Smashing the Axis of Financial Fraud
Corrupt politicians and financiers that has driven this country to the brink
Wednesday, November 4, 2009
By Dr. Edwin Vieira, Jr.
NewsWithViews.com
[The
following is the full text of a somewhat shortened address presented
to the Committee for Monetary Research and Education on 15 October 2009...]
The more things
change, the more they remain the same. In 1814, in an address to the
House of Representatives, Daniel Webster observed that
public credit,
the last reliance of government, * * * does not exist. This is a state
of things calling for the soberest counsels, and yet it seems to meet
only the wildest speculations. Nothing is talked of but banks, and
a circulating paper medium, and exchequer notes, and the thousand
other contrivances which ingenuity, vexed and goaded by the direst
necessity, can devise, with the vain hope of giving value to mere
paper. All these things are not revenue, nor do they produce it. *
* * [N]or is there a device more shallow or more mischievous, than
to pour forth new floods of paper without credit as a remedy for the
evils which paper without credit has already created.[1]
Even earlier, Thomas
Jefferson had predicted the reason for such a sorry state of affairs:
From the conclusion
of the [W]ar [of Independence] we shall be going down hill. It will
not then be necessary to resort every moment to the people for support.
They will be forgotten, therefore, and their rights disregarded. They
will forget themselves, but in the sole faculty of making money, and
will never think of uniting to effect a due respect for their rights.[2]
Jefferson was all
too prescient. Ever since his day, the political class has looked elsewhere
than to the American people for support—and always found it from
the financial class.
The financial class
has arrayed itself on the side of the political class, and the political
class has arrayed itself on the side of the financial class—not
just in an incestuous coupling, but in the veritable fusion of a political-cum-financial
hermaphrodite: the full integration and consolidation of bank and
state.
This unholy alliance
has always centered around a mechanism by means of which the financial
class can create ersatz “money” out of nothing tangible—through
a monopolistic national bank (the First and Second Banks of the United
States), then a national banking conglomerate (the National Banks of
the Civil War), and finally a fully corporative-state banking apparatus
(the modern Federal Reserve System), all operating on the basis of “reserves”
so increasingly fractional that they have now become essentially fictional.
Through the General Government, the political class has guaranteed the
continuance of this scheme, in one form or another, for more than two
hundred years.
By so doing, the political class has always been able to count on the
support of the financial class—but only at the cost of enabling
the financial class to exercise exorbitant influence over the General
Government, and through the General Government over the American people
themselves.
The true name of
this system is financial fascism.
As with all fascistic
arrangements, it involves an axis of coöperation between big private
special-interest groups and rogue public officials—in this case,
the Axis of Financial Fraud that runs from Lower Manhattan
in New York City to Washington, in the Disgrace of Columbia.
Whenever and wherever
a scheme of this type has been put into operation, it has rested upon
a threefold fraud:
First,
the falsehood that the purpose of “money” is to serve some
disembodied entity—“the economy”; or some institution—“the
government”; or some self-selected élite—“the
financial community”, rather than the people as a whole.
Second,
the falsehood that “money” should be created and managed
by self-styled “experts” who are politically independent
of the people.
Third,
and most important, the falsehood that “money” should be
based upon debt, whether public or private, not upon any tangible commodity,
such as silver or gold, the supply and the value of which the free market
determines.
Currency generated
out of debt is not an attempt to create a medium of exchange “out
of nothing”, such as the irredeemable, but debt-free, legal-tender
Lincoln Greenbacks of the Civil War. Rather, it is an attempt to create
a medium of exchange out of something worse than nothing. For,
all other things being equal, debt is always less desirable than the
absence of debt. At base, currency generated out of debt is a contradiction
in terms, because it purports to transform liabilities into assets.
Indeed, it is more of a fantasy even than the fabled Philosopher’s
Stone. For that was supposedly able to transform one asset—lead—into
a more valuable asset—gold, not to turn something that was not
an asset at all into something else that was.
Currency generated
out of debt rests upon the delusion that increases in the stock of society’s
medium of exchange will cause corresponding increases in society’s
real wealth—that is, that debt can be the source of and foundation
for wealth because real economic development can always be “stimulated”
with new doses of debt. Of course, this naive notion that “having
more money equals having more wealth” ignores the questions of
whether increases in the supply of money decrease the purchasing power
of all money, and of whether such increases actually undermine or even
sabotage the operation of the free market, thereby decreasing real wealth.
It also ignores the reality that every emission of new currency results
in a redistribution of real wealth to the currency’s issuer from
the society that initially accepts the new currency at its full face
value and then continues to use it as it depreciates in purchasing power—that
is, that the issuers of currency generated from debt are in fact embezzling
wealth from everyone else.
The generation
of currency out of debt is a confidence game, because it depends for
its continuation upon the average citizen’s misplaced confidence
in the efficacy and especially the stability of the system emitting
that currency. As with every confidence game, however, reality eventually
supplants illusion. As time goes by, society suffers an ever-increasing
dependence upon ever-expanding increments of debt in order to generate
ever-contracting increments of purported “economic growth”.
The economy supersaturates with debt. Then, like the drug addict who
chokes to death on his own vomit as a result of an overdose, the economy
finds itself strangled by the ever-tightening cords of unpayable debt—and
slips into the fatal coma of stagnation, then depression, and perhaps
hyperinflation, too.
The sole constitutional
power of Congress with respect to money is “[t]o coin Money, regulate
the Value thereof, and of foreign Coin, and fix the Standard of Weights
and Measures”.[3]
Observe that this clause links as cognate powers “regulat[ing]
the Value [of Money]” and “fix[ing] the Standard of Weights
and Measures”, because the Constitution intends for “Money”
itself to be a scientific “Standard”—rational,
objective, verifiable, or falsifiable—akin to every other known
or knowable “Standard of Weights and Measures”.
Although emitted
under a purported delegation of power from Congress, the contemporary
Federal Reserve Note, in contrast, is a standard of nothing tangible
or even theoretical—as John Exter used to say, it is truly “an
IOU nothing currency”. The Federal Reserve System provides this
country with neither a rational, nor an objective, nor a verifiable
or falsifiable standard—not even a standard predictable in its
changeability—let alone anything that could be called a constitutional
legal standard. Operating without a scientific monetary standard, the
Federal Reserve System interferes with the free market’s formation
of prices—indeed, the System’s manipulations under the rubric
of “monetary policy” intentionally falsify prices, causing
widespread and ineradicable economic confusion and the monumental waste
of human efforts and natural resources.
Of course, America’s
financial class is not composed entirely of fools devoid of foresight.
Anticipating all of these problems, the financial class arranged for
the political class to provide three forms of protection for different
levels of systemic risk in the Federal Reserve System:
at the lowest
level, the concept of “deposit insurance”, designed to
gull the victims of the fractional-reserve scam into believing that
the banking system can and will secure its clients against a relatively
few especially imprudent operators;
at the intermediate
level, the concept of “the lender of last resort”, the
spigot of “liquidity” within the banking system itself
which enables the system to keep afloat some (albeit not all) large
financial institutions when their mismanagement threatens to sink
them in bankruptcy; and
at the highest
level, the concept of “institutions too big to fail”,
the ultimate safety-valve to be turned on whenever the financial class’s
irresponsible speculations endanger one or more segments of the economy
so sizeable that only the political class can marshal an adequate
“bail out” through the General Government.
The term “institutions
too big to fail” is a rather sorry misnomer—because under
contemporary financial fascism the big financial institutions—and,
it seems, the big industrial concerns as well—are proving too
rotten with corruption not to fail. They cannot help but fail,
they will fail, and for rogue public officials to provide them with
“bail outs” merely transfers the real burden of failure
from the pocketbooks of the financial class onto the backs of the American
people. Having put across the swindle of “institutions too big
to fail”, though, the financial class now holds the people of
the United States hostage to its manipulations. Without “bail
out” after “bail out”, the financial class warns,
the economy will collapse, social chaos will break out, and the invocation
of “martial law” will be necessary to restore order. Thus,
common Americans have been made the unwilling, but perpetual guarantors
of a gigantic Ponzi scheme in which well-organized racketeers in the
financial class rake in the illicit profits—their cronies in the
political class secure the votes, the pensions, and the golden parachutes—and
average citizens must swallow the ever-increasing losses in jobs, in
productivity, in income, in standards of living, and in every other
measure of economic well-being.
Americans must
also suffer the loss of their fundamental freedoms, because, politically,
financial fascism is neither a benign nor a static system. Its vicious
principles are such that their application will drive this
country to a centralized financial police state—and then to a
full-blown police state in every horrific sense of that term. Already
in 1791 this potential for political disaster was recognized in the
debate in the House of Representatives on the First Bank of the United
States, during which Representative Giles warned the country that
“all
the arguments adduced in favor of [a national bank], from whatever
source they arise, if pursued, will be found to rush into the great
one of expediency, to bear down all Constitutional provisions, and
to end themselves in the unlimited ocean of despotism.”[4]
The question then
becomes: Must the Axis of Financial Fraud be suffered to “crucify
America on a cross of debt”?
The answer is NO!
There is a way out. The purveyors of the culture of debt at both ends
of the Axis of Financial Fraud have forgotten that their pyramids of
phony paper promises are still subject to constitutional law.
To smash the Axis once and for all, Americans must:
(i) restore commodity
money of silver and gold as the only official media of exchange for
the General Government and the States;
(ii) gradually
displace and replace currency generated from debt with commodity money
through competition in the free market;
(iii) enforce
the absolute separation of bank and state, so that common
people are no longer compelled to underwrite the financial class’s
Ponzi schemes; and
(iv) declare
uncollectible all unconstitutionally incurred debt.
The last entry
in this list bears repetition and explanation: To declare uncollectible
all unconstitutionally incurred debt is entirely different from
“repudiating debt”. Repudiation of debt presumes that the
debt was originally lawful, but that now, for some reason, the law must
be set aside, or disregarded, or changed ex post facto. In
contrast, declaring uncollectible all unconstitutionally incurred
debt presumes that the debt was never valid at all. But how can
this be accomplished? In at least two ways:
First, under the
doctrine of the Supreme Court’s decision in Craig v. Missouri,[5]
all contracts, agreements, or other arrangements in which any part of
the consideration consists or consisted of the emission of unconstitutional
“bills of credit” through or under the auspices of any Federal
Reserve Bank, “member bank”, or “depositary institution”
within the Federal Reserve System are declared to be void ab initio
and unenforceable in any court of the United States or of any State.
Second, all public
debt obligations of the United States, howsoever made and in whatever
form, that have been incurred for the purpose of raising revenue to
be expended from the general fund of the Treasury in payment of costs
arising under a particular budget of the United States are declared
to be void ab initio and unenforceable in any court of the
United States or of any State in the same percentage that the unconstitutional
programs, activities, or expenditures in that budget bear to the total
programs, activities, or expenditures therein. Every lender must be
presumed to know the constitutional limits on the expenditures of money
the General Government borrows, to the same extent that every official
of that government knows those limits. So, if a lender extends a loan
to public officials, knowing that his loan will be used for unconstitutional
purposes, or with willful blindness to or reckless disregard of the
unconstitutionality of those purposes, he is thereby a participant in
a fraud against the American people. And for the repayment of such a
loan, the American people cannot be held liable.
Plainly enough,
though, the present Congress, President, and Supreme Court will never
reform the contemporary monetary and banking systems, and reduce average
Americans’ burden of debt, along these lines. That leaves it to
the victims of the swindle: WE THE PEOPLE themselves. Which is quite
appropriate.
After all, the
real “federal government” is not the General Government
alone—it is not the General Government and the States alone—rather,
it is the General Government, and the States, and most importantly
WE THE PEOPLE. Most importantly, because the real “federal
government” is not a pyramid in which power flows up from the
bottom to concentrate at the top, with an all-seeing eye at its apex.
For the strength of any pyramid is found not at its apex, but in its
base. WE THE PEOPLE are the essential support of the entire structure,
the source of its strength, the font of political power, the ultimate
sovereigns.
All too many Americans
for all too long have been conditioned to think of “the federal
government” in terms of “higher” and “lower”
levels as on some crude bureaucratic organizational chart: with Washington,
D.C. at the top, the States and THE PEOPLE at the bottom. The correct
description, however, takes into account degrees of authority:
The truly “highest” level is the one closest to the well-spring
of sovereignty, the “lower” levels the ones increasingly
removed from that source. WE THE PEOPLE occupy the “highest”
level in the real “federal government”, because WE THE PEOPLE
not only originally “ordain[ed] and establish[ed] th[e] Constitution”,
but also sustain—and must enforce—its authority every day.
As the Supreme Court has held, “[t]he power to enact carries with
it final authority to declare the meaning of the legislation”.[6]
Moreover, as Sir William Blackstone taught the Founding Fathers, “whenever
a question arises between the society at large and any magistrate vested
with powers originally delegated by that society, it must be decided
by the voice of the society itself: there is not upon earth any other
tribunal to resort to”.[7]
To be sure, the
partisans of the Federal Reserve System will contend that the System
has been declared constitutional on numerous occasions, or at least
is generally treated as constitutional, and that therefore its validity
cannot now be contested. In fact, however, the Supreme Court has never
heard a challenge to the central-banking scheme, or its irredeemable
paper currency, on the numerous grounds of their greatest constitutional
vulnerability. In any event, the very same legal gurus who
tout the alleged legitimacy of the Federal Reserve System—as well
as the propriety of the ever-expanding expenditures of the General Government
that the Federal Reserve System finances through the banks’ “monetization”
of public debt—also claim that America has a so-called “living
constitution”, the meaning of which can change from time to time
to meet differing circumstances. If that is true, then no matter how
many times in the past the Federal Reserve System and the General Government’s
expenditures have supposedly been declared constitutional, WE THE PEOPLE
can decide tomorrow that circumstances demand reinterpretation of this
“living constitution” in order to strike down the Federal
Reserve System and those expenditures, and thereby to save this country
from economic disaster. Or, WE THE PEOPLE can decide on the basis of
the Constitution’s “original intent” that the Federal
Reserve System and expenditures of those kinds were never even arguably
lawful in the first place. In either case, the Federal Reserve System
and all such expenditures—and the huge mountain of ostensible
public and private debt associated with them—can be eliminated.
Why WE THE PEOPLE
will take this course is obvious. As the old saw has it, “Nothing
focuses a man’s mind more than his impending hanging!” THE
PEOPLE have been asleep for a long time. Now, however, as the economic
screws tighten on every side, they have finally awakened to the danger
confronting them. Everyone with an IQ even a single point higher than
his age recognizes the utter and irremediable corruption of the Federal
Reserve System and the entire financial and political régime
centered around and dependent upon it: Consider the gargantuan “bail
outs” that amount to the most mammoth, brazen, and insolent financial
looting any society has ever suffered in the history of the world. Consider
the régime’s refusal to accept responsibility or to provide
for accountability or even minimal transparency. Consider the régime’s
grab for ever-more-abusive powers, not only over the financial sector
of the economy, but also over what remains of the industrial sector.
In short, ordinary Americans are witnessing—and know they are
witnessing—a war being waged against them by the racketeers of
the financial class and rogue public officials in the outlaw city-states
of New York and Washington, D.C. So far, it is a war in which only the
aggressors are doing any fighting. But that disparity will not persist
much longer.
As Jefferson predicted,
now that THE PEOPLE are no longer making money, but instead are losing
it hand over fist—and with it their jobs, their prosperity, their
economic security, and their hopes for decent retirement—they
have but one other alternative: They must “think of uniting to
effect a due respect for their rights”. When they do, THE PEOPLE
will recognize that the only way to restore their national independence,
societal prosperity, and individual liberty is to break
the links once and for all between bank and state and between currency
and debt, using the industrial-strength tools the Constitution
supplies.
How will
they do it? WE THE PEOPLE must first declare and then secure their economic
and legal independence from the Federal Reserve System’s régime
of fiat currency and central banking within their own States
and Localities. They can succeed in this endeavor because:
(i) THE PEOPLE
do not need the advice, or the help, or the interference, or the direction,
or least of all the dictation of anyone in Washington, D.C. or New York
City to live as free and prosperous Americans in their own States and
Localities.
(ii) THE PEOPLE
vastly outnumber the totality of all public officials, politicians,
financiers, bankers, and these parasites’ clients, partisans,
hangers-on, and touts.
(iii) THE PEOPLE
physically control most of the property in this country—and actual
“possession is nine-tenths of the law”. If THE PEOPLE en
masse and through properly organized and authorized resistance
simply refused to relinquish their physical possession in defiance of
the financial class’s merely paper claims, precisely what could
the financial class do about it?
(iv) THE PEOPLE
can still exercise an effective franchise in many States. And, most
consequentially in the final analysis,
(v) THE PEOPLE
constitute the Militia, which the Constitution declares to be “necessary
to the security of a free State”, and to which institution alone
the Constitution explicitly assigns the responsibility and the authority
“to execute the Laws of the Union”.[8]
Combining THE PEOPLE’S actual possession of most of the property
throughout America with their authority through the Militia “to
execute the Laws” would mean that the financial class could not
possibly maintain its stranglehold over the economy for a single minute
after THE PEOPLE decided to declare uncollectible all unconstitutionally
incurred debt.
The initial step
on the long march to reform is to introduce, State by State, an alternative
currency of silver and gold that can compete with, and shortly replace,
the Federal Reserve Note in each State’s public finances and private
economy. This process must take place through the States, because:
(i) the States
are large enough politically and economically to make it work;
(ii) the States
have the undoubted legal authority to do it;
(iii) with respect
to the choice of a currency for the performance of their own governmental
functions, the States enjoy absolute legal immunity from interference
by rogue public officials in the General Government;[9]
(iv) the Militia,
through which the alternative currency will quickly move into each State’s
private economy, are “the Militia of the several States”.[10]
This plan is not
some pie-in-the-sky vision. For several States—New Hampshire,
Montana, Indiana, and Georgia, for instance—have already set out
in the right direction (albeit only with halting steps so far). True
enough, they and other States still have a long road to travel—but,
as the Chinese say, even a journey of a thousand li begins
with but a single step.
An alternative
currency—introduced through the States’ governments and
spread throughout the economy by THE PEOPLE themselves in their Militia—is
not simply an idea whose time has come. More than that, true constitutional
monetary reform will be the new “shot heard ‘round the world”,
the announcement of a new American declaration of independence from
the corrupt alliance of politicians and financiers that has driven this
country to the brink of irretrievable disaster.
Footnotes:
1.
9 December 1814
2.
Quoted in Merrill D. Peterson, Thomas Jefferson and the New Nation (New
York, New York: Oxford University Press, 1970), at 99
3.
Article I, Section 8, Clause 5
4.
The Debates and Proceedings in the Congress of the United States (J.
Gales compilation, 1834), Volume 2, at 1942-1943.
5. 29 U.S. (4 Peters) 410 (1830).
6.
Propper v. Clark, 337 U.S. 472, 484 (1949)
7.
William Blackstone, Commentaries on the Laws of England, Volume 1, at
212.
8.
U.S. Const. art. I, § 8, cl. 15 and amend. II.
9.
Lane County v. Oregon, 74 U.S. (7 Wallace) 71 (1869).
10.
U.S. Const. art. I, § 8, cls. 15 and 16, and art. II, § 2,
cl. 1.
Edwin Vieira, Jr., holds four degrees from Harvard: A.B. (Harvard College), A.M. and Ph.D. (Harvard Graduate School of Arts and Sciences), and J.D. (Harvard Law School).
For more than thirty years he has practiced law, with emphasis on constitutional issues. In the Supreme Court of the United States he successfully argued or briefed the cases leading to the landmark decisions Abood v. Detroit Board of Education, Chicago Teachers Union v. Hudson, and Communications Workers of America v. Beck, which established constitutional and statutory limitations on the uses to which labor unions, in both the private and the public sectors, may apply fees extracted from nonunion workers as a condition of their employment.
He has written numerous monographs and articles in scholarly journals, and lectured throughout the county. His most recent work on money and banking is the two-volume Pieces of eight:
: The Monetary Powers and Disabilities of the United States Constitution (2002), the most comprehensive study in existence of American monetary law and history viewed from a constitutional perspective.
He is also the co-author (under a nom de plume) of the political novel Cra$hmaker:
A Federal Affaire (2000), a not-so-fictional story of an engineered crash
of the Federal Reserve System, and the political upheaval it causes.
His latest book is: "How to Dethrone the Imperial Judiciary
"
He can be reached at:
13877 Napa Drive
Manassas, Virginia 20112.
NOTE: In accordance with Title 17 U.S.C. section 107, any copyrighted material herein is distributed without profit or payment to those who have expressed prior interest in receiving this information for non-profit research and educational purposes only. For further information please refer to: http://www.law.cornell.edu/uscode/17/107.shtml
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