As part of the New Deal, Franklin D. Roosevelt confiscated all privately-owned gold and made it illegal to own the shiny metal, and fixed its price. Jim Powell of the Future of Freedom Foundation goes through the history of the disastrous actions taken by FDR and the aftermath.
Roosevelt understood that he must apply the full force of federal power to suppress the natural desire for gold in troubled times. The Emergency Banking Act, signed into law March 9, amended the Federal Reserve Act by adding a new subsection (n), which empowered the secretary of the Treasury to demand that all Americans surrender their gold and receive paper money. The following day, Roosevelt issued Executive Order 6073, which made it illegal for Americans to take gold out of the country.
In his first “fireside chat,” delivered on March 12, Roosevelt didn’t say a word about his backstage maneuvering to seize gold. He remarked that “hoarding during the past week has become an exceedingly unfashionable pastime.”
Less than a month later, on April 5, 1933, Roosevelt issued Executive Order 6012, which expropriated privately owned gold. He ordered Americans to surrender their gold to the government by May 1, 1933. Violators would be subject to a $10,000 fine or as many as 10 years in prison.
The American Conservative has posted an except of Ron Paul’s new book End the Fed in which Paul gives a short history of our nation’s monetary policy and how the Fed came to be. Then of course he goes on to explain why the Fed is the #1 culprit in why our currency has lost 95% of its value in the past 95 years.
But how much do we really know about what goes on inside the Fed? Even with the newest round of bailouts, journalists had difficulty determining where the money was coming from and where it was headed. From its founding in 1913, secrecy and inside deals have been part of the way the Fed works.
It says that its job is to keep inflation in check. But this is like the car industry claiming to control road congestion. The Fed might attempt to stop the effects of inflation, namely rising prices. But under the old definition of inflation—an artificial increase in the supply of money and credit—the reason for its existence is to generate more, not less.
The banking industry has always had trouble with the idea of a free market that provides opportunities for both profits and losses. The first part, the industry likes. The second is another matter. That is the reason for the constant drive in American history toward the centralization of money, a trend that not only benefits the largest banks with the most to lose from a sound-money system, but also the government, which is able to use an elastic system as an alternative form of revenue support.
Whenever instability turns up, we see efforts to socialize the losses, but rarely do people question the source of instability. Economist Jesús Huerta de Soto places the blame on the institution of fractional-reserve banking. This is the notion that depositors’ money in use as cash may also be loaned out for speculative projects, then re-deposited. The system works as long as people do not attempt to withdraw their money all at once. In the face of such a demand, banks turn to other banks to provide liquidity. But when the failure becomes system-wide, they turn to government.
Read the full excerpt here, and then purchase the hardcover version of End the Fed for only $12.09 here.
Quote of the Day: The government called three accountants to testify. The defense asked each one, “What is the proper way to calculate income for purposes of the Internal Revenue Code if you are paid in a gold coin that has a $50 face value on it?” All three of them responded, “I do not know; I’ll have to research that.” — Mike Zigler, reporting on the 2007 case against Robert Kahre that ended in a hung jury
Robert Kahre is facing up to 296 years in prison. His crime? He hired workers on mutually-agreed terms, and paid them in gold and silver dollars rather than in Federal Reserve dollars.
First, some background . . .
* The face value of the U.S. Mint’s gold and silver coins are legal tender, meaning they must be accepted in payment of debt
* But a Gold Eagle coin that has “$50″ printed on it is legal tender only up to $50, while its gold content is worth about $1,000 in Federal Reserve notes
* No law or IRS regulation requires that receivers of Gold Eagles and other U.S. Mint coins must report the market value of the coins instead of the legal tender value
After extensively researching the issue, Kahre . . .
* hired workers as independent contractors, so he would not pay the payroll tax for their labor
* paid them in gold and silver coins, whose face value – that is, legal tender value – was so low that the workers legally didn’t have to report it as income to the IRS
For instance, if a worker was annually paid in gold coins with a legal tender face value of $2,000, the market value of the gold content in those coins could be $40,000, but only the legal tender face value of $2,000 would theoretically count as taxable income. That face value of $2,000 is low enough to be non-reportable to the IRS. But . . .
“Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, men become the tools of men. Blood, whips, and guns – or gold. Take your choice – there is no other – and your time is running out.” – Ayn Rand
by Jake Towne, the Champion of the Constitution
Originally published Saturday, July 25, 2009 at http://www.nolanchart.com/article6666.html
Douglas Gnazzo’s 2008 book, Honest Money: A History of United States Gold and Silver Currency, is an essential add to the reading list of any serious student of monetary systems. Far shorter than the massive tome of Edwin Vieira’s hopefully-soon-to-be-reprinted Pieces of Eight at 226 pages, Gnazzo takes the reader on a pleasurable blitzkrieg through our country’s rich monetary history, from the founders and the Constitution to modern times. Perhaps the most enthralling section of the book is the closing chapters where Gnazzo’s gives his thoughts on a future commodity-based currency and, more importantly, how to transition there from where we are now. Like myself, Gnazzo has called for a national debate on the subject before it is too late.
Gnazzo splashes all the colors of the truth on the wall for his readers. He relates how our money was slowly debased by the politicians’ wars and those pesky central bankers who weeviled their way back into power after America’s first two central banks were destroyed. He relates how the destructive virus of public debt was sown in during the founding of our country chiefly by Alexander Hamilton, the Revolutionary war hero and mercantilistic servant of the aristocracy in America.
Ron Paul chose to enter politics in 1971, the year I was born. The reason he entered politics was due to then President Nixon driving the last nail into the gold standard coffin. Nixon severed all ties of gold to the U.S. dollar. This event implicitly granted the Federal Reserve to print money without bound. For Ron Paul being anti-Fed is not just another political position, it is the political position. It is in his blood.
In those early years and up until the economic crisis of last year Ron Paul was brushed off as crazy whenever he brought up the unchecked powers of the Federal Reserve. Once the bailouts began and continued it became politically expedient to be more like Ron Paul. That is, as long as you are talking about economics. On foreign policy Ron Paul is still apparently crazy for firmly believing in non-intervention.
I am not alone among the Ron Paul faithful when I say that I’m very tired of reading articles with any of the following labels attributed to Ron Paul:
Radical
Quixotic
Fringe
Extreme
Crazy
In a recent article he had a few labels of his own for Sarah Palin supporters. He called them “establishment” and “country club” Republicans. Palin-ites reacted with fervor in dismissing Paul as just being envious.
Here is Ron Paul’s opening statement today during the House Financial Services Committee hearing on “Consumer Protection and the Role of The Federal Reserve”. He uses his time to promote the idea of “honest money” to legalize the use of gold and silver as legal tender.
I apologize for the poor audio, but that’s how the stream came across.
“Gold is the sovereign of all sovereigns.” – Democritus, Greek scientist and philosopher, circa 430 BCE.
by Jake Towne, the Champion of the Constitution
Originally published Monday, July 13, 2009 at http://www.nolanchart.com/article6588.html
July 24, 1998, was an epic day for the global financial system. In “The Money Matrix – Bring Light to Dark Derivatives! (PART 11/15),” we reviewed the consequences of FED Chairman Alan Greenspan’s decision to allow negotiation of OTC derivative contracts without the use of an exchange to make transactions transparent and reduce counterparty risk. (emblem)
“Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.”
Translated, this comment simply means that the international central banks will suppress the gold price by releasing central bank gold reserves. Why is the gold price so important? Isn’t it just a yellow metal mostly used for jewelry? How exactly is this manipulation accomplished? These are the questions this article will answer.
THE LONDON GOLD POOL AND THE “REAL RATE OF INTEREST”
Before proceeding, I recognize that many hearing this for the first time may be incredulous. To that end, please read “R.I.P. – The London Gold Pool, 1961-1968“. This article painstakingly demonstrates – using the FED’s own documentation – that the international central bankers secretly colluded to manipulate the gold price in the 1960s to hide the dollar’s debasement. Note the severe aftermath: the London Gold Pool was utterly destroyed in 1968 and the end result was the national bankruptcy of the United States in 1971 when President Nixon blocked the redemption of dollars for gold by foreigners. The collapse of the London Gold Pool heralded the era of free-floating fiat currency. If additional proof is please read this 1961 FED document and analysis by James Turk from the Gold Anti-Trust Action Committee (GATA) entitled “The FED’s Blueprint for Market Intervention.”
Ron Paul was interviewed on the Jason Lewis Show by guest host Rod Grams this evening. They talked for about 16 minutes and covered several topics but in the end focused on auditing and potentially ending the Federal Reserve.
Paul specifically discusses why he doesn’t think the way to get HR1207 to a House vote is through a discharge petition. He suggests continuing to drum up grassroots support for HR1207 is the best method.
Grams allowed Ron Paul to speak until he was done on each topic. He even pointed out that his niece convinced him that Paul was a great candidate during the 2008 election.
Listen to the interview in it’s entirety below.
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In case you missed it, Ron Paul participated in a Fed forum at the CATO institute yesterday. I enjoy these types of gatherings. The speakers all were quite knowledgeable.
Most of the public is still unaware of that the gold price is currently suppressed by governments and central banks in collusion with bullion dealers. Even fewer realize that suppression of the price of gold has plenty of historical precedence. The following is the story of the London Gold Pool.
by Jake Towne, the Champion of the Constitution Originally published on Sunday, June 14, 2009 at http://www.nolanchart.com/article6535.html
“When gold speaks, all tongues are silent.” – Italian proverb
This article will briefly review the history and aftermath of the infamous London Gold Pool. For those unfamiliar with monetary history, let me quickly establish the events framing the London Gold Pool.
In 1933, the FED’s monetary inflation caused the Great Depression which was also America’s first bankruptcy. FDR plundered the American people’s gold and one month later outlawed the private possession of gold, an illegal act that existed until 1975. From 1933 onwards, America was on a “gold bullion standard.” A “gold bullion standard” exists when gold coins are not minted and owned by the people, but large international transactions with foreigners are handled in gold bar. However, the FED, America’s central bank, continued inflating the monetary supply which debases the currency and likewise increases the foreigner’s redemption of gold. (emblem)
Liberty Maven
July 24, 1998, was an epic day for the global financial system. In “
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