What is a “dollar”?
One of the best-kept secrets of modern finance is the nature of money itself. I recall a televised dialogue between Ron Paul and Alan Greenspan, when the latter was the Chairman of the Federal Reserve Bank. He was asked by Ron Paul what exactly a dollar is. Greenspan’s answer was: “I don’t know.”
Now I ask this audience: Is it credible that the chairman of the Federal Reserve bank didn’t know what a dollar is? Is it not infinitely more likely he knew exactly what a dollar is, but had a compelling reason for not wanting to say it on the public record?
The simple fact is that for hundreds of years, a dollar was a measurement of weight, a specific number of grams of silver. So “one dollar” referred to X grams of silver. In his essay on the subject, Pieces of Eight, Edwin Vieira Jr. demonstrates beyond any doubt that the constitutional dollar of the United States is a “historically determinate, fixed weight of fine silver.” The Coinage Act of 1792 is but one source among many that makes this plain. It reads:
“the money of account of the United States shall be expressed in dollars or units … of the value [mass or weight] of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure … silver.”
That “a dollar” was a reference to a measured weight of silver and indirectly of gold, was understood by every American man woman and child for hundreds of years. That understanding has been lost over time, since America’s gold was confiscated from the American people by FDR in 1933.
America’s wealth was confiscated in 1933
That America’s gold was forcibly taken in 1933, under threat of huge fines and 10 years imprisonment, is a matter of public record. There is the question of where it went that needs to be understood, and why it was taken is an equally important question which is directly related to the first question. People were threatened with jail time and huge fines because otherwise few would have voluntarily given all their wealth to a government they understood to be their servant.
After all the real wealth was forcibly taken from American people, who was it given to, and why? Most people not only don’t know, they never even considered the questions. But rest assured that SOMEONE took ownership of it. Further, it doesn’t take genius to understand that the decision to confiscate all the accumulated wealth of every American was not made lightly. Most Americans did not give up their wealth voluntarily. There MUST have been a very compelling and dire situation that provoked such a desperate act on the part of the US government. We will discuss that shortly.
What did the American people get in exchange for the total accumulated wealth of some 250 years of American enterprise? In return for the wealth of a nation, the Federal Reserve gave the American people “green pieces of paper,” redeemable for silver (initially). The Indians who got trinkets for selling Manhattan got a better deal, actually. Those trinkets likely had some intrinsic value which paper does not have.
It is hard for the novice to grasp the concept that those green pieces of paper in our wallets are not actually ours. They were lent to the US government (which then distributed it to the population though various purchases and programs). Lending something implies that ownership remains with the lender. If one lends a neighbor a tool, he typically expects it to be returned. Understanding this point is critical.
Every one of those green pieces of paper still belongs to the Federal Reserve, which lent it to the US government. (It is called a Federal Reserve “note”, because a note is evidence of a debt, in Finance.)
So, the American people are using the legal property of the Federal Reserve to “facilitate commerce.” They have no viable choice but to use these pieces of paper to transact business, because real money has not been available since 1933. The central bank in question is privately owned by various persons and corporations, but ultimately there is but a very small group of shareholders of the bank. They are running their business first and foremost to maximize long-term profits for the benefit of the shareholders.
1913 was a fateful year
Beginning in 1913, the owners of the Federal Reserve began lending to the US government an essentially worthless currency which was nevertheless useful because people were willing to accept it in place of gold and silver coin. But despite lending mere pieces of paper, the owners of the Federal Reserve demanded interest payments in gold. Within 20 years, after borrowing so much money to fight WW1 and even more during the roaring 20’s, the US Government was unable to make its interest payments – so the owners of the Federal Reserve foreclosed.
FDR was only in office a couple of days before every bank in the country shut down and did not open again until after he agreed to essentially confiscate the gold of every American, to be given to the owners of the Federal Reserve bank, in payment of the accumulated interest on the government’s debt.
After that fateful day there was no longer any gold in American circulation; there was no longer lawful money available to the American people (silver was still available, but the real store of wealth had been gold). How then could anything be bought or sold? Barter was not only unacceptable in practice, forcing the population to barter would plainly expose the horrific theft that had just taken place! So green pieces of paper, owned by a central bank not answerable to the US government, was substituted to facilitate trade.
Once the readers grasps that the central bank is a private corporation, it becomes clear that “Federal Reserve notes” are not different from “Chuck E. Cheese Money”, or “Disney Dollars”, with a picture of Chuck E Cheese or Mickey Mouse printed thereon. Pictures of dead Presidents are put on Federal Reserve notes to give an illusion of legitimacy. It is not real. It is a façade – an illusion, a deception.
It is important to reiterate that Federal Reserve notes remain the property of the Federal Reserve, and are lent to the American government at interest. As owners they are legally entitled to rental fees from those using their property, in the same manner that an apartment owner can justly demand rent from his tenants. These usage/rental fees are paid in the form of income taxes. Hence, the more of their notes one controls (i.e., the more money one makes), the higher the fees/taxes. This is the key to understanding why it was only after the government began borrowing Federal Reserve notes in 1913 that the income tax was deemed constitutional by the Supreme Court.
The wealth a very few men/families have accumulated from this lending arrangement in the past 100 years is staggering. It is said that less than 200 men own most of the world. The owners of the world are never in the newspaper, would not be recognized on the street, and likely do not even live in America.
Now the “New Deal” makes perfect sense
Understanding the ramifications and implications of the nation renting its currency from a privately owned corporation, and thereby becoming subject to ALL MANNER OF REGULATION AND FEES, we can finally understand why the “New Deal” was implemented in 1933. Immediately after the banks re-opened in 1933, Americans were suddenly and for the first time ruled by all manner of bureaucrats in government agencies. They suddenly were informed they were required to get a license to do almost anything that involved earning those bits of green paper.
High school history students are taught that American society was radically transformed by the New Deal, but are never taught exactly why. In light of what we have now learned, it now makes perfect sense.
The Supreme Court initially objected to this violent upheaval of the American experiment, but FDR threatened to pack the court unless they accepted the terms of the bankruptcy proceedings he was facilitating. Faced with such a Hobbesian choice, the courts yielded and rubber-stamped the rental fees and regulations that came with using privately owned notes in commerce. In 1913, when the Federal Reserve first began lending to the government, income taxes were deemed constitutional by the court, but were only applicable to a very small group of people who directly benefited from those pieces of green paper. After 1933, an ever-increasing number of people were required to pay. Now we know why.
Voluntary Income Tax
It is often said that as a matter of law, income taxes are voluntary. We have all heard this. Yet, in the same breath, those that teach this maxim to us, tell us that we MUST nevertheless pay it. This obvious contradiction is never adequately explained. Virtually every tax protestor in the last 30-40 years, no matter how smart and eloquent, has lost his case. Many of them landed in jail for their valiant efforts, despite reminding the courts that we are taught that taxes are voluntary. How is this bizarre set of circumstances possible?
The tax courts are ruled by the presumption that using Federal Reserve notes is a voluntary act. If you don’t want to use them, you don’t have to. But if you do, then you must pay a usage fee (tax).
Those unfortunate incarcerated tax protestors did not understand that the Federal Reserve notes in their bank accounts are owned by the central bank. Simply having a dollar-denominated bank account in their name, or having a dollar-denominated credit card, was incontrovertible proof that the protestors owed a rental fee, which they refused to pay.
Title to Property
Understanding that there is no lawful money in circulation is also the key to understanding why one cannot get lawful title to their properties or even lawful titles to their cars. How can you actually pay for “real” items, with “fake” money? You cannot. (“Certificates of Title” certify that a title exists, but are not the title themselves.) And so, you only receive certificates of title to your home and car. Because the actual tile is held by the “true” owner of your house and car, you must register the car to drive it, and can be evicted from your fully-paid home for failure to pay “taxes”, which as discussed earlier, are usage fees. This is only possible when we don’t hold title to property.
Unlike fiat currencies, cryptocurrencies such as Bitcoin are not owned by the central banks. They are owned, wholly and completely, by the person who controls the address in which the bitcoin’s are registered. This is the reason that central banks are struggling to find a way to regulate Bitcoin and the lesser-known altcoins. The central banks have been hamstrung and limited to exercising a very modest degree of regulation over exchanges where cryptocoins are converted to and from fiat currencies. It is only the fiat currencies they are lawfully able to regulate, not the cryptocurrencies. But, by regulating the conversion to fiat they give the appearance of regulating the cryptocurrency. It is an illusion – they know it, and are hoping that the rest of us never figure it out.
It is a certainty that central banks want desperately to directly regulate and tax cryptocurrencies as freely as they do fiat notes. (The Bank of China is said to preparing a Chinese cryptocoin for that very purpose.) However, in the absence of a central bank-issued cryptocoin they will likely not do so directly. Why not? Because they are rightfully afraid that a successful court challenge would prohibit such regulation, and in doing so, the resulting publicity might inadvertently expose to humanity the real reason central banks are able to tax and regulate fiat notes.
The last thing the owners of the central banks want is for the public to learn that their retaining ownership of Federal Reserve notes has made them the de facto rulers of the world – far wealthier than the kings of old, the Tutors, or the popes, ever dreamed of. This well-guarded secret could be revealed to the public as a result of a successful court challenge to the illegitimate regulation of a currency they do not own. It’s not worth the risk – not yet anyway.
The Red Pill is available
For the first time in more than 100 years, the owners of the central bank are confronted with a means though which the people of the world might actually escape from their control. To date the central banksters have not figured out a way to stop it (without turning off the internet). They have successfully slowed down the inevitable by keeping the great masses of people ignorant of cryptocurrencies, and/or afraid of them, by stressing their volatility, by associating them with nefarious activities, etc. But a tipping point approaches.
Until the recent advent of cryptocurrencies there has been no viable and effective way for the American people to be free of the debt-slavery feudal serfdom that using Federal Reserve notes has brought upon them. But cryptocurrencies are offering a way out of the matrix. The red pill. To make matters worse for the central banksters, cryptocurrencies are immeasurably more convenient than their “green paper” competitor. They can easily be sent to anyone without any government-mandated paperwork or oversight. No need to ask any bureaucrat’s permission. They are easily usable down to 8 places to the right of the decimal point. 0.00000001 bitcoins can be easily spent. The cryptocurrency is appreciating in value every year, whilst the green pieces of paper become increasingly worthless every year. How terribly inconvenient for the banksters. The solution to mankind’s slavery is also an infinitely better medium of exchange!!
May that day come soon.
Fidelity Investments is Mining Cryptocurrency
Fidelity Investments is a multi-billion dollar brokerage that just so happens to be mining cryptocurrency. In fact, it has been at it for three years, using its own computers to harvest bitcoin and Ethereum.
CEO Abby Johnson recently told Fortune that its U.S.-based mining operation is “making a lot of money.” This comes despite running a relatively modest operation.
Hadley Stern, Senior VP of Fidelity Labs, described his company’s venture as an “experiment.”
The real reason we began mining, and still do, is to learn how the network works, how consensus works, how difficulty levels work,” he said in reference to the mining process.
The key to profitability has been the dramatic rise in cryptocurrency over the past year. Bitcoin and Ethereum are the world’s No. 1 and 2 cryptocurrencies by market capitalization, and no-one else comes close.
Well Ahead of the Pack
The fact that Fidelity has been at this for three years speaks volumes about the company. Other, much bigger players are still dipping their toes in the market, but are unsure about how to proceed. Goldman Sachs is reportedly on the fence about starting a cryptocurrency trading operation, while J.P. Morgan has already begun handling customer orders for bitcoin-based instruments.
Fidelity is doing a lot more than just mining tokens. Earlier this year, it reached an agreement with Coinbase to let customers view cryptocurrency prices alongside other assets on their Fidelity homepage.
Coinbase is the world’s most funded cryptocurrency exchange with more than 7.4 million users.
The cryptocurrency market ended the week on a firm note, with bitcoin (BTC/USD) reaching a session high of $4,425.00. At press time, the index was up 1.6% at $4,368.
Ether is also trading higher against the dollar, with the ETH/USD rallying more than 3% to $305.
Ripple (XRP) lost momentum on Friday, but still managed a weekly gain of 21%.
Chinese Government Eyeing Fresh Bitcoin Legislation?
The Chinese government could roll out fresh cryptocurrency regulation in the coming months permitting licensed brokers to operate, based on recent information from Xinhua.
The state-owned news publication recently revealed that the government is mostly concerned with stamping out illegal activity involving bitcoin and other cryptos. Government authorities could be planning to regulate the market by creating a licensing program with strict Know Your Customer (KYC) and Anti-Money Laundering (AML) systems.
The Case for AML
The need for KYC/AML protocols has long been raised by cryptocurrency proponents, especially in reference to initial coin offerings (ICOs). In response, the blockchain community has come together to create the Simple Agreement for Future Tokens (SAFT). The SAFT is both an instrument and open-source framework for token sales that vets accredited investors.
SAFT activity is quickly gaining traction, with the likes of Gizer recently issuing a presale of its ICO through SAFTLaunch.
SAFT was officially created by Protocol Labs in close collaboration with AngelList and Cooley.
China’s Stance Looms Large for Cryptocurrency Market
Although digital assets have recovered from the China-induced flash crash of September, favorable regulations on the mainland could mean big business for bitcoin exchanges. Prior to the ban on ICOs and bitcoin brokers, Chinese investors were responsible for a quarter of all BTC trades.
According to Xinhua, China is likely to pursue a licensing program similar to Japan, a country that recently approved 11 cryptocurrency exchanges. CnLedger, a leading source of cryptocurrency news in China, recently had this to say:
“Xinhua News, official press agency of CN: Virtual currencies have become the top choices of underground economies. We shall adopt ‘0-tolerance policies’ towards crimes hidden underneath and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions.”
Is China’s cryptocurrency ban temporary? It certainly looks that way. Regulators must already know that the ban hasn’t stopped mainland investors from buying cryptocurrencies next door in Hong Kong or Singapore. A saner approach to an all-out blanket ban is a tighter regulatory framework that will stamp out money laundering and other underground activities.
«Featured image from Shutterstock.»
Tim Draper Has Made Over $110 Million Since 2014 With his Bitcoin Investment
Tim Draper, the billionaire technology investor and prominent venture capitalist who has invested in some of the most successful technology startups in the likes of Coinbase, Patreon, SpaceX, Tesla, Box, FourSquare, has profited over $110 million from his investment in bitcoin less than three years ago.
In 2014, Draper participated in the auction of 144,336 bitcoins by the US government and the US Justice Department, which were seized during the investigation into Silk Road, a dark web marketplace. Draper was granted the permission to purchase a batch of 30,000 at around $600 from the US government.
Upon securing 30,000 bitcoins, Draper told Fox Business:
“[I’m] very excited about bitcoin and what it can do for the world. Bitcoin is as big a transformation to the finance and commerce industry as the internet was for information and communications. If bitcoin were here in 2008, it would be a stability source for our world economy. Everybody should go out there and buy a bitcoin. Every investor who’s a fiduciary should at least be partially involved in bitcoin because it’s a hedge against all the other currencies. There’s a whole ecosystem being built that’s going to make commerce much easier with much less friction and safer.”
Today, Draper’s 30,000 bitcoins are worth $129.9 million. Considering that Draper had spent $19 million purchasing the batch of 30,000 bitcoins in 2014, Draper has recorded a profit of over $110 million in less than three years.
While Draper held onto his investment in bitcoin, the US Justice Department was quick all of the 144,336 bitcoins seized during the Silk Road operation. According to various sources, the US government sold the majority of its 144,336 bitcoins at a price of $336, at $48 million. If the US government had sold its bitcoins in 2017, it would have generated an additional profit of around $573 million, as 144,336 bitcoins at today’s bitcoin price of $4,330 are worth $624.9 million.
Since 2014, in addition to purchasing tens of thousands of bitcoins, Draper has funded some of the most successful bitcoin companies in the cryptocurrency market including Coinbase and Korbit. Earlier this year, Coinbase secured a $100 million investment at a $1.6 billion valuation, while Korbit was acquired by the parent company of a $10 billion gaming company in Nexon at a $140 million valuation.
Furthermore, Draper has not sold his stake in Coinbase and earlier this year, Brian Armstrong, the CEO of Coinbase, revealed that Coinbase is still at an early stage in terms of developing and scaling. Armstrong noted that it will evolve into the safest and most trusted exchange in the global market.
“Digital currencies are having their ‘Netscape’ moment. The pace of innovation has been accelerating and we are now seeing exciting projects and companies being built on top of digital currencies. We’re beginning to transition into phase three of our secret master plan. Our goal is to be the safest, most trusted and compliant, and easiest to use. Not the first to market with new assets. Especially at scale, it takes time to ensure any new asset we add is well tested and secure,” said Armstrong.
Coinbase is also one of the two exchanges in the US market apart from Gemini that is targeting institutional and retail investors by providing sufficient liquidity. As Coinbase and its flagship cryptocurrency trading platform GDAX continue evolve, Draper will position himself at the forefront of cryptocurrency innovation and disruption.
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