The Tyranny Of Legal Tender

From Gather Politics:

The Tyranny of the Legal Tender Law


January 30, 2008 10:30 PM EST (Updated: December 04, 2008 06:50 PM EST)

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"I believe that banking institutions are more dangerous to liberty than standing armies." -- Thomas Jefferson



To the average, everyday American, the idea that legal tender laws constitute an act of tyranny probably seems a bit over the top. Yet the truth of the matter is, right now, Section 5103 of Title 31 of the United States Code -- the regulation that confers monopoly status upon the Federal Reserve's bank notes as United States "legal tender" -- constitutes not only an egregious act of violent government control over the citizens of this country, but it practically reduces the productive members of society to virtual slavery. To understand why this is, it is first necessary to get a handle on a few basic concepts, involving economic principles and the nature of money.



Let's start with money. Most people go day in and day out; earning, using, and saving their money, yet never giving any real thought about the nature of money -- where does it come from? who prints it? what makes it valuable? Basically, few people ever stop to think; What is money?



A simple answer to that question would be "money is barter made easy." Economic forces and principles today, in our highly complex, integrated market society, are not much different from those of a simple barter community of millenia ago. People produce goods and services with which to trade for the goods and services produced by others. What is true in a modern, integrated market economy is true for a simple barter economy as well. People price their goods and services in accordance with supply and demand, and what a person produces -- what they "supply" -- constitutes their "demand" for the things produced by those they would trade with.



This is how things were done in the more ancient civilizations. Even today, the more closed and isolated societies, such as the Amish, still practice barter amongst themselves and their neighbors.



But a barter system imposes some very hefty limitations and obstacles on a society, which severely inhibit the potential for the creation of wealth and thus the standard of living for everyone involved.



One of the two major limitations imposed by pure barter is that of a double-coincidence of wants. If I am a fisherman, and I wish to acquire some milk, I not only have to find a farmer who has some milk he wishes to trade, but I have to find a farmer who has milk to trade who also happens to be in the market for some fish. And so it is for every member of the barter-economy society. It is this double-coincidence of wants limitation that led to the eventual evolution of what we call Money. Recognizing the limitations on trade which this principle imposed, people would seek out more "fluid" or marketable items to use as a "medium of exchange." As a fisherman, I may not be able to find a farmer who has milk to trade and who happens to want my fish. But I could trade my fish for something else, something smaller and more marketable, such as salt or tobacco, and take that to the marketplace to trade for some milk. Over time, the use of items as mediums of exchange grew and evolved in the markets of ancient barter societies, until a single commodity became the dominant medium of exchange, and was then universally accepted as money. Over and over again, in civilizations and societies all over the ancient world, one type of commodity eventually was recognized as ideal for use as a medium of exchange: precious metals, and more specifically, gold and silver.



Gold and silver are ideal money-commodities because they are also ideal in overcoming the second major limitation imposed on a barter-economy; that of Division of Labor.



If I live in a barter society, and I happen to be someone who builds carriages, then I run into some pretty big problems when trying to acquire the things I need to get by. Say I have a carriage to sell in trade, and I want to purchase several different things with the proceeds -- we'll say a carving knife, two chickens, pants, shoes, and new roof for my house -- then I can't very well break my carriage up into five pieces, and go to the market with one section of a carriage for the blacksmith, one section for the farmer, one section for the tailor, one section for the shoemaker, and one section for the roofer. But if I trade my carriage for it's value in gold or silver coins, then I can take them to the market to trade them for the things I want to buy.



Money makes complex economic relationships possible; it makes relative exchange-valuation of all goods and services easy and universal. It fosters and expands the potential for ever increasing division of labor, which is the essential core of society itself.



The properties that make for an ideal money are all exemplified perfectly by gold and silver coin. Scarcity, so it retains its value as a marketable commodity. Divisibility, so that it can be utilized to extract maximum value out of the division of labor, right down to the ounce. Portability, so that it can be easily transported to the place of purchase, or else stored in a vault and kept for safe-keeping while the certificate of deposit may be traded on the open market (called "receipt money," the only honest paper money), and recognizability, so that it is difficult to counterfeit and the purity is easily tested and certified.



Gold and silver coin have always served society well when used as a money-commodity, except in cases wherein bankers have been allowed to pass off and loan out fake certificates of deposit in order to bring more wealth to themselves through interest. In the absence of such fraud and deception by money-changers, gold and silver commodity-money lays the foundation for a prosperous, productive, wealth-producing economy.



One of the important things to understand about money, though, is that it is and always must be the private property of it's holder. And why shouldn't it be? When you go to work everyday, you are essentially trading your labor -- your own blood and sweat -- in exchange for value that can be used to aquire your means of survival, whether it be rent, food, clothing, or transportation. Your employer pays you in money for your labor, and in this way money is the storehouse of the value you earn through your work and production. That money then ought to be considered and understood as your personal property, as it serves as a "medium," or a surrogate, for the value or "purchasing power" you have earned. With money as personal property, as the surrogate for your earned purchasing power, your ownership of it should be inherent; implied and inalienable. Your labor is an extension of your self, and the purchasing power you receive for it is an extension of your labor, and money is the surrogate for that purchasing power, thus your money is an extension of your self. No one but you can rightfully claim the right of ownership over your self, and thus no one else can rightfully claim the right of ownership over the money you receive in exchange for your labor.



This is where the "legal tender" law comes into play.



In November of 1910, seven very wealthy, very powerful men attended a highly-secret nine-day retreat at a J.P. Morgan-owned estate on tiny Jekyll Island, off the coast of Georgia. These seven men were: Nelson W. Aldrich, senator from Rhode Island, served as Republican Whip in the senate as well as chairman of the Senate Republican Conference, and he was the chief sponsor of the Aldrich-Vreeland Act, which created the National Monetary Commission; Abraham Piatt Andrew, who was Assistant Secretary of the Treasury, and would later be elected to the House of Representatives; Frank Vanderlip, who was the President of National City Bank of New York, which was the largest bank in the U.S. at the time; Henry Davison, senior partner of J.P. Morgan Company; Charles Norton, President of First National Bank of New York; Benjamin Strong, head of J.P. Morgan's Banker's Trust Company; and Paul Warburg, who was a partner at Kuhn, Loeb, and Company, and a representative of the Rothschild banking dynasty of Europe.



The reason this secret nine-day meeting was kept hidden from the Press and the public is because the nation had been going through turbulent financial times, and the prevailing public sentiment placed the blame for those troubles squarely at the feet of the great Wall St. banks and financial institutions. If word had gotten out that these seven men -- a group comprising powerful government officials and several banking interests that were supposed to be bitter rivals in fierce competitive struggle -- were meeting together secretly for nearly a week and half at a lofty retreat on a private island, then the public would become highly suspicious that arrangements were being made for an Agreement in Restraint of Trade. And those suspicions would have been well-founded, because this is exactly what they were up to. In those nine days, those seven men hammered out a rough draft of what was actually and literally a cartel agreement. The terms of that agreement would soon become the basis for the Federal Reserve Act, which was eventually passed in the House and Senate during Christmas break of 1913, while most members were home with their families.



Though this was all kept tightly under wraps at the time, all of the men who attended the meetings at Jekyll Island would go on to write memoirs and articles, as well as give interviews to journalists and biographers, wherein they told of the meetings and what occured, and why they were kept secret from the public -- well after the Federal Reserve Act had passed and the central banking cartel had been well-established, of course.



No matter what the Federal Reserve's official propaganda might say, or whatever modern Fed apologists will tell you the purposes and motives of the Federal Reserve System are, the true purposes of those men in coming together on that island to create a central banking cartel were as follows:



To stop the growing influence of small, rival banks and to insure that control over the nation's financial resources remained in the hands of those present;

To make the money supply more elastic in order to reverse the trend of private capital formation and to recapture the industrial loan market;

To pool the meager reserves of the nation's banks into one large reserve so that all banks will be motivated to follow the same loan-to-deposit ratios. This would protect at least some of them from currency drains and bank runs;

To shift the inevitable losses incurred from fractional-reserve lending policies from the bank's owners to the taxpayers.

With the passage of the Federal Reserve Act, our federal government effectively entered into a partnership with a private banking cartel. Both parties to this partnership benefit immensely from it, but they do so at the direct expense of the American public.



The banking cartel's benefit from the partnership is obvious, as they have effectively brought about all of the goals listed above. The bankers were then given monopoly power to print the nation's bank notes, which, as their own private property, they then "loan" out to the government and to commercial banks. Every single U.S. dollar in existence since the inception of the Federal Reserve, has been printed for the sole purpose of being loaned at interest, and put into circulation through the cartelized banking system.



The Fed did not enjoy complete, absolute dominance over the nation's money supply until later though; when in 1933, President Franklin D. Roosevelt issued an (unconstitutional) Executive Order, decreeing that no American citizen was permitted to possess more than 5 ounces of gold (silver had been demonetized in the late 1800's), under penalty of five years in prison plus fines. At that point, ownership of honest money became a felony. From then on, all money that has been issued and circulated in the United States, is the private property of the owners of the Federal Reserve Corporation. The national ban on ownership of gold was eventually lifted; but not until the American people had submitted in their hearts and minds to the Federal Reserve System. Public schools do not teach children about this era, and they certainly do not teach them about monetary principles and the true implications of the Federal Reserve System.



One important thing to understand here is that the printing of new money confers no sustainable benefit on society. "Inflation" of the money supply benefits only a select few people, at the expense of everyone else. The first people to receive and to spend the newly-printed money (government, bankers, and politically-favored private entities and corporations) receive goods and services with the full market value of that money, whatever it may be at the given time. But as that newly-printed money works it way down through the general economy, it dilutes the existing supply and thus diminishes the value of all the money held by everyone. It's purchasing power decreases with each successive holder. The first holders of the new money benefit the same way any other counterfeiter would; they receive value in marketable goods and services out of the economy without having contributed anything to it. It is a windfall for them, but that value they receive is extracted indirectly through the lost purchasing power of the holders of the already-existing dollars. Those who receive the new money late or not at all, are actually subsidizing the select few who receive the new money first. This is the true nature of the phenomenon called inflation. It is the instrument of regressive wealth redistribution.



I like to try to drive the point home to people by saying this: If the printing of new paper money actually increased the amount of capital in existence, then the government should be able to enrich us all simply by running the printing press. Ponderance on the absurdity of that thought ought to bring the fraudulent nature of the central bank/fiat money system into focus.



Thomas Jefferson once gave as clear and concise a description of the inflation mechanism as there ever was, when he was responding to questions after the Revolutionary War about how honest money would be implemented again, after the pure fiat paper currency known as the "Continental" had been literally inflated into worthlessness during the war:



"It will be asked, how will the two masses of Continental and of State money have cost the people of the United States seventy-two millions of dollars, when they are to be redeemed now with about six-million? I answer that the difference, being sixty-six millions, has been lost on the paper bills separately by the successive holders of them. Every one, through whose hands a bill passed, lost on that bill what it lost in value during the time it was in his hands. This was a real tax on him; and in this way the people of the United States actually contributed those sixty-six millions of dollars during the war, and by a mode of taxation the most oppressive of all, because the most unequal of all."



Thomas Jefferson accurately and vividly explained in that statement the process by which inflation acts as an insidious and hidden tax on the people, and how that tax always falls hardest the people who can afford it least -- the people with lower salaries and wages and those on fixed incomes; and without the means to quickly convert their dollar holdings into hard assets of real tangible and lasting value, or the ability to supplement their holdings through speculation.



But the real evil that is imposed on the people via the Federal Reserve System, is that we are effectively made into slaves by it's works; not just because of the fact that it facilitates a culture of indebtedness, but mostly through the very disturbing fact that we are no longer the owners of our money. Because every U.S. dollar in circulation is created as the private property of the central bankers, and loaned into circulation at interest, just the very existence of our money carries with it a debt to it's owners. This is why the national debt perpetually climbs at an astounding rate, non-stop and ever-accelerating. The money to be used for paying off the interest on each successive Federal Reserve loan is never really created -- it must be re-borrowed out of the pool of interest and capital already payed back. If every dollar created carries with it an interest-debt, then where does the money to pay the interest come from? It comes from out of us; it comes through the virtual serfdom of generations of Americans.



The truly disturbing implications of private-banker ownership of the money supply is that they, by extension, then also effectively own us. Remember that money is a surrogate for our purchasing power that we work to earn. It is, because of the rigidly-enforced legal tender law, our only means of exchanging the value of our labor for the goods and services we need to survive and to enjoy life. And because of the Federal Reserve Note's role as surrogate for our hard-earned purchasing power, it is thus an extension of us, as per the chain of logic discussed earlier in the article.



The stunning realization then comes into focus: The private owners of the Federal Reserve Corporation, through the power of Section 5103 Title 31 of the United States Code, are the sole private owners of our only medium of exchange, and are thus shareholders of our selves. Everything we ourselves produce, and everything that is produced that must be bought and sold in Federal Reserve Notes, is owned by the Federal Reserve; because they own the medium that it must be exchanged for. The value of everything that is bought, sold, saved, and invested in the United States, is compelled by law to eventually be expropriated from the people by the I.R.S., and put into the hands of the owners of the Federal Reserve Corporation; because every dollar that is a real surrogate for that value belongs to them and is only being "borrowed" by us -- at interest, of course.



The owners of the Federal Reserve Corporation, their individual identities kept secret from us by virtue of the charter our government has granted them, are in effect the owners of you and I and everything we buy, sell, and produce. We have awoke to find ourselves enslaved in the "land of the free and home of the brave," and this is the legacy we are leaving for our children -- Serfdom. This fact will remain until we do something about it.



* * * * *



Liberty Dollar office raided



Staff report

Originally published 01:42 p.m., November 15, 2007



The future of an Evansville-based company that produces a "private voluntary barter currency" known as the Liberty Dollar is in question after federal agents raided the facility this week, according to an e-mail sent by its founder.



Federal officials reportedly raided the group's headquarters, located in a strip mall at 225 N. Stockwell Road, early Wednesday morning and seized documents and precious metals.



FBI Agent Wendy Osborne, a spokeswoman for the FBI's Indianapolis office, directed all questions on the raid to the Western District of North Carolina U.S. Attorney's Office. A spokeswoman there said she had no information on the investigation.



Bernard von NotHaus, the group's monetary architect and the author of the e-mail, did not immediately respond to a message seeking comment.



Von NotHaus developed the Liberty Dollar in 1998 as an "inflation-proof" alternative currency to the U.S. Dollar, which he has claimed has devalued since the Federal Reserve was established in 1913. The silver medallions are produced by a private mint in Idaho on behalf of Evansville-based Liberty Services, which also issues paper notes which the group says are backed by silver reserves.



Liberty Dollar employees were at the office this morning cleaning up after the raid. They referred all questions to von NotHaus.



According to the e-mail, about a dozen agents arrived Wednesday morning and seized gold, silver, platinum and nearly two tons of recently delivered Ron Paul Dollars. They also took all the files, all the computers and froze the group's bank accounts, the e-mail said.



"We have no money. We have no products. We have no records to even know what was ordered or what you are owed," von NotHaus wrote in the e-mail, which was sent to Liberty Dollar customers. "We have nothing but the will to push forward and overcome this massive assault on our liberty and our right to have real money as defined by the US Constitution. We should not to be defrauded by the fake government money."



The e-mail said the gold and silver that backs up the paper and digital currency was confiscated, as were the dies used to mint the Liberty Dollars themselves. As a result, it warns that recent orders placed for Liberty Dollars may not be filled and it encourages supporters to band together for a class action lawsuit.



The e-mail repeatedly defends the Liberty Dollar as legal.



"You did nothing wrong," von NotHaus wrote. "You are legally entitled to your property. Let us use this terrible act to band together and further our goal to return America to a value based currency."



- Gavin Lesnick