"There is something strange about fighting debt by incentivizing more debt."
- Jaime Caruana, head of Bank of International Settlements, "the central bank of central banks"

Craig R. Smith and Lowell Ponte's book, "Don't Bank on It," should be a required primer for high school and college students who often graduate economically illiterate unless they major in Economics. The average American's economic literacy would be tremendously augmented by reading this book, written for the average person who is not an investor or a banker.

Smith, the Founder and Chairman of Swiss America Trading Corporation, and Lowell Ponte, a former think tank futurist, offer sound advice and options for a future that "you could bank on" as well as a lengthy list of risks to Americans' bank accounts.

The detailed and fascinating history of money and banking, the value of the dollar, its depreciation, and the attractiveness of gold as an alternative to illusory electronic investment that can be hacked overnight and disappear, are laid out carefully and logically.

Touting a cashless society that would eventually deal in electronic entries only, is not so far-fetched. It is a reality that "97 percent of transactions in Stockholm now happen via credit cards, smart phones, checks, and other means of transferring disembodied money that exists almost entirely as flickering digital signals inside computer circuits." Entire towns in Sweden accept no cash. The risks of hacking from a world away can never be underestimated, potentially "breaking the banks." (p. 24)

Financial warfare originating from unfriendly nations makes "too big to fail" banks "much too big to fail" by falling prey to full-time hackers. (p. 27)

The firewalls and the gate keepers entrusted with our money may allow the theft of billions of dollars. Cyber financial warfare such as the Stuxnet computer worm can make anybody vulnerable. (p. 32)

Smith and Ponte describe the "financial Pearl Harbor" that occurred in three coordinated assaults aimed at destroying the dollar as the world's reserve currency:

1. The 9-11-2001 attack which closed the U.S. exchanges for six days.

2. "Bear raids" by Arab Sovereign Wealth Funds with $2 trillion (derived from oil profits of $147 per barrel prices in 2007) against companies like Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, and Merrill Lynch, aimed at collapsing them through "naked short selling and manipulation of credit default swaps, both of which were virtually unregulated" (p. 34)

3. Direct economic attack on the U.S. Treasury to collapse the dollar by "dumping Treasury bonds." (p. 35)

Smith and Ponte explain how the Pentagon was "war gaming" the possibility of a social breakdown caused by a potential economic collapse. Computer-generated trading in nanoseconds can certainly cause "flash crashes." And "high-frequency trader interaction with computerized algorithms of large-cap financial institutions is providing opportunities for high-speed, virtually undetectable market manipulation." (pp. 36-39)

Russia, China, and Saudi Arabia could affect a "flash crash" on Wall Street or an attack on the vulnerable power grid and water supply in order to replace the dollar with a "new gold-backed Russian Ruble and Chinese Yuan/Renminbi during the next U.S. or global panic." (p. 45)

Smith and Ponte believe that "decentralizing our technologies would make America much less vulnerable to high-tech terrorism and breakdowns." There is always the possibility of a "Carrington Event," a solar flare affecting the Earth's magnetic field with disruptive electromagnetic effects, frying "stock trading computers, banking, crash the Belgium-based SWIFT, the Society for Worldwide Interbank Financial Telecommunications," or the potential of a terrorist Electro Magnetic Pulse (EMP) from a weather balloon nuclear bomb exploded 110,000 feet above America. (pp. 40-43)

Smith and Ponte explain that the inflationary history of money and of governments with their "fiat currency" should teach us that money is not a good store of value. Fixing prices, debasing the money, and price controls are also good arguments in favor of gold as store of value.

Because the "magical" fractional reserve banking that the Fed engages in is a Ponzi scheme and should not create a sense of security of our money stored in any bank, Smith and Ponte call it the "Fractured Reserve Banking." Your bank is a "de facto owner of an unsecured loan or asset you have given it." (p. 61-65)

Printing money ad nauseam is not something new. Smith and Ponte state that, from the original 13 colonies with 2.4 million people and only $12 million Spanish dollars in circulation, in five years there were $225 million in circulation, the creation of the "federal trough." (p. 66)

The first Continental dollars issued were worth 1-1.5 silver coins each. By 1779, the inflated Continental was worth 1/24th of face value in silver dollars. According to Smith, in 1782 America's first fractional reserve bank came into being, the Bank of North America, "the depository for all congressional funds."(pp. 67-68)

In 1791, the Bank of the United States issued millions of dollars in paper money, using only $2 million worth of gold and silver. Hamilton said that our nation had a "scarcity" of gold and silver and, in order to grow, we had to issue paper money. Inflation rose by 72 percent. (p. 70-71)

Jefferson said about the 'money changers,' "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." (p. 71)

With the assassination of Republican President William McKinley in 1901, a staunch gold advocate, Progressives took reign under President Teddy Roosevelt. "These Progressives would crucify humankind not upon a cross of gold, as Presidential candidate William Jennings Bryan said, but upon a double-cross of paper and fractional-reserve banking," said Smith. (p. 79)

Smith and Ponte opine that the centralization of banking in America started in December 1914, when 95 percent of the 27,349 banks in existence did not have branches. The dawn of the Fed in 1913, "a new cartel of 12 private central banks," marked the beginning of politicizing banks. (p. 80-84)

The argument presented at the time that creating the Federal Reserve took politics out of the money supply decisions was preposterous. Minnesota Republican Congressman Charles A. Lindbergh recognized the Federal Reserve Act as the "most gigantic trust on Earth." Using other people's money, "They [Fed] know in advance when to create panic to their advantage. They also know when to stop panic." (pp. 85-86)

In addition to the Federal Reserve Act of 1913 "imposed by the new Progressive President Woodrow Wilson," the 16th Amendment created the Progressive income tax, taking more from the rich, a recommendation made by Karl Marx in 1848 in his Communist Manifesto as one of the ten ways to destroy capitalism. (p. 88)

Smith describes how President Woodrow Wilson "took the dollar off the classic gold standard by making it more difficult to convert dollars into gold." FDR issued an Executive Order that confiscated Americans' bullion gold coins, forcing them to exchange any non-numismatic coins at the rate of $20 per troy ounce. (pp. 94-95)

The 1944 Bretton Woods treaty, pegging the dollar at $35 per troy ounce, gave rise to the World Bank (run by an American) and to the International Monetary Fund (run by a European). (p. 98)

According to Smith and Ponte, the Glass-Steagall Act, which did not allow commercial banks to engage in various investing schemes, was not repealed in 1999. They explain that "Insured banks are still prohibited from underwriting or dealing in securities. What was repealed in 1999 were the Glass-Steagall provisions that had prohibited commercial banks from being affiliated with investment banks engaged in underwriting and dealing in securities." This repeal will further endanger the safety of our money. (p. 96)

Beardsley Ruml, the Chairman of the Federal Reserve Bank of New York in 1945, listed federal taxation "as an instrument of fiscal policy to help stabilize the purchasing power of the dollar." He devised income tax withholding from paychecks which enabled the out-of-control federal spending and thus the weakening of the purchasing power of the dollar through inflation brought on by excessive money printing no longer backed by gold. Before Ruml's withholding, only seven percent of Americans paid income tax. (p. 99)

Craig Smith expounds on the Progressives' giveaway of trillions of dollars since the 1970s and how "this political extortion of the banks led to the 2008-near collapse of our economy" and to the current economic situation. (p. 103)

What Smith aptly calls the "Great Unraveling" has cost more than five million people their homes, $5 trillion loss to homeowners when home prices fell by 30 percent, and a forfeiture of $50 trillion in investor equity.

President Carter gave us in 1977 the Community Reinvestment Act which eventually led to forcing banks to give ARM loans to non-credit-worthy home buyers in previously red-lined areas, and to the bursting of the mortgage bubble in 2008, all in the name of imposed equality. It was not fair for the rich to be the sole fortunate "winners of life's lottery." (p. 110)

The two monster banks, Fannie Mae and Freddie Mac, pooled, securitized, and sold mortgages to the tune of $5.4 trillion in 2008 when they were bailed out, said Smith, $1,4 trillion sub-prime. (p. 111)

According to Smith and Ponte, Fannie and Freddie became profitable in 2012, made enough money to pay the required 10 percent to the government, and had money left to pay private investors. However, the Treasury changed the terms such that the 10 percent dividend due to the U.S. Treasury became 100 percent, an act of expropriation not unlike the deal with the Chrysler bankruptcy. (p. 115)

Forcing banks to lend to sub-prime customers restarted in 2013 with the Progressive social engineering of the Obama administration "Affirmatively Furthering Fair Housing" HUD rule. According to Craig Smith, mapping all U.S. neighborhoods by race and publishing 'geospatial data,' HUD will find out segregated areas and will force them to change zoning laws to include subsidized housing for low-income and minorities in 'white suburbs.' The minorities will include illegal aliens. (p. 131)

Americans will be unable to escape the tax man no matter in what corner of the world they might move to – the arm of the IRS will reach them thanks to a new arm-twisting law, FATCA, the Foreign Account Tax Compliance Act, which forces foreign banks to report any Americans with accounts over $50,000. Incredibly, 77,000 banks and financial groups abroad have registered to comply.

And if anyone should harbor the erroneous thought that their money is safe in banks, all they have to do is read what happened to the citizens of Cyprus and their bank accounts, when the EU technocrats decided to help themselves to other people's money who worked hard and saved wisely.

"The bigger a Progressive welfare state becomes, the more of other people's money it needs to devour. Our politicians have targeted banks, and our accounts in those banks, as pools of wealth they intend to plunder," explained Craig R. Smith. (p. 153)

Of the 101 million Americans who work full-time, 86 million are employed in the private sector. These Americans own retirement accounts, 401(k(s, IRAs, and other pension funds for a total of $20 trillion. Politicians are trying to figure out how they can tap into this goldmine. Smith describes how a Progressive-proposed "Guaranteed Retirement Account" power grab might seize your savings. The federal government has already "borrowed" $5 trillion from various government programs that were supposed to be safe lock-boxes. And $5 trillion of unfunded Social Security liability accrues each year. (pp. 166-169)

Smith and Ponte quote Keynes on inflation, "Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…" To paraphrase Frederich A. Hayek, inflation is usually engineered by governments for their gain. (p. 171-172)

Even the IMF is after our money in the form of a "one time levy" of ten percent on income earners with "positive net wealth," Smith explains, that would be households with income of $34,000. (p 173)

Smith and Ponte conclude that it is not out of the realm of possibility that banks and the dollar may cease to exist in the future. Banks are already nationalized via confiscation of property by regulation. Near zero interest rates punish the savers, the retired, and investors in general. The crypto-currency called bitcoin, an attempt to replace the dollar is not "legal tender." Smith says that it can cause deflation, "an increase in value over time as owners hoard it." (p. 194)

Will we become a cashless society as the government eliminates the middlemen and becomes America's bank?

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