Wednesday, October 13, 2010

Misinformation from the FED!

Make this available to every schoolteacher!

Teacher’s instructions: When reading each individual comic first read the critique so that you will have a realistic understanding of the topic.

Dr. A. H. Krieg CMFGE
Former 15 year DEC* member

Facts seem by the FED completely ignored. These comics are produced propaganda to influence those uneducated.

“The Federal Reserve Systems has issued a series of comic books on various separate issues, which cannot even be considered acceptable propaganda, because the manner in which the issues covered in these publications are economically, monetarily and historically incorrectly portrayed. We are sorry to subject you to slog through this, but it is important for you to be aware of the truth!”


*District Export Council: advisors to USDC on issues of trade

#1) The Story of Foreign Trade and Exchange (issued FRS NYC 2008(1))

Foreign trade is addressed in a simplistic manner that has virtually no relationship with reality. Adam Smith is introduced in a manner of supporting the pushed theory of “Free Trade”. The fact that all trade since the second half of the 20th century is totally government controlled through a series of international treaties completely supported by the FED is omitted from the comic, as is the reality that Adam Smith thought free trade, not government or UN, controlled trade. Obviously if government or the international multinational cartels control trade it could hardly be considerd free trade! The fact that inequality of labor costs and benefits mandated by government adversely effect trade, are also omitted. Detail fact that all of these agreements were drawn up by multinational NGO’s is also omitted, as is the list of the treaties imposed, NAFTA, CAFTA, WTO, GATT that control international trade. The theory put forth that some nations are better at producing some items and should concentrate their efforts on, while importing items that they are not so capable of producing, is the prime theory of the comic. It is wrong. International trade, that is trade between two different nations is regulated through the “free market” i.e. by the economic, political and social existing situation in the two trading partners. This issue is not even brought up in the comic. For example, in 2008 the average cost of blue-collar labor in America is $24.64 per hour (2), which consists of $ 19.55 labor and $9.11 benefits. Mexican labor costs for 2009 timeframe are $2.57.8 (3) while American minimum wage is $7.25. (2) Additionally Mexican workers do not have, workman’s compensation, mostly not unionized, no Social Security, no healthcare benefits, no insurance of any sort. So the basic Mexican labor cost in manufacturing is $ 2.58. That however is a small portion of the costs born by American manufacturing. OSHA, costs American manufacturing billions of dollars per year and has been shown to result in a 0.4% variance in industrial accidents, being total ineffective. Environmental regulations are in some cases so sever and so badly administered that they have caused scores of industries (foundries per example) to simply close up and move to the third world. The Americans with Disabilities Act causes ridiculous cost for industry that cannot be offset when compared to a foreign competitor, and are also totally ineffectual. What we are explaining here is that this is not a level playing field. If you as a manufacturer using the identical machinery were able to produce your widget in Mexico at total labor cost of $2.58 per hour while it costs you at least $34.50 per hour in America, where would you produce your widget? The end result is that prior to NAFTA America had a $ 5.7 billion annual trade surplus with Mexico and today we have a $ 67 billion trade deficit per annum. The productivity of labor is another bogus example provided in the comic. In factual terms an American plant would have to be fourteen times as productive to attain parity with a Mexican plant producing the same or similar items, something that is impossible.

Next is introduced the scenario of “comparative advantage,” explaining that if you placed your savings in a bank at 5% interest (good luck on that one) rather than another bank at 8%interest that you would be losing 3% per year which when compounded over 12 months with a $ 1,000.00 investment would earn you an additional $ 30.00 interest. If anyone knows of a bank offering 8% interest please let me know right away! The entire trade related comic is so fraught with mistakes, misinformation and false assumptions that a complete repudiation would take many more pages than you would care to read.

The, what I would call “Kicker”, is then introduced “ if all nations exploit their comparative advantage, all will be better off and the standard of living of each nation will rise”. OK, please provide just one example! Since the introduction of these fallacious theories the standard of living in terms of fixed 1950 dollars for American workers has fallen every single year since 1950. The dollar has fallen in value in the same timeframe by 97%. Free trade as construed at this time is not an economic advantage to anyone except international bankers, and multinational corporations, small and family business suffers under these policies, as do working people. On the employment side of the issue, America through these FRS pushed policies has lost 42,400 manufacturing plants and over ten million blue-collar jobs. With NAFTA and CAFTA alone we lost over 4,400 manufacturing plants to Mexico. (4). Unemployment contrary to the comics information has risen for five years and is today at over 18% (5) nationally

Government regulation in America is rampantly out of control and is a major factor in American competitiveness. In the last 19 months the progressives have been on a regulatory rampage, and with every new mandate, American industry becomes less competitive. The false notion that American exporters want to be paid in dollars, which in international trade is not even an issue is then trotted out. No manufacturer in the export and import business cares one iota what currency he is paid in so long as it is a convertible currency which is the case with the majority of our trade partners. Aside from that, the dollar is still the world reserve trade currency, so this is not even an issue. No international trader to my knowledge uses the FORX; most international trade is consummated in LC’s (6) that spell out exactly the terms of the contract and currencies used in the exchange. The loss of, or more exactly deficit in trade brought on by the enactment of these policies starting in 1995 has averaged over $40 billion per month, a stalwart result for these policies.

Then we learn about the great benefit of the large traders like Wal-Mart, K-mart and others which by their internally controlled trading eliminates exporters, importers, freight forwarders, shipping and even insurance carriers. That in the process they destroyed hundreds of thousands of family businesses turning former retailers into Wal-Mart clerks at one-fourth the pay is omitted. The FRS Story of Foreign Trade and Exchange may be one of the great fairy-tales of the 21st century.

(1) Federal Reserve Bank New York, Public Affairs Dep. 33 Liberty St. NYC 10045. 212- 720-6143
(2) USDL
(3) UE International
(4) USDC internal report not publicly available.
(5) M-6 statistic USDL
(6) Letters of Credit

#2 The Story of the Federal Reserve System (See #1 section 1)

The second cartoon of this comic states “I would like to deposit this in my savings account” Do you know anyone foolish enough to hold a savings account in a local bank in this century? You can make a better deal buying old cars! But let me start at the beginning, something that is totally omitted from this publication.

The Federal Reserve System, is not federal, because it is a private corporation (1) is not a reserve because it has no reserves, the only actual reserves of hard asset are at Fort Knox (2) and the FRS banks in NYC who have never since their founding been audited by anyone, and the FED is not a system because it is an incorporated corporation under the laws of NY state. The FRS was created by a group of bankers who met on Jekyll island Georgia in 1910 and had the FRS established by the 16th amendment to the Constituion on February 3 1913, during the Wilson administration. President Wilson’s closest confidant was Colonel House who was a Rothschild agent. The author of the Federal Reserve Act was Paul Wartburg also an agent of the Rothschild banking group in Europe. To simply omit these facts is unconscionable. We are then informed that the FED is “best known for its handling of monitory policy” the fact that the 16th amendment to the constitution usurped the power of Congress and the U.S. Constitution in transferring that power from congress to a private corporation is also not mentioned. The official lie from 1910 to 1913 was that the establishments of a private banking monopoly would stabilize markets and end the cycle of depressions and market swings that have always been part of free enterprise. The lie was exposed just seven year later with the depression of 1920, then with the Great Depression of 1929 to 1945. The FED’s purpose is the consolidation of banking under control of three or four multinational banks.

The FED through policies enacted by them cause market fluctuations and their incessant offer to loan congress money cause’s inflation through which bankers reap enormous profits. About one-third of our national collected taxes go toward interest to bankers. The fact of the matter is that contrary to what this comic claims, bankers do not walk a tightrope to balance money and credit, and they manipulate money credit and inflation to their advantage and their profit. The then introduced bogus claim that banks do not have money to lend has been popularized by the Obama administration and is nothing but a ruse. Banks in 2010 have more money available for loans than in any years of the pervious decade. The simplistic terms in which monitory policy is expanded upon in this comic is pitiful. The fact that inflation is caused by FED policy is ignored, while the issue that the viability of cash through bank loans is the cause of inflation and deflation is wrong. The issue of pay is correct in that inflation causes the consumers earnings to fall while his wages in most cases do not keep up with the rise in prices. The continuing scenario as presented is that the FED has only three options to control inflation, “Open Market Operations. Reserve Requirements, and Discount Rates”.

Open Market means the money supply. In this instance the FED has, beginning in March 2008 stopped reporting the M-3 money supply. This is the money issued by the FED to replace worn bills that are destroyed and the issuance of new bills. M-3 reported on the variance [increase of new fiat money] thus it was possible to gauge the value of existing money in circulation, something that is now impossible. We in fact have absolutely no idea how much paper the FED has issued since March 2008 and thus we do not know the value of existing money in circulation. None of this is mentioned in the comic.

Reserve Requirement relates to the amount of funds that banks must hold on deposited funds. This percentage has been gradually decreased for decades. It began with about 14% and has gradually through the years been decreased to about 10% (1992) and now 6%. This means that a bank may now loan out $94 on every $ 100. deposit, and when the $94 is repaid they will loan out another $ 88 and so forth. This is why so many banks are failing they have no cash reserve. The original $100 deposit is in normal banking operations expanded into loans exceeding $ 1,000.00. We are then instilled with the lie that the held funds of 6% represent a loss to the bank, which is another lie. The bank can simply purchase FED issued instruments at 3 to 4%, which are considered the same as cash by auditors.

Discount rates are the rate of interest that the central bank, i.e. the FED charges branch banks. This has gradually been decreased and now stands at the lowest rate ever charged, close to 0%.

Monitorysation is not covered at all because it is the most destructive practice of the FED. Every Friday the FED offers for sale T-bills and T-notes and other instruments. These instruments carry interest in some cases a guarantee to offset inflation. The present rate of interst hovers around 3.7%. These implements are offered on Friday after the capital markets have closed so that reporting on them will be minimal. Lately they have only been able to sell a smaller portion of these issued bills (3) and then over the weekend print sufficient fiat paper bills to purchase the remaining outstanding issued T-bills and T-notes etc. Every time this is done, the value of the dollar falls, the value of your savings fall and you are worse off. Oh, and just by the way, all these transactions are carried out with the major banking operations, you know, the ones we bailed out with our taxes in the last three years.

The comic then informs, “People get extra cash that they withdraw from their banks. The banks in turn, get it from the FED” This is not the case at all. Banks have their own funds that they operated their daily business with. Banks do not borrow funds from the FED when you withdraw a couple of thousand dollars. In the case of larger amounts say a mortgage, banks will sell them to bundlers that pay the banks cash for them and the FED is not involved at that level.

One really telling issue in this comic is the omission of any information regarding how money is backed, and what it is backed by. Obviously after the FDR administration and then Nixon the dollar [money] ceased to be supported by any hard asset [gold or silver] and was backed by debt after Nixon. What that means is that new dollars were issued based on the sale with interest of federally issued loan documents called T-bills and T-notes that are in fact issued debt. After March 2008 when the fed began the slippery slide to oblivion much of the issued money was backed by nothing and since the third month of the Obama administration, debt has ben monitorized and thus fiat dollars are produced out of thin air, being backed by absolutely nothing. Thus the public bases the actual value of our issued money solely on its acceptance by them.

We then are treated to trade and FOREX issues that was covered before except here we are told the FED actions relating to money is the cause of value changes in the dollar. This is rather simplistic and not at all accurate. The value of the dollar is part perception, part money supply, and part foreign trade. The perception is what people or governments will accept as the value of a currency, the money supply is how much more money is being issued by the FED above what was previously in circulation, (4) and Trade is the issue of, in our case the size of the monthly deficit, now running at about $ 40 to 50 billion per month. The FORX [Foreign Exchange Markets] have nothing to do with the actual valuation as the comic tries to indicate. The FOREX is simply an international marketplace for currency and is self-valuating of all traded currencies. In other words the value of the dollar on the FOREX market is simply a matter of what banks or people will bid for the dollar in terms of their own currencies. The comic correctly explains that as we purchses more foreign goods “than we export” [left out] that the dollar value falls making imports more expensive. {Also left out} reducing the value of the dollar.

The fact that the total trade imbalance, i.e. our trade deficit is the end result of government policies and the “Free Trade” incentive is also missing from the comic. It should also be pointed out that the S&P 500 stock index is totally bogus. If we convert the stock market index into gold instead of dollar valuation then from May 94 to September 2010 the value of stocks fell by 84%. Now you can appreciate why the market keeps rising in a faltering economy.

The general issue trying to be imposed by this comic is that the FED is working hard to “foster a healthy economic climate” Nothing could possibly be further from the truth. The policies of the FED in conjunction with the political directions fostered by these various government agencies are the producers of our continuous cycle of bust and growth, which allows the banksters and multinationals to optimize their profit margins.

The explanation of transfer payements between the FED and its member banks is also sadly wanting. The fact that in the case of all the bailouts no money was ever printed or transferred between any banking institutions is not mentioned, being in fact distorted to make you believe that actual printed species was transferred. All the FED did when they bailed out, per example, Citybank was to tell them that they could fudge their books and add a bunch of zeros at the credit side of their balance sheets. That’s may be called monitorizing on steroids.

The then provided fiction is that the FED issues Social Security payments and caries out the electronic transfer of SS payments to individual citizens. In fact the FED does not do any transactions with individuals and only deals with banks. The Social Security Administration issues Social Security checks or payments out of their fictional “Lock Box” account, which only contains IOU’s from the FED. The entire process relating to money the FED, SS and all such issue should be called the Disney World on the Potomac Smoke and Mirrors operation.

The last item we will cover is the absurdity that the FED audits its member banks. This is patently false because an agency that has never been audited, has no assets, is a private corporation, and refuses to answer questions even from congressional banking committees, and is not held in contempt for doing so cannot possible audit anyone else.

Appointees to the board of governors that manage the FRS are appointed by the president for 14-year terms. Unfortunately the comic does not inform that the president is given a short list of three names and that he must choose one of those to be appointed.

(1) See NY Times September 23, 1914
(2) Has not been audited since 1956
(3) Usually about $ 50 billion every Friday
(4) M-3 money supply

#3) The Story of Inflation (see # 1 Section 1)

This comic is the greatest lie of the so far covered publications. The attempt is made in the first two pages to induce the reader to believe that inflation is caused by rising prices. Nothing could be further from the truth. Prices rise because the value of the currency used to purchase items has fallen; any proposed views that evil producers are responsible for price increases are lies. This is simple to prove. In 1910 it was possible to purchses a suite of clothing, shoes, socks, a pocket watch, in other words an entire outfit for one ounce of gold that had a value of $ 32.00 in 1910. Today you can purchase all the exact same items for one ounce of gold or about $ 1.300.00. In 1958 I went to college, I had saved up $3,000 and asked my father for a loan of $ 400 in order to allow me to purchase a Chevrolet Corvette. Which cost $ 3,400. I already had a job to support myself and pay tuition. My father loaned me the money and I bought the corvette. Today gold is at $1,300. so the corvette costs about three ounces of gold which in 1958 was valued at $35.10 so in real terms a Corvette that today cost about $44,000 in fact costs based on today’s gold price but valued in 1959 valuation today’s price should be 111 x or $144,300. the real price of the car fell. Further falseness is then produced in the misconception that demand or the lack of it affects the cost of goods. Lets get this right first time. The cost of goods, and by that we mean all goods, is determined in a modern economy of the value of the means of exchange, i.e. the fiat species we use as money. Under the auspices of the FED the value of the dollar has fallen by 97% since 1913 when the FED came into being. This is called inflation and that particular fact seems to be missing in the FED’s story about inflation.

We are then instructed the banksters who loan out money are the greatest losers due to inflation. It just simply makes me feel sorry for these poor Ponzigonifs. Let’s look at this factually. The average bank mortgage is for 30 years. Statistically bankers know that most i.e. over 70% of all mortgages are turned over every 15 years. This is why they front end load all mortgages, whereby for the first half of the mortgage, the variance between interest and principal vary for the first 15 years, almost all of the interest is paid and in the second 15 years the principal is paid. So if you have a 30 year mortgage at 5% you will pay off most of the loan in the first 15 years and if you then decide to sell still own the bank most of the principal, this in turn costs you an accelerated interest of almost 18% not 5%.

Next we are informed that people don’t save in inflation-ravaged economies because they think that purchasing today will be cheaper than tomorrow. The reason people don’t save in our economy is because banks offer interest rates that are lower than the rate of inflation and the government then compounds this by taxing the meager 3% interest earned with capital gains taxes. (1) People are not stupid, as the FED seems to think. If the real inflation rate as of September 2010 is 10%, which it is, and bank savings accounts offer a 3% interest for a total 7% annual loss it is far smarter to purchses something you need that will cost double six months later, like antique cars.

The very next lie is that in order to protect you the government FRS began in 1997 selling inflation indexed bonds to protect your investment. There is one huge problem with this. The government determines what the rate of inflation is and they have consistently lied about that every quarter since 2002. Just this week they said there would be on SS COLA increase because there is no inflation. Every report on inflation omits all the commodities that demonstrate the highest rate of price increase. So, from 2003 to 2009 the cost of fuel, housing, and scores of other items were removed from the index. There are several reasons why government does this, 1) so that they don’t have to pay the indexed inflation penalties of the bonds they sell, 2) so they don’t have to pay federal employees the inflation indexed amount of their employment contracts, 3) so that they can withhold COLA indexed pay of Social Security, 4) because most private union contracts contain an inflation indexed automatic pay rise which they will then not see paid, thus reducing the inflationary pressure.

In simple terms this comic tries very hard to place the blame for inflation with everyone, anyone or anything not connected to banking or the FED, which is the real cause of inflation.

This entire comic is a disgrace no place in it does the FED accept responsibility for its actions and on every page another attempt to blame anything or anyone else but the FED for inflation. Inflation is caused by monitory policy, which was granted the FED by Congress in 1913 when they gave up the power to control coinage and currency as well as interest rates and turned it all over to the FED, which has used the process to enrich themselves at the expense of the American population. The reliance on government statistics like the CPI, etc. that is often used in the comic is all bogus. If the CPI were in fact reported by a private non-governmental body this might be workable, however all government statistic as have been published since the beginning of the Clinton administration are false and do not represent reality of the issues.

(1) Obama now wants to increase capital gains taxes from 15% to 20% to punish the rich!

#4 The Story of Monetary Policy (see # 1 first item)

We have sent the book “Money a primer” and “July 4th 2016 the Last Independence Day” to the NY FRS in hopes that they will at least gain a modicum of understanding on the issue.

The comic begins its story on page one with the 1979 farm protests in Disney World on the Potomac. Actually, money (coinage) begins in what are now Turkey and the Lydian city-state just a few thousand years before 1979. The introduced fallacy that government i.e. the FED can influence and control markets has been touted by the FED since before the FED’s establishment, in fact it was the prime argument used for the organization of the FED. Time and history has demonstrated that central banks are incapable of controlling the markets both capital as well as commercial. Every single attempt and there have been hundreds to do so by central banks, has failed miserably. The manipulations of credit, prices, interest rates, and since the beginning of the Clinton administration interference with the stock markets (1) have produced nothing but failure.

The perpetual growth scenario played in the comic is laughable, nothing goes perpetually up, these people should consider gravity and the laws of physics. For example the price of gold is going up now, the stock market in actual gold value is going down now, unemployment is rising, inflation is rising, prices are going up, in fact all economic issues are continuously in a state of motion that is not unidirectional. Again we see the blame for inflation placed on industry. Then we see the attempt by the FED to induce us to believe that they are the rider on the white horse, here to save every one of us.

The introduction of the myth that banks are not loaning money to industry because they don’t have it is ridiculous. Banks presently are able to borrow at prime rate 3.25 and better. The reason that they are restricting loans is because they have no idea where this goofy administration will go next and if their potential clients will still be able to be in business next year. This is the identical reason why small business is static. If you don’t know what your tax rate, income, raw material costs, and labor costs are going to be in two months you have only one option sit on your hands and wait.

The next issue is the presentation of the theory that it is the FED’s responsibility to see to “the growth of the money supply”. The money supply in realistic terms can only be expanded if the underlying support for it in either loan instruments or hard assets (2) is increased. Any increase in the money supply without backing results in inflation and is the only cause of inflation. The truth is then hidden because we are informed in the comic that the prime income of the FED is the interest payments it receives from the treasury for money congress borrowed. Now we are getting to the core of the problem. The fact is that congress spends money that it has not collected and has no prospect of collecting from taxes. This is called the deficit. There are two deficit and both are the cause of congressional action. The “Trade Deficit”, and the “Spend Deficit”. Congress which has instituted policies that caused this with the loud applause of the FED, which as you will recall, makes their money out of the interest of loans to the government, is the prime culprit but not without the able help of the FED. The FED’s income is totally 30% based on interest of money it loaned to the government.

So, we learn that seven members of the FRS board of Governors and the presidents of five of the FRS are the voting members of the FOMC. (3). In actual fact the president is always head of the FRS bank of NY and NY Banksters always control the committee.

The comic goes on and on, but nowhere dose it explain the process of monetization, which has become the primary issue in the last five years. The fact that the NY branch of the FRS issues instructions to the treasury that in turn instructs the mint to print more money that is backed by nothing is simply omitted from the text of the comic. The proper title for this comic aught to be the greatest magicians in the world.

Let us also interject that as of September 2010 for this year 341 FRS member banks of the FDIC (4) have failed and another 73 are anticipated to fail by December 2010. Interesting to note is that from 1934 to 1941 during the ‘Great Depression” a total of 370 banks went belly up. Looks like we will have about 414 fail in just one year and the FDIC says that 829are “endangered”. This is far worse than the Great Depression in which over a time span of seven years 44 fewer banks failed.

(1) Plunge Protection Team
(2) Gold or silver
(3) Federal Open Market Committee
(4) Federal Deposit Insurance Corporation

#5) Too Much Too Little (SE # 1 of # 1) This comic is fiction!

The basic tenant of this comic is that the FED is the agency that will protect you by implementing Keynesian economics (1) that has so ravaged the world’s banking systems. Keynesian economics in simple terms is the replacement of hard assets as backing for fiat currency by debt, or as of March 2008 by nothing. Students then tell their father or friend that they have to write a paper for their economics class (2) on the FRS, dad offers to help. They all travel back in time to 1690 and the barter system. By the way, barter has nothing to do with the establishment of the FRS. The then offered premise that the American colonies used tobacco as a principal agency of barter is also wrong it was buckskins (3) and to a large extent knives, gun powder and flints.

Amazingly they introduce the Bank of the United States that was chartered by congress in 1792. They then try to imply that the bank had problems because of the huge amounts of gold and silver mined. Then came the Second Bank of the United States of 1816 that the comic claims solved all the banking problems in America. Sorry, it was a banker called Biddle who president Andrew Jackson revealed had stolen over 13 million dollars from the bank and enriched himself and many of his friends. Also missing is the fact that Biddle then tried to bribe about half the congress and blackmailed the rest to force Jackson to reissue the charter, which Jackson refused to do. Just a little revisionist history is useful for all. The comic instead informs that the bank was a step in the right direction, that may be a matter of opinion but judging by the record of the FRS it in my opinion was a step in the wrong direction.

If you thought that the previously mentioned comics were bad this one tops them all. We now are instructed that the war of 1812 (4) caused the creation of scores of state banks that haphazardly issued paper currency not properly backed by gold or silver, you know exactly what the FRS is doing now! State banks in fact were the prime competition to a centralized private but federalized banking system as had already been set up in Germany, Holland, Belgium, England, France, Austria and Naples all controlled by the Rothschild banking empire. Rothschild agents Colonel House, president Wilson’s alter ego, and the German banker, whose brother remained in Europe to run their banks Paul Wartburg, also a Rothschild agent, had been dispatched by the Rothschild’s to set up the same sort of centralized banking system in private hands that they already controlled in almost all of Europe. All this history is sadly missing from the comic. The claim made in the comic that the second Bank of the United States failed due to political opposition is hogwash. A crook (5) managed the bank that had stolen millions from the government and taxpayers, (All conveniently missing) as conclusively proven by Andrew Jackson. Just so you know, the banksters attempted to assassinate Jackson with four attempts that were made on his life, something that has been repeated against every president who bucked the banking cartel. They assassinated Lincoln and most probably Kennedy. The reason that Lincoln was assassinated was his issuance of “Greenbacks” by the government without banking involvement and directly redeemable from the treasury. The NY central bankers then struck and got congress to tax state banks (a tax not paid by the central banks) and then revoked their charters and changed all of them into “National Banks” in essence nationalizing them.
There then developed two political factions. The “Greenback party” that were sponsored by and funded by the federal government, and the “Populist party” that demanded the return to the constitutionally mandated coin rather than treasury issued fiat (papaer) money. The Populists won. The totally bogus comic now informs that America was on the silver standard and then because of gold discoveries in America changed to the gold standard. All of the rest of the world where Rothschild operated was on the gold standard and that is why we changed to it. All fiat species remained convertible to coin.

The bankers then organized the 1907 depression whereupon they had their meeting on Jekyll Island GA, in 1910 to establish the FRS through the enactment of the 16th Amendment, and then the 17th amendment in the same year 1913, to insure that states would never again have the power to interfere with the FRS; all of which is missing in the comic. The claim that the enactment of this legislation an amendment to the constitution took partisan politics out of the money, loans, mortgages, and the issuance of loan instruments is untrue. Unless you perhaps think that Fannie May and Freddie Mac are not political animals, or that the government owning AIG, GM, and Chrysler is not political.

The totally bogus introduction in the final pages of this comic stating to the question, “Just what are reserves?” “They are cash in banks vaults and bank required balances at Federal banks” is another lie. As we learned in other comics the maximum required balances held by member banks is 10% of their total asset base, and all the “cash” held in banks is fiat species backed by nothing, while the 10% is also fiat species backed by nothing so there are no reserves. The last statement is not, “By constantly adjusting reserves [remember there are no reserves] the FRS strives to sustain a robust economy with full employment without inflation” Fine, in 2010 our rate of inflation is 10% our unemployment rate is M-3 10.1%, M-6 unemployment is 22.4% and the dollar has seen its value reduced by 97% in less than 100 years. These guys are doing a marvelous job!

(1) Never mentioned. An economic finacial monetary system implemented in 1944 at a meeting held in the White mountains of NH by the victors of WWII.
(2) Must be college because HS no longer offers economics as a course.
(3) That’s where the anachronism “a buck” came from.
(4) War between England and the Colonies lost by England. It was the cause of Andrew Jackson’s popularity when he severely defeated the British at New Orleans after a truce had already been reached.
(5) Biddle

#6) A penny Saved ( See 1 of #1)

(Why and how we save, and how saving helps the U. S. Economy)

This infantile comic appears to have been written with six-year-olds in mind. The jest of it is that it is wise to save money for future need. Which is a valid and sensible argument. But that unfortunately is where common sense ends. On page six we learn that placing your savings in a bank savings account is the proper way to save. Lets see, my local bank pays a compounded 3.4% interest on a savings account. Present inflation is at 10% so I lose a total of 6% on any money I place in the bank. If instead I were to purchase some gold coins I would earn about 7% above my original investment for just 2010. Not much different if I bought silver, platinum or palladium. The dollar is sadly due to FED policies falling in value every quarter, so hard asset are the way to go. (Obviously not mentioned in the comic) The statement that banks pay a 5% interest rate is somewhat misleading I think! If you know of one be sure to inform us right away. The fact that the IRS taxes earned interest is taxed is not mentioned and the fact that you can avoid paying capital gains taxes on held hard assets is also omitted. Mathematically if you invest $ 100 for 12 months as 3.4% you will earn a total of $3.40 on which you will pay a 15% and now proposed 20% capital gains tax, or $0.51 of tax reducing your income to $2.98 if you bought gold on Jan 1, 2010 you would have made just over $11. With no tax, and be totally insured against inflation or depreciation of value. (Also missing in the comic)

We are then informed that banks lend out money but that we are assured to get our money when we need it. Tell that to the 740 some banks that went belly up in 2010, (2) whose accounts were then covered by the FDIC (1) an agency that is at the verge of bankruptcy. “Banks don’t lend all the money they receive as deposits”. You bet they don’t” they keep about 10% and loan out 90% to another party. In fact they will loan out over $ 1,000 on a $ 100 deposit by continuously rolling the money over. The result is that if 10% of the depositors in a bank all came on the same day and demanded to get their deposited funds the bank (bank run) would have to close its doors and wait for the fed to print up more funny money for them. Then “the FDIC insures all deposits to $ 100,000,” hmm, we thought that they had upped that to $200,000 well, makes no difference since they also will go belly up shortly. That by the way, does not mean you won’t get your money, no indeed you will get your money, every last penny, the problem is what will it be worth after the next round of hyperinflation. (3)

Now comes the pitch for savings bonds, I have been waiting for with baited breath. This is the most losing proposition ever offered to the public. If a private company sold savings bonds under the identical terms as the FED they would go to jail for fraud. The listed benefit is “that you don’t have to pay taxes on the bond until you cash it in”. OK you buy a bond for $ 100 it’s term is 20 years. The rate of inflation is (we will be generous) 5% you paid $ 50 for the bond. When it comes due under the new Obama capital gains tax you will pay 20% capital gains on $ 50, or $10 reducing your margin to $ 40.00 The dollar has through inflation lost 5 x 20 or a total of 100% of the value of the $ 50 you spent originally which is $ 50. so $ 40 plus $ 10 = $60 you lost your entire original $ 50 investment to inflation and taxation, plus $10 of your assumed non-existent profit. What a wonderful investment! As a rebuttal we are informed that the stock market poses risk, which is not the case with Government Securites, inflation is not considerd a risk by the authors of the comic.

Other considerations all discounted as inferior to government bonds are, art, bonds, municipal bonds, real estate, commercial real estate, that’s why all the billionaires in America are purchasing savings bonds and T-bills, sure they are!

The reported in the comic issue, that “savings are important for the national economy” is well taken. However so long as the IRS taxes savings accounts (4) they actually discourage people from saving money and have been so successful in that endeavourer that we have the national lowest per capita savings in the industrialized world.

The very last item states that people tend not to save because they will get Social Security when they retire and will live on that. Good Luck! The average American SS recippiant gets $1,200 per month; just try living on that for a while.

(1) FDIC Federal Deposit Insurance Corporation only to $200.000
(2) Almost the same number as went broke between 1934 and 1941
(3) Hyperinflation is inflation on steroids, of over 25%.
(4) We are the only nation in the world that to our knowledge taxes interst on savings.

#7) The Story of Banks. (See 1 of # 1)

The story of banks, you guessed it, begins with three teenagers that have started a pretzel business in SF on the left coast, how PC can you get? We then learn that it is unwise to keep money at home because it could get stolen, and it is unwise to carry it around because you could get robbed. The benefit of banking i.e. checking accounts is then explained as the solution for these problems.

It strikes us as peculiar that there is nothing of the history of banking, nothing of the Knights Templar and their banking system from the 10th to the 13th centuries, or the Jewish takeover of the banking systems of Europe in the 13th century. Well never mind.
A diatribe of several pages then explains the process of checking accounts and how they work, something I was under the impression of every sixth grader knew. Again we are told that the bank does not keep all the money it accepts as deposits but loans out all except the required by the FED “Reserves”. That only 10% of your deposit is held at your bank is never mentioned. And neither is the fact that the “Reserves” myth of the F[R]S is in fact a minuscule portion of the money in circulation, so small in fact as to be insignificant. The lie is then promoted that “the FED was created by congress in 1913 to ensure that there is enough money and credit in the country to provide for Economic Growth.” Economic growth has nothing to do with banking, it being a function of the farming, commercial and manufacturing enterprises of a society.

In truth banksters created the FED: Paul Wartburg, (Agent for Rothschild & partner on Kuhn & Loeb & co. also the author of the Federal Reserve Act) Abraham Piatt Andrew. (Assistant Secretary of the Treasury), Franck Vanderlip, (Pres. Nat. Bank of NY representing William Rockefeller) Henry P. Davidson, (Senior partner of J. P. Morgan & CO) Benjamin Strong, (Head of J. P. Morgan & Bankers Trust of NY) and Nelson Aldrich, son in law of Rockefeller and Senator and associate partner in J. P. Morgan) they created the FED 1910 at Jekyll Island GA that was at that time a private hunting preserve, belonging to Aldrich. They formed the FED because the Rothschild banking empire wanted control of American banking just as they did all over Europe. By 1913 they convinced a dead-beat brainless lame duck congress to pass the 16th amendment the rest is history. All banking in 1900 was already international as it is now. The tentacles of Rothschild control almost all banks in Western Europe and in North and South America. Banking has nothing whatever to do with the FED claimed desire to help their fellow man, no indeed the FED is an instrument of enormous profit for a very small and select group that grow continuously wealthier as the rest of us are deprived of any reasonable means of self preservation and income.

The portion of income of the FRS is debt services to the U.S. Government is nowhere listed in either government sites or by the FRS but certainly exceeds 30% of the total federal budget at $413,954,825,362.17 and this only covers. on line items. for a debt of $ 13 trillion 632 billion and 968 million dollars, which accounts to $ 44,677.00 for every living American. The national debt has grown 19% in the last eight years. Off book debt, the real number is $ 202 trillion. None of this is in the comic. The fact of greatest importance that we as a nation are living far beyond our means is also ignored, as is the fact that America is bankrupt.

Now things get silly. “With a deposit of only $ 5,000 and just three transactions, the banks got $13,550 in new deposits and made $ 12,195 in loans. Lots on money is created…” You bet and its is right out of thin air. If you as a businessman kept books like banks and were audited by the IRS, you’d be in jail. If you as a manufacturer valued you inventory (banks funds) in the same manner. You’d be in jail. If you as a retailer mangled you accounts the way banks do you’d be bankrupt in the first quarter of business establishment. And wouldn’t it be great if a business could be insured against any financial failure by a federal insurance scheme like the FDIC, effectively removing any sort of risk? Then the advice by the banker is that if you have any surplus funds you should open a 5% savings account in the bank. Right, at 3.7% interest with a 20% capital gains tax and a 10% inflation rate, you’d only be loosing about 7% per year. Then, “If we put $5,000 in the bank in a saving account at 5% we will, at compounded interest have $ 6,380”, sorry, no, 3,7% will yield about $ 5,500 less capital gains of 20% of $ 100 produces an income of $ 400 the inflation loss will be 10% of $ 5,000 invested or $ 500 for an end loss of $ 100.00. Great advice! Then we are advised to get a credit card because we could spread the payment of bills over a long time and through this still have cash on hand, OK that’s good advice because you will be paying the bank between 10% and 24% interest on the outstanding balance, well good advice for the bank, not so good for you.

This grossly oversimplified account of banking and the FED would appear to have been written with primary schools in mind, to bend their thinking and idolize bankers for thee swell fellows they are.

#8 #9 & # 10) The Story of Money, The Story of Checks and electronic payments & Once upon a Dime

All three of these comics could not possibly be of use to anyone above the age of ten. They are produced for kindergarten to third grade; comment on them would be superfluous.

These commentaries are the product of Dr. Adrain H. Krieg of A2Z Publications LLC Las Vegas Nevada. For a complete story on Money go to or to Amazon, Alibris, or any bookselling Internet site a get a copy of Money a Primer ISBN # 0-9748502-6-8 and July 4th 2016 The Last Independence Day ISBN # 0-97319-047-5 from any bookseller.


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