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http://blog.hasslberger.com/2006/06/will_demise_of_dollar_usher_in.html
Liberty Dollar
Linking a currency to gold or silver or any other precious metal would not only be unnecessary
as shown by the many currencies that work quite well without having that link it would make
the economy of the country that attempted such a link depend on the amount of gold
available, rather than on the willingness of people to work and produce.
The mining of all that gold to be used as "money" or rather as the idea behind money is by
no means of benefit to our environment. Those mines are connected with serious problems.
The real problem is not even the Fed's printing of money but the facility the Fed and other
central banks afford private commercial banks to "create money" and loan it out for interest.
This has made control over the amount of money in circulation and thereby control of inflation
very difficult and the cumulative interest to be paid for practically all money in use has been
a substantial drain on modern economies.
There are means of 'taming' money to suit economic activity. One of them would be for
Congress or any legislative assembly or even for the people themselves to take back their
right to issue money. The banks today create money for their private interest and that is the
worst of all conceivable scenarios.
But back to the dollar and its predicted demise. The reason may not be so much the
overprinting, but the fact that other countries are increasingly unwilling to support the
American economy by buying and using dollars for transactions. Almost two years ago, I asked
"Will Oil End the War Economy?" What had propped up the dollar for all the years before
then was the fact that it had become an international exchange currency, necessary for
countries who wanted to buy oil and who doesn't these days.
But the Iraq war changed all that. America is seen as an aggressor. OPEC mooted the
possibility of passing from dollar to euro, and some countries actually did the change, Iraq
first, then Venezuela, and now Iran is considering opening its own oil bourse denominating
black gold in euro instead of dollars. Russia just started to sell its own oil and gas for rubles.
You may have noticed that all these countries are "in bad" with the US.
So what will the future bring?
Some say that the world economy might well collapse. Silvano Borruso is more optimistic. He
says the American economy might adjust in a short time. But he also sees a chance that our
present monetary system could be in for a big change. Mammon, meaning the money powers
behind the throne, the banksters who have sold us into a modern day slavery, is seen as the
dark force. According to Borruso that force might fall, together with its favored creation, the
US dollar...
ADIEU, MAMMON?
The demise of the dollar
The announcement by Venezuelas Chavez and Irans Ahmadinejad that they will accept euros
instead of dollars for their oil is sending shockwaves throughout the world. Frequently asked
questions are:
Howwilltheworldeconomybeaffectedbyaswitchfromthedollarto
theeuroasareservecurrency,giventhattheeconomiesofallcountries
arecloselyinterlinked?
How will America manage its economy, the stability of which depends on the
stability of the dollar?
America has become addicted to the dollars hegemony as a reserve currency.
Wouldnt she consider it as a hostile action, any attempt by another country to
end that privileged status?
Can we expect anything other than chaos, pain and hardship?
Lets us answer the last question first. Chaos, pain and hardship need not hit those who earn
their bread by the sweat of their brow, provided they understand the basics. The situation has
come to a head in the
secularwarbetweenusurersandpeasants,betweentheusurocracyand
whoeverdoesanhonestdaysworkwithhisownbrainorhands.
finances. Mammons chief operator Necker indebts King Louis to a point of no return, thus
encompassing the ruin of the French monarchy and of the Ancien Rgime.
1790s: Mammon sinks the French Assignat by repeating General Howes feat. France printed
45.5 billion units (livres and francs) worth of Assignats. Divided by 26 million citizens it would
have meant 1750 units per head. But the purchasing power sank to less than 1%, indicating
prodigious counterfeiting. 17 printing presses, located in London, were responsible for
hyperinflation. The Assignat died in 1796.
17931815: Mammon finances the Napoleonic wars with promises to pay issued by the Bank of
England. The British are still paying off the interest on that loan.
1815: The Channel Islands manage to escape Mammons clutches by issuing debtfree State
currency. Ten years later Mammon counterattacks by flooding the islands with promises to
pay. The States of Jersey protest. Mammon compromises by forcing on them a yearly limit of
40 000 of States paper money. The arrangement will last until 1914.
183040: The spectacular development of the American Mid West east of the Mississippi is
fuelled by a myriad (literally: 10 000+) small banks issuing paper money in unorthodox
denominations ($10.25, $3, $13 etc.), with discount rates of up to 68%. Mammon is anxious to
suppress these and found a Central Bank, but runs into the determined opposition of
Presidents Jackson (who survives an assassination attempt) and Van Buren. But Van Buren, a
gold buff, causes a severe depression.
1848: The 5th plank of Marxs Communist Manifesto proposes Centralisation of wealth in the
hands of the State by means of a national bank with an exclusive monopoly. Mammon spreads
the institution of the central bank from England to the rest of Europe.
186165: Amidst severe opposition by the banking interests, Lincoln finances the war effort
with a State issue of 450 million debtfree Greenbacks. Greenbacks were not promises to
pay. They were money. Lincoln is assassinated. The Confederacys money, in promises to
pay, manages to contract debts for $826 million by 1864. It failed.
186579: Mammon reestablishes the gold standard (Resumption Act 1879) after a 14year long
tugofwar against the supporters of Lincolns Greenbacks. Booms and busts reappear. Financial
panics destroy hundreds of small banks.
186090: Mammon diverts attention from paper to silver, his main aim being to wrest the
control of the issue of paper money from Congress, empowered by the Constitution to issue
currency.
1893: General Coxey marches on Washington with a 4 000strong army of unemployed,
demanding $500 million of debtfree Greenbacks so as to employ four million men in road
construction. Mammon has him arrested for trespassing on the gardens of the Capitol. Coxeys
policy: print money and spend it into productive public works, is one that Mammon continues
to oppose to this day, as it exposes the fallacy on which his rule stands. Only China is defying
him on this issue.
1906: Gesell publishes the first edition of Natural Economic Order, unmasking the gold
standard and lucidly explaining how paper money can be not only debtfree but also interest
free, by separating the monetary unit from the object representing it. While one country after
another adopts paper money pretending it to be backed by gold, Mammons high priests
(read: economists) continue to talk about the merits of the intrinsic value of gold. 100 years
later Gesell is still taboo in all faculties of Economics.
1907: Banks refuse to honour deposits. Financial panic ensues: J.P.Morgan withdraws $300
million from circulation, and saves the situation by lending them back to the U.S.
government.
1913: By a glorious sleight of hand Mammon gets Congress into ceding its Constitutiongranted
right to issue money to a newly created private outfit called Federal Reserve System. From
now on every dollar issued in the U.S. is loaded with debt, thus duplicating Bank of England
methods in the U.S. The FRS is neither Federal, nor has reserves of any kind, nor is a system
judging by its effects.
1914: The war puts an end to the 50 yearold Latin Currency Union between France, Italy,
Switzerland, Belgium and Greece. The union functioned with a single denomination 5franc
silver coin freely circulating as legal tender side by side with the national currencies of the
five countries. It was also used for foreign transactions. Whenever a country experienced
either a glut or a dearth of fivefranc pieces it adjusted its internal prices accordingly to
restore equilibrium. The union would have worked even with a 5franc paper note. This feat
can be duplicated today, between any number of agreeing countries.
191418: As had happened with the Napoleonic wars, the wholesale slaughter called World War
was financed with promises to pay. The Channel Islands make use of the chaos to wrest
financial independence from Mammon. Their spectacular development since can be verified by
paying them a visit on the Net.
1922: Italy issues debtfree, but not interestfree, lire, thus taking up the policy suggested by
General Coxey and practiced by the Channel Islands. Unemployment rapidly disappears and
prosperity increases visibly.
1923: Mammon attacks the savings of the German people with the Weimar inflation.
1925: Mammon demands a return to the gold standard, and hence to the salary levels of 1913.
The British workers reply with the General Strike of 1926.
1927: Mammon convenes an ecumenical council of central bankers allegedly to an informal
luncheon in Washington D.C. Agenda: to coordinate the imminent Great Depression.
192729: President Coolidge encourages American citizens to purchase overpriced securities.
The Great Crash wipes out $180 billion of ordinary peoples savings. Central bankconcerted
deflationary policy causes the worldwide hardship known as the Great Depression.
1930: First experiment with Gesells Free Money: Herr Hebecker of Schwanenkirchen,
Germany, keeps his coalmine open during the Great Depression by issuing Wra, a private
currency redeemable in coal. Mammons agent Chancellor Brning quashes the experiment.
1931: To Mammons great irritation, British Prime Minister MacDonald announces that Britain is
off the gold standard. All countries follow suit except the United States.
193233: Second experiment with Gesells Free Money: Mayor Unterguggenberger of Wrgl in
the Tyrol issues debtfree and interestfree municipal certificates for work done. 5 300 units
of Wrgl certificates circulating some 450 times move goods and services for about 2.5 million
Schillings. Wrgl built a bridge over the River Inn, tarmacked four roads, renewed the sewers
and took electricity to new areas. It even built a ski jump. Economists flocked to the shrine,
but were not converted. Irving Fisher tried to repeat the experiment in America, but with a
demurrage rate of 2% per week (250% per year) which nipped the idea in the bud. Mammons
High Temple (Austrian National Bank) orders the experiment scotched after 14 months. Hunger
and unemployment return.
193338: Germany follows in the footsteps of Italy, the Channel Islands and Coxey: debtfree
(but not interestfree) paper money pays for an unprecedented economic development: 6
000km of Autobahns, 1.5 million housing units for workers, the Volkswagen, scholarships for
university students, and even three cruise ships for workers families holidays. Foreign trade is
organised on the basis of straight barter. In 1938 unemployment is no more than a memory.
193945: Like the first, the Second World War is also financed by promises to pay. The debt
free Reichsmark loses no more than 12.5% purchasing power in six years of war.
194047: The Dominican Republic becomes solvent under Trujillo, following intense
negotiations with the U.S.
1944: Bretton Woods. The U.S. dollar, as the only currency backed by gold, is imposed on
the rest of the world as reserve currency. The meaning is that it cannot be used for
anything other than matching the issue of domestic currency to the quantity of dollars in
reserve. Economists accept with enthusiasm Keynes plan of deficit spending to make up
for hoards. Deflation is avoided but inflation takes its place. The stagflation of the 1970s
proves that the economy of production and that of money are two independent realms.
1961: Trujillo is assassinated.
1963, June: President Kennedy (Executive Order 11110) authorizes an issue of four billion debt
free (but not interestfree) dollars directly from the Treasury, effectively duplicating Lincolns
Greenbacks and bypassing the Federal Reserve System. In November he is assassinated.
1971: De Gaulle plays the same role in regard of President Nixon as Prince de Conti had played
in regard of John Law 250 years earlier: he demands gold for the heap of Eurodollars in
Frances possession. There is no gold. President Nixon throws the sponge. The U.S. is off the
gold standard.
1971: The rest of the world is on a paper dollar standard, working to exactly the same rules as
the gold standard: an inflow of dollars permits the printing of domestic currency; an outflow of
dollars forces its withdrawal. Inflation and deflation occur regardless of what happens to the
economy of production and exchange.
1973: The oil crisis begets the petrodollar. The London and New York oil bourses force all
countries to use dollars to buy and sell oil world wide. The gate is wide open for the U.S.
economy to rely on printing dollars with which to buy things produced by other countries.
Coupled with the concomitant destruction of the American economy of production, the
situation is clearly unsustainable. It is coming to a head now (2006).
1978: China fuels a spectacular development with debtfree but not interestfree Yuan
according to the Channel IslandsCoxeyItalyGermany model of 18151930s.
1979: Paul Volcker, Chairman of the Fed, inaugurates an era of speculative, but not
productive, growth. A financial bubble of immense size grows unrelated to production and
exchange.
1982: First experiment with a social (peopleissued) currency in British Columbia, Canada.
Community currencies take off in a variety of countries, each community being more or less
independent of official control.
1987: Mammons goldmining companies found the World Gold Council, with the view of
stimulating demand for the yellow metal. WGC ads extol the virtues of goldbacked currency,
allegedly strong, whereas purely paper currencies are deemed weak. Mining companies go
on extracting gold from the ground to rebury it, smelted and refined into ingots, in bank
vaults.
2000: Mammon gambles. With the euro he takes away the sovereignty of the European states,
but the euro begins to challenge the supremacy of the dollar as reserve currency. Saddam
Hussein is the first to accept euros for oil. There is no way to continue imposing the dollar
other than war.
2001: The Red de trueque (barter network) cushions Argentinas financial collapse with
peopleissued paper currency. When the municipalities took to it, the IMF vigorously
intervened to rescue the country.
2005: Some 30 000 communities round the world issue their own paper currencies, some on
Gesellian principles.
2006: Iran threatens to follow Saddam by opening a petroeuro oil bourse. Fear is in the air
that the collapse of the dollar is imminent. Gold shoots to $700 per ounce.
A postdollar world
Perusing the foregoing rather long list of events, it is possible to spot an interesting trend:
Debtfree(butnotinterestfree)papermoneyincreasinglydisrupted
Mammonsattemptsatforcingtheworldintoclingingtogoldand
Debt and interestfree paper money made a brief, successful appearance at
the beginning of the Fort Knox Store of Value period. Only general lack of
awareness prevents the world from taking the last, irreversible step towards
delivering the death blow to usury, and the world from the clutches of
Mammon.
The opportunity is in the offing. It will depend on how people and nonpuppet governments
will react at the collapse of the dollar. From now on the scenario becomes speculative, but
not (I hope) unreal.
Let us answer the first three questions posed at the beginning.
Question One: How will the world economy be affected by a switch from the dollar to the
euro as a reserve currency, given that the economies of all countries are closely interlinked?
Now that Putin has begun to demand roubles for his oil, it is not at all clear that the euro will
act as reserve currency. But let us suppose it does. The financial bubble denominated in
dollars will disappear. Dollardenominated cheques, bonds, bills of exchange, credit cards,
futures, etc., in a word all dollarcredit instruments, will become worthless. The $100 bills
now cluttering the treasuries of most countries could however be made to circulate together
with the national currency, much like the silver coins in the erstwhile Latin Currency Union.
Dollar bills of lesser denomination could continue to circulate as before, especially in the U.S.,
which would have to restore its economy of production. Given American adaptivity and spirit of
enterprise, this turnaround could happen in less than a year.
Countries that have euros would purchase oil with them. Those who do not would have to
start trading with Europe for euros and with Russia for roubles. In other words, a real economy
of production and exchange would quite rapidly replace the economy of speculation, fraud,
bullying, and war that has plagued the world for the whole of the 20th century.
Another welcome disappearance would be that of exportled economies. Perhaps the most
grotesque example of such is the export of some 100 000 hectolitres of milk from England to
Holland, compensated by a somewhat equal quantity (of milk, yes) from Holland to England.
Only parasites can possibly profit from such an arrangement. Others are no less nonsensical.
Countries would develop their economies (or return them) towards their natural end, which is
to look after the domestic market first and export any surplus if available. Thus the
interlinking of the economies would attain a reasonable level, free from artificial distortion.
Question two: How will America manage its economy, the stability of which depends on the
stability of the dollar?
An economy does not depend on the stability of its currency. A currency will have a stable
purchasing power if and only if
a)pricesarekeptstablebysoundeconomicpolicy,and
b)thecurrencyisnotacommoditytobeboughtandsoldlikeany
ordinarygood.
Thefirsthasnothappenedeversincethechecksandbalancesprovidedbytheguildsof
tradersandworkmenwiththeirjustpricepolicyandthesocialsecurityprovidedfor
theirworkerswereabolishedtogetherwiththerightofassociation(bythe1791
ChapelierLawinFrance).Forthepast200oddyearsspeculationhasdominatedthe
field,andspeculationisnotinterestedineitherstablepricesorastablevalueofthe
currency.ThesecondhasbeenafeatureofmoneyeversinceCroesusofLydia.
The American economy can recover its production first by returning to Congress its
constitutional currencyissuing power, abolishing the Fed and using dollar bills up to $50 as
domestic currency and $100 bills as currency for foreign trade. How long this will take is
anybodys guess, but given the American spirit of enterprise I would guess one year or so.
Question three: America has become addicted to the dollars hegemony as a reserve
currency. Wouldnt she consider it as a hostile action, any attempt by another country to end
that privileged status?
Of course she would. Thats why she restored the dollar as the purchasing currency of Iraqs
oil immediately after the invasion of 2003, and why she intends to move war on Iran now. But
Venezuela has already declared its switch from petrodollars to petroeuros, and Russia from
petrodollars to petroroubles. Let another country dump its reserve dollars and Americas
addiction will come to an end.
Countries with huge dollar reserves will be well advised to get rid of every worthless scrap of
paper except 100dollar bills, for the reason spelled out above.
Communities that are already using local currencies need worry the least. Not only will they
continue producing and exchanging as they have done up to now, but businesses would see
the sense of accepting these currencies (which they have not so far) thus reviving the local
economies.
By Free Money here is meant money stripped of its function as store of value, and therefore
free not only from debt but also from USURY, as Gesell recommended 100 years ago. Free
Money made its appearance twice in the 1930s, both times successfully, and both times
squashed by Mammons raw power. This happened in a lowtech world. It is not possible for
Mammon to crush it now. The collapse of the dollar will upset Mammons power to the point of
no return, unless the world is foolish enough to let him regroup and save the day with his
incantations about intrinsic value and the like.
Who, or what, is in a position to deliver the first blow to USURY? Ideally it should be a State
brave enough to take the brunt of Mammons retaliation top such an act of aggression. But it is
not necessary. If Herr Hebecker could issue Wra redeemable in coal back in 1930,
Aconsortiumofschoolscouldissueitsowncurrencydenominatedin
schoolteachingperiodsandredeemableinthesame
Ditto a utility company with a currency denominated and redeemable in
kilowatthour;
Ditto a transport company or consortium of companies, with a currency
denominated and redeemable in passenger/km or ton/km.
Were a State to do it, it could begin by overprinting its existing currency with a date of issue
and another of expiry twelve months apart, plus twelve boxes to be
punched/stamped/embossed at the rate of one per month. The bill would circulate fast for a
whole year, become worthless at the end of it and ready to be exchanged for a new one with
the first box stamped/punched/embossed.
Before considering how dramatic and instantaneous the results of such an action would be,
please reread the historical review of events in the preceding pages, and try to imagine what
would have happened had Free Money been in existence at the time. Not ONE of the events
listed would have taken place as it did. What happened did happen that way because of the
power of USURY. To spell this out case by case would take an entire volume.
The advent of Free Money would entail a fundamental paradigm shift, from the rule of money
to that of work. Production would be organized for the sake of human needs, not for the sake
of paying interest on debt. Money would thus be dethroned from its secular pedestal to
become the servant of the economy. The scandal of poverty in the midst of abundance, of
artificial, chronic scarcity, of the wanton destruction of food to keep prices artificially high, of
economic crises and of the ills that have been plaguing mankind from time immemorial, would
come to an end, first in that happy country and then in the rest of the world. Current
economic terms like dear cheap money laundering credit line costbenefit analysis
financial budget and so on and so forth, would become obsolete. A not exhaustive, but
telling, list of benefits follows.
Moneywouldnolongerbealimitingfactortodevelopment.Funds,
deadlines,capitaletc.wouldnolongerbenecessaryforbeginning
anything.Hoursofworkwouldreplacemoneyasastandardofworkdone.
Anyenterprise,privateorpublic,couldbelaunchedwithaslittleas1/100
ofthesumneededforcompletion,simplywaitingforittocirculate100
times.Thetimeneededforcompletionwouldbecomethetruelimiting
factor.
Unemployment would disappear for good. Fastcirculating Free Money would
absorb the entire workforce of any country in next to no time, shortage of
See also some earlier articles of mine giving more background on Gesell and the dangers of
the interest mechanism:
Comments
June 8, 2006 12:23 PM | Posted by: steve
Great article Sepp.
Like the free energy field the history of money is littered with assasinations and dirty tricks.
I am a little confused by the difference between debtfree money, interestfree money and
debt & interest free money. Could you point me somewhere which clears this up?
For anybody reading who is interested in alternative currencies may I reccommend taking a
look at ripplepay.com.
It does not seem that these provisions are actually being observed in the present day and age.
The Liberty Dollar site mentions a 2003 bill in Nevada where the situation is acknowledged and
adduced as a justification for proposing issue of a Nevada silver dollar of 20 dollars face value.
Congress has given the moneyissuingauthority to a consortium of private banks called the
"Federal Reserve" and practically all money in circulation in the US is creditbased, i.e. has
been brought into existence by either the Fed or by its owners, the commercial banks, and
then loaned to either the US government or to corporations and individuals.
So the current situation would seem to be far removed from what little prescriptions the
constitution makes. The issue of money either by the government or by a cooperative effort of
individuals would certainly be preferable to the current situation, where practically all money
is issued by banks and thus at issue is already a debt by definition, its use subject to payment
of interest for the entire period of its existence.
The Ripplepay site seems to be up and well. Latest update was on 5 May 2006.
ripplepay.com/
The system itself is in beta testing mode, meaning you can play with it, even with a circle of
friends, but it is not (yet) open for business. Right now the goal is ironing out bugs and getting
some experience with how the program holds up. To start using it, you have to sign up (there
is a link for that).
Thank you for the link to Hans Eisenkolb's site.
About Volcker raising interest rates, the idea behind that is that with higher interest rates
less people are likely to take out loans. Since 95 % of the money supply is created by economic
players taking out loans, higher interest dampens the enthusiasm for creating more money, as
well as leading to foreclosures of existing loans. Any time a loan gets extinguished, money is
"uncreated" and the money supply diminishes a bit. This is true for both government and
private debt. It's extinguishing a debt that decreases the money supply.
Let's hope we get some lateral thinkers to examine these problems and find solutions.
Ross
schemes, as they were too small to make it pay to counterfeit. With a universal money system,
that would of course change.
I believe the best route would be to go with the times. My idea would be to make the money
system an exclusively webbased one, running on open source software where bugs aren't
hidden and are quickly found and remedied. So the "coins" would be electrons. Counterfeiters
would have to hack the system extremely difficult and easily detected.
As to the control of the system, I am sure a body could be set up similar to those that have
control over the internet. The remit of such a body would include regulating the amount of
electrons (or whatevers) in circulation, and assuring the smooth function of the system.
Parameters would have to be set collaboratively and given to the controlling body for
execution.
Electrons could be issued to all those participating in equal amounts, probably in monthly
intervals.
There would have to be a mechanism to be able to retire electrons (in case the economic
situation requires that kind of intervention). Such a mechanism could be an automatic debit to
each account also in monthly intervals of a small percentage of the electrons on that
particular account. That mechanism would allow not only to decrease the money supply but
also to constantly redistribute a monthly "allowance", of equal amount for each participant.
The mechanism would counteract the accumulation of large hoards of electrons.
The great drawback I see in using gold is that it's a finite resource, a thing that has to actually
be bought on the open market. The fact that gold has to be taken out of the ground and is
relatively scarce would counteract an uncontrollable increase in money mass, but it would not
be flexible enough to allow increases that, for instance, would be larger than the available
amount of gold.
So I would vastly prefer the webbased electron solution to our money problems.
Kind regards
Sepp