Financial Sense Archive | About | Newshour | Metals | Storm Watch | Authors | Resources

fsu editorials

Beware of False Prophets

Social Security - Part 9

by Douglas V. Gnazzo, July 26, 2005

Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8

"More Law – Less Justice"

"The stranger that is within thee shall get up above thee very high, and thou shalt come down very low. He shall lend to thee, and thou shalt not lend to him; he shall be the head, and thou shalt be the tail." – [The Bible]
"I am afraid the ordinary citizen will not like to be told that the banks can, and do, create and destroy money. The amount of finance in existence varies only with the action of the banks in increasing or decreasing deposits and bank purchases.
We know how this is effected. Every loan, overdraft or bank purchase creates a deposit, and every repayment of a loan, overdraft or bank sale destroys a deposit.
And they who control the credit of the nation direct the policy of governments, and hold in the hollow of their hands the destiny of the people." [The Rt. Hon. Reginald McKenna former British Chancellor of the Exchequer - Chairman of the Midland Bank]

INTRODUCTION

dove in cage Well, we are about to shortly delve into social security about as deep as one can go, and what you find stirred up at the bottom may surprise, and even startle you, however, it is all information taken directly from the listed Acts, Codes and Statutes.

Due diligence by the reader is, as always, strongly recommended. Only specialized professional legal advice can provide a complete and exhaustive study on the subjects contained herein, and the reader is advised to seek such professional advice for a definitive explanation on all of the issues raised.

WHO

As you will find, this is not quite the insurance program that it has been made out to be. So who is responsible for this? Who should be held accountable? Should anyone be held accountable?

We all should be held accountable, as we all are accountable, as we get what we deserve. There's a saying, "if your not part of the solution, you're definitely part of the problem", and it applies here as with all things.

We get what we deserve, what we are willing to accept. This is but the law of Karma, of cause and effect on the metaphysical level. When we are collectively more worthy, we will deserve more, and we will get more. And this is speaking of direct responsibility as in day to day events and occurrences, as it effects the quality of our life.

But be it noted, there is also an even higher standard that all must answer to � the final weighing in the balance, the reckoning. And I reckon that the elite banksters are not going to fare to well, when all has been said and done, and is then accounted for. Destiny is its child, justice and righteousness its offspring.

THE PLAN

On July 22, 1944, the would-be-rulers of the world all had a little get together at Bretton Woods, New Hampshire, for the United Nations-sponsored Monetary and Financial Conference, also known as the Bretton Woods Conference.

The purpose of the Conference was to establish an international system of rules to better manage the commercial and financial transactions of the major industrial nations of the world, with the intent of rebuilding the system of world capitalism that had been weakened following the aftermath of World War II. The main architects of the plan were the Assistant Secretary of the United States Treasury, Harry Dexter White, and economist John Maynard Keynes.

An interesting side note: Dexter was accused of being a spy Guilty as Charged by Arnold Beichman, and Keynes was a member of the Fabian Society. ALOR - The Fabian Socialist Contribution, [click on links to view] so it is quite reasonable to conclude that they both harbored some ideological undertones that were not too far removed from socialism, if not knee deep in it.

THE STRUCTURE

Since you can’thave a system of rules and management without having an organization to implement them, it was deemed necessary to create a couple of international organizations to put the plan in place: hence, the International Monetary Fund and the International Bank for Reconstruction and Development were established. The bank later came to be called The World Bank.

Recall that the Federal Reserve Bank had recently been established as the central bank of The United States. The Federal Reserve Bank was the corporation that financed the corporation of The United States, per the 12 districts of jurisdiction it had created.

Also, note that the Federal Reserve was one of the major financiers of the war, and that the United Nations was established after the war, with the purpose of creating an international system of regulation to bring about �the least diversion for armaments of the world's human and economic resources", as stated in the U.N. Charter.

THE AGREEMENT

The Bretton Woods Agreements Act, was codified at United States Code - Title 22 at 286, which reads:

286 Acceptance of membership by the United States in International Monetary Fund

"The President is hereby authorized to accept membership for the United States in the International Monetary Fund (hereinafter referred to as the "Fund"), and in the International Bank for Reconstruction and Development (hereinafter referred to as the "Bank"), provided for by the Articles of Agreement of the Fund and the Articles of Agreement of the Bank as set forth in the Final Act of the United Nations Monetary and Financial Conference dated July 22, 1944, and deposited in the archives of the Department of State. (July 31, 1945, ch 339, � 2, 59 Stat. 512.) Short titles: � May be cited as the 'Bretton Woods Agreements Act'�.

OTHER PROVISIONS:

�Par value modification. For the Congressional direction that the Secretary of the Treasury maintain the value in terms of gold of the Inter-American Development Bank's holdings of United States dollars following the establishment of a par value of the dollar at $38 for a fine troy ounce of gold pursuant to the Par Value Modification Act and for the authorization of the appropriations necessary to provide such maintenance of value, see 31 USC � 449a.�

BY WHAT AUTHORITY?

Notice the first sentence of the above quote which reads, �The President is hereby authorized to accept membership for the United States in the International Monetary Fund�, authorized by who? The Bretton Woods Agreement? The Bretton Woods Conference? The Delegates of the Meeting? Or did Congress authorize it? Why doesn't it clearly state who is doing the authorization � isn't it a fairly critical and important issue?

Well, to be honest, it really doesn't matter who approved it, or if anyone ever did, as whomever may have approved it was not authorized to authorize any such agreement.

Even if Congress had authorized it, they have no such authority according to the Constitution. An agreement between two nations is what is known as a Treaty. To agree to join and become a member of an international organization of foreign nations, is obviously an international agreement, which requires a Treaty.

The Constitution is very specific on Treaties. It states that for a Treaty to take effect, that first the President must sign the treaty; and second, the Senate then ratifies his signature with a two-thirds majority vote. The records do not show that this was the procedure originally used to make this agreement.

Also, The Constitution plainly states:

"The enumeration in the Constitution of certain rights, shall not be construed to deny or disparage others retained by the people." [Ninth amendment]

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." [Tenth Amendment]

According to the above referenced quote from the United States Code, it appears that the United Nations gave authorization for the agreement, as 286 reads, �provided for by the Articles of Agreement of the Fund and the Articles of Agreement of the Bank as set forth in the Final Act of the United Nations Monetary and Financial Conference dated July 22, 1944.�

Can the United Nations give the United States authorization to join and international organization, and to make international agreements? Well, not according to our Constitution.

It almost sounds as if �they� have, or think they have, some kind of sway or power over us..? This is obviously not conclusive proof, but it does appear to warrant further investigation and some fully disclosed discussion and answers.

Now, be it duly noted that a treaty was made and signed between the United States and the United Nations - on December 20, 1945, five months after the above took place. Kind of like a game of rules and treaties ipso facto. I may be wrong, but I don't think that's how it is supposed to work.

TIMELINE

THE TREND

Are there any definable trends in the above timeline?

One obvious trend is that at the beginning of the timeline, the people of America were subjects of the King of England. As the timeline progresses, the people broke away from England and declared to be a free and independent people. A new Nation was formed.

In the middle of the timeline, a slow but continual change of the exact �structure� of the government occurs, including a Civil War, incorporation, and the implementation of Executive Orders declaring martial law. The Constitution takes a backseat.

In the latter part of the middle of the timeline another national emergency is declared, and the private holdings or property, i.e. gold currency of the people, is confiscated. A number of socialistic programs are implemented, some declared unconstitutional by the Supreme Court.

Suddenly there appears a trend involving the word international and world in several far reaching plans, policies, and organizations � both on a governmental level, and a monetary level. The Constitution does not authorize any such authority except by treaties between nations according to due process of The Supreme Law of The Land.

Throughout the timeline there is a trend whereby the previous monetary system in place is replaced by a new monetary system, which is supposed to cure the ills of the previous monetary system. Yet, there is also present the trend whereby the financial condition of the nation keeps growing worse and worse.

Included in this worsening financial trend is: an increasing national debt level, which moves the nation from the largest creditor nation in the world, to the largest debtor nation in the world; loss of purchasing power of the Federal Reserve Note or dollar bill by 95%; and the savings rate falls to historical low levels. Not exactly a stellar performance.

The toll these trends add up to, or perhaps the proper word to use should be � subtracts to, is an overall net investment position of the United States of a negative, as in minus �2.4 trillion dollars as of the year 2003. This equates to approximately � of the nation's gross domestic product value, which begs the question: who is buying America?

The Bottom Line

Net Asset/Debt Position of the United States 1976 to 2003

The above chart speaks volumes as far as trends are concerned. They say on wall street that the trend is your friend. So exactly who does the above chart help out, in a friendly sort of way? Cui Bono? Note: now in 2005 it is close to �3 trillion dollars.

Perhaps the trend of internationalism or globalism is not the precipitating factor behind the negative trend of The United States Investment Position, then again, perhaps it is...?

Perhaps socialism is the ideology behind internationalism and globalism, then again it’s all probably just mere coincidence, as is all of history. Perhaps greed is the motivation behind all of the �isms�, the greed for money, power, and wealth. The reader is left to decide for themselves.

SOCIAL SECURITY REVISITED

Now that the background history of social security has been presented, as well as the resulting aftermath of the New Deal Administration, and the various social programs it gave birth to, we can henceforth surgically dissect social security with a much broader understanding at our disposal, knowing from whence its ideology has come, and where its implementation has taken us.

Perhaps the future does come from out of the present, and the present from out of the past. Perhaps to know one, may be, to know all. Perhaps not. But let's jump in and find out.

Also, please note in what follows � the courts have repeatedly held that a statute means only that which is stated in the statute and nothing more.

One cannot second guess, or add or delete from what is specifically said, word for word. Nothing more, and nothing less is allowed.

Also, only a professional legal and or tax expert can provide a complete and exhaustive study and opinion on these topics. What follows is for intellectual consideration and discussion only. As always, due diligence is a necessity.

THE ACTS AND THE STATUTES

The Social Security System was created by the 1935 Social Security Act, which is part of Title 42 of the United States Code, Chapter 7. Social Security.

The Security Act is administered by the Social Security Administration. The latest amended version [2005] can be viewed at: Social Security Act, Title 1 (click on links to view).

The taxes paid to supposedly fund the system, are collected by the Internal Revenue Service under the provisions of Title 26 : Section 1 of the United States Code, known as the Internal Revenue Code [click on link to view].

The taxes that the Internal Revenue Services collect are not sent to the Social Security Administration, they are sent to the Government Accountability Office [GAO], along with other taxes that are collected, all of which gets deposited into what is called, and which is � the government's general account.

The taxes paid and collected are supposedly held in a "trust fund�. While it may be correct that a "trust fund" exists, that does not mean that it contains the actual money that was taxed and collected.

As has previously been shown, only special issue government bonds are in the trust fund, bonds that are non-marketable. As Our Commander In Chief, President Bush explained:

PRESIDENT DISCUSSES STRENGTHENING SOCIAL SECURITY IN COLORADO
Wings Over The Rockies Air and Space Museum
Denver, Colorado

�Now, you probably think �some of you may think there's what they call a Social Security trust: the government collects the money for you, we hold it for you, and when you retire, we pay it to you.

�But that's not how it works.�

You pay your payroll tax; we pay for the people who have retired, and if there's any money left over, we spend it on government."

�That's how it works.�

�And what's left is an empty IOU, a piece of paper.�

�Because it's a pay-as-you-go system, when more retirees start retiring�who are living longer, getting paid more�more money starts going out than coming in.�< [end of quote].

To view the entire Presidential report click on [http://www.whitehouse.gov/news/releases/2005/03/20050321-13.html]

AUTHORIZATION

The United States Constitution does not authorize the federal government to be in the insurance business, and this is what the Social Security System claims to be. This is similar to the fact that Congress is not authorized to loan money, only to borrow money.

Social Security is not a contract as some believe. It is simply a promise that Congress has made out of political expediency, and Congress at anytime could change their present position and renege on the entire system.

All money distributed by the Social Security System has to first be appropriated by Congress, each year as needed. Since no contractual obligation exists for the payment of any benefits, the benefits could be terminated at any time, especially if Congress doesn't appropriate the needed funds.

IRS COLLECTS TAXES

All direct taxes, including the personal and corporate income taxes, self-employment taxes, as well as the so-called Social Security tax, are imposed and collected under TITLE 26 - INTERNAL REVENUE CODE [click on link to view].

The Social Security tax is imposed by the code sections in chapter 21, subtitle C of the Internal Revenue Code titled: Subtitle C. Employment Taxes (click on link to view).

Sections 3101(a) and 3111(a) are statutes for the FICA tax - section 3101(a) applies to employees and 3111(a) to employers.

TITLE 26, Subtitle C, CHAPTER 21, Subchapter A, Sec. 3101 [click on link to view]

Sec. 3101 Rate of Tax

STATUTE

�(a) Old-Age, survivors, and disability insurance. In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined In section 3121(a) received by him with respect to employment (as defined in section 3121(b).� [end quote]

TITLE 26, Subtitle C, CHAPTER 21, Subchapter B, Sec. 3111

Sec. 3111. Rate of Tax

STATUTE

�(a) Old-age, survivors, and disability insurance. In addition to other taxes, there Is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the following percentages of the wages (as defined In section 3121(a) paid by him with respect to employment (as defined In section 3121(b)� [end quote].

Now, most consider FICA to be a wage tax. However, a close reading of section 3101(a) clearly states that the tax is an income tax, as the statute reads, �there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages�. [end of quote].

So apparently, FICA is an incometax equal to a certain percentages of wages.

TITLE 26, Subtitle C, CHAPTER 21, Subchapter C, Sec. 3121 (click on link to view)

Sec. 3121. Definitions

STATUTE

�(a) Wages. For purposes of this chapter, the term "wages" means all remuneration for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash; except that such term shall not include � . . . .� [end quote]

Therefore, wages are defined as remuneration for employment.

Sec. 3121 (b). Employment

STATUTE

�For purposes of this chapter, the term "employment" means any service, of whatever nature, performed (A) by an employee for the person employing him, irrespective of the citizenship or residence of either,

(I) within the United States, or

(II) on or in connection with an American vessel or American aircraft under a contract of service which is entered into within The United States or during the performance of which and while the employee is employed on the vessel or aircraft it touches at a port in The United States....� [end quote]

Thus employment means a service performed by one who is an employee within the United States ...

DEFINITION OF UNITED STATES

As with the issuance of all critical statutes, the important definitions of the terms used in the statutes is always provided with the statute. The United States, being a most important term in use within these records, obviously receives a listing of specific definitions regarding its use in this chapter: as defined in section 3121(e)(2):

Section 3121 (e) (1) & (2)

STATUTE

e) State, United States, and citizen
For purposes of this chapter -

(1) State
The term ''State'' includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.

(2) United States
The term ''United States'' when used in a geographical sense includes the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa. An individual who is a citizen of the Commonwealth of Puerto Rico (but not otherwise a citizen of the United States) shall be considered, for purposes of this section, as a citizen of the United States.

What does the above say? � the definition of the term "United States" is the Commonwealth of Puerto Rico, the Virgin Islands, Guam and American Samoa. Does that mean these are the only areas in which the tax imposed by the cited chapter applies?

Whenever words are used as legal terms, precise definitions of those terms are always included in the law. These definitions explain the exact meanings of the terms used.

It is also a general rule of law that nothing can be added to the definition of a term � it means only that which is stated, nothing more, nothing less.

But why would the term "United States" be limited to refer to the four island possessions of Puerto Rico, the Virgin Islands, Guam and American Samoa? That appears to be a bit odd?

As previously stated, only a professional legal tax expert can provide a definitive explanation and or answer, but the wording is as it is. And it is most curious, to say the least.

Now, let's compare the above statute with another statute which also involves taxes and the term United States.

TITLE 26, Subtitle D, CHAPTER 38, Subchapter A, Sec. 4612

Code Section 4612 is a code concerning a tax on crude oil.

STATUTE

a) Definitions
For purposes of this subchapter -

(1) Crude oil
The term ''crude oil'' includes crude oil condensates and natural gasoline.

(2) Domestic crude oil
The term ''domestic crude oil'' means any crude oil produced from a well located in the United States.

(3) Petroleum product
The term ''petroleum product'' includes crude oil.

(4) United States

(A) In general
The term ''United States'' means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands.

Obviously the most highly trained and skilled legal tax experts wrote these statutes, which collectively compose a body of some of the most complex writings known to mankind.

It would thus seem to follow that if in one statute they specify one thing, and in another statute they specify something else, they do so because they know there is an important difference and distinction to be made known or expressed; and they express it accordingly, by specific definitions.

This seems to indicate that when the term United States means the fifty states of the union, [as existed at the time of the writing of the statute], it specifically refers and says: the 50 States, as it most clearly and distinctly does in the above statute TITLE 26, Subtitle D, CHAPTER 38, Subchapter A, Sec. 4612 concerning taxes on crude oil.

Conversely, it is also clear that the term United States, as used to describe the areas where the Social Security tax applies, does not mention or use the term �the fifty states� in the definition under that section, it only mentions the four island possessions under the term's definition.

Therefore, according to the wording of the statute itself, it appears that the FICA tax does not apply within the fifty states of the Union. But perhaps we are missing something that only a legal tax expert can clear up.

However, the wording is as it is, and probably is susceptible to different interpretations by different �experts�, as even in a court of law, both sides are represented by �experts�, that have diametrically opposing views and opinions. And even the Supreme Court Justices differ in their opinions, as noted by the dissenting views.

SO, WHAT�S THE POINT?

There are lots of points that have been made thus far; the final conclusion to come in part ten will go over all of the major conclusions and findings in a final reiteration. The main point that this present article is attempting to illustrate is that social security is a tax, a form of income tax based on the amount of wages one earns.

And furthermore, the wording of some of the language of the statutes does not seem to indicate what many would or have led us to believe. But as has been repeatedly said, only a legal tax expert can give a definitive explanation and answer to these issues.

Without doubt, however, social security was one of, it not the cornerstone of, Roosevelt�s New Deal Program, and as we have seen, many of the New Deal programs were very socialistic in ideology, structure, implementation, and final result(s).

Such is a far cry from a the original constitutional republic form of limited government established by the founding fathers, where the emphasis was on individual freedoms as opposed to far-reaching governmental powers.

Social security is stated to be an insurance program, its original name was �Old-age, survivors, and disability insurance�. However, the Constitution does not grant Congress the power to be in the insurance business.

The Constitution does not grant Congress the power to hand over the control of the nation's money supply to a private corporation such as The Federal Reserve (1913). And most definitely the Constitution does not delegate Congress the power to confiscate all the people's gold (1933), which at the time was the monetary system of the country.

Many of these seemingly unconstitutional acts, or offshoots of prior such acts, uncannily cluster around the year 1933, during Roosevelt�s term as President. Even the charts show abnormal patterns starting during this year (1933). The only year that rivals 1933 for such an infamous proliferation of history making events is 1913.

The evidence so far revealed, indicates that the collective result of the policies of the New Deal, Social Security being its cornerstone, has been a weakening of the financial strength of our country.

This is most evident by the rising debt levels, falling savings levels, etc., but the most telling statistic is the cumulative negative �3 trillion dollar international investment position of the United States. This speaks volumes of the bottom line, as it is the bottom line.

As the timeline shows, our present negative international investment position is the culmination of a series of events that were part and parcel of an overall trend of more and more power being usurped by big government, while less and less power was left to the people.

Our negative international investment position is the report card on how the government performed with the increase of power � the honor roll was obviously not made. A more resounding proclamation as to why more power should be returned to the people would be hard to come by.

All during this trend there was the formation of several international organizations that our Constitution does not grant any direct authority to, to �seemingly� wield the influence they do over the United States.

These international organizations then use the power and prestige accorded by their relationship with the United States, to direct the rest of the world to follow their recommended course of action, most often in the financial and economic arena, although the �big stick� is always present if needed, and looms large in the background.

It is almost as if there were some unseen power that is slowly moving all nations towards some sort of one world government or order, especially in regards to monetary policy.

The advent of the euro is a most interesting development, especially on the ideological level as to the motivation for its creation. The intent would seem most obvious � just follow the money and or the stream being created for the money to flow through and to.

As was stated way back near the beginning of this series, after we had started to look closer and closer at social security and its genesis � it is apparent there is much more to social security than first meets the eye.

There is much more to The New Deal then first meets the eye. There is much more to all of history then first meets the eye, especially history according to the text books written by the trust foundations of the wealthy elite.

Hopefully some of that which is hidden from view has been made known. In part ten we will attempt to �put it altogether�.

�And by the signs which it is allowed to work in the presence of the beast, it those who dwell on earth, bidding them make an image for the beast which was wounded by the sword and yet lived; so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name.�

"And I saw, issuing from the mouth of the dragon and from the mouth of the beast and from the mouth of the false prophet, three foul spirits like frogs; for they are demonic spirits, performing signs, who go abroad to the kings of the whole world, to assemble them for battle on the great day of God the Almighty."

Part Ten to be forthcoming – the final conclusion.

© 2005 Douglas V. Gnazzo

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

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

Contact Us | Copyright | Terms of Use | Privacy Policy | Site Map | Financial Sense Site

© 1997-2012 Financial Sense® All Rights Reserved.

The opinions of the contributors to Financial Sense® do not necessarily reflect those of Financial Sense, its staff, or its parent company.