[davep]

Quite. And btw, the USA was using fractional reserve banking prior to the Fed Act, so the chart upthread showing business cycles prior to the Fed Act doesn't mean much in that context. The Fed Act was an act of consolidation of power.

[ralfy]

$this->bbcode_second_pass_quote('Pops', '')$this->bbcode_second_pass_quote('Outcast_Searcher', 'E')ven the article you cite says these "demand notes" were unbacked paper money, and the suggestion was to "just let congress print it" and worry about paying the money back later.

[davep]

For those who feel daunted by watching the full three and a half hour Money Masters video, this is a transcript of the video providing interesting historical insight into the fight to control money supply http://stefaancasier.magix.net/public/filmpjeslinks/The_Money_Masters.htm

Here's a bit from Chapter 8, "The American Revolution"

$this->bbcode_second_pass_quote('', 'I')n 1720 every colonial Royal Governor was instructed to curtail the issue of colonial money. This was largely unsuccessful. In
1742 the British Resumption Act required that taxes and other debts be paid in gold. This caused a depression in the colonies
– property was seized on foreclosure by the rich for one-tenth its value.
Benjamin Franklin was a big supporter of the colonies printing their own money. In 1757, Franklin was sent to London to fight
for colonial paper money. He ended up staying for the next 18 years – nearly until the start of the American Revolution.
During this period, ignoring Parliament, more American colonies began to issue their own money.
Called Colonial Scrip, the endeavor was successful, with notable exceptions. It provided a reliable medium of exchange, and it
also helped to provide a feeling of unity between the colonies. Remember, most Colonial Scrip was just paper money – debt-
free money – printed in the public interest and not really backed by gold or silver coin. In other words, it was a fiat currency.
Officials of the Bank of England asked Franklin how he would account for the new-found prosperity of the colonies. Without
hesitation he replied:
“That is simple. In the colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the
demands of trade and industry to make the products pass easily from the producers to the consumers... In this manner,
creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one.”
This was just common sense to Franklin, but you can imagine the impact it had at the Bank of England. America had learned
the secret of money, and that genie had to be returned to its bottle as soon as possible.
[1st American Central Bank War (1764-1776); Bank of England; 12 years duration]
As a result, Parliament hurriedly passed the Currency Act of 1764. This prohibited colonial officials from issuing their own
money and ordered them to pay all future taxes in gold or silver coins. In other words, it forced the colonies on a gold and
silver standard. This initiated the first intense phase of the first “Bank War” in America, which ended in defeat for the Money
Changers beginning with the Declaration of Independence, and concluded by the subsequent peace Treaty of Paris 1783.
For those who believe that a gold standard is the answer for America’s current monetary problems, look what happened to
America after the Currency Act of 1764 was passed. Writing in his autobiography, Franklin said:
“In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that
the streets of the Colonies were filled with unemployed.”
Franklin claims that this was even the basic cause for the American Revolution. As Franklin put it in his autobiography:
“The Colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the
Colonies their money, which created unemployment and dissatisfaction.”
In 1774, Parliament passed the Stamp Act which required that a stamp be placed on ever instrument of commerce indicating
payment of tax in gold, which threatened the colonial paper money again. Less than two weeks later, the Massachusetts
Committee of Safety passed a resolution directing the issuance of more colonial currency and honoring the currency of other
colonies.
On June 10 and June 22, 1775, the “Congress of the Colonies” resolved to issue million in paper money based on the credit
and faith of the “United Colonies.” This flew in the face of the Bank of England and Parliament. It constituted an act of
defiance, a refusal to accept a monetary system unjust to the people of the colonies.
“Thus the bills of credit [i.e. paper money] which historians with ignorance or prejudice have belittled as instruments of
reckless financial policy, were really the standards of the Revolution. They were more than this: they were the Revolution
itself.” – Alexander Del Mar, historian
By the time the first shots were fired in Concord and Lexington, Massachusetts on April 19, 1775, the colonies had been
drained of gold and silver coin by British taxation. As result, the Continental government had no choice but to print its own
paper money to finance the war.
At the start of the Revolution, the U.S. (colonial) money supply stood at $12 million. By the end of the war, it was nearly $500
million. This was partly a result of massive British counterfeiting. As a result, the currency was virtually worthless. Shoes sold
for $5,000 a pair. George Washington lamented, “A wagon load of money will scarcely purchase a wagon of provisions.”
Earlier, Colonial scrip had worked because just enough was issued to facilitate trade and counterfeiting was minimal. Today,
those who support a gold-backed currency point to this period during the Revolution to demonstrate the evils of a fiat
currency. But remember, the currency had worked so well twenty years earlier during times of peace that the of England had
Parliament outlaw it, and during the war the British deliberately sought to undermine it by counterfeiting it in England and
shipping it “by the bale” to the colonies.
[2nd American Central Bank War (1781-1785); Bank of North America; 4 years]

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Oneaboveall', '
')Have we not realized yet that money is BS?

[davep]

$this->bbcode_second_pass_quote('Outcast_Searcher', '')$this->bbcode_second_pass_quote('Oneaboveall', '
')Have we not realized yet that money is BS?