The Secret Of Oz Page #4

With the goldsmiths back in control, England was now financing its wars with this bank-loaned money.

Just 75 years England's war debts consumed 75% of its budget, 3/4 of British taxes were spent just on paying the interest on its war bonds.

As a result England needed to squeeze more and more money from all her colonies to pay the interest on this new growing debt. America was no exception.

Pre-revolutionary america was still relatively poor, there was a severe shortage of precious metals coins to trade for goods, so the early colonists were increasingly forced to experiment with printing their homegrown paper money.

This paper money was called "colonial scrip".

"Colonial scrip" was a dangerous concept for bankers, it broke the colonies free of the privately-owned central bank system were money had to be created by banks and loaned to governments, as Franklin put it:

"In the colonies we issue our own money. It is called Colonial Scrip, we control its purchasing power, and we have no interest to pay to no one."

In 1764 the british parliament passed the currency act. Again it ordered all americans to pay their taxes in gold or silver coins.

For those who believe that a return to the gold-backed money is the answer for America's current monetary problems, look what happened to America after currency act of 1764 was passed! As Franklin put it:

"In one year the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the colonies were filled with unemployed."

To Ben Franklin this return to the gold money system was the basic cause for the American revolution: "The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the Colonies [their] money, which created unemployment and dissatisfaction.

Americans were mad and did everything they could to get around Britain's gold money system.

In 1765 parliament passed the STAMP ACT, requiring that every item sold had to have a stamp placed on it indicating that a tax had been paid on that item and paid in gold. This is what drove America to open revolt.

To understand what that means: without gold you could literally buy or sell or nothing. Why? Because the British had successfully forced the colonies to pay for everything using only a precious commodity: gold. This is the very definition of the word Plutocracy - ruled by the rich.

These people that deal with gold and silver only had never spent one minute to actually try and figure out how it worked in history, how it worked in real life, and the only way they could support their gold theories is they just treat it as religion and say: we don't have to understand it we just know that that's god's money and it will work - and that's not true!

By the outbreak of the revolution in april 1775 colonies started printing a new form of money to finance the war.

It was called "Continental currency" because unlike Colonial Scrip it was the first issued by the new central government.

Continentals were great at first, but then the British started counterfeiting it massively, sending it to America literally by the bail.

By the end of the war the currency was virtually worthless. As george washington lamented: a wagon load of money will scarcely purchase a wagon load of provisions.

Earlier, Colonial Scrip had worked because just enough was issued to facilitate trade and counterfeiting was minimal! In other words, the quantity was controlled by the government that issued it.

Gold bugs today try to claim that because paper money didn't work during the revolutionary war, it shouldn't be used today, but keep in mind it doesn't matter what backs your money. All that matters is who controls its quantity!

Will it be your elected officials, or will it be some unelectable banker?

Colonial paper money before the revolution had worked so well that the Bank of England had parliament outlawed and forced America only to use gold-money, gold which they controlled.

In our next stop on the yellow brick road which represents the bankers' gold money system we find how the curse of the privately-owned central banks first came to America.

In 1781 towards the end of the war the Continental Congress met here in Philadelphia; they pondered what to do about their grave financial situation. The money was so worthless that people papered their walls with it.

Congress finally agreed to give a group of bankers a monopoly on creating US money by loaning it to the government. It was the first privately-owned central bank. The plan of course was modeled on the Bank of england.

The new bank would be called the Bank of North America it would be the first of a string of controversial privately-owned central banks which congress would charter, then in the face of public outrage, uncharter over the years.

Four years later in 1785 the value of the new currency had plummeted, inflation was rampant, prices had risen by 72%.

So after a stiff battle congress killed this, the first privately-owned central bank in America.

Two years later when it came time to write the constitution in 1787 many of the delegates did not remember how well America's government-issued paper money had worked in Pennsylvania.

They were still stung by the inflation of the Bank of North America and the hyperinflation during the revolution primarily caused by British counterfeiting.

Strangely the constitution allows the Federal government to borrow money but it's silent on the federal role in printing paper-money known in the language of the day as "Emitting bills of credit".

This defect in constitution is at the root of all our economic problems today.

One mistake the constitution didn't make was to mandate that the federal government pay all his debts only in gold. Then we would have wound up with the same system that had caused the revolution in the first place.

It does mandate that for state governments, but that has never been adhered to.

All the constitution had to do is to mandate that only congress could issue the nation's money, debt-free, just like most people think happens today.

This defect in the constitution left the door wide open for bankers to run a bill through congress in 1791, 4 years after the constitution had been signed, to turn over creation of the nation's money to private bankers once again.

Like all the privately-owned central banks that would follow, the new bank was given a name that would deceive people into thinking it was part of the U.S. government but it was not: it was called the 1st Bank of the United States - this is actually the original building here in philadelphia.

After a contentious debate congress finally granted the new bank a 20-year charter of private monopoly, again the nation's money would be created out of thin air by the new bank and loaned to the government and to private individuals, all at interest just as our money supply is created today.

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