Itallian specie bankers were the first to discover the advantages of fractional reserve banking. The owners of gold would deposit it in the bank for safe-keeping and the convenience of writing checks against it. The banker would honor the check by exchanging gold from the accout of the check writer for the check. They were contracted to issue checks in an amount never to execeed that on deposit, but reasoned the likelihood of every depositor withdrawing their gold or exausting it with checks would .
During the 80 years BEFORE the passage of the Federal Reserve Act of 1913, there was an average deflation rate of 3% (http://www.westegg.com/inflation/). What cost $10,000 in 1833 would cost $9,664 in 1913. In other words, $10,000 stuffed in your mattress in 1883 would gain value over 80 years --a life time. If you purchased a set of commodities (horse, clothing, tools, jewelry, etc.) in 1833, you could buy the same commodities in 1913 with dollars deposited 80 years before and still have $336 dollars left over with no productivity increase during that period to reduce costs.
For the 80 years AFTER the passage of the Federal Reserve Act, there was an inflation rate of 1,343% (17%/year). What cost $10,000 in 1913 would cost $145,343 in 1993. In other words, $10,000 stuffed in your mattress in 1913 would lose more than its value over 80 years. If you purchased a set of commodities in 1913, you could not buy any of those commodities in 1993 with dollars deposited 80 years before. In fact, you would owe $135,343. Is it any wonder that no matter how hard you work, you don't seem to get ahead?
An ounce of gold stuffed in your mattress in 1833 would buy a good suit in 1833, a good suit in 1913 and a good suit 1993, even if there were no cost reduction due to improved productivity and trade. The value of your dollars decrease faster than productivity impovements reduce cost. Government and its media erroneously call the result "price increases." The Federal Reserve Act enabled the gradual elimination of commodity money (gold) and paper notes convertible to it. All that is left is paper, and paper is cheap to print. By allowing banks to loan more unredeemable paper than they hold (fractional reserve banking), the Federal Reserve enables the creation of even more of this fiat money without printing anything.
That's why saving does not pay in the U.S.A. You must convert your earnings to commodities as soon as possible to avoid losing the value of your labor, or you must make risky investments to try to earn dollars at a rate faster than they are losing value. Furthermore, interest is effectively subsidized with taxes, so you are encouraged to borrow to buy the most expensive house you can afford in anticipation of future dollar value declines, which government officials, Publik schools and their parrot media call "price increases."
When the Federal Reserve is creating money faster than the economy can absorb it, interest rates decline, businesses borrow to expand to make more and better products less expensively, so your investments increase in value, you are gainfully employed to pay your mortgage and you may borrow more at the lower rate to buy the better products. When the Federal Reserve contracts the money supply relative to economic demand, you stop buying, businessmen lose what they invested in their business, your investments lose value, and you loose your job, your house a what you invested in it. Then those who somehow anticipated Federal Reserve activity buy business assets and your house for nickels on the dollar. Now you know what it's like to be milked.
The "business cycle" is in fact a Federal Reserve cycle. If you don't like being milked by it, vote Libertarian.
With the exception of "emergencies," the federal government once lived entirely on import duties levied at a flat rate as a percent of declared value. If there was a Congressionally-declared emergency, Congress could pass a one-time tax allocated against the States according to population to fund the emergency, as it did in 1812. The number of Congressmen of each State is also established in proportion to population as a consequence of the revolutionary demand for "No taxation without representation."
At least three times before the War of Succession (1869-1865), the southern States nearly went to war with the federal government, because the northern manufacturers were using it to impose high import duties on the southern States to encourage southerners to subsidize or buy more expensive manufactured goods from northern merchants than the southerners could buy from England, where many southerners had I.O.U.s for slaves that were discounted when they purchased English goods.
Furthermore, since 1808 the southern slave owners were battling Section. 9 of the Constitution for the United States, which says "The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person. The Privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it." By 1861 southerners had lost their 53-year battle to populate territories with slave owners before the territories became States, so their Senators could forestall constraints on slavery as well as reduce import duties. As a last resort, they threatened succession from the Union.
Federalists and their apologists are quick call it a "Rebellion," because that mitigates the numerous suspensions of the Writ of Habeas Corpus by their beloved Abraham Lincoln, the career attorney for northern merchants (see Reference 1). The Federalists also divert attention from the import duty issue by proclaiming slavery to be the sole cause of the succession, despite the fact the Lincoln said the southern States could succeed as long as they continued to pay import duties. When southerners considered declaring their ports to be free of duties, which would impoverish the northern ports if duties were collected there and not in the southern ports, Lincoln reinforced the federal forts in the southern ports to insure the collection of import duties.
In the meantime Lincolin's Congress saw their opportunity to eliminate the hated first 13th amendment and passed the second 13th amendment to the Constitution, which said it would not interfere with slavery where it already existed. (See Reference 1.) This amendment did not make it to the States for ratification before Lincoln broke his promise not to reinforce the fort controlling the entrance to Charleston harbor. That act precipitated the shelling of Ft. Sumter by the South, which initiated the "War Between the States", which was really a war of the Southern States with the federal government, which used conscription at the end of a bayonet to get many of its troops. (See Reference 2.)
After laying waste to the southern States, Congress passed and President Buchanan signed the Morrill Tariff Act on 3/2/1861, which placed duties on imported raw materials (purchased primarily by the northern States) at 5 to 10%, and duties on imported manufactured goods (purchased primarily by the southern States) at 25 to 30%. (uschronology.com). [Now you know how that (North) "Old Eastern money" originated.] Then Congress offered the 13th, 14th and 15th Amendments to the States for ratification, and declared them ratified, despite the fact that the southern States were not free to vote their will. They were occupied by federal troops and their legislatures were dominated by "carpetbaggers" from the north.
The 14th amendment created the first United States citizen. (See Reference 4.) Heretofore Americans were only sovereign Citizens of one of the States of the Union known as the United States of American, which is a completely separate jurisdiction from the United States, which consists of the District of Columbia, the remaining territories (American Samoa, Guam, American Virgin Islands, etc.) and enclaves in the States, like "forts and other needful buildings." These U.S. citizens were originally intended to be the ex-slaves, who by virtue of the amendment were entitled to federal protection within the southern States. [This is why black victims of State governments (civil rights protesters, Rodney King, etc.) are afforded two trials - one State and one Federal.] The amendment further made it unconstitutional to question the Federal debt. Some suspect all Americans were duped into claiming they are U.S. slaves subject to the income tax by signing Social Security cards or Voter Registration forms with the "U.S. citizen" box checked.
Within a year of the passage of the Federal Reserve Act in 1913, the 16th and 17th Amendments were declared ratified by Philander Knox --all under dubious circumstances. The Federal Reserve Act was declared passed on the eve of Christmas, perhaps without a quorum after the forced removal of a dissenting Congressmen who allegedly chained himself to his desk. Few States clearly voted for the 16th and 17th Amendments. Many submitted modified Amendments. Legislation was worded such that voting against the legislation meant approving the Amendment, confusing many legislators. Instead of reprimanding the State legislatures for submitting amended Amendments and seeking the reality of the vote, all but the clearly "No" votes were counted as "Yes" votes.
After the 16th Amendment, the requirement that federal taxes on the States be in proportion to the population of the States was eliminated. That enabled the federal government to play one State against another and one group of people against another. The graduated income tax encouraged people to "soak the rich" and plunder other demonized groups. It engendered class envy, and resulted in a constant clamor for more federal regulations, bureaucracies and subsidies for one group or business at the expense of another group or business. Soon every American was plundering every other American, as is the case today.
Before the 17th Amendment, senators were elected by and from the State legislatures, and answerable to them. Consequently, the Senate was the first to question federal actions that might result in the need for emergency funding, because they did not want to tell the legislators who elected them that they had to put their reelection at risk by increasing State taxes to pay the federal tax. This balance of power between Representatives clamoring for federal pork and Senators resisting it kept the federal government in check. That check was destroyed by the 17th Amendment. Now Senators are just glorified Representatives clamoring for even more federal pork on behalf of their constituents. They happily vote for the pork of other States and Districts in reciprocity for their vote for their pork.
Clearly, the replacement of the original 13th amendment, the enactment of the 14th amendment, and particularly the enactment of the Federal Reserve Act and the 16th and 17th Amendments was a package deal intended to steal the savings and labor of Americans on behalf of those favored by the federal government. Given the unlawful method of their enactment, the 13-17th amendments should be returned to the States for ratification, and the Federal Reserve Act should be returned to Congress.
If you want this to happen, elect Libertarians.
Since 1860 the federal government has been at war with someone somewhere, including the War on Poverty, the War on Drugs and now the War on Terrorism. Fabian (gradual) Socialism officially originated in 1884. Horrified by the prospect of its success, George Orwell wrote "1984" as a warning. Fabian Socialism has been introduced so slowly that hardly anyone noticed when in 1960 the perennial Socialist Party candidate for President saw no necessity to run again, because the Democrat Party had adopted the Communist part of the Socialist platform and the Republican Party had adopted the Fascist part. Few noticed the correlation between the book and reality on 1984. Perhaps by 2014 the United States will surpass the murder rate of the Soviet Communists (62 million), Chinese Communists (35 million), National Socialist Party (Nazis) of Germany (20 million non-Jews in addition to 6 million Jews) or, Communist Cambodia (one third of the population), as documented by Rudolph Rommel in "Death by Government." By then people may notice, but it will be too late for the non-conformists and other demonized groups.
If you DON'T want this to happen, register as a Libertarian.
REFERENCES:
Reference 1 (history-resources.com):
The three 13th amendments (USC 1):
ARTICLE XIIIa.
[Proposed in 1789, again in 1810, apparently ratified in 1819 and persisted in State records until 1890, this amendment had the effect of denying international bar association attorneys public office and denying anyone any privileges under law, like the immunity from prosecution enjoyed by government employees.]
If any citizen of the United States shall accept, claim, receive, or retain any title of nobility or honour, or shall without the consent of Congress, accept and retain any present, pension, office, or emolument of any kind whatever, from any emperor, king, prince, or foreign power, such person shall cease to be a citizen of the United States, and shall be incapable of holding any office of trust or profit under them, or either of them.
ARTICLE XIIIb.
[This is the only proposed Amendment signed by a President. It was effectively a resolution to entice the pro-slavery States to remain in the Union without fear of any threat to slavery. It was known as the Corwin Amendment. If Slavery were the primary cause of the Civil War as we are taught in Public, i.e. government schools, why would the allegedly anti-slavery Abraham Lincoln offer such an amendment?]
No amendment shall be made to the Constitution which will authorize or give to Congress the power to abolish or interfere, within any State, with the domestic institutions thereof, including that of persons held to labor or service by the law of said State.
ARTICLE XIIIc.
[The southern States were under martial law and were threatened with continued martial law and economic suppression if they did not vote for this article of amendment, so it cannot be
considered to be lawfully ratified.]
Section 1.
Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.
Section 2.
Congress shall have the power to enforce this article by appropriate legislation.
Reference 2 (uschronology.com - referenced):
3/3/1863
The First Confederate Congress passes the Conscription Act, the first military draft in American history, subjecting male, State sovereign citizens, ages 18 through 35 of European descent to three year military conscription. Also the one-year enlistments of previous volunteers are involuntarily extended an additional two years. [See New York draft riots.]
Because the State Militias (Citizen-volunteers) have proven ineffective in winning the War Between the States, the 37th Constitutional Congress&emdash;without a Constitutional amendment&emdash;passes the Enrollment Act&emdash;bypassing the States. This is the first military conscription (professional military) in the united States.
The 37th Constitutional Congress&emdash;without a Constitutional amendment&emdash;passes the Indemnity Act, an ex post facto law&emdash;forbidden by Article I, Section 9, Clause 3&emdash;finally giving Commander-in-Chief Lincoln the authorization to suspend Habeas Corpus for the past 22 months.
To "give greater Efficiency to the judicial system of the [u]nited States" (Capitalization in the original), the 37th Constitutional Congress&emdash;without a Constitutional amendment&emdash;passes the Judiciary Act of 1863&emdash;raising the number of Supreme Court Justices to ten, which allows President Lincoln to appoint a controlling majority.
Reference 3 (uschronology.com - referenced):
1/11/1861 - Governor Francis Pickens, of the Independent Republic of South Carolina, and Major Robert Anderson of the Army of the united States, Commander of Ft. Sumter, arrive at an uneasy truce to allow food and water into the fort &emdash; provided the united States makes no further attempt to re-supply the fort by sea.
2/26/1861 - President-elect Lincoln tells William C. Rives, a Virginia delegate to a peace conference intended to avoid a war between the States, "If Virginia will stay in [the Union], I will withdraw the troops from Fort Sumter." [But federal troops will remain in the customs forts of the rebellious States.]
Reference 4 (history-resources.com):
ARTICLE XIV.
Section 1.
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside....
The validity of the public debt of the United States, authorized by law, ... shall not be questioned....
Reference 5 (uschronology.com - referenced):
8/28/1960 - Perennial presidential candidate of the Socialist Party, Norman Thomas States that it is no longer necessary to run for President, as "both parties [Republican and Democratic] have come up with the best platforms in history. The old-timers like Cleveland and McKinley would find both platforms socialistic."
Reference 6 (Infopedia)
FABIAN SOCIETY
British socialist educational organization affiliated with the Labour party. It was founded in London in 1884 by a group of middle-class intellectuals who rejected the Marxist theory of class struggle but wished to promote equality for all through collective ownership and democratic control of the nation's resources. Believers in peaceful and gradual change, they named their group for the ancient Roman general Fabius Cunctator, who wore down a powerful enemy by using delaying tactics and avoiding decisive battles. In time, local Fabian societies affiliated with the parent body were founded all over Britain.
From the beginning the society attracted a number of talented people who helped ensure its success. Among these were the economist Sidney Webb and his wife, sociologist Beatrice Webb; dramatist George Bernard Shaw; future prime minister James Ramsay MacDonald; and novelist H. G. Wells. Shaw was a particularly effective promoter of Fabian ideas. Fabian Essays (1889), which he edited, became a classic of British socialist thought. Devoted primarily to education and social research, the Fabians never constituted themselves as a political party, but they participated in founding (1900) the Labour Representation Committee, which later became the Labour party, and have maintained a close connection with the party.