Survival in adversity

                      What is money?

Money has no value in itself. We cannot eat it, drink it, wear it, use it to build something. Money has value only if members of a society as a whole recognize and accept its value. Money has value it allows us to get items and goods we can use. We can also use something besides money to get items and goods we desire. We can use food, our time, our labor, our knowledge, even someone else’s generosity to get what we desire.

Whether we trade using barter or money, debt can cause that trade to become unjust. Before there was a Federal Reserve Bank, before there was even a United States of America, Europeans traded with the Native Americans. The Natives had no coin, no money. Their economy was based on the deer. The deer provided them with food, clothing and shelter. The Europeans introduced guns. Supposedly this was to increase the “money” of the Natives. But there were a limited number of deer. One gun sold for 30 deerskins. Ammunition sold for 20 to 30 deerskins. As the Natives became unable to pay their debt the Europeans told them we will take your land in payment of the debt. Money is supposedly an easier way to determine the value of our labor, our knowledge, our land, or any other resources and gifts we have. But who determines the value of our money and as a result the value of our time, labor, knowledge and other resources?

If we work for minimum wage, the government determines the value of our labor. In 1940 the minimum wage was 50 cents an hour. In 1940 the median price of rent for house or apartment was $27 a month. A person earning minimum wage would have to work 54 hours to pay one month’s apartment or house rent. In the year 2000 the minimum wage was $5.10 an hour. The median cost of rented housing was $602 a month. A person earning minimum wage would have to work 118 hours at minimum wage in order to pay one month’s housing costs. That is more than twice the hours a person on minimum wage would have had to work in 1940 to pay a month's housing costs

Over the years the United States Government has done several things in an attempt to “solve” this problem.

1. THE FEDERAL RESERVE BANK

In 1913 the Federal Reserve Bank was created. The Federal Reserve is not an agency of the U.S. Government. It is a network of private banks in the USA. The Federal Reserve registers all federal banks in the USA. It also takes 6% of the assets of every federal bank in the USA. Every bill issued as U.S. currency is a Federal Reserve Note. That means every bill issued is a debt owed by our Federal Government to the Federal Reserve Bank. It is money the U.S. Government has borrowed from the Federal Reserve.

The U. S. Constitution states that the U.S. Government alone is authorized to control the money. In fact, the Government has turned this role over to the Federal Reserve, a group of private bankers.

In 1963 President Kennedy attempted to regain some control over the U.S. money. He ordered the “Silver Certificate” to be issued. This is money backed by a corresponding amount of silver and gold. Some even claim that Kennedy was attempting to shut down the Federal Reserve. No mention of this effort has been mentioned in the many books and articles about Kennedy’s assassination. Immediately upon Kennedy’s death the issuing of Silver Certificates ceased.

By their own admission the Federal Reserve has tremendous power internationally. For example, they are able to buy and sell U.S. dollars on an international market. By buying and selling U.S. dollars they are able to manipulate the value of various currencies. They can influence the amount of exports and imports that come to and go out of each nation. This ultimately influences employment and jobs in different nations. The policies they set in place can cause inflation in some nations and lead to depression in others. WITH ALL THIS POWER NO ONE HAS ANY OVERSIGHT OR POWER OVER THE FEDERAL RESERVE. Representative Ron Paul of Texas has led a group which now consists of many U.S. Congress persons. This group is attempting to get an audit of the Federal Reserve. The Federal Reserve claims their charter renders them immune from any U.S. Government investigation (even an audit). So far, their opinion has prevailed.


2. THE BRETTON WOODS CONFERENCE 1944

Thirteen months before the end of World War Two an economic conference was held at Bretton Woods, New Hampshire. This conference set up a series of procedures and 2 international banks which supposedly were to unite the monetary systems of the world. The members of the conference made certain decisions.

A.   The International Monetary Fund and the International Bank for Reconstruction and Development (the World bank) were set up. Underdeveloped nations were encouraged to become members. Being a member had certain advantages: the Bank could make loans to member nations, political subsidiaries of member nations, and private business or agricultural enterprises of member nations.

Over the years most loans of the Bank have been for building railroads, airports, ports and inland waterways. These loans have allowed large corporations to go into these nations and extract the natural resources from the nation. The loans have not served the needs of the local people. In many cases land that had been used to grow food for local people was used. Now these same people had to import their food from other places at a high price. This is simply a more sophisticated program than selling guns and ammunition to Native American, placing them in debt and taking their land in payment.

B.   At the end of World War Two the USA was the strongest nation in the world economically and militarily. The Bretton Woods Conference recognized this and placed the USA in charge of the reconstruction of the world. This led to an expansion of the U.S. military, soon to be in over 130 nations of the world. The U.S. dollar was the strongest currency in the world. Most nations of the world tied their currency to the dollar. The dollar replaced gold as the standard of exchange among nations. To emphasize this fact the value of the dollar was tied to the value of gold. One U.S. dollar was made equal to an ounce of gold whose value was set at $35. But the price of gold did not stay at $35 an ounce. Gold become many times more valuable than gold. Gradually other nations began to trade their dollars for gold. Soon the USA no longer controlled the amount of gold in the world.

In August 1973 President Nixon recognized what was happening and freed the dollar from an connection with gold. Now no currency in the world had any restraints. Any nation (really its central bank) could issue as much currency as it wished.

If the median cost of housing rental is an adequate criteria, taking the dollar off the gold standard had devastating effects. Between 1970 and 1980 the median cost of housing rental increased 125%. Between 1980 and 1990 it rose another 88% and has continued to rise ever since.

3. WILD EXPANSION OF DEBT

What happens when we go into debt? We agree that someone will back our debt. In exchange, we offer them something concrete that they can take from us if we do not pay off our debt.

Most of us have some land, property, labor, automobile or other resource we can use to back our debt. Sometimes the item we are buying (e.g. a house or an automobile) becomes the concrete item the bank or loan company can take from us if we do not pay our debt. What do we get in exchange for the asset we agree to hand over if we do not pay our debt? We do not get real money. We get a line of credit. The bank has no money. The bank, like the Federal Government, has debt.

The bank has it expenses: building and maintenance costs, interest on money it has borrowed, money in the bank which can be withdrawn at any time. The bank is required by law to maintain in its possession a certain percentage (somewhere between 5% and 15%) of money deposited in it. 85% to 95% of money deposited in it is not on hand.

The bank is in debt. What the bank lends us is debt. Unlike us, the bank is not required to put up any real asset in exchange for the money it owes us. In fact, the Federal Government is required to make good on a certain amount of the bank’s debt. The Federal Government is already in debt to the Federal Reserve Bank for money the Government has borrowed from the Federal Reserve Bank. It is a vicious circle.
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