to trigger a default-event is for one large bank or country to refuse cash settlement and demand actual silver (gold). Currencies and entire national economies can be –and have been- brought down by naked shorting. The practice threatens broader markets, and could be the catalyst to shatter global confidence in the dollar.

By Denise Rhyne

TEN COMPELLING REASON TO BUY SILVER NOW: http://www.washingtongoldexchange.com/2014/ten-compelling-reasons-to-buy-silver-now/

HUNT BROS. & 1980 SILVER SHORT SQUEEZE: http://www.youshouldbuygold.com/hunt-brothers-and-1980-silver-short-squeeze/

WEIMAR: First DEFLATION Then INFLATION (See what happened to the price of silver in Germany):  http://www.youshouldbuygold.com/weimar-first-deflation-then-inflation/

The Golden Age of any society directly corresponds to its use of gold and silver money. Real money produces economic freedom. Maximum productivity is the result. When England and America were on a gold standard, the merchant class expanded and the people flourished.

Now that the United States and Europe have debased
their currencies, most people’s living standards are falling. 

John Maynard Keynes diagnosed the effects of debauched money:

 “Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” Lord John Maynard Keynes.* 

Great civilizations always go into decline when they freely print currency backed by nothing. Why?

The printing press enables politicians to secretly siphon off the wealth of the people with an invisible tax.

The tax is invisible because people rarely make the connection between the central bank’s “printing press” and their falling standards of living. With each passing year, their currency buys less. Thomas Jefferson on the invisible tax:

“Every one, through whose hands a bill passed, lost on that bill what it lost in value during the time it was in his hands. This was a real tax on him… a mode of taxation the most oppressive of all because the most unequal of all.” Thomas Jefferson, Observations- Etats Unis, June 22, 1786, Encyclopedia, vol. IV, p. 165.

SOUND MONEY REIGNS IN GOVERNMENT.

From 1792 until 1971, the supply of currency in America was limited by the amount of physical gold and silver the country owned. Paper currency that is backed by gold and/or silver is called “hard money.” A government cannot print gold and silver.

That is how hard money checked the growth of government and why the central planners despised gold-backed money. Most of the money the government spent had to be taken in by direct taxation. Before bureaucrats engaged in foreign wars or doled out money to their cronies and special interests, they first had to raise additional taxes (and tax increases are never popular).

THE INVISIBLE TAX

Gold backing was removed from the dollar in 1971. Now that the dollar has no ties to gold or silver, the bureaucrats have a blank check. Direct taxation now covers only a small percentage of the money the United States spends [on and off budget]. Printing-press-money allows them to spend with no set limits.

Most government spending is financed by an exorbitant tax levied on constituents invisibly. This includes the poor, wage earners, manufacturers, investors, business people, savers, and retirees. Most of them just do not know it.

P E R P E T U A L    W A R

The invisible tax perpetuates the war machine. If military activities had been paid by direct taxation, the public would not have allowed the following:  20+ years of war in Iraq; 10+ years of war in Afghanistan; 700+ military bases in 140 countries; 10+ years in Viet Nam and Southeast Asia; a Libyan invasion; covert operations in Syria, Yemen, Iran, Pakistan, Latin America, South America, Africa; and major wars one out of every four years in the last century.   

Our government —in partnership with the Federal Reserve— is hollowing out the nation’s wealth by a tax levied through money debasement. The “Fed” is the agency of the hidden tax. The wealth-transfer is accomplished by the private bank’s mind-boggling money creation mechanism.

When Congress needs more money, the Federal Reserve creates new credit. Creating credit is essentially the same as printing money. The monetary base is inflated in the same way air inflates a balloon. As the dollar supply expands, each dollar people have earned and saved becomes worth less.

Martin Kozlowski, Wall Street Journal

DEFICIT SPENDING IS A SCHEME
FOR THE CONFISCATION OF WEALTH.

The difference between what the dollar could buy last year and what it can buy this year is the invisible tax you paid on every one of your dollars. The more credit created by the Federal Reserve [for wars, bail-outs, federal programs], the poorer we become:

“By a continuing process of inflation, government can confiscate secretly and unobserved an important part of the wealth of its citizens.” John Maynard Keynes *

Not one in a million understands the role the Federal Reserve and our government are playing in transferring the wealth of the American people to a small group at the top: 

“The decrease in purchasing power incurred by holders of money due to inflation imparts gains to the issuers of money.” St. Louis Federal Reserve, Review, p. 22, Nov. 1975.

ZERO PERCENT INTEREST RATES 

Artificially low interest rates are transferring the real wealth of the United States to politically well-connected corporations and mega-banks. Artificially low interest rates are made possible by massive credit creation by the Federal Reserve.

Credit creation dilutes the dollar
supply just as water dilutes soup.

Billions of brand new dollars flood the market
and water down the value of the currency.

At first, prices rise slowly; but each time the money supply is diluted, it takes more dollars to buy the same essentials. Prices do not rise uniformly. Businesses ‘eat’ their higher costs as long as they can; but eventually, most enterprises are forced to raise their prices.

Businesses compensate for higher fixed costs by cutting employee benefits, reducing their work forces, and consolidating. This will be an increasing trend in 2018. Sky-high prices for rent, stocks, groceries, insurance, tuition, utilities, energy, fees, housing, and healthcare indicate the deterioration of the currency is gaining speed.

The Golden Constant 

The purchasing power of gold has remained remarkably stable over thousands of years. That is why this “monetary metal” is called the “golden measuring rod.” The price of gold gauges the dilution of the supply of paper currency. As the dollar is debased, more and more dollars are exchanged for the constant value of 1 Troy oz of gold. Over time, gold measures the erosion of dollar value.

MEASURING CURRENCY SUPPLY DILUTION:

On August 14, 1971, gold was @ $35/0z
On Jan 2, 2002, (London pm) gold was @ $278.35/oz
On Nov. 4, 2015, a 1-oz American Gold Eagle was @ $1,168
Today, a 1-oz American Gold Eagle is @ $1,258.

Since 1971, the dollar has fallen more than 3,400% against PHYSICAL gold. That is how much purchasing power the dollar lost! The rising gold price is evidence confidence in the dollar-reserve system is waning:

“Without the confidence factor, many believe a paper money system is liable to collapse eventually.” Federal Reserve Bank of Philadelphia, “Gold,” p. 10.

The U.S. economy will hold together as long as nations are willing to accept dollars as the reserve currency. When the world loses confidence in the dollar’s value as the primary basis of global trade, the international monetary system will “re-set” once again [2018?]. In the meantime, grand theft is underway. The invisible tax is siphoning off the wealth of the nation and stealing your purchasing power.

Submitted by Denise Rhyne

END NOTES

*John Maynard Keynes, The Economic Consequences of the Peace, (London: McMillan/St. Martin’s Press for the Royal Economic Society, 1919, 1920, 1971) pp. 148-149, 235-236.

The petro-dollar is a key to understanding America’s foreign policy. GOLD, the PETRO-DOLLAR & U.S. FOREIGN POLICY: http://www.youshouldbuygold.com/gold-the-petro-dollar-and-us-foreign-policy/

THE FUNDAMENTAL TRANSFORMATION OF THE UNITED STATES: http://www.washingtongoldexchange.com/2018/fundamental-transformation-of-the-united-states-12719/

In 1966, Alan Greenspan was right: “Deficit spending is simply a scheme for the confiscation of wealth:”

“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions.  They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.  This is the shabby secret of the welfare statists’ tirades against gold.  Deficit spending is simply a scheme for the confiscation of wealth.  Gold stands in the way of this insidious process. It stands as a protector of property rights.  If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”  Alan Greenspan, “Gold and Economic Freedom,” published in 1966, “The Objectivist.”

4 BILLION PEOPLE PREFER PHYSICAL BULLION.

People in the Far East and Middle East prefer PHYSICAL gold bullion to promissory pieces of paper. China is now the biggest buyer of gold bullion in the world. (China is also buying silver and gold mines.) According to London traders, buyers from the Eastern Hemisphere have been vacuuming physical metal out of the market for the last ten years.

The transfer of gold from the West to the East is massive and on-going. As “Good Delivery” bars become available, the 400 oz bars of pure gold bullion are migrating to China, India, Korea, Japan, UAE, Thailand, Vietnam, Turkey, Iran, and Russia. Since the 2008 crash, China’s purchases have been off the charts (about 75% of world gold production).

Most investors in the West buy and sell on the exchanges without ever taking delivery of actual gold or silver. The paper market is easier than the physicals market (especially with silver). Investors do not have to pay for shipping or worry about storage. 

WHAT IS THE “SPOT” PRICE?

Spot prices quoted by exchanges refer to gold and silver contract prices. On the Commodities Exchange in New York (COMEX), a gold contract is for 100 Troy oz; a silver contract is for five 1,000 oz bars. In London, a  “Good Delivery” gold bar weighs between 350 and 430 Troy ounces of .995 pure gold. Quoted spot prices do not include costs for delivery of gold and silver contracts (100 to 430 ounces of gold; 5,000 ounces of silver).

PAPER GOLD & SILVER

The terms “paper gold” and “paper silver” refer to paper receipts that substitute for physical silver and gold. Examples are futures market accounts on the COMEX and shares of NYSE-listed Exchange Traded Funds (ETFs such as GLD and SLV). The PAPER market has an unlimited, virtual supply of silver and gold. In this securitized, fractional-reserve system, they sell contracts without the necessary bullion to back the contracts. 

Gold and silver ETFs are leveraged to the hilt. If you own these ETFs, you have risk, rather than protection (the piece of paper is not backed by actual bullion oz for oz). Investors’ exposure to third-party risk is minimal with ETFs, until interest rates begin to move wildly (as in June 2013).
 

Most GLD/ SLV buyers have never read the fine-print on their contracts. In reality, derivatives investors own nothing more than highly leveraged certificates, and are exposed to the risks associated with Treasury Bonds. A paper certificate that represents debt is not good insurance in these economic times.

Paper gold and silver trade like physical silver and gold until –suddenly– the music stops. Highly-leveraged derivatives eventually unwind; and investors get hurt in the unwinding process. If you take delivery of PHYSICAL gold and silver, you have no third-party risk and liquidity under all market conditions.

No other thing is as easy to trade as a silver or gold coin. There is always someone else who wants to trade real gold and silver money.

BULLION COINS

In the 1970s, U.S. coin dealers began trading gold and silver bullion coins at market prices, rather than at government fixed prices. Anyone can easily trade “bullion” coins. A bullion coin is a real coin from a sovereign nation or private mint. Bullion coins are traded according to weight, rather than “numismatic” value (rarity). Usually, the dates, condition, and mint-marks have little affect on coin prices because they are produced in such large numbers. 

In 1970, my brother Craig Rhyne began trading gold bullion coins such as British Sovereigns, Colombian pesos, Swiss 20 francs, Austrian coronas and ducats, Hungarian 100 koronas, Mexican pesos, and South African Krugerrands; and “bags” of U.S. 90% silver dimes, quarter, halves, and dollars (according to the “face value” of the old silver coins).

The 24-karat gold Canadian Maple Leaf (below middle) became available in 1979. In 1985, the U.S. Congress passed the Bullion Coin Act, authorizing the sale of American Gold Eagles (1 oz coin below left) and the 1 oz American Silver Eagle below right (first available in 1986). Platinum Eagles became available in 1997. 

Purchasing PHYSICAL silver and gold is much different than purchasing gold and silver certificates. The price is firm when the trade is locked in. For example, when you place an order for U.S. 90% junk silver coins, a dealer shops the market to secure the actual silver coins. A customer’s price is locked in when the dealer purchases the coins for him.

If the supply of junk silver coins is low and market demand is high, the premium is bid higher. When supplies are scarce, dealers must pay much higher premiums over the spot price to acquire the coins.

COIN & BAR PREMIUMS

Usually, coins and bars cost more than the spot price. Think of the spot price as a “benchmark.” Premium is the difference between spot prices and current market prices for particular gold and silver products (before commission). 

A dealer’s cost includes the coin or bar premium. Refining, minting, and shipping costs contribute to coin and bar premiums. For example: ten (1/10^th oz) gold coins cost a dealer more than one (1 oz) coin. One hundred (1 oz) silver coins have higher premiums than one (100 oz) bar of silver.

Spot prices and coin premiums constantly fluctuate. 

Premiums for coins and bars are not fixed. Premiums are a function of supply and demand and are dictated by the marketplace. Rising premiums on gold and silver bullion coins indicate supply shortages of physical silver and gold.

TRADABILITY

The best form of precious metals to buy is the form that will be easiest to trade in chaotic markets. Get some small coins. It is easier for individuals to trade small denominations. Gold coins from many countries are available in 1 oz, ½ oz, ¼ oz, 1/10th oz, and smaller sizes.

Small coins command healthy premiums over the spot price. But the divisibility of small coins is well worth their higher premiums. A huge bar purchased at or near spot price might not be a very good bargain down the road. When you want to sell the large bar, the bid price might be well below spot.

BID & ASK

Gold and silver dealers provide bid prices and ask prices for a specific coins and bars. The difference (percentage) between bid and ask is called the spread. You will find smaller spreads when you trade recognizable coins that are in high demand. Usually, dealers are just as eager to buy from you as they are to sell to you because gold and silver are so liquid.

FOR MORE INFORMATION CLICK ON THE FOLLOWING:

CONTROL YOUR OWN PORTFOLIO INSURANCE: http://www.youshouldbuygold.com/control-your-own-portfolio-insurance/

GOLD IS A PRUDENT INVESTMENT: http://www.youshouldbuygold.com/gold-is-a-prudent-investment/

WEIGHTS, MEASURES & BALANCING SCALES:
http://www.youshouldbuygold.com/weights-measures-and-balancing-scales/

CONTENTS: Ancient Monetary System: TALENT, MANEH, SHEKEL, GERAH, BEKAH; TROY Weights; METRIC Weights; CARAT Weights; KARAT Purity; MILLESIMAL Fineness; FAR EAST Weights; British POUND (Pennyweight, Pound Sterling, Sovereign); DOLLAR (Old U.S. Gold Coins); Historical GOLD-to-SILVER RATIOS (U.S. 90% Silver Coins, Gold & Silver American Eagles); BIBLE Weights (Conversion Table); WORLD COINS (Gold Contents).

WHY BUY PHYSICAL GOLD? Charles Dupont’s True Story: http://www.youshouldbuygold.com/why-buy-physical-gold-charles-duponts-true-story/

TEN COMPELLING REASON TO BUY SILVER NOW: http://www.washingtongoldexchange.com/2014/ten-compelling-reasons-to-buy-silver-now/

WHY DO I HAVE TO PAY MORE THAN SPOT PRICE?  http://www.washingtongoldexchange.com/why-do-i-have-to-pay-more-than-the-spot-price/

Things You Probably Didn’t Learn in School about Gold & Silver (includes articles on NAKED-SHORTING): http://www.youshouldbuygold.com/wp-content/uploads/2017/09/GOLD-SILVER-9-1.pdf

By Denise Rhyne