Major Frauds of the U.S. Monetary System
Jason Hommel
Fraud #1. Paper Money. Originally, a paper dollar
was a paper promise, a contract, to pay in gold or silver. The issuers
of dollars have defaulted on that promise numerous times in recent
history, at a rate of about once per generation. The issuers of paper
money defaulted on domestic gold redemption in 1934, defaulted on
silver redemption in 1968, and defaulted on international gold
redemption in 1971. Those who issue U.S. paper money (Federal Reserve
Notes) are in default. The creation of paper money is fraud, and was
used to steal away gold and silver from the hands of the people.
Fraud #1 (A). Unchecked Borrowing and Printing of
more Paper Money. All paper money is borrowed into existence, and that
does not make the excessive creation of paper money right. This fraud
is an additional theft upon all people who are already deceived by
holding onto the fraudulent dollars, instead of gold and silver. The
total amount of money in the U.S. banking system is known as M3, and is
almost $9 Trillion as of Jan., 2004.
www.federalreserve.gov/releases/h6/Current/
Fraud #2. The Debt of the U.S. Federal Government.
Originally, this debt was incurred to a large degree to fight and win
World War II, as the debt soared from under $50 billion to over $250
billion by the war's end. This was fraud, however, because at the time,
the U.S. was on a gold standard at $35/oz., and the U.S. never borrowed
$250 billion worth of gold in the first place, we only borrowed paper
money that was created to excess. The debt is primarily used as a means
to hide the fact of the excessive creation of paper money. By the end
of Feb, 2004, the debt can be rounded up to $7.1 Trillion, and is as
fraudulent today as it ever was. See
www.publicdebt.treas.gov/opd/opdpenny.htm
Fraud #3. Fractional Reserve Banking. Banks don't
even have the fraudulent paper money they say you have in your account.
They say you have "on demand" deposits, but they loan deposits out long
term, which is fraud, because you cannot demand your deposits when you
want. You have to order cash in advance, which your bank will have to
order from the Fed, if you take out more than a few thousand dollars,
and sometimes they will not even provide such a "service" of giving you
your money, but will only give you a cashier's check.
What are the fractional reserve requirements? In
June of 2001, it was $37 billion for the entire U.S. banking system.
See www.frbsf.org/education/activities/drecon/2001/0108.html
In June of 2001, M3 was $7605 billion. See www.federalreserve.gov/releases/h6/hist/h6hist1.txt
Therefore, in total, the reserve requirement was 37/7605, or .49%, or less than half of 1%.
The reason why it is so low is that for the first $6
million of deposits at a depository (your local branch) the reserve
requirement is zero. Then, for the next $6 million to $45 million, the
amount is 3%. Then, for amounts larger than $45 million, it is 10%. See
www.federalreserve.gov/monetarypolicy/reservereq.htm
Therefore, since the vast majority of deposits are
small ones, the effective reserve requirement is close to zero, or that
1/2 of 1%.
Fractional reserve banking is fraud, because those
reserves cannot simultaneously be used to pay out to depositors and be
used to back up the rest of the deposits at the same time. If more than
1/2 of 1% of people took their money out of the banking system, the
system would collapse, unless the banks were willing to go to the
Federal Reserve (the lender of last resort) and borrow more paper money.
The system works fine in theory, but works only for
paper money. (And in practice, it has only worked for less than 20
years.) But there is no "lender of last resort" for real gold and
silver.
Fraud #3 (A). The FDIC, or Federal Deposit Insurance
Corporation. www.fdic.gov/ The FDIC, in theory, insures accounts up to
$100,000. As inflation continues, the value of this number grows
smaller every year. In theory, this insurance is in place in case the
bank is insolvent and fails due to a bank run, and insufficient
fractional reserve requirements. In practice, it is there to back up
banks that fail that the Federal Reserve refuses to bail out. In
practice, sometimes depositors have to wait months to be paid this
insurance money. In practice, the FDIC does not have the money to back
up the accounts, either, which is fraud.
You would need this insurance the most if there was
runaway inflation. If there was runaway inflation and a million dollars
became nearly worthless, then the effective insurance amount of the
FDIC would be close to zero.
In my view, insurance itself is collectivism, and
fraud. Why should one depositor in New England who makes a deposit in a
small town bank have to pay for the lack of fiscal responsibility of an
entirely different bank, in an entirely different company, in an
entirely different state such as New Mexico, and ultimately pay to
protect those depositors in New Mexico? This transference of
responsibility, through the FDIC, is fraud and a crime.
Fraud #4. Central bank gold-leasing. This is the
fraud that GATA has been working to expose. The central banks own gold
in two forms, real gold in their vaults, and paper promises. They
report it all as if it were one category, which is fraud. The official
estimates are that 30,000+ tonnes of "gold" are held by the central
banks, and of that, 5000 tonnes have been leased out. The GATA
research, by three different methods by three different people, shows
that the amount leased out is closer to 15,000 tonnes. To say they have
gold, when they do not have gold because it has been leased out, is
fraud. To lease out the people's gold (that ostensibly backs up the
people's currency) without the people's knowledge or consent, is fraud.
U.S. gold is stated to be 261.5 million ounces. See
www.fms.treas.gov/gold/index.html (x 32152 oz/tonne, it's also 8407
tonnes.) The U.S. gold has not been audited by any independent third
party since the 1960's.
Even if the U.S. government really still has all
this gold, and even if they pledged it against all deposits in the U.S.
via the FDIC and backed the full $9 Trillion of money in the banks, M3,
(and it is purely a fantasy that they would be so honorable) there
would be only one ounce of gold for every $34,482. (That's 9,000,000
million (a trillion is a million million) dollars / 261 million oz.)
Fraud #5. Bonds. Bonds are a paper promise to pay
more fraudulent paper promises. It is fraud upon fraud. In theory, a
bondholder will always receive more paper money than they lent out when
they bought the bond in the first place. In practice, that does not
matter if inflation rises faster than the rate of return, in which case
the bondholder loses value. What does it matter to be paid more money,
if the money is worth much less? Or, if bond interest rates rise as
inflation increases happen, then the current re-sale value of the bond
drops tremendously.
Fraud #5. (A). Inflation indexed bonds. These bonds
promise to pay out a variable rate of return, indexed, or matched to
the inflation rate. This is fraud upon fraud because they lie about the
inflation rate, saying it is lower than it really is. Currently, the
government is claiming that the inflation rate is about 1%. In reality,
by mid 2003, the inflation rate was closer to 6%. Since mid 2003, many
commodities are up about 20% or more, and by the end of 2003, we may be
experiencing an annualized inflation rate of 40% in the U.S.!
Furthermore, the dollar continues to drop against other currencies, and
is down to 85 from a high of about 130, which is a drop of about 35%!
Furthermore, what use is it to be paid out in more and more paper
money, if the ultimate value of paper money will return to its
intrinsic value, which is zero? Also, inflation indexed bonds will help
to cause the very inflation that is feared. As more and more money will
be needed to pay off the bonds, inflation will be forced to increase
more and more!
Therefore, if you own inflation-indexed bonds that
are paying you anything less than about 50% per year, then I suppose
you have been deceived by this fraud, too.
$33 Trillion, U.S.: The value of the World bond market yr end, '01: http://tinyurl.com/vr7u
$20.2 Trillion, U.S.: The value of the U.S. bond market, yr end, '02: http://tinyurl.com/vr7g
Bonds are used to steal away gold and silver still
in the hands of the people who would not be deceived through paper
money alone, and who are tempted through the lure of the crime of
usury, or receiving an interest rate. If all the U.S. bonds, and M3,
were both backed by the U.S. gold hoard, it would mean that there are
about $29,000,000 million (a trillion is a million million) / 261
million = $111,111/ per oz. of gold.
Fraud #6. Paper futures contracts, and derivatives,
especially when created to excess. The dollar is a derivative, and a
paper contract, but that's not the only one. There are also contracts
at the COMEX, and on the "over the counter" (OTC) market to deliver
gold and silver. At the COMEX, in silver, we regularly see over 100,000
contracts for 5000 ounces, or 500 million ounces. To see how many
contracts there are for 5000 ounces, see
www.nymex.com/jsp/markets/sil_fut_csf.jsp?
But they have only 52 million ounces of silver in
the registered category, ready for delivery. To see how much silver
they have now, see www.nymex.com/jsp/markets/sil_fut_wareho.jsp
The value of 52 million oz. of silver, at $6.50/oz. = $338 million.
The frauds here are similar to the fraud of the
dollar and the fraud of fractional reserve banking, all in one. They
have made too many futures contracts to deliver gold and silver, just
as they have printed up too many dollars. And they only have a small
portion of real gold and silver to back up their promises to deliver.
If bondholders ($20 trillion) and bank account
holders ($9 trillion) ever think to prefer the safety of owning
physical silver again, they should know that buying silver is a "first
come first served" process. They should know that there is $29,000,000
million (a trillion is a million million) dollars available for the 52
million oz. of silver available in the market, or $557,692/oz.
Fraud #6 (A). Options. As if paper futures contracts
were not enough to deceive people through the "magic" and "promise" of
leverage, they have options on paper futures contracts, where a person
puts down even less money to "control" the silver and "profit" from its
price rise. (It's as if the lure of 100,000 fold gains are simply
enough for these greedy and deceived people.)
Fraud #7. Position limits on longs. At the COMEX,
there are limits upon how much one person or entity can buy. I believe
it is a false idea that longs can manipulate the market. It is
impossible for longs to manipulate a free market! In a free market,
everyone is free to buy and own whatever they wish, and own however
much silver they wish. Restrictions on longs or restrictions on
ownership is nothing less than communism, theft, and fraud! What good
is money if you cannot spend it on whatever you wish? If you cannot buy
what you wish, your money is no good! In other words, the entire U.S.
monetary system is no good, it's fraudulent from top to bottom.
As a recent example, position limits were reduced
for buyers of copper futures in the spot month, from 5000 contracts to
3000 contracts on December 22, 2003. See
www.nymex.com/jsp/news/press_releas.jsp?id=pr20031222b
Fraud #8. Delivery delays for COMEX silver (also
known as defaults). A default occurs when there was fraud. It is also
known as bankruptcy, or a failure to deliver upon an obligation or
promise. If a bank cannot honor on-demand deposits, then the bank is
insolvent, or bankrupt. Similarly, if someone promises to deliver
silver by a certain date, and is unable to do so, they are bankrupt,
and in default, and have committed fraud. Since there have already been
delivery delays of silver, then the long awaited default at the COMEX
has already occurred. This is probably the best explanation for why the
price of silver is moving up at this time.
The last major silver defaults were the failure to
pay out silver when silver certificates (dollars) were presented for
delivery, way back in 1968.
Frauds numbered 6-8 are the frauds that Ted Butler has been working to expose.
Fraud #9. Banking hold times. Why are there such
long hold times on checks when you make a deposit in your bank, and
hold times on wire transfers? They say it is for my protection, but I
think it's for the bank's protection, or profit! A wire transfer can
take up to a week. Depositing a check can take from a week to 3-4 weeks
before they let you withdraw your money! Outrageous! As bulky and as
heavy as silver bullion is, it is quicker and easier to ship silver
bullion than to deal with the so-called "convenience" of U.S. paper
dollars in the banking system.
Fraud #10. Legal tender laws. To add insult to
injury, legal tender laws are laws that treat these frauds as if they
were the corner stone of "The American Way". They force people to
accept the fraud, in place of real money, gold and silver. And they
prevent people from making and contracting for gold and silver, even
though the big banks are somehow exempt, and can contract in gold and
silver all they want through the "over the counter" derivatives market.
The fraud of legal tender laws is the fraud that www.fame.org/#Strategy has been working to expose.
Fraud #11. Tax on gold and silver purchases. In the
U.S., some states collect a sales tax on the purchase of gold and
silver coin. It usually ranges from about 5-8%. In some states, such as
California, it is only applicable on transactions for less than $1000.
In Europe, they have what is called a VAT, or "value added tax". It's
also fraud. There can be no tax on a money exchange. When you get two
$5 bills for a $10 bill, do you pay tax? Of course not. When you
convert money from the Canadian dollar to the U.S. dollar is there a
tax? Of course not. Therefore, there should be no tax on other money
exchanges.
The fraud of the tax on bullion is a fraud that Franklin Sanders has been working to expose.
Fraud #12, The Income Tax. Prior to 1913 when the
Federal Reserve was founded, there never was an income tax, and America
got along just fine without it for hundreds of years. Between 1913 and
1945, the income tax was paid only by the extremely wealthy, and it
started out as only a tiny percentage of income. The income tax did not
become widespread and was not paid by the average person until after
World War II, and it was supposed to be "temporary". We've been paying
this temporary tax ever since, and with no end in sight. The income tax
is fraudulent because it is and unconstitutional on many grounds, but
the judges of the nation rule as if they do not care.
Fraud #13, The Social Security Number (SSN). Started
by FDR in the depression, the original cards are printed with the
phrase, "not to be used for identification purposes." Now, due to the
Patriot Act, you cannot get a bank account without one. The social
security system is a fraudulent ponzi scheme. It is collectivism.
Fortunately, I don't use a SSN, which is a protection from most of the
frauds of the entire system.
Conclusions: Fraud is not the American Way.
Unfortunately, it is the way of life today -- that we all must face.
Anyone who uses paper money is guilty of allowing these frauds to
continue. Anyone who saves in terms of paper money in the banks is
guilty of allowing themselves to be deceived by these multiple frauds.
It is wrong to participate in, or by deceived by
fraud, just because many other people also participate. Stop
participating in fraud, and stop allowing yourself to be deceived by
fraud.
Which of the above frauds do you think is the
greatest fraud of the monetary system in the U.S. today? One of the
above, or one I may have left out? I'd like to read what you think.
Email jasonhommel@yahoo.com I may not have time to respond to each
letter, but I really do appreciate and read all the feedback.
I believe that the best way to protect yourself from
the frauds and excesses of the U.S. monetary system is to own real
silver bullion. I also invest in silver stocks, which I think have the
potential to continue to provide a greater return on investment than
silver bullion. For example, silver is up about 50%, and silver stocks
are up about 350% since June of 2003. If you would like to receive my
free weekly silver stock report in email, sign up for the free e-book
at www.goldismoney.com
The beauty of the internet is that it is helping
knowledge to increase, and it is a form of communication that those who
commit these crimes of monetary fraud upon us cannot control. Please
make the most of it, and please forward this on to others.
February 24, 2004
Other essays by Jason Hommel:
25 Reasons To Support The Sound Money Bill - 08 July 2004
I'm Insanely Bullish On Silver - 19 June 2004
Silver Stock Evaluations - 22 May 2004
The Silver Bull Is Back - 04 May 2004
Late April Silver Update - 22 April 2004
Silver Juniors With Cash Flow - 04 March 2004
Major Frauds of the U.S. Monetary System - 26 February 2004
Market Perspective & Cabo Mining - 12 February 2004
Usury Enslaves - 19 January 2004
Sterling Mining - 29 December 2003
The U.S. Trade Advantage With China - 17 December 2003
Rising Gold Prices Will Help The Economy - 02 December 2003
Miners to Use Silver as Cash - 27 November 2003
Private Placements in Silver Companies - 20 November 2003
Is the Silver Market Too Small to Buy? - 13 November 2003
Inflation & Deflation During Hyperinflation - 06 November 2003
Silver Price Expectations of Silver Stock Investors - 30 October 2003
Buying & Tracking Canadian Silver Stocks - 29 October 2003
Canadian Zinc--Silver Potential - 23 October 2003
Silver Stocks--Comparative Valuations - 4 - 13 October 2003
Silver Stocks--Comparative Valuations - 3 - 06 October 2003
Silver Stocks--Comparative Valuations - 2 - 29 September 2003
Silver Stocks--Comparative Valuations - 1 - 22 September 2003
Silver and Cardero Resource - 08 February 2003
The Moral Failures of the Paper Longs - 22 January 2003
CFTC Response to Silver Problem - 14 January 2003
People Talking About $32,567/oz - 10 January 2003
Letter To Authorities of Silver Markets - 06 January 2003
Why no talk of $32,567/oz ? - 02 January 2003
Refuting Myths about Gold - 28 October 2002
Controlling Gold with Paper - 10 June 2002
Impending Gold Futures Default - 29 May 2002
Certain gold stocks are still cheap - 07 May 2002
A Few Supply and Demand Fundamentals of the Dollar and Gold - 06 May 2002
New DROOY Institutional Holdings - 21 February 2002
Hommels View of Gold - 23 March 2001
Gold Price Under Differing Scenarios - 24 June 2000
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