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Appendix 1: Disengagement From The Gold Standard Copyright 1982-2006 and beyond, by Bernard Palicki. All Rights Reserved. The 'stock market crash' on October 29, 1929 marked beginning of the 'Great Depression of the 1930s'. The 'Great Depression of the 1930s' in the U.S. was caused by the 'private authority' over the U.S. 'central banking system', when that 'private authority' over the U.S. central banking system' called in the loans for all 'money' (units of U.S. national currency) 'borrowed' during a period of time after World War I (1918-1929) - that is, all 'money' borrowed to purchase 'investment' in all 'private business structure' organizations in existence during that period of time. Capital stock could be purchased with a minimum down payment (called 'margin') during the 'Roaring Twenties', and borrowed money to cover the balance of the going market price. That condition initiated a stock buying frenzy across the country, giving that decade its name. All 'borrowed' money to purchase 'stock' drove stock market prices up, as dictated by the natural law of 'demand and supply'. Stock market prices are always inflated by borrowed money. The value of material assets simply did not exist to support the inflated stock market prices. The stock market crash caused destruction (or soaking up - like a sponge) of all national capital investment. Because of the unavailability of money, the major thrust of government policy to recover from the Great Depression was simply to print more money, to make money available. No one no longer had any assets to use as collateral to borrow money - all industrial assets had been wiped out on a national scale by bankruptcies and foreclosures because of the 'crash'. Because the 'crash' wiped out all available money for investment, U.S. Federal Government was elevated to the position of 'God' as "employer of last resort". Elevated to the position of 'God' as "employer of last resort", Federal Government programs such as the WPA (Works Progress Administration) and the Civilian Conservation Corps (CCC), for logging, and to build roads, bridges and dams, and the TVA (Tennessee Valley Authority) for rural electrification of the South, and the Social Security System for pensions, were initiated. Since the finite amount of gold stock in the vaults of the U.S. Treasury was not sufficient to cover the published exchange rate of gold for the increased amount of paper money, the exchange rate of gold for the U.S paper dollar was reduced (The exchange rate of dollars for gold was devalued. More paper dollars were required for fewer ounces of gold.) A chronology of gradual disengagement from the gold standard in the aftermath of the Stock Market crash October 29, 1929 follows: o "Before January 30, 1934, the gold stock of the United States consisted of gold coin in circulation in the United States and gold held by the Treasury and the Federal Reserve Banks. On that date, in accordance with the the Gold Reserve Act of 1934, title to all gold owned by Federal Reserve Banks was transferred to the U.S. Government, while gold coin was retired from circulation by a series of Executive Orders." o January 31, 1934 - By Executive Order, the dollar was devalued in terms of gold from $20.67 per fine ounce of gold to $35.00 per fine ounce of gold. The beginning of World War II in September of 1939 was the beginning of the end of the Depression of the 1930s. After World War II, the Marshall Plan1 to finance the reconstruction of Europe contributed to the expansion of total U.S. national money supply in excess of the growth rate of U.S. national population and the gold stock in the U.S Treasury. (1Marshall Plan was the name given to reconstruction of areas decimated by the military actions of WWII using the World Bank and the International Monetary Fund established/enabled by the Bretton Woods Agreement Act of 1945. Commonly referred to or called 'Foreign Aid'.) During the years immediately following World War II, as a consequence of generous foreign aid programs, European banks were flooded with holdings of U.S. dollars. They came to be known as Eurodollars. o Starting in 1960, European nations, forming an alliance under the concept of a European Common Market, and led by France under Charles DeGaulle, started to remove the glut of U.S. dollars in their banks by exchanging them for gold from the U.S. Treasury. o January 1961 - By Executive Order, the holding of gold abroad and of securities representing gold on deposit was prohibited to counter the gold drain initiated by France. During a period from September 1970 to August 1971, U.S. money supply was increased from $212.6 billion to $227.7 billion. Meanwhile gold supply dwindled from $10.8 billion to $9.8 billion due to foreign exchange of U.S. dollars for U.S. gold. In effect, the U.S. Treasury was bankrupt in terms of the amount of gold left in the vaults as backing for the total amount of paper in circulation. o August 15, 1971 - By Executive Order, a wage-price freeze was instituted for 90 days to hold back inflation (caused by the increase of U.S. Money Supply) and payment in gold by the U.S. to foreign banks in exchange for the return of U.S. dollars was suspended. o May 8, 1972 - The dollar was again devalued in terms of gold from $35.00 per fine ounce to $38.00 per fine ounce (Public Law 92-268). o October 18, 1973 - The dollar was again devalued in terms of gold from $38.00 per fine ounce to $42.22 per fine ounce (Public Law 93-110). and beginning of 'USURY' in the U.S. 2. ABOLISHMENT OF U.S. STATE LAWS FOR LIMITS ON INTEREST RATES CHARGED BY BANKS FOR COST OF BORROWED MONEY On this date, October 29, 1974, the 45th anniversary date of the Stock Market crash that inititiated the Great Depression of the 1930's, the 93rd Congress passed an Amendment to the un-constitional Federal Reserve Banking Act of 1913, and abolished those portions of all State constitutions that had set limits on interest rates that banks could charge for cost of borrowed money. See Public Law 93-501, 93rd Congress, S. 3838, October 29, 1974, repeated as follows: TITLE III-APPLICABILITY OF STATE USURY CEILINGS TO CERTAIN OBLIGATIONS ISSUED BY BANKS AND AFFILIATES Sec. 301. Section 18 of the Federal Reserve Banking Act is amended by adding at the end thereof the following new subsection: (12 USC 461.) (12 USC 371b-1.) "(k) No member bank or affiliate thereof, or any successor or assignee of such member bank or affiliate may plead, raise, or claim directly or by counterclaim, setoff, or otherwise, with respect to any deposit of obligation of such member bank or affiliate, any defense, right, or benefit under any provision of a statute or constitution of a State or of a territory of the United States, or of any law of the District of Columbia, regulating or limiting the rate of interest which may be charged, taken, received, or reserved, and any such provision is hereby preempted, and no civil or criminal penalty which would otherwise be applicable under such provision shall apply to such member bank or affiliate or to any other person." December 9, 1974 - Rather than continue an endless and periodic devaluation of the dollar in terms of gold, decision was made to allow the price of gold to seek its own level in a free market. By this date, gold certificates had been issued by the Treasury to the Federal Reserve against all of the gold owned by the Treasury. December 31, 1974 - The ban on private ownership and trading of gold by U.S. citizens was ended (Public Law 93-373). In connection with the lifting of the ban on private ownership of and trading in gold by U.S. citizens, the Treasury announced it would sell gold at auction. In the January-June 1975 time period, the auctioned gold sold at roughly $165.00 per fine ounce. As of November 1992, the free market price of gold was roughly twice that amount. The only logical explanation for floating a set-aside of gold stock for exchange on the open market is to determine an exchange rate of gold based on world open-market demand for gold as a monetary unit, to assist stabilization of the exchange rate of the U.S. dollar vis a vis other national currencies, as opposed to some artificial or arbitrary fixed price that has no reference to anything. Fixed price or free-market price, the published value of gold has no reference or relationship to anything that warrants its use as a standard of measure for the relative values of the different talents of human labor. The free market price of gold, subject to the natural law of demand and supply, is based on two factors: 1. Lack of confidence in the exchange power of any paper currency. 2. real demand for gold for industrial use, such as micro-electronic circuits required by computers. Even when gold was the unit of measure of the value of human labor in antiquity, the amount of existing gold never had a relationship with the population headcount that required it as a medium of exchange and as a unit of measure of the relative value of goods, products and services of the market place. Just as that moment and circumstance in time, when the use of gold to represent the value of human labor was lost in antiquity, the concept and reality that money, representative of the value of human labor and human life, was, and continues to be, lost in antiquity. Money, or more of it, is not a true measure of progress or productivity. True progress or productivity is only smarter or more intelligent application of better and more sophisticated tools, resulting in improved circumstances and conditions for living, not more money. Improved circumstances and conditions for living cannot be measured in terms of money, as long as the value or dimension of money as a measuring rod keeps changing. 1. Increase of Money Supply in excess of national population headcount is the single cause of a decrease of purchasing power faster than the dollar (or any paper money) can be earned by labor. 2. A changing cost of money to counteract deliberate inflation is the singular cause of turmoil and instability of the exchange process of money for goods, products and services. A fixed dimension of money is an absolute essential to stability of business operations and prices and wages in the market place. Gold can't provide that stability because the amount of gold that exists on Earth is essentially fixed, and that fixed amount of gold has no relationship to the variable increase of population headcount that exists to earn it. Advance/Return Options:
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