Jake Towne For US Congress PA-15 - The Financial Crisis (WEB) (Sept 2009)

TowneForCongress.
com
Sept 2009
Jake Towne for US Congress

Pennsylvania's 15 District
th
presents
The Financial Crisis

A Tale of Dollars, Debt, and Derivatives and
Capital Destruction in America
“If universal peace, civilization, and commerce are ever to be the happy lot of man, it cannot
be accomplished but by a revolution in the system of governments.” - Thomas Paine
“An invasion of armies can be resisted, but not an idea whose time has come.” - Victor Hugo
TowneForCongress.com
Agenda
 The Fall of the Dollar, 1913 to Present
 The Crisis Accelerates
– Glass-Steagall Act Revoked (1999)

– D-Day: Washington, DC 7/24/1998
– The Coal Mine's Strangled Canary
– The FED Caused the Depression
 Hope for the Future
 Sources
 Appendix
– Speaker Credentials
– Fractional Reserve Banking in Pictures
– Principles
– Our Open Office
The Fall of the Dollar
1913 to Present
A German burns banknotes for
warmth since their value has
been reduced to just paper due
to the Weimar hyperinflation
that followed WWI.
FIAT = by decree
The National Debt
below
Source: http://www.nolanchart.com/article6512.html
Dishonest Money: The Fall of the Dollar
The purchasing power of the dollar has lost >94% since FDR took America off
the classical gold standard in 1933 through monetary inflation.
The monetary inflation was caused by the FED. They debased the dollar by
creating more and more irredeemable paper dollars.
The Inflation Tax
+ = ?
1965 - A loaf of bread cost about 35¢
2009 - A loaf of bread per the BLS costs $1.80 *

- A 1965 quarter and dime can be exchanged for $4.25
*Source: http://www.bls.gov/cpi/cpid0907.pdf page 108/119
The Real Interest Rate
Source: http://towneforcongress.com/economy/unlocking-the-money-matrix-the-real-interest-rate-part-1215
The Crisis Accelerates
1998 to present
Glass-Steagall Revoked (1999)
Commercial Banks Investment Banks Insurance Companies
Collect Savings Trade Stocks, Bonds Offers Insurance

Make Loans Trade Derivatives (Life, Property, Casualty
Credit Cards Trade Forex Annuities, etc.)
Citibank, N.A. Primerica Travelers Insurance

Smith Barney
Source: http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
Glass-Steagall Revoked (1999)
•Commercial banks, investment banks, and insurance
companies merged.
•Did not cause but helped enable the crisis.
•Removing these barriers in a free market economy
would work, but with a fiat currency system, and FDIC
deposit “insurance,” this was an open invitation for
corporate welfare and balance sheet manipulations.
Commercial Banks Investment Banks Insurance Companies
Collect Savings Trade Stocks, Bonds Offers Insurance

Make Loans Trade Derivatives (Life, Property, Casualty
Credit Cards Trade Forex Annuities, etc.)
Citibank, N.A. Primerica Travelers Insurance

Smith Barney
Source: http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
D-Day 7/24/1998
"The [Federal Reserve] Board continues to
believe that, aside from safety and
soundness regulation of derivatives dealers
under the banking or securities laws,
regulation of derivatives transactions that
are privately negotiated by professionals
is unnecessary."
"...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."
- From FED Chairman Alan Greenspan's Testimony to US House of Representatives
- Source: http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm
Why care about derivatives?
“Derivatives
Photo courtesy Mark Hirschey

are Weapons
of Mass
Destruction!”
- Warren Buffet, 2003
Q: How much is a Trillion?
A: $1,000,000,000,000
A Trillion is a “million millions”
If I paid you $1,000,000 a DAY, to reach a Trillion dollars
you would have needed to start working in 731 B.C.!!
Courtesy Chris Martenson

A Trillion-dollar stack of $1,000 bills would stretch from
Bethlehem to Philadelphia (67.9 miles)
All values in Trillions of USD
120
100
80
60
40
20
0
U.S. GDP ('08) EXD Derivatives (Mar '09) World Equity and Bond Markets ('08)
U.S. M2 Money Supply (Aug '09) World GDP ('08) World Real Estate ('08)
 Source: U.S. Global

www.usfunds.com/webcast/CreditBubbles/Credit_Bubbles_Replay.pdf
All values in Trillions of USD, best figures as of Aug 2009
600 The crux of the OTC

derivatives issue is its
enormous size relative
500
to rest of the financial
system.
400
However, this is
notional value; true
300 contract values cannot
be assessed.
200
100
0
U.S. GDP EXD Derivatives World Equity and Bond Markets
U.S. M2 Money Supply World GDP World Real Estate OTC Derivatives
 Source: Bank for International Settlements latest, December 2008

http://www.bis.org/statistics/otcder/dt1920a.pdf
Notional Amount OTC "Dark" Derivatives 1998-2008
(Data courtesy bis.org - Jake Towne)
800
700
600
in Trillions of USD
500
400
300
200
100
0
Dec.98
Dec.99
Dec.03
Dec.04
Dec.05
Dec.07
Dec.08
Jun.99
Jun.00
Dec.00
Dec.01
Dec.02
Jun.04
Jun.05
Dec.06
Jun.07
Jun.08
Jun.98
Jun.01
Jun.02
Jun.03
Jun.06
Massive Credit/Debt Expansion from 1998 – June 2008. Start of credit contraction???
What ARE Derivatives?
Derivatives began in the

1700s in imperial Japan's
Dojima Rice Exchange.
The Tale of Joe the

Samurai and Bob the Trader
Spot Price & Future Price
 For more details, please read my article “What the Heck Are Derivatives?”
at www.nolanchart.com/article5620.html
What ARE Derivatives?
Simplified, the term "derivative" refers to a

"derived" wager, or bet, on the price of something.
Derivatives are financial contracts whose values
are derived from the value of something else, which
is termed the "underlying" asset. The main use of
derivatives is to transfer risk for one party.
There are many types of derivatives – futures,
options, swaps, etc – covering different types of
“underlying” “assets” - commodities, interest rates,
FOREX, equities, credit defaults.
The Monetary System's
Strangled Canary
The Suppression of the Gold Price
Courtesy Quadell
The Gold Market
When mining gold, a typical yield is 1 gram per metric ton (1,000,000 grams).
“Gold is Money, and Nothing Else.”
- JP Morgan, Banker, before Congress in 1913. He was lying – silver is as well.
The earth's aboveground gold stock could be placed into a cube 20 meters per side.
The London Gold Pool
The Story of the London Gold Pool, 1961-1968
There are ~160,000 metric tons of aboveground gold stock.
The World Gold Council reports that the world's central bank
gold reserves are at 29,698 metric tons as of June 2009, and
this is a fall from the 35,582 metric tons reported in 1990 while
the world's paper money supply has more than tripled
since then.
For more information please read:

http://towneforcongress.com/economy/unlocking-the-money-matrix-the-summers-gold-price-suppression
The Plotters and the Scheme
The FED Causes Depressions
"On account of [the Federal Reserve],

we ourselves are in the midst of the
greatest depression we have ever
known. From the Atlantic to the Pacific,
our Country has been ravaged and laid
waste by the evil practices of the Fed and
the interests which control them. At no
time in our history, has the general welfare
of the people been at a lower level or the
minds of the people so full of despair...
They are the victims of the Fed. Their
children are the new slaves of the
auction blocks in the revival of the
institution of human slavery."
- Congressman Louis T. McFadden, Pennsylvania's 15th District

- From the 1934 Congressional Record
"Our nation's monetary policy over the past
century is the most despicable hoax ever
committed against the American people
in our history. If I can help the people of
our district understand the utter immorality,
the sheer evil, of this system and how it
restrains the prosperity of our society, we
will and can succeed. With your help, I can
help lead the way with actions that can
save us and our children. This is not a
joke. If our society fails to deal with this,
the abject slavery McFadden warned of,
and drop in living standards will soon be
realized by us all.” Rembrandt's 1626 depiction of Jesus
chasing the Money-changers out of
the temple
- Jake Towne, 2010 Candidate for Pennsylvania's 15th District
✔ Interest rates represent the present time-value of money.
✔ They serve as a check-valve between the deployment of
capital (and the amount of mal-investments!) for economic
growth and the savings deferred to the future to pay for the
goods and services resulting from the growth.
“Interest is the difference in the

valuation of present goods and
future goods; it is the discount in the
valuation of future goods as against
that of present goods.”
- Ludwig von Mises

American Economist and
Founder of the modern Austrian School
✔ The FED decides on and sets the interest rate.
➢
Unlike most of the 19th Century (without the FED) and the early 20th
Century where the different FED regions varied interest rates to
account for regional differences (agricultural Midwest, industrial East
Coast), the modern FED constrains the economy to the same interest
rate.
➢
This is similar to the EU's central bank; not only do they all use the
Euro, but far more importantly, highly industrialized states like
Germany now share the same interest rates as states with very
different economies like Greece and Spain.
"Let me end my talk by abusing slightly my status as

an official representative of the Federal Reserve...
Regarding the Great Depression: You're right, we did
it. We're very sorry.”
- current FED Chairman Ben Bernanke

From his 8 November 2002 remarks
Federal Reserve Interest Rate 1995-Apr 2009
Source: http://www.federalreserve.gov/releases/h15/data/Monthly/H15_FF_O.txt
8.0
Bust
Federal Funds Rate % (Monthly Weighted)
7.0
6.0
Bust
5.0
Boom 9/11
4.0
Dot.com's
3.0
Tech stocks Boom Fall 2007:
2.0
Housing Financial Depression
System
Treasury &
1.0 Breakdown
Begins Dollar Crisis
0.0
01/95
09/95
05/96
01/97
09/97
01/98
09/98
05/99
01/00
09/00
05/01
01/02
09/02
09/03
05/04
01/05
09/05
05/06
01/07
09/07
05/08
09/08
05/95
01/96
09/96
05/97
05/98
01/99
09/99
05/00
01/01
09/01
05/02
01/03
05/03
01/04
09/04
05/05
01/06
09/06
05/07
01/08
01/09
03/95
07/95
11/95
03/96
07/96
03/97
11/97
07/98
03/99
07/99
11/99
03/00
07/00
11/00
03/01
07/01
03/02
11/02
07/03
03/04
07/04
11/04
03/05
07/05
11/05
03/06
07/06
11/06
03/07
11/07
07/08
03/09
11/96
07/97
03/98
11/98
11/01
07/02
03/03
11/03
07/07
03/08
11/08
 The FED's interest rate control combined with the money supply
changes result in the Boom-Bust cycle.
 Booms are periods of credit expansion that central bankers
mostly created themselves, while busts are credit contractions.

 Each “Boom” plants the seeds of the next “Bust” by creating a
multitude of wasteful mal-investments.
Hope for the Future
"...if anything will be done, common Americans themselves
must do it, they can count on no one else."
-Dr. Edwin Vieira
"If there must be trouble, let it be in my day, that my child

may have peace.”
– Thomas Paine, “The American Crisis,” 1776
Replace the Socialistic Keynesian Government
Status Quo with the Austrian Free Market
Keynesian Economics
The “Money Power” is held by the
Government & Bankers
Government 'Commands' the Economy
Renown for Deficit Spending and
Stealing via Currency Debasement
Redistributes Wealth to the Military-
Industrial Complex, Banking Cartels,
Special Interest Groups & Corporations
Allows and Rationalizes Government
Takeovers of Private Businesses “In the long run, we are all dead.”
May promote “capitalism” and the “free
- Lord John Maynard Keynes
market” in word, but in deed functions as British Economist and
“Crony Capitalism,” “Vulture Capitalism,” the Central Planner
“Corporatocracy” or “Disaster Capitalism”
Replace the Socialistic Keynesian Government
Status Quo with the Austrian Free Market
Austrian Economics
The People own the “Money Power”
Government Plays No Role in
Economic Planning
Promotes Honest Money & Balanced
Budgets
Highly Rewards those who Create
Wealth and Shares it with All
“All those intent upon Government Does Not Takeover
sabotaging the evolution
towards welfare, peace, Private Businesses
freedom and democracy, Promotes Free Market Capitalism
loathe gold.”
and laissez faire, or “let them be!”
- Ludwig von Mises
Founder of the modern economics
Austrian School
Demand Market Transparency in OTC
“Dark” Derivatives
“Bring Light to Dark Derivatives!” - Jake Towne, 2008
Over-the-counter derivatives are very loosely regulated

and directly traded between two parties.
Quite likely, many OTC derivative contracts are

insolvent since corporations cannot cover in the case of
one party defaulting.
Requiring traders to use an exchange or publish proof

of solvency should be required of corporations.
 For more details, please read my article “Bring Light to Dark Derivatives” at
http://towneforcongress.com/economy/bring-light-to-dark-derivatives-1
Restore Honest Money
“The Congress shall have Power to coin Money, regulate the Value thereof, and of
foreign Coin, and fix the Standard of Weights and Measures... No State shall... coin
Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in
Payment of Debts.” - The United States Constitution, 1787 - present
Open the Mint to free Coinage of Gold & Silver

Remove all taxes on the exchange of Gold & Silver
Revoke and Forbid Legal Tender Laws
Help drive the debate on a new Monetary System
● Prefer gradual transition from the current FRN to gold and/or silver.
Note: I do not advocate a return to the 1930s era classical

gold standard, which was based on fractional reserves.
Abolish the FED
Phase out the FED over a year with Congress
taking a role in all decisions until its abolishment.
Transition to Honest Money replacing all Federal
Reserve Notes with (fiat) United States Notes in a
1:1 ratio. Gradually increase reserve requirements
to end fractional reserve banking.
Replace the central planners of the FED with
Honest Money and the free market.
Then remove the federal government from
monetary decisions. Allow private coinage to exist
so citizens can trade as they wish.
GOLD and SILVER
Face it – your country is broke.
Thank You!!
My sincere thanks to the team of campaign volunteers who took the time
to peer review this presentation and offer many improvements. This team
includes Erik Gumbrecht, Gene DeNardo, Aaron Emery, Dann McCreary,
and Brian Theiss, who agreed to be recognized. Many thanks to Derek
Wyatt for creating the “Towne 2010 - As Good As Gold” graphic!! Of
course, thanks to my family and friends for supporting me in this
endeavor to dedicating the next 18 months of my life to this mission.
I would also like to thank:
Walt Thiessen of www.NolanChart.com

Marc Gallagher of www.LibertyMaven.com
Chris Mullen of www.GoldSeek.com and
Bill Murphy of www.LeMetropoleCafe.com
for publishing my writings during the past couple years and allowing them
to be reviewed and debated on their sites. I have learned quite a bit from
the reader feedback and look forward to more.
“Veritas numquam perit. Veritas odit moras. Veritas vincit."
Truth never perishes. Truth hates delay. Truth conquers.
(My personal motto)
Graphics Acknowledgements
Unless listed below, all photos are either mine or public domain.
 The “Towne 2010 – As Good As Gold” logo was created by Derek
Wyatt
 Statue of Liberty photo is courtesy “BigMacSC99” LINK LICENSE
 USSR flag photo courtesy “Neozuki” LINK LICENSE
 Faneuil Hall photo courtesy “Daderot” LINK LICENSE
 The Roman forum photo is courtesy Stefan Bauer LINK LICENSE
 The Representatives vs Population graph is used with permission
from Jeff Quidam of www.thirty-thousand.org. It is fair to mention that

while we both agree on increasing the number of representatives, this
site proposes a higher increase than myself.
 Roman tribune bust photo is courtesy Andrew Bossi LINK LICENSE
➢ The Federal vs Local power pyramids are used with permission from
Clyde Cleveland and his wonderful piece of literature “Common Sense

Revisited” which can be found at www.commonsenserevisited.com
➢ The Raging Debate icon is used with permission from Jason Rines
of www.RagingDebate.com
Source List (1/3)
This is a partial list of the sources used in this work. Place the cursor over
the title to access the link. Here is a LINK to a summary of my writings and
my semi-bibliography.
Towne, Jake. 2009. “The Money Matrix – The Summers Gold Price Suppression
Scheme.”
Towne, Jake. 2009. “The Real Interest Rate.”
Towne, Jake. 2009. “R.I.P. - The London Gold Pool, 1961-1968.”
Towne, Jake. 2009. “Silver and Gold ARE Money.”
Towne, Jake. 2009. “Federal Reserve Plank.”
Source List (2/3)
This is a partial list of the sources used in this work. Place the cursor over
the title to access the link. Here is a LINK to a summary of my writings and
my semi-bibliography.
Armstrong, Martin. 2009. “Financial Panic = Political Change.”
Bastiat, Frederic. 1848. The Law.
Butler, Smedley. 1935. “War is a Racket.”
The Constitution of the United States. 1787-present.
Eisenhower, Dwight. 1961. Farewell Address.
Federal Reserve Bank of Chicago. 1994. Modern Money Mechanics.
Federal Reserve. Federal Funds Rate Data, Monthly 1954-2009.
Fekete, Antal. 2009. “Open the Mint to Gold!”
Hazlitt, Henry. 1946. Economics in One Lesson.
Jefferson, Thomas. 1801. First Inaugural Address.
Marx, Karl. 1848. The Communist Manifesto. See page 21/44 for the planks
McFadden, Louis T. 1934. Remarks in Congress on the Federal Reserve.
Mises Institute. Money, Banking, and the Federal Reserve. 40-min. Video
Source List (3/3)
Place the cursor over the title to access the link. Here is a LINK to a
summary of my writings and my semi-bibliography.
Reagan, Ronald. 1984. Remarks when accepting the presidential nomination.
Rothbard, Murray. 1990. What Has the Government Done with Our Money?
Towne, Jake. 2009. “America's Military Empire.”
Towne, Jake. 2008. “Bernanke's Great Lie – The “Gold Standard”and the
Great Depression.”
Towne, Jake. 2009. “Income Tax Plank.”
Towne, Jake. 2008. “The Money Matrix – How the FED Works.”
Towne, Jake. 2008. “The Money Matrix – What the Heck Are Derivatives?”
Towne, Jake. 2009. “The Money Matrix – Bring Light to Dark Derivatives”
Towne, Jake. 2009. “Why Obama's Stimulus Plan Will Fail... and a Better
Alternative.”
Washington, George. 1796. Farewell Speech to the People of the United States.
White House Budget FY2009. (FY2010 here.)
Document Copyright
Copyright © Jake Towne, 2009. Any portion of this presentation that could be
copyrighted is owned by myself and I hereby released it to the public domain. I
grant full permission to use any of the ideas or material within. You may republish
this work. Attribution to myself is appreciated but not required.
Closing Remarks
* I am running as a citizen, not with either major party - What I offer to the citizens
of the 15th district, and many do belong to the two main parties, is a truly
independent voice and ear.
* I am not a career politician. If elected, I would plan to run again in 2012, but
following this I would most likely not run again. My aim is to serve as a temporary
statesman and representative and then leave government. I am more mindful than
most of the sad truth behind "Power corrupts and absolute power corrupts
absolutely." As collateral for this assurance, if elected, I will not enlist in the
Congressional pension plan, which guarantees members up to 80% of their salary in
annual pension. I believe this is fiscally irresponsible and too lucrative. The current
salary for a seat in the U.S. Congress is $174,000. I view this as too lucrative given
the current purchasing power of the dollar, so obviously I would act to reduce
Congress's salary and mine - how can the people believe Congress will tighten the
purse-strings on government if Congress fails to start with itself? I support tying the
salaries of our Congress in some manner to household median incomes.
My Biography
Born and raised in Nazareth
30 years old, never married, no children
Attended Nazareth Area High School
Graduated 3rd in my class of about 230
Awarded the area's Citizenship Award from then-U.S.
Congressman Paul McHale
Active on football, track & field (captain), township
baseball (catcher), and cross country teams
Attended Lehigh University from 1998-2002
Graduated with honors with a major in Chemical
Engineering and minored in the Classics. Cumulative
GPA of 3.7
Attended Dortmund University (Germany) as an
exchange student in 2001
As a Martindale Scholar, I traveled to Hong Kong in
2001 and then wrote a paper on their political system
My Biography
Following Lehigh, I moved to California where I worked
for Ablestik Laboratories, a supplier for the semiconductor
industry, as a process engineer. In my job, I scaled up
new products from R&D to production, troubleshot product
problems for customers, and implemented cost-saving
changes to benefit both my company and the customer.
For nearly the last 4 years, I have been living and

working in Shanghai, China as a process engineering
supervisor starting up two brand-new manufacturing cells.
I led the commissioning of the equipment and products,
then helped the factory qualify customers and ramp
production. I can speak Mandarin Chinese.
More details on my professional career are in my resume
My Biography
Besides traveling within China
and our country, I have been
fortunate enough to travel for
either business or vacation to:
Japan Belgium
New Zealand Germany
Australia France
Cambodia Italy
Thailand Switzerland
Singapore Nepal
Malaysia South Korea
My Biography
Educated at Mises University, Class of 2009
Towne For Congress is endorsed by RetakeCongress.com,
912Candidates.org, and is a proud member of the “Liberty
Candidates” coalition
Economics articles published at SeekingAlpha.com,
Goldseek.com, DollarCollapse.com among others
Eco-Political articles published at NolanChart.com,
LibertyMaven.com, CampaignForLiberty.com among others
Fractional Reserve
Banking in Pictures
By Jake Towne, 2009
Dishonest Money
How to Create $900 from $100
The banking system creates dishonest “money” each
time you deposit money. Here's how it is done, using the
current approximate fractional reserve ratio of 10%.
Step 1)
1000
A depositor deposits $100 at a bank.
Total Reserves: $100 800

Total Loans: $0
Total Money Supply: $100 600
"Give me control of a nation's money 400

and I care not who makes its laws."
200
- Mayer Amschel Rothschild, 1744 -1812,
Leader of the Rothschild Banking Cartel of
Europe 0
Total Deposits Total Loans Total Money Supply
Dishonest Money
Step 2)
The bank holds $10 for its reserves and loans out the other $90 to others.
Total Reserves: $10

Total Loans: $90 1000
Total Money Supply: $100

800
"It is well enough that people of the nation do
not understand our banking and monetary
system, for if they did, I believe there would 600
be a revolution before tomorrow morning."
- Henry Ford 400
200
0
Total Loans
Total Deposits Total Money Supply
Dishonest Money
Step 3)
This $90 is deposited elsewhere. Next, this second bank takes the $90 in
deposits, holds $9 for its reserves, and loans out the other $81.
Total Reserves: $19

800
"When an assembly undertakes to issue
paper as money, the whole system of safety 600
and certainty is overturned, and property set
afloat. Paper notes given and taken between
individuals as a promise of payment is one 400
thing, but paper issued by an assembly as
money is another thing. It is like putting an
apparition in the place of a man; it vanishes 200
with looking at it, and nothing remains but the
air."
- Thomas Paine, “Dissertations on Gov't” 0
Total Deposits Total Loans Total Money Supply
Dishonest Money
Step 4)
Step 3 repeats. The third bank takes the $81 as a deposit, holds $8.10 for its
reserves, and then loans out $72.90.
Total Reserves: $27.10

Total Loans: $243.90 1000.00
800.00
“The few who understand the system, will 600.00

either be so interested in its profits, or so
dependent on its favors, that there will be no
opposition from that class. The great body of 400.00
people, mentally incapable of comprehending
the tremendous advantages, will bear its 200.00
burden without complaint."
- Lord Rothschild 0.00

Total Loans
Dishonest Money
Step 5)
The process keeps repeating. The bulk of the money creation is done after 15
repeats, but what is eventually left after 40 or 50 repeats is pretty much:
Total Reserves: $100

800
So within a short period of time, banks
transferring to other banks within the 600
system can CREATE $900 from the initial
$100 deposit.
400
For those hearing the above for the first
time, this process is such NONSENSE that 200
it is a little hard to grasp.
 Source: Federal Reserve Bank of Chicago, “Modern 0
Money Mechanics” (1994) Total Loans
Dishonest Money
FED Open Market Operations
The FED itself also creates or destroys dollars, but they
do not even require deposits.
The Federal Reserve conducts open market operations
by purchasing or selling any type of asset.
In the past the FED mostly bought Treasuries. In the
past several years, the FED has mostly bought company
assets or bad debt, such as AIG's.
"Bankers own the earth. Take it away from

them, but leave them the power to create
money and control credit, and with a flick of a
pen they will create enough to buy it back."
- Josiah Stamp, former President of the Bank

of England
Dishonest Money
FED Open Market Operations
Here’s what happens when the FED buys Treasuries or other assets
1) The FED’s Open Market Committee (FOMC) decides to expand the nation’s
money supply. They purchase, for example, $100 billion in Treasury bonds.
2) The FED writes a check on itself for $100 billion. [Where did it get the money?
The answer is -- FROM NOWHERE!]
Monetary Supply Expansion: $100 billion
3) This $100 billion FED check then goes to one of the select government bond
dealers (such as JP Morgan Chase or Goldman Sachs) in exchange for the $100
billion in Treasuries.
4) Then the dealer deposits its $100 billion FED check at a commercial bank.
5) Enter the fractional reserve loop. This deposit is very quickly loaned out
repeatedly and grows to $100 billion in deposits and $900 billion in loans.
Monetary Supply Expansion: $1 Trillion
Mission Statement
(1) Spread my message of prosperity by
defending freedom and peace.
(2) Educate as well as learn from the public.
(3) Win the 15th District U.S. Congressional
seat in 2010.
(4) Truly represent the citizens of the district
by voting on their behalf.
(5) Create and drive new legislation in
agreement with the platform, my principles
and citizen input.
Principles
Government, or the rule of law, solely exists to
protect the liberty of the individual.
Photo courtesy BigMacSC99
“What is law? It is the collective organization of the individual right to lawful defense.”
- Frederic Bastiat, 1848, The Law
Government exists to protect liberty, not
to redistribute wealth, nor to grant
special privileges, nor to interfere with
the lives of individuals and their actions.
The government of a free country,
properly speaking, rests not in its elected
officials but in its laws.
The Constitution is the supreme law of

the land. Therefore, transfer of
American sovereignty to supranational
organizations, even if “benign,” is not
permissible without a constitutional
amendment.
The United States Constitution was written under the principle of
"positive grant." This means the federal government is authorized
to exercise only the powers which are specifically given to it by the
Constitution, and nothing more.
Each individual is fundamentally
equal under the law with all other
individuals. The rule of law's
framework of liberty ensures the
greatest opportunity for
individuals to explore their
strengths and surmount
obstacles.
A limited and decentralized

government with inherent checks
and balances results in more self-
rule by local communities, and
hence providing local diversity
and overall greater satisfaction
for individuals. Individuals can
always vote with their feet, and
move to areas not affected by
laws they strongly disagree with.
Individuals have the right to live their own lives how
they choose, so long as they do not forcibly interfere
with the equal rights of others.
Ultimate disregard for

human life – Remains
of Nazi Germany's
victims taken by the
US Army in 1945
The only legitimate use of force is in defense of
individual rights — life, liberty, and justly acquired
property — against aggression.
The Japanese attack at

Pearl Harbor resulted in a
declaration of war against
Nazi Germany and
Imperial Japan.
Shown here is the

beachhead assault on D-
Day in 1944.
Geronimo's Apache tribe fought to
maintain their independence from
both the United States and Mexico.
The philosophy of liberty holds that

everyone has certain natural rights.
Rights belong to individuals, not groups.
Rights are not privileges, they are derived from the natural
state of being human.
The Constitution merely acts to forbid the infringement of the

federal government upon these rights.
The monetary unit must be incorruptible, not based on fraud.
"Of all the contrivances for cheating the laboring classes of mankind, none has been
more effective than that which deludes them with paper money."
- Daniel Webster, 19th century American statesman
The government's monetary role is to mint money and maintain the
integrity of the monetary unit, not to commit fraud by debasement
or to substitute counterfeits of paper for the constitutionally-
specified forms of lawful money, coins of gold and silver.
However, individuals should be free to trade and exchange as

money any mutually agreeable commodity or item as they wish.
A German burns banknotes for warmth since

their value has been reduced to just paper due American Silver Eagle bullion
to the Weimar hyperinflation that followed WWI. coin made by the U.S. Mint
Property should be owned by people, not government.
Photo courtesy Neozuki
“No person shall be... deprived of life, liberty, or property without due process of law.”
- The Constitution of the United States of America
“Life, liberty, and property do not exist because men have made laws. On the contrary, it
was the fact that life, liberty, and property existed beforehand that caused men to make
laws in the first place.”
- Frederic Bastiat, 1848, The Law
The free market is feared by many who do not understand it.
Those who do realize the free market is the most just, most
humane economic system, and remains the greatest engine
of prosperity and liberty the world has ever known.
A stacked microchip package used in mobile

phones and computers – products of the
free market
Freedom is an indivisible whole and includes
both economic and personal liberty.
Ben Franklin's 1754 political cartoon signified The complementary elements of

the need for the colonies to unite to preserve the economic and personal liberty are
liberty of all. Likewise, economic and personal inseparable from their greater
liberty together is a powerful force and freedom whole, freedom.
is lost when either is compromised.
Government Accountability &
Transparency
“As your Representative, I will work inside of an Open Office that is clear as glass.”
Our Open Office
Besides our existing website and system, I will offer:
1) Online Public Feedback & Debate

Forum
2) Monthly Reports
3) Online Bill Submission Service
4) On-Demand Town Hall Discussions
“If citizens demand it, I would even install a Webcam in my office. But they should
know I will never support the government watching them. I want to get the
government off our backs, and full Accountability and Transparency is the path.”
Our Open Office: Online Public
Feedback & Debate Forum (1/4)
Faneuil Hall, Boston, MA Photo courtesyDaderot

Login moniker account for
all residents
Registered voters to have

a priority flag symbol next to
their comments and votes
“This revolutionary idea is based on the Town Halls and Roman Forums of old.
Together, let's remodel and restore our Republic for the 21st Century using NEW
ideas and tools.”
Submit votes and comments on the house bills
coming up on the House calendar
Users can create forum topics & foster citizen
debates
Phone calls and separate emails/letters will be tallied
onto the forum pages by my office
The Forum will email news and personalized
notifications to receive based on your personal
preferences and interests
“I'm trying to free our minds. Here is one of the doors, but I can only show it to
you. You have to decide whether to walk through it.”
Those who do not have computer access may:
Use the terminals at our district office

Dictate comments in manually by phone
Request their mailed letters to be publicized, and
our office will scan and post into the Forum
“Freedom of speech must be protected at all costs. Dissent must not only be
tolerated but welcomed in a free and open society.”
“If the freedom of speech is taken away then dumb and silent we may be led, like
sheep to the slaughter.”
- George Washington, President of the United States, 1789-1797
Forum Romanum Photo courtesy Stefan Bauer

“With your help and votes, we will together redefine the 'res publica', our Republic,
or our 'public affairs.' We will revolutionize politics, and move it from its current
darker age into a new era of real hope, real change, and openness.”
Our Open Office: Monthly Reports
This written monthly report will offer:
Summary of how and why I voted for each and
every House floor vote
My co-sponsoring activity and why
New bills introduced and why
Refer to Forum consensus and feedback in my
reports
Office budget updates will be transparent
“My monthly reports are aimed at delivering maximum transparency and maximum
accountability. What if my votes, actions and views do not agree with the public's?
I expect they won't at all times, but if I fail to provide adequate explanations and do
not obey the wishes of the people, then I will not be in office very long, now will I?”
Our Open Office: Online Bill
Submission Service (1/2)
Any resident can submit draft proposals for new legislation
Each publicly-published proposal must either:

➢
Cite the power granted to Congress for its validity
➢
Or, if revoking a current act or law, provide detailed
justification or cite the Constitution if it is unconstitutional
A public reply must be given to each draft by myself, and I

hope to contact and discuss with Drafters themselves
“Look, there are around 650,000 citizens in our district. I am no more intelligent
than anyone else, but I do know that many of us are experts in certain fields or
have special interests of one kind or the other. This idea will bring the best ideas
out of our community, and give citizens a real voice in which to be heard.”
Our Open Office: Online Bill
Submission Service (2/2)
If the draft idea is accepted, I will work with the
Drafter to refine it, and submit it to the Forum for
review by the community before submitting it on the
House floor
Especially if this idea is popular, Drafters should

be aware that they will be partly responsible for
helping promote their bill.
“No matter how hard I work with my staff and Congress, I am only one person. I
estimate this idea could allow us to multiply my output as your Representative in
Congress by at least five-fold. We may even need to organize ourselves to sell
our ideas to citizens in other districts and organizations to get these bills passed,
instead of relying on often corrupt back-door DC deals.”
Our Open Office: On-Demand
Town Hall Discussions
Offer ability to sign up for Town Halls at the Forum
Town Halls are teleconferences at a preset day and
time that you receive at your phone number
Bi-Weekly Town Halls in 2 Formats
➢
Pure Q&A
➢
Topic Discussion followed by Q&A
Residents at the Forum can summon me to an “On-
Demand” topic discussion after voting reaches a
target for hot topics that I am not addressing fast
enough
“When citizens speak, their Representative must listen completely. Across our
land, the so-called “Representatives” have not troubled to listen to We the People,
and this is a key reason our country is in such dire straits today.”

Jake Towne For US Congress PA-15 - The Financial Crisis (WEB) (Sept 2009)

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Jake Towne For US Congress PA-15 - The Financial Crisis (WEB) (Sept 2009)

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Jake Towne for US Congress

The Financial Crisis

– Glass-Steagall Act Revoked (1999)

2009 - A loaf of bread per the BLS costs $1.80 *

*Source: http://www.bls.gov/cpi/cpid0907.pdf page 108/119

Commercial Banks Investment Banks Insurance Companies

Collect Savings Trade Stocks, Bonds Offers Insurance

Citibank, N.A. Primerica Travelers Insurance

Commercial Banks Investment Banks Insurance Companies

Collect Savings Trade Stocks, Bonds Offers Insurance

Citibank, N.A. Primerica Travelers Insurance

- From FED Chairman Alan Greenspan's Testimony to US House of Representatives

Photo courtesy Mark Hirschey

Courtesy Chris Martenson

 Source: U.S. Global

600 The crux of the OTC

 Source: Bank for International Settlements latest, December 2008

Derivatives began in the

The Tale of Joe the

Spot Price & Future Price

Simplified, the term "derivative" refers to a

There are ~160,000 metric tons of aboveground gold stock.

For more information please read:

"On account of [the Federal Reserve],

- Congressman Louis T. McFadden, Pennsylvania's 15th District

- Jake Towne, 2010 Candidate for Pennsylvania's 15th District

“Interest is the difference in the

- Ludwig von Mises

"Let me end my talk by abusing slightly my status as

- current FED Chairman Ben Bernanke

mostly created themselves, while busts are credit contractions.

multitude of wasteful mal-investments.

"If there must be trouble, let it be in my day, that my child

Over-the-counter derivatives are very loosely regulated

Quite likely, many OTC derivative contracts are

Requiring traders to use an exchange or publish proof

Open the Mint to free Coinage of Gold & Silver

Note: I do not advocate a return to the 1930s era classical

I would also like to thank:

Walt Thiessen of www.NolanChart.com

 USSR flag photo courtesy “Neozuki” LINK LICENSE

 Faneuil Hall photo courtesy “Daderot” LINK LICENSE

 The Roman forum photo is courtesy Stefan Bauer LINK LICENSE

 The Representatives vs Population graph is used with permission

from Jeff Quidam of www.thirty-thousand.org. It is fair to mention that

Clyde Cleveland and his wonderful piece of literature “Common Sense

Towne, Jake. 2009. “The Real Interest Rate.”

Towne, Jake. 2009. “R.I.P. - The London Gold Pool, 1961-1968.”

Towne, Jake. 2009. “Silver and Gold ARE Money.”

Towne, Jake. 2009. “Federal Reserve Plank.”

For nearly the last 4 years, I have been living and

More details on my professional career are in my resume

Total Reserves: $100 800

"Give me control of a nation's money 400

Total Reserves: $10

Total Money Supply: $100

- Henry Ford 400

Total Reserves: $19

Total Reserves: $27.10

“The few who understand the system, will 600.00

- Lord Rothschild 0.00