AMICUS CURIAE ARGUMENT
Part I
This argument was served by overnight express mail upon all the attorneys of record in Howe vs BIS et al., and submitted to the US District Court in Boston on October 23, 2001, with motion for leave to have it filed. Because of its size, it is presented here in three parts.
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1. Most people believe they are entitled to have their civil claims adjudicated before the jury of their peers. They are, but only if their complaints survive the motions to dismiss, and most of them do not.
2. During the 12-month period ending September 30, 2000, United States District Courts terminated 215953 civil cases. (Additional 43281 civil cases that were terminated without court action - settled, withdrawn or otherwise discontinued - are not included in this number.)
3. Of these 215953 court terminated cases, 189808 cases (87.89%) were terminated before pretrial, 20365 cases (9.43%) during or after pretrial, and 5780 cases (2.68%) during or after trial.
4. If the defendants motions to dismiss are granted, the case at bar will fall into the 87.89% of the cases which are terminated before pretrial proceedings. Once this happens, in order to restore its status quo ante the case at bar will have to be appealed to the First Circuit Court of Appeals and then remanded to this Court for
discovery and trial.
5. In the same 12-month period ending September 30, 2000, United States Courts of Appeals adjudicated 19088 civil appeals. Only 286 of those appeals were remanded.
6. By taking the most generous position, and counting all these 286 remanded appeals against the base figure of 189808 cases terminated before pretrial, we arrive at the incredulous statistical fact:
If terminated on motions to dismiss, the case at bar would stand only one chance in 664 to be remanded by the Court of Appeals back to this Court for discovery and trial. In other words, once dismissed the odds would be 0.15% against 99.85% for this case ever to see the light of day again.
In reality, these odds are 0% against 100%, because the appellate courts never second-guess the findings of fact made by the district courts, which means that none of those 286 remands can in good faith be counted against 189808 cases terminated before pretrial.
7. It was this statistical fact - derived from www.uscourts.gov/judbus2000/contents.html - that the summary dismissal of the plaintiff's complaint before pretrial is for all practical purposes final - has prompted this most unusual request for permission to file amicus curiae brief at this point, instead of at the
appellate level where it ordinarily belongs.
8. Taking this statistical fact into consideration, and the fact that countless millions of lives will for generations be adversely affected by the dismissal of this complaint, THIS COURT SHOULD RULE OUT TERMINATION OF THIS CASE UPON MOTION TO DISMISS BEFORE PRETRIAL. Once a fair, in-depth inquiry into the merits of this case will take place in the course of discovery procedures, ALL THESE MOTIONS TO DISMISS MAY BE RENEWED on far better evidentiary basis.
9. Because the denied motions to dismiss can be renewed at subsequent stages of the civil procedure, and for this reason their initial denial does not carry the consequences of res judicata, the aim of all defendants memoranda to assure that the motions to dismiss are granted before pretrial is obviously calculated to protect the information genie from leaving the bottle of secrecy, rather than to prevent injustice without review.
10. By contrast, if the motions to dismiss are granted, such ruling does have res judicata consequences for the plaintiff's case. These unequal procedural consequences stand in reverse relation to the material consequences.
11. If the motions to dismiss the complaint are denied unjustly, the defendants will be exposed to the expense and inconvenience of a needless discovery procedures. Assuming the discovery establishes that there is no genuine issue to be tried, they can then renew their motions to dismiss.
12. But if the motions to dismiss the complaint are granted unjustly, millions of defrauded people will be left without any recourse whatsoever. And the losses incurred by the unsuspecting public on account of gold price manipulation alone pale by comparison to the losses incurred on account of stock market bubble for which gold price manipulation served only as a prerequisite.
13. By means of this bubble, trillions of dollars of simple people's savings and pension money were wiped out in cold blood to make room for eurodollars displaced by the ascending euro. One of the purposes of this gold price manipulation is to keep the value of these "repatriated" dollars undiminished until they are converted into the real wealth of this land. The word "repatriated" is placed between quotation marks because these dollars never saw America before; they were created abroad by foreign banks and foreign branches of US banks (including some of the defendants herein), and circulated abroad until they were displaced by the euro.
14. And this still will be not yet the end of the proximate consequences of granting the defendants motions to dismiss. Whether plaintiff realizes it or not, his case confronts the reigning evil of the fiat money regime on behalf of the suppressed gold standard, and its dismissal would amount to dismissing the case for gold and sanctioning the extra legal confiscation of savings. An essay written by Alan Greenspan upholds this view. www.gold-eagle.com/greenspan041998.html
15. How does all of this compare to the expense and inconvenience of discovery procedures?
16. One of the underlying reasons for this argument is to put all the defendants on notice, so they will be able to present to this Court, at the time of hearing on their motions to dismiss, their clear and unequivocal statements how exactly their cases will be prejudiced if this Court's decision will be: MOTIONS TO DISMISS DENIED WITH LEAVE TO RENEW UPON COMPLETION OF DISCOVERY. The mere record that the defendants herein were so put on notice and have not responded will conclusively establish that their cases will not be irreversibly damaged when their motions to dismiss are so denied.
17. Footnote 2 on page 3 of Reply Memorandum of Defendant Paul H. O'Neill in Further Support of Motion to Dismiss contains the following statement:
"The Secretary reiterates that the ESF has not since 1978 dealt in gold, including "gold swaps". In the event the Court denies any part of the Secretary's motion to dismiss, the Secretary intends to promptly file a motion for summary judgment, supported by sworn affidavits, demonstrating that the factual speculation upon which Howe's claims are premised is incorrect."
18. It is respectfully submitted, that this statement amounts to an open admission that the Secretary's two memoranda in support of his motion to dismiss are still incomplete, and as such are insufficient to support his motion to dismiss. The Secretary in effect expects this Court to grant his motion to dismiss on the strength of his threat that he will file yet another motion, this time supported by evidence, which, as a matter of law, should have been appended to his memoranda already filed. Procedurally, a motion for summary judgment is a mirror image of a motion to dismiss, which offers still further support to a call for denial of the Secretary's motion to dismiss in order to allow him additional opportunity to present all the evidence during discovery procedures, so his renewed motion to dismiss or a substitute motion for summary judgment would not suffer from the present evidentiary deficiency.
19. What the Secretary of the Treasury calls "the factual speculation upon which Howe's claims are premised" is Howe's allegation that gold price is being manipulated by the defendants. Howe's complaint succeeds or fails on this Court's finding that gold price manipulation is either a fact or a myth; the existence of a specific form of this manipulation is not a decisive issue. If Howe is right that the gold price is being manipulated by the defendants, but he is wrong that this manipulation involves some exotic form of gold swaps, his complaint stands, and the case proceeds to discovery where the evidence of actual forms of this manipulation can be sorted out and positively established.
20. Defendants motions to dismiss could only be unjustly denied if there was no possibility of gold price manipulation whatsoever. But one of the reasons why this amicus curiae brief is being filed is that neither party to this action brought to the Court's attention that a litmus test exists that can be used by anyone to positively establish that a particular price of gold is in fact manipulated. Under free market conditions, a legal-tender currency, not redeemable in gold, can sometimes be as good as gold, but it can never be better than gold. When a fiat currency is better than gold, this is a proof positive that the market is not free, ergo is being manipulated. This argument is deducted from chapter 64, The Tyranny of Gold, of Benjamin M. Anderson's magnum opus Economics and the Public Welfare. It is available from the publisher http://catalog.libertyfund.org/ or from www.mises.org/catalog.asp
21. Between January 1, 1862, and January 1, 1879, America was on fiat money regime while gold market and foreign exchange market were free. When Dixie armies were winning on the battlefields of the Civil War, $100 in gold would cost as much as $145 in greenbacks; when Union armies were turning the tide, the price of gold in greenbacks would plummet; and when it appeared that US Treasury was determined to make greenbacks redeemable in gold they would become as good as gold, i.e., $100 in gold would cost $100 in greenbacks before they could be formally exchanged. But as long as gold market remained free, no one in his right mind would sell $100 in gold for less than $100 in greenbacks, i.e., as long as gold market remained free, greenbacks could never become better than gold.
22. It was under Bretton Woods regime, that paper dollar, in the form of Federal Reserve Note, was consistently better and better than gold, i.e., the price of gold was consistently lower and lower than gold's inflation value. The only explanation how this regime actually operated can be found in a copyrighted essay EURO AND GOLD PRICE MANIPULATION, PART I, available at www.gold-eagle.com/editorials_00/tlaga121100.html
Two factors made this anomaly possible:
- Possession of monetary gold was outlawed in the United States;
- Nearly 14 thousand metric tons of US gold reserves were sold to foreign central banks in exchange for their Federal Reserve notes at the price lower and lower than gold's inflation value.
23. When President Nixon closed the gold window and President Ford restored free gold market, the price of gold quickly returned to its inflation value. January 10, 1977, ten days before President Carter's inauguration, was the last day when, at $121.00 per ounce, the market price of gold matched its inflation value.
By January 21, 1980 gold went up to $850
By March 18, 1980 it went down to $481.50
By September 23, 1980 it went up to $711.00
By June 21, 1982 it went down to $296.75
By February 15, 1983 it went up to $509.25
By February 25, 1985 it went down to $284.25
By December 14, 1987 it went up to $499.75
By September 15, 1989 it went down to $355.75
All these roller-coaster rides notwithstanding, the price of gold during President Carter's and President Reagan's administration never went below the level of its current inflation value.
24. Under President Bush's administration and during the first term of President Clinton's administration, gold's volatility gradually died down until, in 1995, the price of gold became nearly fixed at annual average of $383.79. With annual average of the monthly highs at $388.46 and annual average of the monthly lows at $380.52, the average bandwidth of volatility became as narrow as $7.94 or 2 percent. One percent on each side, that =was like gold export-import points.
25. Early in the election year of 1996, the price of gold spiked to $414.80 on February 5, and from then on every rally was quickly beaten down until the price hit $252.80 on July 20, 1999. On the way down, the price of gold crossed the level of its current inflation value on July 4, 1997, and has been remaining below its current inflation value ever since. In other words, ever since July 4, 1997, the fiat dollar, in the form of Federal Reserve Note, has been better than gold. THIS MEANS THAT AT LEAST FROM JULY 4, 1997, GOLD MARKET HAS BEEN MANIPULATED. And this is arithmetical like 2 X 2 = 4.
26. In reality, gold price manipulation began three years earlier. For two years, between 1994 and 1996, the price of gold was manipulated from both sides; day after day, somebody was always selling enough gold into the market to stop every rally, and was buying enough to stop every decline. The evidence of this effort is laid bare in Golden Gyrations by Adam Hamilton.
www.gold-eagle.com/gold_digest_00/hamilton112700.html
27. The Exchange Stabilization Fund comes as a natural candidate for this de facto pegging of the price of gold. But why would the Secretary of the Treasury and/or the President of the United States elect to peg the price of gold for two years and then, all of the sudden, switch to pushing it all the way down? No one, including the undersigned (in PART II of EURO essay) has answered this question right. To answer this question correctly we must first answer another one:
28. What was created during those two years of pegging of the price of gold, that did not exist before, and which made the subsequent downward manipulation of the price of gold feasible? And the answer is: IT WAS THE BUILDUP OF IMMENSE POSITIONS OF GOLD DEPOSITS AND GOLD DERIVATIVES AT THE LEADING BULLION BANKS.
29. To put it another way, the mysterious pegging of the price of gold for two years was undertaken to build up gold-carry trade, or to prime the pump for gold deposits and gold derivatives. It is impossible to build up derivatives positions under conditions of volatility, because each deep swing of the market pendulum wipes the board clean. Thus somebody had used the government resources to keep gold market volatility under control until gold derivatives positions accumulated to the point of no return. Once saddled with hyperloads of gold deposits and gold derivatives, so large that they were impossible to unwind in case of adverse swing of the market, the bullion banks were turned into the Cerberean guards, keeping the price of gold down per fas et nefas.
30. This argument rejects the thesis that one of the underlying motives for the whole manipulation has been the need to bail out the leading bullion banks from their untenable positions. Their positions were deliberately induced in order to make this price manipulation
practically impossible to reverse. The best analogy for the logic employed in this whole endeavor would be Julius Caesar's order to burn his legions boats after landing in Britain. With no way back, the legionnaires had to conquer or die. Here, the ultimate prize is the economic conquest of the whole world. Why should the methods be different?
J.N. Tlaga
25 October 2001
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