Announcing a Project to Modify or Replace the US Monetary System ...The US Dollar (USD) has been the world’s primary reserve currency (used for most international transactions, even when the US is not a party, and for bank reserves in all nations) since 1920, which has helped support its value due to high demand. The use of the USD for most oil sales since 1973 (the ‘Petrodollar’) has also brought helpful demand, but that is fading. Due to excessive creation of new money (‘traditional’ monetary inflation, plus the Bernanke ‘spike’ in 2008 and recent QE activity), the USD has lost over 95% of its purchasing power (PP) since the Federal Reserve System (the ‘Fed’, our central bank) was created in 1913. The rate of decline worsened with the end of gold ‘backing’ in 1971. To prevent losses, many nations now avoid owning or using the USD (or other assets denominated in USD), and instead trade with each other using their own currencies (led by the BRICS – Brazil, Russia, India, China, and S. Africa, plus Japan and Australia). This could lead to a major reduction in the USD role as a world reserve currency, and cause a 50% to 90% crash in value (PP) due to reduced demand. Such a crash could happen soon, and would cause; 1) Large losses for all holders (persons, firms, governments) of dollar-denominated assets (cash, CDs, bonds, annuities, life insurance, equities, real estate, etc.), and 2) A major increase in interest rates, which would blow-up the US budget and business loan rates! Thus, we must consider changes that will prevent the crash. I hereby volunteer to be the collector of ideas, and use this input to write a draft plan, seek approval from contributors, then publish a comprehensive final plan for a modification of the current US Monetary System. The system includes the Fed and its ‘Fed Notes’, Treasury Dept. bonds and policies, legal tender laws, the FDIC, mints, banks and various banking laws and regulations. The Initial Plan Subject to modification, and with further definition below, the initial plan is; 1) Terminate the Federal Reserve System, 2) Make existing ‘Fed Notes’, deposits and bonds (M3) immediately redeemable for gold by any bearer on demand (100% backing will deter a ‘run’ to redeem for gold), 3) Require that all ‘Fed Note’ denominated cash and instruments be converted to the new ‘gold money’ (see plan below) by a certain date, 4) Terminate legal tender and many banking laws to allow private mints and ‘free banking’ without licenses (but with full disclosure of mint gold reserves, bank loans, etc. required by law), 5) Create a new system of gold coins, and redeemable notes and token coins, to replace the current ‘Fed Note’ currency, with ‘weight of 24 carat gold’ (or more weight for lesser carats) as the unit of account (no ‘Dollar’ or ‘price’ of gold), and 6) Design and implement the plan without formal agreements with other nations (this would just dilute and delay the new plan), but seek their ideas and keep them informed of the US plan and schedule so they can make compatible plans (or be left out!). This plan is documented in detail in Chapter 4 of my book Monetary Revolution USA, and posted at part 2 in the left margin of Forward-USA.org. History and logic tell us that the above approach will stabilize purchasing power and bring more peace and prosperity to nations who use it, and all will convert to gold or no Seller will accept their trash fiat ‘money’. Details of the Plan and Implementation As a starting point, I recommend the Five-Step Plan shown below. While other private gold standards include ‘parallel government currency’ and other remnants of the monopoly and Fed system, this version has zero mandatory (but some optional) control by the government, and banks. The Fed will be gone! Notice that under this plan money is produced by private firms in the free market where customers (users of money) decide which source and type of money is best, and mints compete for customers by supplying a good product. Government mints, if any, are optional, and have no control or privilege over the private mints. The free market is allowed to work! Step 1. Repeal: a. All legal tender laws so private mints can issue new money, b. Laws that tax increase in market value (then to be known as ‘purchasing power’) of precious-metal coins (formerly considered numismatic), and c. Any other laws that prevent, inhibit, or tax the new money. The only government role would be to prevent fraud (including counterfeiting), and to verify by physical inspection that reserves are as advertised (but with no reserve ‘requirements’). I recommend that ‘demand deposits’ (checking) have 100% reserves, and ‘time deposits’ have reserve ratios based on prudence of bankers and approval of their customers (or they will withdraw their funds or sell the stock). The Federal Reserve will be abolished three to five years after private money becomes legal (or if Congress refuses abolishment, let it atrophy to death from lack of customers and income). Its useful functions will be done by private firms. Step 2. Private mints are allowed, with government licensing optional. Banks could also provide mint services. Silver, semi-precious metals, and foreign coins could be used (based on market demand), but for simplicity, only use of gold will be discussed here. The mints would introduce new gold money labeled by law as to the weight and purity (fineness; carats) of gold a coin contains, or that redeemable tokens or paper certificates represent (thus ‘weight’ is the unit of account). Some might offer ‘Digital Gold Currency’ (see bitcoin.org). All mints would be required by law to; 1. Publicize the weight and purity of gold they have as a reserve for redeeming paper or digital money, and the value of money issued, 2. Allow unscheduled physical inspections to confirm that the gold is in their possession, and free of encumbrances such as liens, leases, etc. The same would apply to base-metal coins. The ‘unscheduled’ requirement will prevent relocating the same gold to be put on display at different mints, or their branches, ‘just in time’ for an inspection! The results of these inspections would be published by the mint’s Internet web site, newspaper, poster in the mint, etc., and available from a government web site. The inspections would be justified as a routine function of the government to prevent fraud, but could be done by a private org. Mints with strong reserves will advertise their strength to attract customers. Customers will ‘wake up’ and pay attention to reserve status, rather than assuming the government is protecting them with regulations. The free market at work! Step 3. Require the Federal Reserve banks, the U.S. Treasury (Ft. Knox), the Exchange Stabilization Fund, and any other part of the United States government that has gold, to promptly submit to a private audit of the amount and purity of gold they own and its title status (leased?, loaned?), reveal the results to the public, and then give it all to a ‘Redemption Trust’ owned by the U.S. Treasury, to be used to redeem existing coin or paper currency, ‘digital deposits’, and bonds (such as M3) on demand, based on a certain weight per ‘Fed Note’ Dollar, in accordance with the plan below. The Fed would not be involved in such conversions. Some may argue that the Fed is a private firm and owns the gold it has, but this ignores the fact that it got it from the US citizens illegally in the first place by issuing fake Fed Notes, and perhaps some from FDR’s confiscation of gold in 1933. If the Fed manages to win a court fight on this point, the Treasury could buy it with US bonds. The U.S. government claims to have 8,134 metric tonnes of gold in its reserves (an audit is needed). At 32,150 troy oz. per metric tonne, the US has 260.415 million troy ounces. Others say the US currently holds 261.5 mill. troy ounces, or 265 mill., but these figures are all close enough for this analysis. There is also a question as to the purity (fineness; 24 carat is 0.9999 pure) of the US gold (debased or fake bars in storage, or gone on lease or loaned?). Only a proper audit will tell. The Fed stopped publishing M3 in 2006 (claiming high expenses; I say to hide its growth!), but private sources put it at about $15 trillion worldwide in Feb-2012. If 100% of the M3 Fed Note dollars and bonds were made redeemable with our 260.415 million troy ounces of gold there would be 0.0000186 oz. per dollar (about 2 ‘100 thousandths’; or less if the Fed is lying about how much gold we have!). This means 53,763 ‘gold-backed’ Fed Note dollars would be redeemable for one troy ounce of gold. This implies a 96% drop in the dollar’s current value versus the July 26, 2013 spot price of $1,330 per oz.; a ‘gold value’ ratio of about 25:1, to be known as the ‘Conversion Factor’. Some suggest we repudiate all federal debt, but this would be immoral Of course, other nations – Russia, Argentina, etc. — have done it without legal backlash). The dreaded day of reckoning! But this issue fades as all nations convert to gold money (they must or no sellers will take their trash fiat ‘money’ once the US dollar is redeemable) and there is no ‘price’ for gold, just its weight, because gold IS money (example; what is the ‘price’ of a Dollar?). We need to audit and inspect U.S. gold reserves in the Ft. Knox and the New York Fed vaults, and determine whether some has been secretly removed, leased, loaned, or some bars replaced by gold-plated base metal. This concern was heightened when in Jan-2013 the Fed told Germany it would take seven years to return the 300 tonnes gold they were storing for them!. beforeitsnews/alternative/2013/07/announcing-a-project-to-modify-or-replace-the-us-monetary-system-2723194.html?utm_medium=twitter&utm_term=http%3A%2F%2Fb4in.info%2FqDo8&utm_source=http%3A%2F%2Ffacebook%2Fl.php%3Fu%3Dhttp%253A%252F%252Fb4in.info%252FqDo8%26h%3DcAQELqwffAQHzSR1WevfGXx2LcC3ZY1SXOorvOeUQLb6Trg%26s%3D1&utm_campaign=&utm_content=beforeit39snews-floatingtoolbar
Posted on: Mon, 29 Jul 2013 06:11:51 +0000
Trending Topics
Recently Viewed Topics
© 2015