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House of Honest Money Is America Broke - Part II - The Debt God
Is America Broke Part II The Debt God "Because of the fractional reserve system, banks, as a whole, can expand our money supply several times, by making loans and investments." Abstract The following paper is the second installment of the three part series: Is America Broke . The first article discussed the main issues of the financial crisis. It was suggested that the root cause of the systemic failure is the monetary system itself: paper fiat debt-money – Federal Reserve Notes or dollar bills. Evidence that a dollar a bill (Federal Reserve Note) is not the dollar of the Constitution was provided. The first is a promise to pay. The second is an honest weight of silver: 371.25 grains of fine silver – the silver dollar. This distinction lies at the heart of why the financial system is falling apart. A system of paper fiat debt-money is destined to fail. It can be no other way. Paper money is created out of thin air. Excess credit creation fuels booms that eventually go bust. The Constitution states that only gold and silver coin is legal tender in payment of debt. Our Founding Fathers were fully aware of the destruction that paper money breeds. The Revolutionary War and the Continental paper money used to finance it had left deep impressions. Inflation rates of over 1200% caused hardships not easily forgotten. Runaway inflation turned into hyper-inflation that destroyed the currency. This is where the phrase: “not worth a Continental” comes from. The authors of the Constitution wanted nothing to do with paper money. Bills of credit were forbidden. Only gold and silver coin was allowed to circulate as legal tender. Today’s bailout plans will save nothing. They are simply creating more debt to exchange for existing debt. Debt cannot pay off debt. This simply erodes the purchasing power of the dollar and quickens its inevitable demise. If excess credit continues unabated, the saying “not worth a Continental” may once again become the topic de jour. Several questions were asked in the first article. The following paper expands on these issues, setting the stage for the final article in the series that offers a solution to the present financial crisis: a monetary system of gold and silver coin, as mandated by the Constitution. Full Article

08/27/10 by Douglas V. Gnazzo
Market Wrap Currencies The currencies seem to be the asset class from which most of the other major markets key off. This makes sense, as currencies are money, upon which all financial and economic systems are based. They are units of account, and mediums of exchange, not to forget: legal tender, although unconstitutionally so. But that is another story for another time. During the late 90’s and early 2000’s, the yen carry trade was in vogue: borrow short and lend long. I remember writing papers on how Japan’s zero bound interest rate policy was a death trap that would pull the rest of the world into the same dark hole. There was one particular member of the Austrian School of economics that used to argue that a zero bound interest rate policy, by any major economy, especially the United States, was absurd and couldn’t and wouldn’t be attempted. Nonetheless, it was. What this unsound policy meant was that investors could borrow the Japanese yen at or near zero interest rates and turn around and buy U.S. Treasury bonds paying at first 8%, then 6%, then 4%, and now 2.6%; and simply pocket the difference in yield. It was a license to steal. This was known as the Greenspan put, which has now become the Bernanke put. It is a tacit promise from the U.S. that any investor who subsidizes government debt, will be taken care of. Profits are essentially guaranteed. Huge loans resulted, which were known as the yen carry trade. Recently, the sucking sound of money being siphoned away from the productive sectors of the U.S. economy, and into the unproductive debt markets, can be heard here in the U.S., as it too sports a zero bound interest rate policy, similar to Japans. This is market intervention at its worst, and will end badly, as it always does. The chart below shows the precipitous fall of the euro/yen cross during the 2008 financial crisis. As the euro/yen cross was unwound, the euro took a big hit, while the yen rose in value, as many loans were liquidated (brought back or paid off). The yen is now the world’s strongest currency: go figure. Now, the U.S. is following the same mistaken path of unsound monetary policy and zero bound interest rates. Money is being usurped by the government bond market, instead of going into savings and investment in the productive sectors of the economy. Notice on the chart the divergence between the euro/yen cross (lower lows) and stocks (higher lows). Something has to give. Full Report


Honest Money War Room Is America Broke - Part One
Is America Broke - Part One "The time is near at hand which must determine whether Americans are to be free men or slaves." Top to Bottom The United States used to be the largest creditor nation. Now we are the largest debtor nation. One bread winner used to earn enough to support the entire family. This is no longer the case for most American households. It now takes two. Why? The savings of the American people is at all time lows, less than one half of one percent. Debt levels are at historic highs. Our government is running deficits of unprecedented proportions. What has happened in the past few decades to cause such drastic changes in our standard of living and way of life? Something is going on, and whatever it is, it isn’t good. The goal of this work is to ferret out what is wrong with our monetary system, and to offer a possible solution before it is too late. Not so much for ourselves, as for our children and their children to come. Time is of the essence. Money is not easily understood, at least not in the way it has been presented by the international bankers and the elite establishment. But why would anyone make it appear different than it is? “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.” This raises the questions: by whom and towards what end? Cui Bono? Full Article

Novus Ordo Seclorem - The New World Order WHAT IS THE LAW? BY LYSANDER SPOONER
What Is Law? by Lysander Spooner Before examining the language of the Constitution, in regard to Slavery, let us obtain a view of the principles, by virtue of which law arises out of those constitutions and compacts, by which people agree to establish government. To do this it is necessary to define the term law. Popular opinions are very loose and indefinite, both as to the true definition of law, and also as to the principle, by virtue of which law results from the compacts or contracts of mankind with each other. What then is LAW? That law, I mean, which, and which only, judicial tribunals are morally bound, under all circumstances, to declare and sustain? In answering this question, I shall attempt to show that law is an intelligible principle of right, necessarily resulting from the nature of man; and not an arbitrary rule, that can be established by mere will, numbers or power. To determine whether this proposition be correct, we must look at the generallaw. signification of the term. Full Article

Quo Warranto - By Whose Authority Is America Broke Part 3 - A Solution for the Financial Crisis
Is America Broke Part III A Solution for the Financial Crisis "The rich ruleth over the poor, and the borrower is servant to the lender." [1] Abstract This is the third and final paper in the Is America Broke series. In the first two articles, several of the contributing factors to today’s financial crisis were discussed. Several important questions were asked: Why is the most advanced economy in the world buckling at the knees, acting like a punch weary fighter? How did the largest creditor nation on earth become the largest debtor nation? Are soaring debt levels consummate with wealth creation or a diminishing standard of living? In the process of finding answers to these questions, we were led to the root cause of our economic problems: the monetary system itself, and more specifically – the unit of money of that system. Our present day unit of money is the Federal Reserve Note or dollar bill. A dollar bill is not, however, the same as the dollar of the Constitution. The first is a piece of paper; the latter a weight of silver. A system of paper fiat debt-money is diametrically opposed to the monetary system of gold and silver coin mandated by the Constitution. Paper money is unsound and unconstitutional. Such a system allows excess credit and money creation to run amuck, resulting in huge sums of debt that can never be paid off. This reduces the purchasing power of the money-unit (dollar bill). The more money that is created, the greater is the loss of purchasing power, and the poorer we all become. The solution to the debased condition our monetary system is in is to return to sound money of gold and silver coin. We should never have wandered off the path laid out in the Constitution. It is too easy to point the finger and say: the system is broke; Wall St. is to blame; there was not enough oversight, etc. These are all valid concerns, but what good does it do to expose them, if a viable solution is not offered? The following work offers a solution. It does not provide all the answers; it does, however, provide a starting point from which the healing process can begin. The information is from the 18th chapter of Honest Money. Full Article