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Jaime Caruana,
head of Bank of International Settlements, “the central bank of central banks”
Smith, the Founder and
Chairman of Swiss America Trading Corporation, and Lowell Ponte, a former think
tank futurist, offer sound advice and options for a future that “you could bank
on” as well as a lengthy list of risks to Americans’ bank accounts.
The detailed and
fascinating history of money and banking, the value of the dollar, its
depreciation, and the attractiveness of gold as an alternative to illusory
electronic investment that can be hacked overnight and disappear, are laid out
carefully and logically.
Touting a cashless society
that would eventually deal in electronic entries only, is not so far-fetched.
It is a reality that “97 percent of transactions in Stockholm now happen via
credit cards, smart phones, checks, and other means of transferring disembodied
money that exists almost entirely as flickering digital signals inside computer
circuits.” Entire towns in Sweden accept no cash. The risks of hacking from a
world away can never be underestimated, potentially “breaking the banks.” (p.
24)
Financial warfare
originating from unfriendly nations makes “too big to fail” banks “much too big
to fail” by falling prey to full-time hackers. (p. 27)
The firewalls and the gate
keepers entrusted with our money may allow the theft of billions of dollars.
Cyber financial warfare such as the Stuxnet computer worm can make anybody
vulnerable. (p. 32)
Smith and Ponte describe
the “financial Pearl Harbor” that occurred in three coordinated assaults aimed
at destroying the dollar as the world’s reserve currency:
1.
The 9-11-2001
attack which closed the U.S. exchanges for six days.
2.
“Bear raids” by
Arab Sovereign Wealth Funds with $2 trillion (derived from oil profits of $147
per barrel prices in 2007) against companies like Bear Stearns, Lehman Brothers,
Fannie Mae, Freddie Mac, and Merrill Lynch, aimed at collapsing them through “naked
short selling and manipulation of credit default swaps, both of which were
virtually unregulated” (p. 34)
3.
Direct economic attack
on the U.S. Treasury to collapse the dollar by “dumping Treasury bonds.” (p.
35)
Smith and Ponte explain
how the Pentagon was “war gaming” the possibility of a social breakdown caused
by a potential economic collapse. Computer-generated trading in nanoseconds can
certainly cause “flash crashes.” And “high-frequency trader interaction with
computerized algorithms of large-cap financial institutions is providing
opportunities for high-speed, virtually undetectable market manipulation.” (pp.
36-39)
Russia, China, and Saudi
Arabia could affect a “flash crash” on Wall Street or an attack on the vulnerable
power grid and water supply in order to replace the dollar with a “new
gold-backed Russian Ruble and Chinese Yuan/Renminbi during the next U.S. or
global panic.” (p. 45)
Smith and Ponte believe
that “decentralizing our technologies would make America much less vulnerable
to high-tech terrorism and breakdowns.” There is always the possibility of a “Carrington
Event,” a solar flare affecting the Earth’s magnetic field with disruptive
electromagnetic effects, frying “stock trading computers, banking, crash the Belgium-based
SWIFT, the Society for Worldwide Interbank Financial Telecommunications,” or
the potential of a terrorist Electro Magnetic Pulse (EMP) from a weather
balloon nuclear bomb exploded 110,000 above America. (pp. 40-43)
Smith and Ponte explain
that the inflationary history of money and of governments with their “fiat
currency” should teach us that money is not a good store of value. Fixing
prices, debasing the money, and price controls are also good arguments in favor
of gold as store of value.
Because the “magical” fractional
reserve banking that the Fed engages in is a Ponzi scheme and should not create
a sense of security of our money stored in any bank, Smith and Ponte call it
the “Fractured Reserve Banking.” Your bank is a “de facto owner of an unsecured
loan or asset you have given it.” (p. 61-65)
Printing money ad nauseam
is not something new. Smith and Ponte state that, from the original 13 colonies
with 2.4 million people and only $12 million Spanish dollars in circulation, in
five years there were $225 million in circulation, the creation of the “federal
trough.” (p. 66)
The first Continental
dollars issued were worth 1-1.5 silver coins each. By 1779, the inflated
Continental was worth 1/24th of face value in silver dollars. According to Smith, in 1782 America’s first
fractional reserve bank came into being, the Bank of North America, “the
depository for all congressional funds.”(pp. 67-68)
In 1791, the Bank of the
United States issued millions of dollars in paper money, using only $2 million
worth of gold and silver. Hamilton said that our nation had a “scarcity” of
gold and silver and, in order to grow, we had to issue paper money. Inflation
rose by 72 percent. (p. 70-71)
Jefferson said about the ‘money
changers,’ “If the American people ever allow private banks to control the
issue of their currency, first by inflation, then by deflation, the banks and
corporations that will grow up around [the banks] will deprive the people of
all property until their children wake up homeless on the continent their
fathers conquered.” (p. 71)
With the assassination of Republican
President William McKinley in 1901, a staunch gold advocate, Progressives took
reign under President Teddy Roosevelt. “These Progressives would crucify
humankind not upon a cross of gold, as Presidential candidate William Jennings
Bryan said, but upon a double-cross of paper and fractional-reserve banking,”
said Smith. (p. 79)
Smith and Ponte opine that
the centralization of banking in America started in December 1914 when 95
percent of the 27,349 banks in existence did not have branches. The dawn of the
Fed in 1913, “a new cartel of 12 private central banks,” marked the beginning
of politicizing banks. (p. 80-84)
The argument presented at
the time that creating the Federal Reserve took politics out of the money supply
decisions was preposterous. Minnesota Republican Congressman Charles A.
Lindbergh recognized the Federal Reserve Act as the “most gigantic trust on
Earth.” Using other people’s money, “They [Fed] know in advance when to create panic
to their advantage. They also know when to stop panic.” (pp. 85-86)
In addition to the Federal
Reserve Act of 1913 “imposed by the new Progressive President Woodrow Wilson,” the
16th Amendment created the Progressive income tax, taking more from
the rich, a recommendation made by Karl Marx in 1848 in his Communist Manifesto as one of the ten
ways to destroy capitalism. (p. 88)
Smith describes how
President Woodrow Wilson “took the dollar off the classic gold standard by
making it more difficult to convert dollars into gold.” FDR issued an Executive
Order that confiscated Americans’ bullion gold coins, forcing them to exchange
any non-numismatic coins at the rate of $20 per troy ounce. (pp. 94-95)
The 1944 Bretton Woods treaty,
pegging the dollar at $35 per troy ounce, gave rise to the World Bank (run by
an American) and to the International Monetary Fund (run by a European). (p.
98)
According to Smith and
Ponte, the Glass-Steagall Act, which did not allow commercial banks to engage
in various investing schemes, was not repealed in 1999. They explain that “Insured banks are still
prohibited from underwriting or dealing in securities. What was repealed in
1999 were the Glass-Steagall provisions that had prohibited commercial banks
from being affiliated with investment banks engaged in underwriting and dealing
in securities.” This repeal will further endanger the safety of our money. (p.
96)
Beardsley Ruml, the Chairman
of the Federal Reserve Bank of New York in 1945, listed federal taxation “as an
instrument of fiscal policy to help stabilize the purchasing power of the
dollar.” He devised income tax withholding from paychecks which enabled the
out-of-control federal spending and thus the weakening of the purchasing power
of the dollar through inflation brought on by excessive money printing no
longer backed by gold. Before Ruml’s withholding, only seven percent of
Americans paid income tax. (p. 99)
Craig Smith expounds on
the Progressives’ giveaway of trillions of dollars since the 1970s and how “this
political extortion of the banks led to the 2008-near collapse of our economy”
and to the current economic situation. (p. 103)
What Smith aptly calls the
“Great Unraveling” has cost more than five million people their homes, $5
trillion loss to homeowners when home prices fell by 30 percent, and a forfeiture
of $50 trillion in investor equity.
President Carter gave us in
1977 the Community Reinvestment Act which eventually led to forcing banks to
give ARM loans to non-credit worthy home buyers in previously red-lined areas,
and to the bursting of the mortgage bubble in 2008, all in the name of imposed equality.
It was not fair for the rich to be the sole fortunate “winners of life’s
lottery.” (p. 110)
The two monster banks,
Fannie Mae and Freddie Mac, pooled, securitized, and sold mortgages to the tune
of $5.4 trillion in 2008 when they were bailed out, said Smith, $1,4 trillion
sub-prime. (p. 111)
According to Smith and
Ponte, Fannie and Freddie became profitable in 2012, made enough money to pay
the required 10 percent to the government, and had money left to pay private
investors. However, the Treasury changed the terms such that the 10 percent
dividend due to the U.S. Treasury became 100 percent, an act of expropriation
not unlike the deal with the Chrysler bankruptcy. (p. 115)
Forcing banks to lend to
sub-prime customers restarted in 2013 with the Progressive social engineering
of the Obama administration “Affirmatively Furthering Fair Housing” HUD rule. According
to Craig Smith, mapping all U.S. neighborhoods by race and publishing ‘geospatial
data,’ HUD will find out segregated areas and will force them to change zoning
laws to include subsidized housing for low-income and minorities in ‘white
suburbs.’ The minorities will include illegal aliens. (p. 131)
Americans will be unable
to escape the tax man no matter in what corner of the world they might move to –
the arm of the IRS will reach them thanks to a new arm-twisting law, FATCA, the
Foreign Account Tax Compliance Act, which forces foreign banks to report any
Americans with accounts over $50,000. Incredibly, 77,000 banks and financial
groups abroad have registered to comply.
And if anyone should
harbor the erroneous thought that their money is safe in banks, all they have
to do is read what happened to the citizens of Cyprus and their bank accounts,
when the EU technocrats decided to help themselves to other people’s money who
worked hard and saved wisely.
“The bigger a Progressive
welfare state becomes, the more of other people’s money it needs to devour. Our
politicians have targeted banks, and our accounts in those banks, as pools of
wealth they intend to plunder,” explained Craig R. Smith. (p. 153)
Of the 101 million
Americans who work full-time, 86 million are employed in the private sector.
These Americans own retirement accounts, 401(k(s, IRAs, and other pension funds
for a total of $20 trillion. Politicians are trying to figure out how they can tap
into this goldmine. Smith describes how a Progressive-proposed “Guaranteed
Retirement Account” power grab might seize your savings. The federal government
has already “borrowed” $5 trillion from various government programs that were
supposed to be safe lock-boxes. And $5 trillion of unfunded Social Security
liability accrues each year. (pp. 166-169)
Smith and Ponte quote
Keynes on inflation, “Lenin is said to have declared that the best way to
destroy the Capitalist System was to debauch the currency. By a continuing
process of inflation, governments can confiscate, secretly and unobserved, an important
part of the wealth of their citizens…” To paraphrase Frederich A. Hayek,
inflation is usually engineered by governments for their gain. (p. 171-172)
Even the IMF is after our
money in the form of a “one time levy” of ten percent on income earners with “positive
net wealth,” Smith explains, that would be households with income of $34,000.
(p 173)
Smith and Ponte conclude
that it is not out of the realm of possibility that banks and the dollar may
cease to exist in the future. Banks are already nationalized via confiscation
of property by regulation. Near zero interest rates punish the savers, the
retired, and investors in general. The crypto-currency called bitcoin, an
attempt to replace the dollar is not “legal tender.” Smith says that it can
cause deflation, “an increase in value over time as owners hoard it.” (p. 194)
Will we become a cashless
society as the government eliminates the middlemen and becomes America’s bank?
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