Gold is the ultimate money and money is power. The holder of gold ultimately rules. That is what counts for the Grandees. But for us ordinary people gold is not so much a question of power and riches. Gold means more. No other asset bolsters self confidence and self esteem for the individual like gold does.

Gold has many unique characteristics: it is rare; it is beautiful; it does not oxidize; it is malleable and is one of the heaviest metals. Moreover, gold has: intrinsic value; may be shown and can be hidden. Further, gold is personal, anonymous and secret - allowing it to evade the hungry eyes of the State from generation to generation. Last, but certainly not least, gold is portable, global, crosses borders, disappears and resurfaces. In essence, gold stands for absolute liberty.

Gold in the hands of the citizens is the guardian of freedom and independence. In the hands of the State and the Banks it means serfdom. What counts is: will the State, the Banks or the people hold the gold and the silver? Will the government be the servant of the people, or will the people be owned by the State and/or the Bank?

Gold can not be altered or obliterated. It exhorts the truth. It is incorruptible. That is what gold is all about. Comunis salus singulis constat. The well-being of the community rests with the individual, while the other way round it spells dictatorship.

That is why we want gold back where it belongs -- and corruptible paper out. We refuse to be forced into financial slavery. We want to return to a world where we can live as human beings with human values, not as numbers - even if the road to get there must lead through upheaval.

We already been mislead into financial slavery through replacement of gold and silver by fiat money - conjured out of thin air by State and Bank by stealth! The anchors of ultimate savings, gold and silver have for the greater part been subtly abducted by the State through excessive taxation, if not directly confiscated. Stalin did it, Hitler did it and Roosevelt did it. The Bank for its part has nothing more to do than simply wait for the taxes to take effect and then catch the destitute in their loan shark nets, wrest people's last remaining golden securities from them and chain everyone to its iron debt empire.

Under cover of the exceptional growth of prosperity brought on by the great technical advance of the 20th Century, unnoticed, on the sly, the State and Banks in collusion wormed their way into the citizens lives to become the greatest threat to freedom.

Besides Evil Empires of physical force, an even mightier, hitherto unknown kind of Evil Empire has risen: The anonymous Totalitarian Capitalism. It has nothing of the likes of the solid broad based natural free market capitalism on which the West prospered over centuries. Totalitarian Capitalism is already near controlling everybody and everything: the circulation of currencies, banking and credit, the government, the Central Banks, the markets, the media, education, most industries and trade. Still lurching in the background, it is relentlessly encroaching, corrupting whatever it touches, usurping whatever assets it can lay its hands on, putting the shackles of debt on its unsuspecting victims under the cloak of make believe, falsehoods and loaned prosperity.

Totalitarian Capitalism's monster child - Credit - has bloated from millions to billions to trillions, smothering the globe in debt. As long as the credit bubble keeps on inflating, people can count on ever easier and more credit and do not feel the debt yoke or pains of repayment, they do not want to hear or see the danger and consequences ahead. But once this monster bubble bursts, and soon it will, and Giant Papa Bear is going to play havoc with people's assets and savings, then the loan shackles will start hurting and people will be in for a rude awakening! If it would not be for the birth of the Internet where the free flow and exchange of information has made an early beginning in lifting the veil of cloak and dagger politics of the financial mafia, we would inevitably end up with worldwide financial dictatorship. But like modern open communication and the free flow of information tore down the Iron Curtain, the Bamboo Curtain and the Berlin Wall, so will the Walls of Wall Street and the City come tumbling down. Page after page has recently begun appearing on the Web, revealing the ongoing financial deceit and crookery.

Once the truth will have penetrated and people's eyes will open, they will not meekly accept the debtor yoke anymore and resignedly be dragged down into recession as happened in 1930 . This time the heaven sent Internet, yet uncontrolled by Totalitarian Capitalism like most other media, is bound to bring the truth out into the open and unmask the greatest ever Ponzi scheme - fiat money - reveal deceit, manipulation and the Grandees behind.

In his superb Gold-Eagle editorial "I want the Earth plus 5%", Larry Hannigan could not have described this con-game called modern finance in a more subtle and explicit way. His whole text should be considered as an integral part of this article. http://www.gold-eagle.com/editorials_99/hannigan092099.html

This is not a meek world any longer. We are living in an ultra rapidly changing, hyper tense, aggressive world primed for upheaval, unrest, radicalism. Strong anti Western feelings are bound to rise abroad. Debtor countries will negate on their debt and fury and anger will be unleashed against the governments at home. The recent demonstrations in the City of London and Seattle are but forerunners of worlds to come. Debtor's unions like in Mexico will sprout up all over. Politicians still on Bank payrolls, will tomorrow demand the nationalization of all banking institutions and exhort public esquires into financial shenanigans. Financial power is a house of cards, paper burns in seconds, digits get lost in Cyberspace. And although Banks do not have armies, they well might buy justice and the police!

But let us beware of ever falling back into the old system by re-employing the same culprits who brought on the mess in the first place. That would bring an even bigger crisis upon us in no time. And let us also beware of swaying from the evils of financial dictatorship to the other extreme of political dictatorship! We want neither.

The roots of the present crisis have their origin in the very heart of finance. It is the whole structure of fiat money creation with a fantasy credilandia mushrooming on top. The excessive money and credit creation and credit pushing by the Banks has brought a most dangerous underlying structural imbalance in Western finance out into the open. The out-of-bound credit creation is the prime manifestation of this imbalance. The stock market bubble, being credit bubble induced, is this time secondary, whereas in 1929 the stock market was the primary culprit through over-valuation of assets versus money which at the time still had some intrinsic value left. In 1929 it were the bloated stocks against bonds and gold together. Today stocks only play the overture. The main players, who remain in the background, will be the bonds against gold.

Most likely the first signs of trouble will pop up on the currency markets and well the moment capital inflows will begin falling short of covering the huge, persistent US trade deficit. This will be followed on the heels by a collapse of the dollar debt markets. Because foreigners are already selling more US debt paper than buying, Summers was forced to make a beginning with taking US long bonds off the market in order to avoid, or better postpone, an early bond market collapse. But taking bonds off the market equals monetizing debt or in other words printing money on a massif scale. The hesitant strengthening of the yen of late should be watched in particular, as the Japanese are the largest US bond holders.

There is a golden middle road where the citizen holds sway over gold and silver. Where the State and Banks are but the servants. Where money is a simple means of exchange and store of value, uncorrupted by power. To get the world back into balance, State and Banks have to be cut back to size and become servants again. Moreover, the citizen has to be re-instated as the pillar of society. It is a question of the State and Banks returning the gold and all the assets (illegally confiscated either directly or through debt originating from credit creation out of thin air) to the legitimate owner, the citizen. And that is going to be a hard and long struggle.

At the beginning of the 20th Century in the West the State represented less than 10% of GNP on average and the Banks less than 5%. And when I talk here about the Banks I am referring to all Financial Institutions taken together. In less than a century the State and the Banks together usurped over 60% of the GNP - and control even more. Never before in history has there been a greater transfer of wealth by stealth in a such short time span. The importance of this change in the state of the affairs of man cannot be stressed enough.

Nearly all Western Countries use the same basic financial framework, legalized and sanctioned by the State, comprising:

1. the right ceded to the banks to extend multiple credit relative to capital and deposits.
   
   
2. to receive interest compensation on loans extended.
   
   
3. the exclusive right extended to a privately owned Reserve Bank to issue currency.
   
   
4. for protecting the anonymity of shareholders in a corporation,
   
   
5. taxing a profit only once even if its trail might run through several companies,
   
   
6. ceding tax free status to certain trusts and foundations, and
   
   
7. the obligation for anyone finding gold to sell it to designated institutions.
   
   

These laws are the basic culprits for the present financial crisis.

As long as the private sector could finance growth out of profits, and only made use of loan facilities on a voluntary basis, the above mentioned concessions to the bankers did not yet carry too much weight and restricted the banks to playing only a minor role. But this started to change in the beginning of the 20th Century, when the State began to run short of cash because of heavy war expenditure and ever growing electioneering promises.

The democratic State is run by elected representatives and by a permanent administrative body. Running for election needs cash. Sponsors are needed. And sponsor monies will only come on the table once post-election preferential treatment has been agreed upon. To get elected the representatives have to promise the voters heaven on earth. Promise now! That is easy, as it will not be the candidate who will have to come up with the money personally after being elected. Social Security, Medicare, Welfare and great infrastructures are promised. However once the election is over, it will be the Government which has to provide the money to make good on the promises made by the candidates. Naturally the sponsors will be honored first. Each new election demands still greater promises. Competitive electioneering makes democracy inherently corrupt and expansionist. But as Churchill said: democracy though far from perfect is still the best political system so far invented.

There are the thousands of lobbyists pestering and corrupting the Government. And then there is the unstoppable growth of the administration pushed ad infinitum by the bureau-rats mentality that: "the greater the number of employees below, the higher one's own status and that if a government department fails to exhaust its budgetary allocation, its allocation under the following budget will be reduced accordingly. It all leads to an ever growing need to increase taxation and deficit financing. Through its undisciplined behavior the State has become ever more dependent on loans and taxes. But by constantly raising taxes and debasing the currency it is at the same time herding enterprise and people into the loan net of the same Banks on which it itself depends.

(Final Part next week)

Lake Chapala, Mexico
10 April 2000
Hans Schicht