fsu editorials

Honest Money Part 8 - Final Summary & Conclusions

by Douglas V. Gnazzo. December 9, 2004


Many are of the opinion that a return to the gold standard is the best answer for the urgently needed reform of our monetary system. As we have seen, however, the gold standard was not what many believe it to be. Gold was not the original constitutional standard - silver was.

The so-called failure of the gold and silver standards is not a reflection on either silver or gold. The would be masters of the universe have gone to great lengths to discredit and dishonor both metals, by purposefully entangling them within a finely spun web of self-destructive standards and systems, knowingly doomed to fail from the start. All by careful design to attain the final goal: the removal of gold and silver from the world's monetary system. Nothing was left to chance, just in case it exists.

Without gold to keep the creatures at bay, the elite moneychangers have free reign to force their debt-ridden system of paper fiat upon the people. The International Monetary Fund's Articles of Agreement, Section 4-2b, states that no member country can have a currency backed by gold. Yet until about a year ago, the Bank For International Settlements (BIS), which is the central banks central bank, only accepted settlement from each other in gold. They would not accept one another's paper currency. Recently they've changed to special drawing rights (SDR's): vouchers that represent a basket of paper currencies - paper promises for a basket of other paper promises.

Several well-intentioned writers have suggested that $3000 dollar an ounce gold represents the requisite price needed to re-establish a gold backing to our current paper money. It is this writer's opinion that such would not represent a return to Honest Money. It would moreover, be as ill conceived as trying to give Sodom and Gomorrah an honorable name. The present United States Dollar Bill or Federal Reserve Note is not worthy of being backed by gold. Federal Reserve Notes are "a heritage of" – the antithesis of Honest Money.


Paper currency, regardless of whether or not it is backed by gold, is not the original hard money of our Constitution. Only Honest Weights and Measures of silver and gold coin is Honest Money. Paper fiat is simply a mechanism of wealth transference, where wealth is siphoned off from "We The People" by the debasement of the currency through inflation and loss of purchasing power. This is a system of wealth redistribution that enables one half of one percent of the world's elite - to own 95% of everything.

"And the moral of that is - the more there is of mine, the less there is of yours."

Without a constitutional amendment, any system of paper money is unconstitutional. And even with a constitutional amendment, the efficacy of such a system has already been shown to be counter-productive and self-destructive. Paper money that is fractionally backed by specie creates debt for the many and wealth for the few. Fractional reserve lending is a scourge to mankind that would be best put to rest.


The entire concept of gold being used to back Federal Reserve Notes, while at the same time being priced in Federal Reserve Notes, even at $3000 per ounce, is not only unconstitutional, it would also help perpetuate the grand illusion the international bankers would have us believe. Our original constitutional money was not priced or denominated in Federal Reserve Notes or in dollar bills, and there has not been a constitutional amendment to change it.

Dollar bills or Federal Reserve Notes did not set the standard, definition or value of money. Silver was the standard by which the dollar was defined, according to Honest Weights and Measures; and both gold and silver coin exchanged as the currency of Honest Money. The dollar was defined by specific weights of silver and gold, not vice versa. And a dollar bill is a piece of paper, a Federal Reserve Note, while a dollar is a specific weight of silver coin: 371.25 grains of silver. So a dollar bill and a dollar are two different things. Who would have guessed?

To define or price either gold or silver in terms of dollars, especially Federal Reserve Notes, is to turn the original system of our money upside down. Such a system has already been had and weighed in the balance and found to be wanting. This is the great lie or myth the international bankers want us to believe and accept.

"The cause of the lightning," Alice said very decidedly, for she felt quite sure about this, "is the thunder – no, no!" she hastily corrected "I meant the other way".

"It's too late to correct it," said the Red Queen: "When you've once said a thing, that fixes it, and you must take the consequences…".


The moneychangers have certainly lived up to their namesake, changing the definition of our money: the dollar – from a specific weight of silver coin, commonly referred to as a silver dollar: 371.25 grains of silver – into paper Federal Reserve Notes or dollar bills. At first the moneychangers backed the dollar with fractional amounts of silver and gold, slowly reducing the amount over time, until the final coup d'etat: the removal of any and all specie backing whatsoever.

Federal Reserve Notes were originally redeemable in gold, but that too had a quick death. Voila – the current Federal Reserve Note, supposedly redeemable in lawful money, whatever that is; which obviously isn't Federal Reserve Notes, otherwise they wouldn't be said to be redeemable in such; unless of course they redeem themselves, which makes about as much sense as anything else the Federal Reserve has ever done. Sir Alan has played the part of Sire most fittingly:

"Remember, Sire, yourself it was last night
That signed the note. You stood as mighty Pan,
The Chancellor came and spoke in words that ran:
"A lofty festal joy do for thyself attain:
Thy people's weal - a few strokes of the pen!"

These did you make, then thousand-fold last night
Conjurors multiplied what you did write;
And that straightway the good might come to all,
We stamped at once the series, large and small;

Tens, twenties, thirties, hundreds, all are there.
You cannot think how glad the people were.
Behold your city, once half-dead, decaying,
Now full of life and joy, and swarming, playing!"

So the answer to our inquiry as to whether or not a return to the gold standard of old is the fix-all to all things monetary, as many believe – the answer is no. There is nothing that could provide adequate backing for the present irredeemable fiat paper dollar and the mountains of debt it has created – not even gold, the Sovereign of Sovereigns. Such an attempt would be a disgraceful travesty of utter folly.

"Whom the gods would destroy, they first make mad."


There is a system of Honest Weights and Measures, that can and will work - but it cannot, and must not, allow for the issuance of paper money or bills of credit, whereby government debt is monetized - meaning that the debt circulates as the currency or money.

Our existing monetary system allows money, credit and debt to morph into one and the same entity. There is no honesty in such a system, only empty promises to exchange for future empty promises. There is no payment, only promises to pay. The future is being sold, by the extension of credit and the acceptance of debt, to obtain in the present that which cannot be paid for here and now. We are being sold out and hoodwinked, accepting the unacceptable: the prostitution of our children and their children's future, which will be spent working to pay off the debt we are accumulating.

A strange brew has been cast into fortunes cauldron: shadows of politics and finance, the gnashing teeth of greed and lust, the gnawing torments of the quest for power; all stirred by the currents of the past, as they ripple across the present, forming the future that lies ahead.

The rulers no longer allow for a monetary policy where both the everyday expenses of government, and the extraordinary costs of war, are financed by the age-old method of raising money by the levying of taxes within that year. The resulting increase of expenditures would cause too great a rise in yearly taxes, which has never been acceptable to the People, and thus a political coup de grace, for those seeking the future holding of public office.

Instead, a new system was created – based on future tax revenues of the State. The prospective sum total of receipts was used as the base upon which to borrow large sums of money, by the issuing of bonded debt; thus allowing for only a slight increase in taxes, enough to pay for the service on the outstanding debt; or better yet, no increase at all. This created the elite international moneychangers dream: the grand illusion of ever-expanding debt and a perpetual interest rate stream, masquerading as the increased wealth of the People.

This is how the creature known as the national debt was born; suckled at the breast of taxes; nourished by ever-larger bits and pieces of private property; men, women, and children's lives of toil tossed as scraps to feed the beast. Such a system is the work of a master magi, adept in the arts of deception, performing the grand illusion:

"Go back a little to that point," I said,
"where you told me that usury offends
divine goodness; unravel that knot."

"Philosophy, for one who understands,
points out, and not just in one place," he said,
"how nature follows – as she takes her course"

The Divine Intellect and Divine Art;
and if you read your Physics carefully,
not many pages from the start, you'll see

That when it can, your art will follow nature,
just as a pupil imitates his master;
so that your art is almost God;s grandchild.

From these two, art and nature, it is fitting,
if you recall how Genesis begins,
for men to make their way, to gain their living
for men to make their way, to gain their living

And since the usurer prefers another
pathway, he scorns both nature in herself
and art, her follower; his hope is elsewhere."

Dante Alighieri


The quantity of property and goods in the nation increases, and things appear to be better than they were before the national debt existed, or at least so we are repeatedly told. But are things better? Better for whom? Who owns all this stuff: the houses, the cars, the real estate, the factories, the buildings, the boats, etc.?

Has all this stuff been paid for, or has it been "leased" – even if for an entire lifetime, by the extension of credit and the acceptance of debt? Does he who owes the debt own the property, or does the banker who has extended the credit – who holds the title, own it? And where did the banker get the money to take and have, possession of most all the titles?

What is a deed? What is a mortgage? Is it related to morte? Is there such a thing as an allodial title? And what were land grants all about? If you own your land, can it be taken from you? If so, who can take it; and more importantly – why can they take it? Who died and left them King?

Where did all this money come from, does it truly exist? The money is but mere pieces of paper of the public's faith upon the debtor, the government's obligations, to whom taxes are owed; both directly as property tax or income tax, or tariffs, etc., and indirectly as occurs through the debasement and inflation of the currency, which although unseen, is a tax of deadly stealth. Over the long-term it does more damage to one's purchasing power, and hence wealth, then any of the up-front direct taxes.

A creditor's property exists in the demand he has upon the debtor, yet the debtor is but a trustee to the creditor for a portion of the value of his income and or private property, needed to pay his portion of the public debt, by taxes. The creditor becomes richer; by the amount the nation becomes poorer, in paying the taxes. This only condemns our future sons and daughter to a life of perpetual servitude and debt. It is a vicious circle of chasing one's tail.

The final step in the master's plan was to create a currency that was connected to bonded debt at the hip, as Siamese twins, essentially using private property, the People's possessions, land and labor, to provide the necessary income to pay the required taxes, to service the public debt. This is not freedom – this is nothing but a hidden system of bondage and indebtedness, to enrich the elite few at the cost of the many: feudalism of the 21st century.

This is how one half of one percent got to own 95% of everything. Do you think they have honestly earned all the world's wealth? How? Do they work harder than the rest of us? Are they smarter than the rest of us? Are they superior to the rest of us? Then how did they come by all this wealth? Some have honestly earned their huge wealth, and have done great things for mankind in the process, but there are those that haven't – and their number is legion.

As Josiah Stamp, President of the Bank of England in the 1920s stated, who, at the time was the second richest man in England:

"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits."


The resulting debasement and loss of purchasing power of the fiat dollar is the true cause of all the United State's financial problems, including the current account deficit, which has now become 5.7% of our gross domestic product. One of the results of this astounding deficit is the fact that our country has gone from being the largest creditor nation on earth - to being the largest debtor nation on earth.

This is clearly evident by the net international investment position of the United States, which is what the United States owes to the rest of the world; the difference between the value of all United States assets outside of our country in foreign nations, minus the amount of United States assets within our country that are owned by foreign entities.

Presently the net international investment position of the United States is approximately minus 2.7 trillion dollars! The United States GDP is approximately 12 trillion dollars, so the United States foreign investment position of approximately minus 3 trillion dollars is equivalent to almost 25% of our GDP.

At the present rate of expansion of the current account deficit, by the year 2008 this negative position will be approximately 50% of the GDP! This begs the question as to who is buying or owns America? The answer: the elite international collectivists; they who hold the legal titles.

We are allowing our country to be sold out beneath our feet. This is wealth transference par excellence if you are one of the elite moneyed interests involved in globalization. For "We The People" it is the road to perdition and enslavement - the loss of our freedom and liberty.


What is needed is a return to a system of Honest Weights and Measures of gold and silver, not a return to a system of paper money that is backed by gold and silver. If gold and silver are valuable enough to back the currency, then they are the real deal - the true value. Why not use them as the currency? Is someone afraid of gold and silver being the currency? Why?

The policy of fractional reserve lending allows banks to essentially lend that which they do not have. This is why banks may be solvent, but they are not liquid. Such a system allows for the moral hazard of not honoring contractual obligations. If half of the People went to the banks and demanded to withdraw their money, do the banks have the money? No other business besides banking is allowed to work according to such rules.

A fractional reserve system of money cannot be liquid; it is impossible. If more depositors demand to redeem more money then the banks have on reserve, huge problems can occur. Such is what precipitates bank runs, deflation, depressions, or worse yet - hyperinflation and the total destruction of the currency. History is replete with such events.

Existing Federal Reserve Notes must be realized as what they are: future goods being exchanged for present goods. Most are of the opinion that bank notes are present goods. But how can that be? Even when backed by gold they were future goods.

The Constitution states that nothing but silver and gold are money, and that paper bills of credit are not allowed. What is a Federal Reserve Note, if not a bill of credit, a receipt that at one time could be redeemed in gold and silver? Now they are redeemable in lawful money, although no one seems to know exactly what that is.

If a bank note is an obligation to be redeemed, it is an obligation that has not been paid. It is an obligation that has yet to be fulfilled; hence it is a future good, waiting to be fulfilled. When one uses bank notes they are exchanging a future good (the bank note) for a present good (the item they exchange it for).

Because of the time preference of a future good to a present good, such a transaction involves the extension of credit, as a promise to fulfill a contract or obligation is being offered and accepted. The transaction, however, has not been completed - payment has not yet been made. Goods have been exchanged on credit - they have not yet been paid for, but simply discharged or offset.

This is why Robert Hemphill stated the following in the forward of Irving Fisher's book, "100% Money," when he was the Credit Manager Of the Federal Reserve Bank of Atlanta, Georgia:

"This is a staggering thought. We are completely dependent on the Commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."

Even a system that backs Federal Reserve Notes 100% by gold will be found to be wanting. To begin with, such a system is unconstitutional, as the Constitution does not grant the power to Congress to be in the banking business, functioning as a bank of deposit. Congress was granted the power to borrow money, not to loan it out. Our monetary system should create wealth - not debt.

Furthermore, we have seen that the banks and the government can easily declare national emergencies, enacting The War Powers Act or The Trading With The Enemy Act, thereby obtaining reasons for suspending specie redemption; or worse - the private ownership of gold can be declared illegal and the currency called in; which is a good reason for the People to demand a constitutional amendment explicitly disallowing such legislative or executive powers, just in case such do exist.

President Jackson well understood the vast power and influence the banking powers could wield, this is why he stated in an address to Congress, in 1829:

"The bold efforts that the present bank has made to control the government and the distress it has wantonly caused, are but premonitions of the fate which awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it...If the people only understood the rank injustice of our money and banking system there would be a revolution before morning."


Look closely at a newly minted United States Gold Eagle Coin. On the backside of the coin, at the bottom, is stamped: 1 OZ FINE GOLD - 50 DOLLARS.

Why does a one ounce gold coin, that is presently trading in the market for approximately $450, have stamped on it $50? And yet the gold the government holds is valued on the books at $42.22 an ounce. Why all the discrepancies? Try that with your bookkeeping and see what happens.

Part of the answer goes back to the legal tender issue. The government has stamped the one ounce gold coin to have the legal tender value of $50, but the market price of one ounce of gold is almost 9 times greater. This disparity is the exact reason why even gold and silver coin should not have a dollar amount fixed on it, but simply have stamped Honest Weights and Measures of gold and silver content - as in a one ounce coin, a half ounce coin, a quarter ounce coin, a tenth ounce coin, etc.

Even a true dualmetallic system of gold and silver coin, leaves many problems to be solved, but at least it is a step in the right direction, and, a journey of a thousand miles does begin with one step. And if ever a step in the right direction was needed, now is the time - as the numerous coinage acts that followed the original Act of 1792, have presently placed the United State's monetary system on self-destruct - heading down the Sisphusian slope of collective, corporate, socialistic, global, and perhaps even fascist control.

If gold and silver are good enough to back the currency, then they are good enough to be the currency. It is time to return the Sovereign of Sovereigns to its rightful place - as Honest Money. We do not need to back the dollar with gold. Simply open the mint to the free coinage of gold and silver coin. Let gold and silver be accepted for all payments, at free market rates of exchange; and circulate along with Federal Reserve Notes. Let the People decide which they prefer to use. And maybe Christmas will come early; and all the gold that was confiscated from the People will be returned to the People.


In ending, the following words of the greatest American Patriot for Honest Money, President Andrew Jackson, seem most appropriate, as they are as prescient and telling today, as when written almost 200 years ago:

"But when the charter for the bank of the United States was obtained from Congress, it perfected the paper system, and gave to its advocates the position they have struggled to obtain from the commencement of the Federal Government down to the present hour. The immense capital and peculiar privileges bestowed upon it enabled it to exercise despotic sway over the other banks in every part of the country. From its superior strength it could seriously injure, if not destroy, the business of any one of them that would incur its resentment; and it openly claimed for itself the power of regulating the currency throughout the United States. In other words, it asserted (and undoubtedly possessed) the power to make money plenty or scarce, at its pleasure, at any time, and in any quarter of the Union, by controlling the issues of other banks, and in permitting an expansion, or compelling a general contraction of the circulating medium according to its own will.
The other banking institutions were sensible of its strength, and they soon became generally its obedient instruments, ready at all times to execute its mandates; and with the other banks necessarily went also that numerous class of persons in our commercial cities who depend altogether on bank credits for their solvency and means of business, and who are therefore obliged, for their safety, to propitiate the favor of the money power by distinguished zeal and devotion in its service. The result of the ill-advised legislation which established this great monopoly, was to concentrate the whole moneyed power of the Union, with its boundless means of corruption, and its numerous dependents, under the direction and command of one acknowledged head; thus organizing this particular interest as one body, and securing to it unity of action throughout the United States, and enabling it to bring forward, upon any occasion, its entire and undivided strength to support or defeat any measure of the government. In the hands of this formidable power, thus perfectly organized, was also placed unlimited dominion over the amount of circulating medium, giving it the power to regulate the value of property, and the fruits of labor in every quarter of the Union; and to bestow prosperity, or bring ruin upon any city or section of the country as might best comport with its own interests or policy.
We are not left to conjecture how the moneyed power, thus organized, and with such a weapon in its hands, would be likely to use it. The distress and alarm which pervaded and agitated the whole country, when the Bank of the United States waged war upon the people in order to compel them to submit to their demands, cannot yet be forgotten. The ruthless and unsparing temper with which whole cities and communities were oppressed, individuals impoverished and ruined, a scene of cheerful prosperity suddenly changed into one of gloom and despondency, ought to be indelibly impressed on the memory of the people of the United States. If such were its power in a time of peace, what would it not have been in a season of war, with an enemy at your doors? No nation but the freeman of the United States could have come out victorious from such contest; yet, if you had not conquered, the Government would have passed from the hands of the many to the hands of the few; and this organized money power, from its secret conclave, would have dictated the choice of your highest officers, and compelled you to make peace or war, as best suited their own wishes. The form of your Government might for a time have remained, but its living spirit would have departed from it."
President Jackson's farewell speech upon leaving office on March 3, 1837.

© 2004 Douglas V. Gnazzo

All rights reserved. Any republication without written permission
of author and Financial Sense prohibited.

Editorial Archive

12/09/2004 Honest Money, Part VIII: Final Summary and Conclusions
11/30/2004 Honest Money, Part VII: The Moneychangers - Secrets of the Temple
11/22/2004 Honest Money, Part VI: The European Connection
11/15/2004 Honest Money, Part V: History of American Money and Banking
11/01/2004 Honest Money, Part IV: Treasury Notes
10/25/2004 Honest Money, Part III: Coinage Acts from 1834-1900
10/20/2004 Honest Money, Part II: Silver Standard with a Bimetallic Coinage System
10/20/2004 Honest Money, Part I: The Constitution and Honest Money

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