"On Money:"
"A Candid Proposal to Change Public Policy"
by
Paul Andrew Mitchell, B.A., M.S.
Counselor at Law, Federal Witness,
Private Attorney General, and Candidate
for the U.S. House of Representatives
July 15, 1998
Assume for the moment that the Congress can be persuaded to
face the cruel facts, and to abolish the federal income tax
completely (because those tax revenues are not paying for ANY
government services whatsoever) and replace it with nothing at
all (not even a national sales tax). Where does this action
leave us, as a nation and as an economy?
The answer is important and also difficult, because of the
economic complexities that were introduced by the Federal Reserve
System.
In the book entitled "The Federal Zone," the IRS and the
Federal Reserve Banks are likened to two pumps, working in
tandem: the banks pump money and credit INTO the economy, and the
IRS pumps (sucks?) money and credit OUT of the economy. The real
economic reason for having an IRS, in its present configuration,
is to maintain the purchasing power of Federal Reserve Notes. If
FRN's were allowed to flood the marketplace, without a counter-
balancing force to remove them from the marketplace, we would
experience the very same hyper-inflation which plagued Germany
after World War I.
Thus, it is clear that, to stop this essential connection,
the two pumps must be stopped at approximately the same time.
Only a very few, quite brave Americans have had enough
courage and insight to face a solution which may not be too
obvious to those who are less educated about monetary systems,
and monetary fraud. This solution is, very simply, that the
foreign banks who have extracted immense wealth from America, via
the federal income tax, must now "eat" the Treasury Bonds which
they purchased with money they created out of thin air, quite
literally.
Remember, the FRB pays Printing and Engraving less than 3
cents per FRN, REGARDLESS OF THE DENOMINATION on each FRN. Then,
FRB obtains a legal lien on collateral equal to the face value of
the FRN, PLUS INTEREST. Thus, for a total cost of 3 cents
($0.03), FRB gets to collect about $107.50 from our economy
(assuming 7.5% interest on a $100 FRN). This much leverage is
obviously unjust enrichment, because the $0.03 "cost" is also
created out of thin air.
The crucial connection which must be recognized is that
FRN's do not get created now, until and unless the debt ceiling
is raised. Put in simpler words, FRN's do not get created, until
and unless more Treasury Bonds are sold, and FRB gets
preferential treatment on the purchase of such bonds.
Thus, to break the cycle of monetary fraud, cash must be
created without also increasing the federal debt, without also
authorizing the issuance and sale of additional Treasury Bonds,
and without also increasing inflation.
Remember, higher prices are not the "cause" of inflation;
higher prices are the "effect" of inflation, which is defined to
be a disproportionate increase in the money supply, relative to
the amount of goods and services being exchanged.
The solution which JFK devised, was to authorize the
printing of "U.S. Notes" (the ones with the distinctive "red dot"
Treasury emblem). Some believe that it was this action, among
others, which cost JFK his life.
U.S. Notes were a straightforward solution to eliminating
the connection between cash creation and debt ceiling increases.
JFK's U.S. Notes were NOT created at the expense of additional
debts payable to foreign banks, via the Treasury Bonds which
would normally have been sold to those banks. Despite the
obvious risks inherent in this solution, it remains a viable one,
whether or not those U.S. Notes are actually redeemable. Please
defer, for the moment, the question of redemption.
The main advantage which U.S. Notes have over Federal
Reserve Notes, is that the former have no interest expense
attached to them, whereas the latter do have an interest expense
attached to them (in addition to the problem of the FRB's huge
leverage, discussed above).
Another, quite similar solution is to issue "Silver Bonds"
which are Treasury Bonds that are only redeemable in silver
substance, at their maturity date. A proposal was made last year
to issue Silver Bonds with 1-, 2-, and 3-year maturities, and
interest rates slightly above market rates. This program would
be coupled with an aggressive federal government program to mint
large numbers of silver dollars (not the "clad" coins we
currently use). Those individuals and companies who had raw
silver to sell to the Bureau of Engraving and Printing, would be
paid in bank credit, Silver Bonds, or U.S. Notes, but NOT in
FRN's.
The other aspect of this program would be to recall Federal
Reserve Notes on a one-to-one basis with new U.S. Notes, "over-
the-counter" (i.e. no bank accounts, cash transaction reports, or
SSN's required). FRN's would be treated as "bearer bonds" (for
those of you who know the meaning of that term).
Once the silver coin production is ramped up, Congress can
deliver on its promise to redeem Silver Bonds when they mature.
Later, as the supply of FRN's dwindles and the corresponding
supply of U.S. Notes increases, Congress would be asked to phase
in a redeemable U.S. Note, in a fashion which eases the
transition to a redeemable currency. Silver bonds would be very
attractive investments for public agencies, like state
governments and their political subdivisions. At maturity, of
course, Silver Bonds could be used to purchase more Silver Bonds.
The quantity of Silver Bonds to be issued, would be
controlled by the amount of silver dollars to be minted;
clearly, this is the kind of determination which Congress has
constitutional authority to make.
The major problem which must be solved, under this new
national policy, is the massive "skew" which is present in the
substantive equivalent of the FRN. One silver "dollar" today
buys about seven (7) Federal Reserve Notes.
As long as the FRN circulates, and as long as such a skew
exists, people will be better off to trade their silver for
FRN's, because they get 7 FRN's for each silver dollar.
Obviously, if you are buying milk and bread, you are much better
off to be holding FRN's, because you have SEVEN TIMES as much
purchasing power as you would have by holding silver, in the same
"nominal" amounts. ("Nominal" here means "face value".) Forcing
people to exchange FRN's for silver, in nominal amounts, results
in stealing huge amounts of money from the people who possess
those FRN's. That is the major reason why U.S. Notes are printed
-- to moderate the FRN's inevitable devaluation to zero.
Thus, the withdrawal of FRN's from the entire economy
represents a massive, one-time economic adjustment which must
occur, if we are to return to constitutional money in America.
The proper place for an open and candid discussion of the
consequences, would be the committee which conducts hearings on
the legislation that must be enacted, for this program to go into
effect.
Without more study, it is impossible to be exact about the
magnitude and distribution of "damages." But, take this one
example: John Doe is persuaded to spend $100 FRN's on a silver
bond, which matures at, say, 5% in one year. One year later, he
gets $105 in silver dollars. He then turns around and exchanges
them for $735 in FRN's (because the FRN's are still circulating
at 7-to-1).
Then, he goes to the counter of his friendly local bank, and
exchanges the FRN's for U.S. Notes, one-for-one. Clearly, this
is not the kind of "appreciation" which Congress would, or
should, intend. Conversely, if the exchanges flow in the
opposite direction, Congress should never "force" such a massive
devaluation in the common man's purchasing power. The federal
income tax has already done enough of that, for the past 85
years!! The new national "policy" is to keep the money in our
country.
Putting a future "kill" date on the FRN only aggravates the
problem I have described above, because people will not be able
to "defer" their decisions after that deadline. As of a
particular date, the FRN is officially worthless. This "kill"
date must also be coordinated with legislation which dishonors
the Treasury Bonds which foreign banks now own (i.e. we must shut
off both pumps at approximately the same time).
Clearly, if the Silver Bond solution is adopted, the
maturity dates on these bonds also need to be carefully
coordinated with the deadline for total withdrawal of the Federal
Reserve Note. FRN's can be used to purchase Silver Bonds; or
FRN's can be traded for U.S. Notes, "over the counter" and "one-
for-one" at all participating banks (read "all banks" by law).
To illustrate, the ramp-up in minting of silver coins should
begin BEFORE the first Silver Bond matures, and enough silver
dollars must be warehoused to cover all Silver Bonds which may
get redeemed. By law, I would require 100% of all Silver Bonds
to be redeemable, on demand, as proof of the good faith and
credit of the United States (federal government) under this new
program.
Now, assuming that the U.S. Treasury Dept. can develop bank
and consumer regulations which smooth this important transition,
what are the real political ramifications?
The answer to that question falls squarely on the
willingness of wealthy foreign banks to tolerate the huge amount
of debt they must eat, as a result of implementing this solution.
Dr. Edwin Vieira has confronted this problem, in his essay
"Return to Constitutional Money," and concluded that these
foreign banks should be given no choice in the matter: either
eat the debt, or face criminal racketeering charges.
There are many educated Americans who fear that these
foreign banks would choose instead to wage an overt war against
America, rather than forego all this future revenue. The federal
government must face this possibility realistically, and treat
any such threats as nothing less than an expression of treasonous
intent to invade our shores. A policy of peaceful transition
must be clarified by the Congress, and our loyal military must be
alerted to the probability of foreign invasion during this period
of transition.
Indeed, the foreign invasion appears already to have begun,
under auspices of U.N. command. The United Nations is controlled
by the very same foreign banks who now hold massive numbers of
U.S. Treasury Bonds slated for dishonor.
I don't want to get too "far out" with a discussion of
probable future scenarios. However, it is essential to understand
that the foreign banks who presently hold Treasury Bonds, must
face a future in which those Bonds are destroyed, because it is
the new policy of the United States (federal government) to
dishonor bonds which were acquired by means of fraud and
racketeering by foreign banks, particularly if the real leverage
of their "scheme" is in a ratio of $107.50-to-$0.03!
I assume you all have calculators to do your own computation
of this ratio.
Sincerely yours,
/s/ Paul Andrew Mitchell, B.A., M.S.
Counselor at Law, Federal Witness,
Private Attorney General, and Candidate
for the U.S. House of Representatives
email: Contact Us
website: http://supremelaw.org
# # #
Return to Table of Contents for
Paul Andrew Mitchell