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2022-07-09 17:14:30 ENDNOTES

1 This essay was inspired by Dr. Martin Luther’s Trade And Usury.
2 Works of Lord Byron, London : John Murray, Albermarle Street, 1833, Vol. 17, p. 41.
3 The Tragedy of Faust, Part 2, pp. 283-4, by J. W. von Goethe, translated by Theodore Martin. Dr. Hjahnar Schacht’s Oct. 15,1923 Rentenmark (revenue mark) used Goethe’s analysis in the invention of this new currency by its being “guaranteed by gold mortgage on all German lands, by gold obligations of industry, commerce and banks” even though the real gold cover was nearly nonexistent. See page 164 of Dr. Schacht’s Confessions of the Old Wizard, and pages 323 and 472 of Dr. Franz Pick’s and René Sedillot’s All The Monies of The World. This created out of thin air Rentemnark and worked like a miracle to end the German hyperinflation of 1923. Goethe described this Rothschild technique a few pages further in Faust, Part 2, as “all heretics’ and wizard’s doing.”
4 Tragedy and Hope, p. 49, by Carroll Quigley.
5 Those who say that deposits under zero reserves can extend out to infinity are philosophically and practically wrong. On a practical basis, the bank’s necessity of holding “working balances” would at the very minimum prevent the extension to infinity. Infinity, as it relates to man’s finite intellectual capacity, is an absurd concept outside of theology.
6 The supply of funds and the use are equal. However the November Bulletin statistics don’t always balance, as figures appear from different times. Information developed by telephone inquiry with the Fed.
7 The dirty float issue is pregnant with meaning. In 1995 the U.S. had a 187 billion trade deficit with the following significant trade deficits with individual trading partners.

The figures of Treasury holdings for each of these countries sheds light on their intervention in the market, preventing the self-correcting mechanism of supply and demand of dollars to lower the value of the dollar irrespective of purchasing power parity. Foreign holdings now represent 30% of total privately held public debt. Figures taken from Direction of Trade Statistics Yearbook 1996 of the International Monetary Fund, and Quarterly Press Conference of November of Asst. Secretary of Domestic Finance, Darcy Bradbury.

A large support for the dollar against the Yen is the Japanese subsidized half a percent central bank rate to relieve their beleaguered banks, which has generated one of the largest speculative manias in the history of Wall Street, sending average stock yields to their lowest level in 100 years. What is happening is that hundreds of billions are being borrowed in Japan at low interest rates and then invested in the U.S. in Treasuries at higher yields in a classic arbitrage operation. This artificially lowers interest rates in the U.S. sponsoring the stock market. Senior central bank officials expressed their concern about these developments but feel the Japanese must reflate their banks. Shall it result in an uncontrollable financial crash? In the meantime, the Japanese exporters to the U.S. are having a heyday with the high U.S. dollar.

Some argue that the 1995 trade deficit is inconsequential, as it represents only 2.5% of the U.S. Gross Domestic Product (187 billion out of 7.5 trillion). However, this forgets about the inequity of the dirty float and the significant composition of industrial products, such as cars and steel, that these imports represent and how such attacked industries have been in periodic distress. Imports now account for about 28% of our car industry and a significant portion of our steel industry. It must be remembered that the power of a modem nation is found in its power of production (see Tacitus Annals, Book XII, p. 43).

What we see happening is whenever another country has a problem, such as the Mexican debacle, the U.S. surplus of 5 billion in 1992 is turned into a deficit of 17 billion in 1995 to solve the problem. Открыть/Комментировать

2022-07-09 17:13:42 11. The High Price of Bullion, A Proof of The Depreciation of Bank Notes, Second Edition corrected, by David Ricardo, London, Printed for John Murray, 32 Fleet-street., 1810.
12. The Merchant of Venice, by William Shakespeare, Macmillan and Co. London, 1891, The Works, Act 1, Scene 3, verse 90.
13. The U.S. Dollar: An Advance Obituary, Third Edition, by Dr. Franz Pick, 1986, Pub. by Silver and Gold Report, Bethel, CT 06801.
14. All The Monies of The World, by Franz Pick-Rene Sedillot, Pub. by Pick Publishing Corp., N.Y., N.Y. 10006, 1971
15. The Economics of Inflation, by Costantino Bresciani-Turroni, translated by Millicent E. Savers, Augustus M. Kelley, Publishers, Third Impression, 1968.
16. International Monetary Fund Yearbook, 1996, International Monetary Fund, Washington, D.C.
17. A Monetary History of The United States, by Milton Friedman and Anna Jacobson Schwartz. Published by the National Bureau of Economic Research, Eighth Paperback printing, 1990
18. Direction of Trade Statistics Yearbook, 1996 International Monetary Fund.
19. Fedwire March 1995, Federal Reserve Bank of New York.
20. International Banking and Financial Market Developments, Bank for International Settlements, Basle, November 1996.
21. The Annals, by Gaius Cornelius Tacitus, The Loeb Classical Library, John Jackson, translator, 1986. Открыть/Комментировать

2022-07-09 17:13:42 Modern civilization’s attempts to escape arduous work (Gen. 3:19) by the sweat of the brow (healthy exercise) has led to the loss of the beautiful bucolic world of pasturage and farming where families had many healthy children and strong rugged men.

The average modern man is in hock for his home mortgage, car loan, and consumer loan and worries that his good paying job with a one-month vacation will be wiped out by imports or immigrants. He must worry that his frustrated children may develop passions for degenerate movies or disreputable rock stars that represent our new culture, but really serve as distractions to meaningless lives. The financiers are happy if we don’t recognize their sordid system, as they promote this moral disintegration.

It was not always so. Peter Jon Simpson in a pamphlet entitled Life Without Usury quotes from Thorold Rogers, Professor of Political Economy at Oxford University in the middle of the nineteenth century that “at that time (in the Middle Ages) a labourer could provide all the necessities for his family for a year by working 14 weeks.” For this the bankers had him fired.

Werner Sombart in his study of agricultural conditions in Central Europe in the fourteenth century “found hundreds of communities which averaged from 160 to 180 holidays a year.” Here was old “Merrye Englande.” That free time was used to build beautiful Gothic cathedrals.

Their crowds didn’t sit before the television watching insulting vulgarity but went a different way.

And specially from every shrines end
Of Englande to Canterbury they wende
The holy blissful martyr for to seeke
Them that hath holpen when that they were seeke.24

Who is really superstitious? The modern man who believes that paper money or bank credit has value when it has no intrinsic value, or these noble English folk who had half a year off to build Gothic cathedrals or go to shrines to venerate saints who resisted temptation? (Our movies glorify whores.) Their money was gold and silver, or agrarian goods. Real goods.

The incessant propaganda of the financially controlled media would have us believe this bucolic world never existed – and that medieval farmers were lazy, loafing dolts. But our world isn’t even a debased copy of theirs.
If we had adhered to the Biblical prohibitions against usury, our world would not have been ruined by the fangs of international finance capital. They have brought ruin to our world in two world wars and are setting the stage for another collapse outlined in “Deficit Without Tears”. We must return to God and His Bible25 and take back our Western civilization from the international financiers. The good book, dear reader, is still good.26
Bibliography
1. The Jews And Modern Capitalism, By Werner Sombart, translated by M. Epstein, Transaction Books, New Brunswick, U.S.A., 1982.
2. Federal Reserve Bulletin, November 1996, Board of Governors of The Federal Reserve System, Wash., DC
3. Works of Lord Byron, London: John Murray, Albermarle street, 1833, Vol. 17, Don Juan.
4. Confessions of The Old Wizard, by Dr. Hjalmar Horace Greeley Schacht, Houghton Mifflin Co., Boston, 1956.
5. Tragedy And Hope, Carroll Quigley, 1966, The Macmillan Co., N.Y., (President Clinton’s favorite professor at Georgetown University).
6. Modern Money Mechanics, Federal Reserve Bank of Chicago., Feb 1994
7. Settlement Risk In Foreign Exchange Transactions, Bank For International Settlements, Basle March, 1996
8. Central Bank Survey of Foreign Exchange And Derivative Market Activity, Bank for International Settlements, Basle, May, 1996.
9. Politics, Aristotle, Loeb Classical Library, translated by H. Rackman, Reprinted 1990. Book 1,3,23, Loeb page 51.
10. The Tragedy of Faust, by J. W. von Goethe, translated by Sir Theodore Martin, Boston, Francis A. Niccolls and Co., Publishers, 1902. Открыть/Комментировать

2022-07-09 17:13:42 Farfetched? Is it likely that the J. P. Morgan firm was independent of Rothschild and Rothschild had no major presence in America, though the towering giant in Europe?18

Dr. Pick said Morgan took orders from Rothschild and profits were skimmed to Rothschild from the Morgan firm, as the Las Vegas Casinos do to their Mafia overlords.19 Lets look at pp. 326 and 327 in Quigley’s book . . .

“It must not be felt that these heads of the world’s chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down. The substantive financial powers of the world were in the hands of these investment bankers (also called ‘international’ or ‘merchant’ bankers) who remained largely behind the scenes in their own unincorporated private banks.”

The monetarist Milton Friedman, in explaining the 1929-33 monetary contraction, wants us to believe that these banking specialists were just inept.20 This is hard to swallow, as these fellows were experts. The Rothschild-Roosevelt story outlined here was related as true to me by Dr. Franz Pick, Baron Eduard de Rothschild’s selection as paymaster of the French Resistance for the OSS. But whether it is true or not, and we have no doubt it’s true, is not as important a question as to what must we do now.

We close by saying that acceptance of the Bible’s prohibition against usury and fraudulent hypothecation would have prevented these massive credit upheavals of our century. And then there could have been no rise of psychopathic personalities, as Adolf Hitler. The good book is still good. (See Ex. 22:25; Lev. 25:36,37; Deut. 23:19,20; Deut. 25:15; Lev. 19:36).

We have scientifically demonstrated that the interest rate system was unworkable and doomed. Here we shall show how it is the ferment of decomposition of our western civilization.

The major pressure driving the United States and the world economy is the interest rate burden. Although page A-41 of the April Federal Reserve Bulletin shows 19.5 trillion in credit market debt and 43,325 trillion in total liabilities, most of this nets itself out, as often the lender to one party is the borrower from the same party. For example, I could buy a Sears bond, on the one hand, and buy on credit from Sears on the other. Both liabilities would be picked up and aggregated. The best measure of the interest rate burden is the 193 billion (1996) net interest21 which represents the difference between the interest on loans of financial intermediaries and their cost of funds. This 193 billion net interest compares to 249.3 billion of 1995 personal savings and 586.6 billion of 1995 corporate profits.22 The interest rate burden was the source of the historical financial pressure that uprooted the old agrarian economy and drove our civilization to the speed-up of contemporary life. It drives the frantic race to greater efficiency to service the interest, and is the main source of technological innovation, automation and greater industrialization.23 The remaining farms have been turned into factory systems. Here unhealthy chemical fertilizers are used to boost production, which destroy the bacteriological balance, necessitating pesticides. These substances cause a deterioration in the national health and lead to cancer. Hormonal treatment of cattle and poultry to grow faster and pump up the egg production also contribute to cancer.

The mad chase to greater efficiency is supposed to lead us to a modern paradise where machines do all the work and leisure abounds, but instead has led to the masses having to live in squalid, ugly cities that are as barren and sterile as deserts. The quality of life in the cities is far inferior to the old agrarian civilization, and the modern glass architecture is insubstantial and ugly. When driving out of this wasteland, the eyes are affronted by concrete, gas stations and Coca-Cola signs. Открыть/Комментировать

2022-07-09 17:13:42 25 years 17 trillion
50 years 74 trillion
75 years 316 trillion
100 years 1,357 trillion
213 years 1,000,000,000,000,000.0013
It is true we have allowed about 425 billion in currency in the above calculation, which is in circulation, but our interest rate is low as most bank loans are above 8%. Our point is that 25 or 50 years from now the monetary authorities (not being omniscient) will not be able to manage this. They must, however, keep increasing the money supply at least by the interest rate or the system will contract and collapse. As we saw in Dr. Pick’s inflation history, they were unable to restrict the money growth sufficiently, thereby creating an enormous historical inflation, even against the consumer price index.

This does not give us confidence in the future that the Federal Reserve will not significantly exceed our 6% interest proxy. At some point between now and 50 years, our currency and credit system will explode. If we review Dr. Pick’s inflation history between 1940 and 1985, nearly 97% of the dollar’s value was destroyed. Costantino Bresciani-Turroni in his The Economics of Inflation writes that in 1781 the American “continental money” was worth only a thousandth part of it original value. The depreciation of the French assignats on June 1, 1796 was one metal Franc to 533 assignat Francs. The gold mark in 1913 was equal to one paper mark, whereas in 1923 one gold mark equaled 1,000,000,000,000 paper marks. At what point will the U.S. system self-destruct as in 1796 France, 1781 America, or 1923 Germany? When we remember the U.S. has 11.050 billion in gold, it is scheduled to underpin 74 trillion in dollars and credit in 50 years. The chief difference between the U.S. situation and the German one is the time span, not the currency and credit mathematics.14 In the U.S. the same gigantic abstraction of the currency will occur but over a longer time. The illogical nature of the system is understood by few.

I have saved for last some discussion of the use or manipulation of the inflated unit for political and economic power. Mr. Quigley in his books tells us the Rothschild House “manipulated the quantity and flow of money so that they were able to influence, if not control, governments on one side and industries on the other (page 51 Tragedy And Hope).15 What he means is that if a government gave the Rothschild’s trouble, they would deflate the credit system, thereby overturning it . For example, Mr. Quigley asserts that J. P. Morgan (an agent of Baron Eduard de Rothschild) engineered the “panic of 1907” (p. 72). This was probably done to get us into the Central Bank system of a Federal Reserve. It would be easier to control the U.S. economy through this mechanism as was seen in the 1928-33 tightening to destroy the Republicans. Blame is deflected from the private bankers.

Let’s turn to an example. Between 1928-30 there was a Republican tariff movement in the U.S. whose purpose was to protect American Industry. In 1930 they passed the Hawley-Smoot Tariff Act. Since tariffs interrupt bank credit flows, the U.S. Federal Reserve under orders from Baron Eduard de Rothschild in Paris restricted credit between 1929-1933 for the purpose of overturning Republican tariff control of the U.S.16 Rothschild’s men17 on the Federal Reserve strangled the U.S. and in 1932-33 the Democrats won a resounding election, taking over the presidency and both Houses of Congress. Baron Eduard accumulated huge gold holdings in Europe and, in the heart of the depression in the U.S., ordered the Paris Central Bank to start a run on the U.S. gold supply. (Tragedy and Hope p. 349) states the French Central Bank started the run. The Rothschild President, F. D. Roosevelt, used this as an excuse to reward his patron by devaluing the dollar in a deflation (a very rare event in history, as this virtually always happens in an inflation) and then the good Baron converted his gold into dollars, buying up depressed U.S. assets, thereby making a killing. Открыть/Комментировать

2022-07-09 17:13:21 In the case of international or domestic runs, the currency unit will default or die as the central bank will not have enough gold to cover the withdrawals. If the monetary authorities attempt to deflate the currency to a 100% gold backing, untold human hardships will follow as the economy goes into a depression. This is usually avoided as otherwise a revolution will occur.
The final solution of modern times to this problem is to declare gold a barbarous relic and just trust in paper money. Here we have a kind of neoplatonic transubstantiation of a paper or credit unit (with no gold backing or intrinsic value) into an energy (Karl Marx) or a value (David Ricardo).12 The truth is that this transformation is merely a sleight of hand to conceal the fraudulence and unworkability of the system. The credit and usury system is the barbarous relic from the fallen nations of antiquity. (See Annals of Tacitus, Book 6, 16). Even without the gold base, the growth of paper and credit must grow continuously to pay the interest.

Only an omniscient mind can control the domestic credit issuances in relation to its floating against other currencies, which in the end will be mathematically or statistically impossible (see Gen. 3:5). If we use our four trillion of currency and credit outstanding as a proxy, and allow a 6% average interest figure, recognizing the cyclical nature of interest rates due to occasional efforts to control this syndrome, we list below the credit figures after compounding annually. Открыть/Комментировать

2022-07-09 17:13:21 His definition of inflation is found in his 1810 piece entitled “The High Price of Bullion, A Proof of the Depreciation of Bank Notes.” He wrote if too many pounds were issued there would be an inflation causing gold to rise in value and the pound to fall. His remedy was to withdraw pounds from circulation. This would be done today by the Federal Reserve selling Treasuries taking back and extinguishing previously created credit. Today the Ricardian definition of inflation is the rise in the price of goods instead of gold in relation to the paper money and credit. This is measured by the Consumer Price Index. I use a study on this inflation entitled: The U.S. Dollar = An Advance Obituary by Dr. Franz Pick. Here are his inflation figures reflecting the erosion of the dollar’s value through inflation, starting at 100 in 1940 . . .

The inflation wiped out 86.9% of the government index since 1940 and around 96.5% to 97% in the unofficial statistics. Dr. Pick relates in his book that he never changes the commodities in his unofficial commodity baskets while the government does. The U.S. government’s policy is that if a product becomes very popular, its price rises causing it to be bought by much fewer people and so its importance in the economy decreases. So it drops it from its basket. Dr. Pick says this thereby understates true inflation. He never changed his basket since 1940. The destruction of 86.9 to 97 per cent of the 1940 dollar is a reflection of the fraudulent transfer of wealth. Since much more inflation has occurred since 1985, the figures today are worse.

We can now understand why he entitled his book The U.S. Dollar: An Advance Obituary because Dr. Pick was predicting the dollar’s future death. Rene Sedillot wrote in Paris in 1954: “It will come to a bad end”, repeated Jacques Bainville’s parrot in Jaco et Lori. “In the cases of currencies, alas, it always ends badly.” 10

Now, why is this so? In The Merchant of Venice by Shakespeare, Antonio asks “...is your gold and silver ewes and rams?” This is reminiscent of Aristotle in Politics 1:3:23.
“But, as we said, this art is twofold, one branch being of the
nature of trade while the other belongs to the household art; and the
latter branch is necessary and in good esteem, but the branch connected
with exchange is justly discredited (for it is not in accordance with
nature, but involves men’s taking things from one another). As this is so, usury is most reasonably hated, because its gain comes from money
itself and not from that for the sake of which money was invented. For
money was brought into existence for the purpose of exchange, but
interest increases the amount of money itself (and this is the actual
origin of the Greek word: offspring resembles parent, and interest is
money born of money); consequently this form of the business of
getting wealth is of all forms the most contrary to nature.”
Now what does Aristotle mean by contrary to nature? If we have in an economy 100 million ounces of gold lent at 10% interest, the 100 million ounces cannot breed the extra 10 million ounces, and that 100 million ounces represents all the gold existing in the world, so defaults to the lenders will occur as the usury or interest does not exist to pay it. It is thus against nature. Wealth will concentrate in the hands of the lenders.11 If we try to escape this discipline through fraud as in Goethe’s and Byron’s time, paper money and bank credit in excess of the gold will be created provided (if we follow Ricardo) the price of gold doesn’t rise (inflation). Discipline, however, is nearly impossible to maintain for if the amount of credit is not continuously increased to pay the interest, the same defaults will occur as if we had a finite amount of gold. As the inflation of paper units and credit continues, the ratio of gold to paper decreases even if the consumer price indexes are not increasing. This ratio of gold as it decreases makes the convertibility of the currency into gold impossible. Открыть/Комментировать

2022-07-09 17:13:21 When the 38.8 million returns to the banking system, it can re-lend it out 37.636 million, holding 1.164 million as a 3% reserve. When this process expands out, the 40 million becomes 1.333 billion of loans. This calculation can be expressed in the simple algebraic formula 0.03x = 40 million, with “x” representing the total amount after the expansion. Consequently, the banks create out of thin air credit in the amount of 1.293 billion dollars (1.333 billion less 40 million). The system is a closed circuit, as no credit leaves it to foreign countries to pay the balance of payment deficit. What happens is the credits are bid for in the foreign exchange market. When the U.S. incurs a deficit, a credit to a foreign bank appears in the account of the U.S. bank. If the foreign bank wishes to sell the U.S. deposit, his account is debited, and the buyer of the dollars will have his American bank credited. If there were no market for these credits, the U.S. dollar would fall until there was one. Foreign central banks will often intervene to buy such dollar deposits or credits and then use them to purchase Treasury Bonds. Their holdings amount to 572.839 billion in June and mostly reflect the massive efforts of the so-called Asian miracle economies to support the dollar to facilitate the continuation of massive U.S. trade deficits. This currency manipulation is described as a dirty float.7 The Eurodollar market is like re-used toilet paper. The European bank has a deposit of dollars in a U.S. bank from which it creates new loans on its own books without any reserve requirements. This additional expansion of credit is huge.8

The gross domestic product is about 7.547 trillion dollars (Bulletin, p.48). So if we compare 4 trillion in currency and bank credit, we can see the stupendous transfer of power to the privately owned banks. Byron attributed this new power in his time to Rothschild and Baring and Goethe’s Mephistopheles is Rothschild. Goethe obviously considered this inflation a fraudulent hypothecation of the original gold reserve which today, if it were used on any other asset such as real estate, would be regarded as a criminal fraud. In any event, this fraudulent banking power through their endowments to universities selected their presidents and changed their curriculum away from Christianity, which taught against usury, and away from the study of classics such as Aristotle, since this undermined the banker’s position in society from that of honored citizens to their original status of guttersnipe.9

Newspapers under their influence in the U.S. were the N.Y. Times, N.Y. Herald Tribune, Christian Science Monitor, Washington Post and the Boston Evening Transcript. See for this source Carroll Quigley’s Tragedy and Hope, pp. 952-3 and 980. Although this subject is given vast treatment throughout, Mr. Quigley does not draw the obvious Christian implications. This dechristianization was achieved through this stupendous transfer of wealth and power by which the privately owned banks (and the Federal Reserve is nominally privately owned, for that matter, though highly regulated and most of its interest income is returned to the Treasury) were enabled to create out of thin air nearly four trillion of deposits less currency. How many Americans understand this, much less received the opportunity to vote on it? Mr. Quigley basically tells us our American democracy is a banker’s stage on which the politicians, their marionettes, dance. The pirouetting judges are merely the agents of the politicians.

Byron justly said they “make politics run glibber all” and make “Europe’s journals (newspapers) squeak and gibber all.” One need only have watched the massive orchestration behind Nafta and Gatt to be convinced.
When I read through the various Federal Reserve, International Money Fund, and Bank for International Settlement, material in preparation for this report, I was surprised at the influence of the stockbroker, David Ricardo, through his analysis of comparative advantage and inflation. Открыть/Комментировать

2022-07-09 17:13:21 CURRENCY, CREDIT AND USURY AS A CONTROL MECHANISM

BY DAVID K. LIFSCHULTZ
COMPLIMENTS OF THE LIFSCHULTZ ORGANIZATION FOUNDED IN 1899

Though this paper was written well over a decade ago, it is more urgent today about the evil usurpation of power by the fraudulent global economic practice of usury.

Currency, Credit and Usury as a Control Mechanism 1


Who hold the balance of the world? Who reign
O’er congress, whether royalist or liberal?
Who rouse the shirtless patriots of Spain?
(that make old Europe’s journals squeak and gibber all).
Who keep the world, both old and new, in pain
or pleasure? Who makes politics run glibber all?
The shade of Bonaparte’s noble daring?
Jew Rothschild and his fellow Christian Baring.
From Don Juan of Lord Byron
Here we have the most interesting and accurate analysis of the power transfer of inflation ever presented in the English language. But the Germans are not far behind.

Chancellor
In my old days my happiness how great!
Hear, then and see this fateful scroll, for this
Has turned our woe and wailing to bliss.
“Be it to all whom it concerneth known,
This note is worth a thousand crowns alone,
And for a guarantee, the wealth untold,
Throughout the empire buried, it hath hold.
Means are on foot this treasure bare to lay.
And out of it the guarantee to pay.2

Emperor
Crime I surmise, some monstrous fraud. Oh shame!
Who dared to counterfeit the Emperor’s name?3

Here Goethe explains what William Paterson, the founder of the Bank of England, said in 1694 that “The Bank hath benefit of interest on all moneys which it creates out of nothing.”4 The Emperor considers it a fraud. Shortly after, Goethe predicts the overthrow of Christianity and the nobleman whose duty it was to defend it by this new banking power. Since we do not have statistics available for the 1819-1832 period during which Faust and Don Juan were written, we cannot analyze this power transfer from the clergy and nobleman to the bankers except to show it by modem statistics. The United States presently has 11.050 billion in gold at 42.22 per ounce against about 4 trillion in paper currency, coin and credit which represents M-3 of 4.744 trillion less an estimate for non-depository instruments. All American statistics will be taken from the Federal Reserve Bulletin of November 1996. The inflation level would represent 4 trillion less 11.050 billion in gold if we wish to use an unconventional definition of inflation as representing the excess of currency and credit above the gold reserve.

It is interesting to follow how this credit is manufactured out of thin air. I will only give a rough approximation on how this is done. The Federal Reserve supplies most of the funds out of about nearly 400 billion in Treasuries it acquired merely by transmitting a credit balance to a bank (manufactured out of thin air). This supply of funds represents one side of the balance sheet. The other side is described as use of funds or absorbing reserve funds. Here we have as a use currency in circulation, part of which is used for vault cash at the banks, and reserve balances at Federal Reserve Banks (Page A-5 of Bulletin). Vault cash plus reserve balances at Federal Reserve Banks constitute the 0% to 10% required reserves of the banks (Page A-8) of 52.26 billion (page A-12). These are the raw requirements of the system. The question is how does the 400 billion Fed credit become 4 trillion. If we took the 52.26 billion reserve requirement at the .03% reserve ratio for transaction accounts under 52 million (A-8) we come out to 1.742 trillion expansion, still short of 4 trillion. But some of the reserve ratios are 0% for non-personal time deposits, savings accounts, and eurocurrency liabilities.5 The expansion at 0% can make up the difference since we must also consider as a use nearly 429 billion in currency.6 The way a reserve ratio works is if the Federal Reserve creates, out of thin air, 40 million credited to an account in a commercial bank to buy a Treasury Bill, the bank can lend out 38.8 million, holding a 3% reserve of 1.2 million. Открыть/Комментировать

2022-07-09 17:12:32 Глубокое рассуждение Лифшульца о природе современных денег и неизбежности краха долларового финансового пузыря Открыть/Комментировать