Jake Towne - Monetary Policy To CC-Upper Perk Small Govt (Jan 2010)

TowneForCongress.
com
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.
TowneForCongress.com
The Inflation Tax
+ = ?
1965 - A loaf of bread cost about 35¢
2010 - A loaf of bread per the BLS costs $1.80 *

- A 1965 quarter and dime can be exchanged for $4.75
*Source: http://www.bls.gov/cpi/cpid0907.pdf page 108/119
Source: http://towneforcongress.com/economy/unlocking-the-money-matrix-the-real-interest-rate-part-1215
http://towneforcongress.com/platform-issues/sound-money-and-jobs
The National Debt
below
Source: http://www.nolanchart.com/article6512.html
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
The FED Causes Depressions (1/4)
"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
✔ 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
1.0 Treasury &
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.
THE STATUS QUO
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
May promote “capitalism” and the “free dead.”
market” in word, but in deed functions as - Lord John Maynard Keynes
“Crony Capitalism,” “Vulture Capitalism,” the British Economist and
Central Planner
“Corporatocracy” or “Disaster Capitalism”
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
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 economics
Founder of the modern
Austrian School
Game Plan
CONTAIN – NEW SPENDING AND NEW TAXATION
No health care tax, energy tax, etc.
No stimulus or bailouts
ATTACK ROOT CAUSE - CUT SPENDING AND TAXES
CORRECTIVE ACTION – RESTORE SOUND MONEY
Removes the hidden tax of inflation
Halts redistribution of wealth from the people
Provides stable unit of account, store of value, and
exchange medium
Imposes fiscal discipline on government
Cut Spending and Taxes
$1,200 billion in income taxes in '08
“Just” $67 billion to run core federal gov't
3-step plan
1) Slash Military Spending
2) Eliminate Redundant/Useless Dept.
3) Gradual phase out Welfare State
See http://towneforcongress.com/platform-issues/income-tax
See http://towneforcongress.com/economy/guns-or-health-care-1
Departments to Cut
$101 billion Dept. of Education
$106 billion Dept. of Labor
$ 46 billion Dept. of Energy
$ 91 billion Dept. of Transportation
$ 55 billion for HUD
$ 11 billion each for EPA, IRS
$ 13 billion for Dept. of Interior
$ 16 billion for Dept. of Commerce
$ 22 billion International Assistance Programs
Most of $ 29 billion State Dept.
Phase out $133 billion Dept. of Agriculture
Slash $ 26 billion for NASA/NSF
All figures FY 2010 http://www.gpoaccess.gov/usbudget/fy10/pdf/hist.pdf
Restore Sound 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
Abolish the Central Bank
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.
Also see http://towneforcongress.com/economy/end-the-fed-then-what-the-transition-to-sound-money-1
GOLD and SILVER
Face it – your country is broke.
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.

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TowneForCongress.

2010 - A loaf of bread per the BLS costs $1.80 *

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

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

Total Reserves: $100

"Bankers own the earth. Take it away from

- Josiah Stamp, former President of the Bank

"On account of [the Federal Reserve],

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

✔ Interest rates represent the present time-value of money.

“Interest is the difference in the

- Ludwig von Mises

✔ The FED decides on and sets the interest rate.

"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

Open the Mint to free Coinage of Gold & Silver

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

Also see http://towneforcongress.com/economy/end-the-fed-then-what-the-transition-to-sound-money-1

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