Two Titanic Forces Part 2

Author David W Franklin

TWO POWERFUL PARALLELS of HISTORY

“We have a financial system that is run by private shareholders, managed by private institutions and we’d like to do our best to preserve that system.”

Spoken by Timothy Geithner, former chairman of the Federal Reserve Bank of New York and presently Secretary of the Treasury. January 28th, 2010, on the PBS program, NIGHTLY BUSINESS REPORT.

Parallel 1a

In 1913, a privately owned and privately managed corporation assumed the monetary power delegated to and intended exclusively for the Federal Congress. Shortly thereafter, this privately owned corporation began expanding credit and the paper money supply (Gold certificates) against the Real Wealth savings (Gold coin and Gold bullion stored in banks and U.S Treasury depositories) of WE THE PEOPLE.

Parallel 1b

Shortly after 2002, the privately owned, privately managed corporation began expanding electronically, the supply of modern “electronic” credit and currency against the “electronic” savings of WE THE PEOPLE.

Parallel 2a

1913: The expansion of credit and currency by the private bank after 1913, became the CAUSE for the EFFECT that was to follow:

1. The inflation of the “Roaring Twenties”, accompanied by unbridled speculation.

2. The exponential rise of the stock market from an initial indexed value of about 41, to the high of 381 in October of 1929: A Stock Market “Bubble”.

Parallel 2b

2002: The expansion of “electronic” credit and currency by the private bank after 2002, became the CAUSE for the EFFECT that was to follow:

1. The “roaring” inflation of real estate prices, accompanied by unbridled speculation.

2. The meteoric rise of the Stock Market from a value of 7200 to over 14,200: a stock Market “Bubble”!

Parallel 3a

In late October of 1929, the private bank removed the CAUSE of the EFFECT:

1. It stopped being a “Market Maker” by withdrawing “liquidity” from the stock market. The Market began to “crash”.

2. It contracted the availability of credit and currency in the economy. For lack of currency and credit to access their personal property and Capital, WE THE PEOPLE were put into the Great Depression: plummeting real estate prices, countless foreclosures, homelessness, loss of millions of jobs, and a sordid degree of unnecessary human suffering and misery not seen since the great civil war.

Parallel 3b

In late October of 2007, the private bank removed the same CAUSE of the EFFECT:

1. It stopped being a “Market Maker” by withdrawing “liquidity” from the stock market, just as it did in 1929. The Market began to “crash”.

2. It contracted the availability of credit and currency in the economy. For lack of currency and credit to access their personal property and Capital, WE THE PEOPLE are being put through the Great Recession. This contraction of credit and currency has resulted in plummeting real estate prices, millions more foreclosures than the Great Depression, homelessness in the tens of thousands, loss of millions of jobs, and a sordid degree of imposed human suffering and misery not seen since the Great Depression.

Parallel 4a

1. By 1930, the People of the United States, through generations of sweat, blood and application of immeasurable quantities of raw human Labor Capital applied to resources, had accumulated a Real Wealth savings of over 10,000 metric tons of Gold coin and Gold bullion. This immense quantity of Gold represented the accumulated human energy, property and True Capital of five human generations.

2. This mass accumulation of human energy in the form of Real Wealth Savings equaled an economic force of titanic proportions, capable of purchasing for the American People, the entire annual Real Wealth production of their sacred labors.

Parallel 4b

1. By 2007, the People of the United States, through three generations of sweat and application of immeasurable quantities of human Labor Capital applied to resources, had accumulated “electronic savings” in excess of fifty ($50) trillions, vested in the Stock Markets.

2. This immense quantity of accumulated “electronic savings” is equivalent to an economic force of titanic proportions, capable of purchasing for the American People, the entire annual Real Wealth production of their sacred labors.

Parallel 5a

1. By 1930, the full EFFECT of the GREAT DEPRESSION caused via the contraction of credit and currency by the private central bank, was upon the American People. The President, the Federal Congress and the private bank, “planned” together in advance, to “deficit spend” into the hands of the People, a quantity of paper money of titanic proportions, equal to the entire annual Real Wealth production of the People’s sacred labors. It was to be called “The New Deal”.

Parallel 5b

1. By 2009, the full EFFECT of the GREAT RECRESSION caused by way of the contraction of electronic credit and currency by the private central bank, was upon the American People. Now, as in past history, the President, the Federal Congress and the private bank, have “planned” together in advance, to “deficit spend” into the hands of the People, a quantity of modern “electronic money” of titanic proportions, equal to the entire annual Real Wealth production of the People’s sacred labors. The Cycle of History repeats!

“There is no Thing new under the Sun.” W. D. Gann

This time, in principle, it is NOT DIFFERENT! The only difference is, instead of paper money flowing to the masses as it did after 1933 with the NEW DEAL, this time it will be modern “electronic money”.

Parallel 6a

“It is experience that teaches man what is right and what is wrong.” Cicero

1. It is 1933. Decades and centuries of the recorded experience of their currencies being expanded and contracted, have permanently taught the posterity of managers of private central banks the lesson of THE SUPREME INVIOLATE LAW of ECONOMICS.

Therefore, being aware of all the author has described in Part I, the managers of the private central bank in the United States had a very important decision to make.

To obey the lessons of THE SUPREME INVIOLATE LAW of ECONOMICS and avoid hyperinflation, they had to decide which one of the two available titanic forces of purchasing power would be “permitted” to go into circulation in the near future.

Would it be:

A. The billions of ounces of Gold bullion and Gold coin belonging to WE THE PEOPLE, stored in the treasuries and banks of the United States?

OR,

B. The billions of paper money “dollars” planned to be “spent” into circulation by the NEW DEAL?

Their “Decision”, in two parts:

FIRST DECISION

By 1933, the President of the United States was advised of the first decision. Therefore, on April 5th, 1933, the President was to issue Executive Order 6102, which read, in relevant part as follows:

“All persons are required to deliver ON OR BEFORE MAY 1, 1933 all GOLD COIN, GOLD BULLION, AND GOLD CERTIFICATES now owned by them to a Federal Reserve Bank, branch or agency, or to any member bank of the Federal Reserve System.”

Please see AUTHORS NOTE No. 4 at the end of this PART II

QUESTION:

Today, should the President of the United States issue a similar Executive Order, under “threat of fine and imprisonment”, the question is:

With this information above, will you be turning in your Gold to managers of a privately owned, privately managed central bank? Again?

SECOND DECISION

Executive Order 6102 was insufficient by itself to prevent the titanic purchasing power of the People’s Gold from coming into circulation. This is due to the fact that the People still possessed millions of paper Gold Certificates (warehouse receipts for their Gold) bearing a “Gold clause” which enabled them to “redeem” the Gold Certificates for the Gold they owned that was on deposit in the Treasury and local banks.

Permitting the People to put the titanic purchasing power of their Gold into circulation at the same time as billions of paper money notes of the “New Deal” would result in hyperinflation. Further, the “zero” intrinsic value of paper versus Gold would become obvious to all.

That was not going to be permitted.

Thus, also in 1933, the Federal Congress of the United States was advised of the second decision.

On June 5th, 1933, the Federal Congress passed House Joint Resolution 192. HJR 192 suspended the Gold Standard and abrogated (ended) the Gold Clause on Gold Certificates. In so doing, the People were absolutely barred from acquiring the Gold which was, without a shadow of any doubt, their personal property. Shortly thereafter, ownership of all Gold on deposit in the United States was transferred to the private central bank and the Bank of International Settlements.

Please see AUTHORS NOTE No. 5 at the end of this article.

With the passage of HJR 192, the plan was complete. Only one titanic force of purchasing power would be circulated: the billions of “NEW DEAL” paper dollars that would be “borrowed” into existence.

Parallel 6b

“A person can live a lifetime in the shadow of an idea, and not comprehend it.” The Author’s deceased Mother.

1. It is 2010. Decades and centuries of the recorded experience of their currencies being expanded and contracted, have permanently taught the posterity of managers of private central banks the lesson of THE SUPREME INVIOLATE LAW of ECONOMICS.

Therefore, being aware of all the author has described and illuded to in Part I, the managers of the private central bank in the United States had a very important decision to make.

To obey the lessons of THE SUPREME INVIOLATE LAW of ECONOMICS and avoid hyperinflation, they had to decide which one of the two available titanic forces of purchasing power would be “permitted” to go into circulation in the near future.

Would it be:

DOOR NUMBER ONE: Those “… trillions upon trillions of digital units of modern “electronic money” in various forms of retirement “savings”: IRA’s, Keogh’s, 401K’s, etc.”, vested in the Markets and “believed” by future American retirees, to be “owned” by them?

OR,

DOOR NUMBER TWO: “…those tens of trillions of units of modern, digital “electronic money”, representing the deficits of the Federal Congress..” now planned to be “spent” into circulation in the future?

“The Federal Reserve sets the nation’s monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates.”

Please See AUTHORS NOTE No. 6 at the end of this article.

Referring to the private central bank, on June 7, 2009, the Chairman of that bank stated:

‘It manages monetary policy for the country. It’s one of the main tools we have for stabilizing our economy and keeping prices stable,” quoted from the transcript of the CBS interview.

The primary concern and “responsibility” of any private central bank is to prevent inflation by “stabilizing” the purchasing power of the local currency, in this case the electronic “dollar”.
That means maintaining a “balance” between the quantity of units of electronic “currency” in circulation, versus the total value of Goods and Services available to be purchased at any time, i.e., Real Wealth production.

“Stabilizing” (preventing inflation) the purchasing power (quantity) of the “dollar” is the primary
objective of the (any) private central bank, for the following reason:

No civilization can live without the production of Real Wealth: Things we eat, wear and use. Inflation erodes the living standards of those who produce Real Wealth.

Further, significant amounts of inflation, and in particular hyperinflation, destroys the ability of
Real Wealth Producers to produce the Real Wealth we cannot live without. Further, rapidly increasing inflation makes it extremely difficult for Real Wealth producers to raise additional sums of Real Wealth Capital necessary to finance improvements in efficiency and future production of Goods and services that will be critical to a healthy economy.

BOTTOM LINE: Without Real Wealth Producers, the US economy would suffer a cataclysmic
collapse.

ELECTRONIC “SAVINGS” REVISITED, ONE MORE TIME

The author earnestly suggests to the reader to seek to comprehend the following irrefutable facts that describe the TRUE NATURE of these “electronic savings”, as rephrased below from
Part I:

The trillions of units of Modern “electronic money” in various forms of retirement “savings”, such as IRA’s, Keogh’s, 401K’s, etc., are NOT TRUE SAVINGS! They are NOT Real Wealth. They are not Things one can eat, wear or use today.

Rather, these trillions upon trillions of digital units of modern “electronic money” represent a “Claim” on Real Wealth production that may, or may NOT be available in the future.

Those trillions upon trillions of digital units of modern “electronic money” equal a titanic force of purchasing power that has the potential…. to purchase nearly all available Real Wealth that may be available in the future.

All these so called “savings” are “invested” in the Markets. The only way one can posses Real Wealth from these “electronic savings” is to liquidate them at the prevailing Market “dollar” value, pay the penalty or appropriate tax, and used the electronic proceeds to acquire Real Wealth available in economy today.

The U.S. economy has two titanic forces of purchasing power coming “on line” in the very near future: Government deficits, and electronic “savings”. Each one by itself, “promises” to

consume nearly all available Real Wealth in the future.

Were both of these titanic forces of purchasing power “permitted” to be unleashed at the same time into the U. S. economy’s supply of what constitutes “currency”, inflation would, very shortly thereafter, go exponential!, i.e., hyperinflation!

For published evidence that government deficit spending is purely modern “electronic money”(the same as electronic “savings”) typed into a computer “somewhere”,

Please see AUTHORS NOTE No. 7 at the end of this article.

The “Decision” has been made:

The recent decision to accept another term of office by the Good Chairman of the private central bank, informed me with a high degree of probability, which titanic force of purchasing power would be permitted to circulate in the coming years.

It would NOT BE the tens of trillions of modern “electronic savings” vested in the Stock Markets by hopeful future retirees.

Instead, it WOUD BE the “… trillions of electronic monetary units, represented by government deficits..” that will be circulated and “spent” into the hands of the people.

FACTS in REVIEW

1. “There exists today, untouchable, unseeable trillions upon trillions of digital units of modern “electronic money” in various forms of retirement “savings”: IRA’s, Keogh’s, 401K’s, etc. All these so called “savings” are “invested” in the Markets.”

Those trillions of electronic “savings” cannot be permitted to come into the US economy at the same time as electronic Government deficits.

2. To diminish or eliminate the inflationary “threat” these trillions of electronic “savings” pose to the economy, the private central bank need only cease providing liquidity to the Markets, the same as it did in 1929, 1987, 2007, and before every recession.

So, just in case you think the private central bank is NOT the “person” providing liquidity to the Markets, consider the following fact I personally remember and witnessed, just after the 1987 Crash of the Stock Market on 19 October of that year.

About two days following the 500 point “Crash” on “Black Monday” 19 October 1987, the then Chairman of the private central bank came down to the floor of the New York Stock Exchange and uttered, to the best of my recollection, the following words:

“The Federal Reserve will now resume liquidity.”

The “Official” statement published thereafter was: “The Federal Reserve affirms today its readiness to serve as a source of liquidity to support the economic and financial system.”

QUESTIONS:

1. Would that “source of liquidity” be a computer “wired” into the trading terminals on the floor of the New York Stock Exchange, providing “Buying and Selling” at the speed of light?

2. If the private bank resumed “liquidity” shortly after the 1987 Crash, when did it stop providing liquidity? How many times in the past, has it stopped providing liquidity?

Please review my prior comments above in Parallel 3a, regarding “liquidity” and the 1929 Crash of the stock Market. Then, draw your own conclusions.

With respect to all of the above, here follows:

MY CONCLUSIONS

A. Historically, the equity Markets are presently in an identical collapse of Markets that followed the expansion of paper money by the private central bank after 1913.

B. 1929 monetary History IS repeating, for the same causal reasons.

C. The private central bank has begun to decrease, and will continue to decrease providing liquidity to the equity Markets.

D. Over the coming weeks, months, possibly years, the lack of liquidity for the Markets will result in dramatic declines in the index values of all equity Markets.

And finally,

E. The end EFFECT of this CAUSE will be devastating losses to the modern electronic money “savings” of all future retirees!

THEREFORE:

My broad, overall LONG TERM VIEW of the Markets is the following:

THE MARKET is “SHORT” LONG TERM: for weeks, months, perhaps even years.

1. The Market has made the 50% (0.618) retracement from the March ’09 Low. This is identical to the 50% retracement after the 1929 initial “crash”. See “C” on the chart below.

2. The Market Maker must, over the near and long term, take away most if not nearly all equity Market value belonging to WE THE PEOPLE, just as was done by 1933.

WHY?

For all the historical facts and reasons heretofore stated.

Here below is a Chart to indicate where I think the Market is now, and where it will be going, relative to the time period of 1929 to 1933:

Related posts:

1. Two Titanic Forces Part 1
2. An Open Letter
3. Pay No Attention To Men Behind The Curtain
4. China Banking 2.0 “Crash of the Titans”
5. The Supreme Inviolate Law of Economics

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