THE ALTERNATIVE FUTURE
A Call for Overnight Revolution
In his Midas column of June 16, 2001, Chairman of the Gold Anti-Trust Action Committee, William J. Murphy III, wrote:
"For the past year I have asked my GATA delegation colleagues what could be done to solve the gold problem; ie, I am The President of the United States, know GATA is right and have called the Howes and Venerosos in, requesting suggestions on the best way to undo the gold mess orchestrated by the Clinton Administration.
"My colleagues have mostly come with an "I don't know." To illustrate just how serious and complicated the gold problem is, Frank Veneroso's specialty in the past was crisis management. The finance ministers of Chile and Mexico both called on Frank to help them solve severe economic crises in their respective countries. He knew just what advice to give them. But gold, he draws a blank."
Dear Mr Chairman: If you are still sitting in the Oval Office and are still taking suggestions on how to undo the gold price manipulation, here is the advice what to do.
At first, you will reject this advice off hand as too radical, if not downright revolutionary. Only when you give it a long second thought you will realize it is a perfectly rational solution without equally rational alternative. It is based on very simple proposition that there is no substitute for getting done what needs to be done.
There are two solutions to this undoing, Mr Chairman:
A permanent solution, which can be implemented literally overnight, and...
A temporary solution, whose implementation will drag on well into the next year only to result in further deterioration and renewed crisis later on and on and on.
Permanent solution will solve the problem in the interest of the people, and...
Temporary solution will only patch up the problem in the interest of the bankers.
Naturally, I am assuming you would like to hear about permanent solution, and let the bankers worry about temporary one.
You begin from preempting broadcasting programs all across the nation for one minute one Friday afternoon to announce that all exchanges will be closed on the following Monday, because on Sunday afternoon you will deliver very important address to the nation that will change our whole way of life. This short announcement should run every hour on all broadcast media outlets until Sunday afternoon, and as a last minute headline in all print media outlets on Saturday and Sunday.
On Sunday afternoon, you should announce your reforms in very relaxed, business-like, non-dramatic manner. What follows is a raw draft of your speech:
Good Afternoon:
If you are standing, please sit down.
(Instead, all the people will stand up and come closer to their TV screens.)
When the choice must be made between the reigning evil and the suppressed good, there is no substitute for throwing the evil away and bringing the good in.
Effective immediately, the Federal Reserve notes, commonly referred to as paper dollars, are declared null and void, and are no longer the official currency of this country.
Because the total face amount of all these paper dollars now in circulation within the United States is about ten times greater than the total face amount of all coins, the paper dollars can be instantly replaced with the existing coins, provided the value of the coins is increased ten times up.
How can this be accomplished?
By converting all prices, wages and accounts into cents, and dividing them by ten.
And so, my fellow Americans, all the prices are divided by ten and are payable in cents only;
All the wages and salaries are divided by ten and are payable in cents only;
All the bank accounts are divided by ten and all the payments are to be made in cents only;
All the debts are divided by ten and are payable in cents only;
All the taxes are divided by ten and are payable in cents only;
All the pensions are divided by ten and are payable in cents only;
Everything and anything with a dollar sign in front of it is divided by ten and is payable in cents only.
If we would have decided to exchange Federal Reserve green dollars for new red dollars at the rate of one new dollar for ten old ones, all the prices and accounts would have also been reduced by the factor of ten. Instead we are using already existing coins as the new currency, and effect is the same.
The exchange of the old money (paper dollars) into the new money (coin cents) is automatic, and the transition period will end at the strike of midnight on Monday night.
During this one day transition period, both paper dollars and coins at their new value may be used interchangeably, for example, a copy of the New York Times can be paid for with one dollar in paper or 10 cents in coins on Monday, but from Tuesday on, only 10 cents in coins will be the proper payment. All paper dollars not deposited on Monday by midnight deadline in banking institutions for credit in cents at the rate of 10 cents for each dollar, shall not be accepted as payment from Tuesday on.
From now until midnight Monday, all the border crossings shall be closed, all interbank wire transfers shall be suspended, and no international flights will be allowed into the United States except those now in the air.
It would make little sense, to scrap the Federal Reserve paper dollars while leaving the Federal Reserve System in place so it would produce counterfeited cents in place of counterfeited dollars.
The Federal Reserve banks are hereby declared to be on indefinite holiday, and the Secret Service, which has jurisdiction over investigating the cases of counterfeiting, was instructed to put padlocks on all of them under official seal of the President of the United States. The proposed legislation to repeal Federal Reserve Act as amended, shall be submitted to Congress first thing tomorrow morning. This legislation calls for transfer of the Fed's entire "estate" to the US Department of the Treasury, whose primary duty now it shall be to see to it that unearned currency is never reintroduced again.
It would also make little sense to scrap the paper dollar and the Federal Reserve producing it, while leaving your credit cards intact, so you could produce unearned money yourself.
For this reason, indefinite moratorium is declared on credit card payments, and the new legislation shall be submitted to Congress in the morning, to make charging the purchase of anything into non-existing funds a felony equal to passing bad checks. If you like to use your Visa or Master Card, first apply for a loan, deposit the loan proceeds into your bank account, and then use your Visa or Master Card to your heart's content as a debit card, charging your purchases to the money you actually have in your account. Creating new money out of thin air after the fact just to make good your plastic "payments" with non-existing money is over.
But you will be happy to hear that the proposed credit card legislation calls for uniform, statutory discharge in bankruptcy of all existing credit card debt. Whatever you bought so far with your credit cards is yours to keep, and you won't have to repay anything on your terminated credit cards accounts.
So far, but no further.
All your other debts whether secured by public filings, such as mortgages, UCC-statements, liens, etc, or plain unsecured debts are still valid and enforceable.
Scrapping the fiat dollars, the Federal Reserve System and the credit cards would still be insufficient to kill the fiat money regime, if the Federal debt in the form of Treasury bills, Treasury notes and Treasury bonds was not declared null and void either. These bills, notes and bonds are simply the counterfeited fiat dollars earning interest.
Ordinarily, interest is the price of liquidity. If you prefer to keep your wealth in perfectly liquid form, you keep it in the form of cash and your cash earns no interest. To earn interest you must exchange your cash for less liquid assets, and the less liquid the asset the higher the interest rate you earn. Under the fiat dollar regime, Treasury bills, notes and bonds allowed one to keep one's wealth in perfectly liquid form and still earn interest by courtesy of the American taxpayers. And to add proverbial insult to injury, these obligations were originally paid for not in earned money but the unearned money, the counterfeited money, created out of thin air by a few keystrokes on Alan Greenspan's computer at the Fed.
In his famous essay, Gold and Economic Freedom, Alan Greenspan wrote:
"The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which - through a complex series of steps - the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets."
"The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion."
Thus we have it on the best authority that the Treasury securities we elected to declare null and void match, dollar for dollar, the Government's past deficit spending.
Now the question is, may we in effect confiscate all that counterfeited wealth without violating the Constitution of the United States, which provides in the Fifth Amendment: "No person shall be... deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." And the answer is: Yes, we may, because it is a counterfeited wealth. When you are found in possession of a counterfeited 100-dollar bill, that bill is subject to confiscation without compensation, notwithstanding that you received it in the course of regular commerce, for value, and without notice that it was in fact counterfeited.
The stock exchanges will remain closed indefinitely, and proposed legislation shall be submitted to Congress tomorrow morning to close them for good, and to establish a rule that corporate stock shall from time now on be always purchased directly from the issuing corporations, subject to express warranties as to its book value, and redeemed by the issuing corporations in a manner similar to redemption of shares of money market mutual funds. Internet technologies provide sufficient instrumentalities for executing such stock transactions instantaneously. The rigged casinos, known as stock exchanges, will never reopen. They are history.
An amendment to the Constitution of the United States abolishing personal income, estate, and gift taxes and prohibiting the United States Government from engaging in the business in competition with its citizens will be resubmitted in Congress tomorrow morning. The present system of taxation shall continue temporarily until it is overhauled in accordance with the new tax legislation.
Effective immediately, Social Security Administration shall be placed in receivership, and all Social Security payroll deductions shall be deposited in the special departments of the local banks, to the individual accounts of the beneficiaries from whose paychecks they were withheld. Maintaining such departments shall be the public service of the local banks in consideration for yearly renewal of their banking charters. All these departments in aggregate shall constitute new National Pension Fund. NPF shall pay interest on all pension deposits at the rate not lower than 1 basis point per day (3.65% per annum), and shall charge interest on mortgage loans at the rate not higher than 2 basis points per day (7.3% per annum). Net annual profits of NPF operations shall be distributed as dividends to individual depositors in proportion to their deposits maintained at the NPF.
There shall be no compulsion for anyone to maintain his/her pension money at the NPF. Once the payroll deduction is deposited at the NPF, the beneficiary will be free to write a check against it at any time. It shall be each citizen's own responsibility to provide for his/her retirement. The NPF will only provide banking infrastructure to make it easier to accomplish.
The government will of course assume responsibility for continuing Social Security benefits now due, and for equalizing benefits to new retirees in the coming years, for whom NPF system will not be able to produce adequate pensions in time for their retirement. These benefits will be paid from the Treasury's general fund.
To assure that the purchasing power of people's savings will remain undiminished, the orderly transition to silver and gold money shall be arranged.
One gram of standard monetary silver .900 fine shall be the new currency unit that will circulate parallel with new cents. US Mint shall promptly begin production of the new 5 grams and 10 grams silver coins, and the old silver coins shall also be accepted as payments at the following "gram" values:
Old Silver Dime 2.50 grams
Old Silver Quarter 6.25 grams
Old Silver Half 12.50 grams
Old Silver Dollar 26.73 grams
New Silver Eagle 34.56 grams
How many new cents for one gram? That will be determined over time at the marketplace.
US Mint will also begin production of the new 5 grams and 10 grams gold coins, made of standard monetary gold .900 fine, and their value in new cents and in grams of silver will also be determined by the free market. Already existing gold coins, domestic or foreign, will of course be accepted at their gold content in grams .900 fine.
The ultimate objective is to develop uniform worldwide monetary system where 1 gram of standard monetary silver will be the unit of account in daily commerce, and 1 gram of standard monetary gold for big ticket items and in international commerce.
Well, you will have plenty to think about tonight. For the benefit of those who missed it, or who need further clarification, this address will be re-broadcast every hour tonight and tomorrow. This reform only appears overwhelming and earth-shattering. In reality, it is very simple, and it will change your life very much for the better.
Thank you for listening. Good Night!
This in a nutshell is what to do, Mr Chairman. If you would turn to Ludwig von Mises Institute, they would tell you the very same thing, only they would do it by way of scores of essays offering in depth analysis what not to do.
It is not a new idea. If you would read "Don't Delay EURO, but..." http://www.gold-eagle.com/editorials/Tlaga004.html you would not believe it was posted on Usenet on July 16, 1997. Some people wrote me "Don't Delay EURO" prompted legendary Warren Buffett to his silver buying spree on July 25, 1997, and even though they first characterized my proposal to declare Federal Reserve notes null and void as an "anarchistic concept", later on they wrote me that the more they thought about it the more they liked it.
Give it a thought Mr Chairman, and in time you will agree this is the only way out which will allow us to escape the horrendous catastrophe looming on the horizon, and to return to honest money regime which in turn will prevent any similar catastrophe in the future.
The only problem is that your presence in the Oval Office is imaginary, and in this character you cannot do much about anything that requires real executive powers. For this reason GATA should support Ron Paul for the office of the President of the United States. It should be within GATA's corporate powers to do so, but to play it safely the charter should perhaps be amended.
I sincerely believe that US District Court in Boston will deny motions to dismiss in Howe vs BIS, and Dr Paul's presidential bid will quite naturally meet this decision half way. The fundamental reform of the fiat money regime is therefore not as unrealistic, and the looming catastrophe is not as inevitable, as many people think. But we must act. We cannot count on mafia to abolish organized crime.
This proposal is not written in stone. It is open to any critique and any counterproposal. It's purpose is to open a constructive debate on how do we get from here to there. It may take Dr Paul some time to decide whether and when to seek the office of the President. Debating the means for the incoming reform is the best use of this waiting time on our part.
Greetings!
J.N. Tlaga
tlaga@shadow.net
Copyright 2001 J.N. Tlaga
PS: Some people are sending mischief e-mail messages all over internet with my return address.
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