Following the financial gesticulations of the Bush administration have become a daily affair of late. Bailout after bailout for the last few months and now this:
Big banks started falling in line Tuesday behind a rejiggered bailout plan that will have the government forking over as much as $250 billion in exchange for partial ownership—putting the world's bastion of capitalism and free markets squarely in the banking business.I just never get enough of Bush logic, preserve something by undermining its integrity. Next they'll tell us we don't need rockets to go to the moon we'll just float there.
Some early signs were hopeful for the latest in a flurry of radical efforts to save the nation's financial system: Credit was a bit easier to come by. And stocks were down but not alarmingly so after Monday's stratospheric leap.
The new plan, President Bush declared, is "not intended to take over the free market but to preserve it."
But then as I ran across an article called The Federal Reserve & The Fiat Monetary System recently which seems to explain in simple terms the workings of the system, I was reminded that the emperor has no clothes:
The fiat money system is not backed by anything physical (it has no intrinsic value), such as a precious metals like Gold or Silver.Note the words, "no intrinsic value". Federal Reserve Notes are just debt, a vacuum, created by a banking system, on pieces of paper, which aren't really worth anything. So in a strange sort of way I suppose Bush is preserving something, a charade.
The money is printed out of thin air by the Federal Reserve, who controls the nations monetary system and they are accountable to no one. The Federal Reserve has no budget, it is not subject to an audit, and no Congressional Committee knows of, or can truly supervise its operations.
As a fascinating side note, this piece mentioned something called the Credit River case:
In 1969 there was a Minnesota Court Case involving a man by the name of Jerome Daly. He challenged the foreclosure of his home by the bank who provided the loan in the first place. His argument was that the mortgage contract, required both parties, each put up a legitimate form of property for the exchange. Mr Daly explained that the money was not the property of the bank for it was created out of nothing as soon as the loan agreement was signed.I wanted to know more, looked it up and the case really does exists. Mr. Daly, a lawyer, represented himself and won the case on the grounds that the bank provided no consideration, nothing of value, for the loan, but simply made an accounting entry to reflect the loan amount. The same thing other federal reserve member banks have done and continue to do. One particular statement in the memorandum of summary judgment by Judge Mahoney was telling:
The money and credit first came into existance when they created it. Mr. Morgan (the president of the First National Bank of Montgomery, MN which issued the mortgage) admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note. See Anheuser-Busch Brewing Co. v. Emma Mason, 44 Minn. 318, 46 N.W. 558. The Jury found there was no lawful consideration and I agree. Only God can created [sic] something of value out of nothing (emphasis mine)Only God can create something of value out of nothing. Only God can. Government says, "Let there be $800 billion", and so there is. What $800 billion is worth is an entirely different story.