LOUISIANA’S BULLION BILL AND SOME NECESSARY CLARIFICATIONS

After last week's blog about the South Dakota bullion and unit-of-account bill, I received an  email from Catherine Austin Fitts that the movement to state bullion depositories might be the latest gimik and squeeze play from the banksters.  We'll get to why that possibility should never be ignored in a moment, because the Louisiana bill, as written, contains some telltale signs that her misgivings are well-founded.  But I also want to use this opportunity to clarify my thinking for the record, and to remind readers here that if you read my individual blogs and do not contextualize them within the wider body of my thinking about financial and physical systems, that you will be bound to misinterpret and forget what I've stated on previous occasions. Absent any repudiation by me, those earlier statements still form part of my thinking.

A case in point: bullion.  I have repeatedly warned on numerous occasions, in interviews, at conferences, in writings, that I view any possible return to a bullion-backed currency as a near impossibility, for two basic reasons: (1) there simply isn't enough gold or any other bullion to "back" all the circulating currency, a scenario that immediately sets up all sorts of possibilities for manipulation of shorting. Since the world gold standard was abandoned as a result of the massive increase of credit by World War One, the two - money supply and bullion supply - have become increasingly disconnected... and then along came World War Two, and the aftermath of Bretton-Woods, a modified gold standard, and its abandonment by Richard Nixon. This is a complex point, and one that one could spend volumes pondering. We must, however, pass on doing so for the moment and pass to consider the second point: (2) since the end of World War Two, the amounts of bullion - and particularly gold bullion - available in the world's banks' and national depositories' stocks, is badly obfuscated, and again, for two reasons (a) as a matter of national security, and (b) because the amounts of gold looted during World War Two particularly into the Axis' powers' treasuries is itself badly obfuscated. I have opined on many occasions that the estimated amounts of bullion may be off by as much as an order of magnitude too low.  A recent and, to my mind, telltale indicator of this possibility of wild obfuscation of estimated bullion amounts are all those estimates of the bullion in asteroids, in many cases amounts of such estimates range to the quadrillions of dollars. That's a lot of bullion, the only trouble is going out and getting it. Claiming to do so would be a way to mask the introduction of those badly obfuscated figures into the equations, or conversely, to claim to have done so.  In other words, to boil all of this down to its most basic point, the opportunities for continued bankster fraud are maintained in any system claiming to be bullion-backed for the simple reason that the obfuscation admits the possibility of commodities markets manipulation and further fraud.  For this reason I've insisted on convertibility of any certificates of deposit into state bullion depositories and their use as legal tender: one should be able to go to a bank, and exchange a note for specie, and that convertibility is a matter defined by law. Therewith we have the real point of my blog about the South Dakota bill, the central point of which was not the bullion or the specie, but the definition of the value of a unit of account by law.

Why is that important? The answer is simple, and admittedly quite scary when one thinks through the obvious nature of it: the current international system is entirely lawless: or to put it differently, it has no internationally recognized standard of the value of any currency, because commodities data and the markets pricing dependent on that data are both badly obfuscated.

This is where my attention - and where, I believe Ms. Fitts' concerns (and mind you, I'm guessing here on the basis of some writings she referred me to, and because she is travelling now and it is difficult to have time to compare notes) - were both grabbed by the South Dakota bill, and I want people to understand that the bill's effects can be either very good or very bad, depending on the context of the system in which it is enacted. As I mentioned, my attention was not focused on what the bill said about bullion or specie, but about what it said about units of account being defined by law, and mutually agreed upon between countries or, in this case, the State of South Dakota and potentially any of its trading partners, be those partners Italy, Wyoming, or (perish the thought) Delaware. Units of account are definitions of value of assets and liabilities on the ledgers of banks. They first emerged in modern financial history in the northern Italian banks of the late High Middle ages and early Renaissance, and especially so in the Italian city-states like Genoa, Florence, and of course, Venice. For the bankers on the Rialto, trading constantly and on not just a daily basis, but an hourly one, and doing so in a plethora of different national currencies from Florentine (and its own) ducats, florins, to Byzantine bezants and Turkish crescents and the various marks of German principalities, the unit of account allowed the banks of the Rialto to conduct transactions and currency conversions quickly, because the transactions were settled in those units of account, which had agreed-upon definitions of value based on the several currencies behind it, and the commodities traded with it. As such, the value of such units of account tended to be less volatile than that of any individual currency comprising it. Needless to say, the value of such units of account more often than not fluctuated far less wildly than the national currencies themselves, a fact which, as I detailed in The Financial Vipers of Venice, that city state could and did exploit by the manipulation of gold-to-silver exchange ratios...and, please note, by having access to a then-'secret" supply of bullion from the as-yet not publicly known source of bullion in the New World which its Templar allies were able to exploit.

In other words, the estimated bullion supply of Europe was off by a large amount because of that hidden and unknown supply. 

Thus, the South Dakota bill, by referring to the idea of the creation of a unit of account in law, can be taken in a profoundly good way, as a way of by-passing the data obfuscation and central bank monopoly (which was my approach in the previous blog), if whatever definition of such unit of account does not peddle to those interests, or, as Ms. Fitts pointed out to me, could be a very cleverly laid central banksters' trap, which is also certainly possible and indeed a trap that I've written about before. The nature of these concerns may be illustrated by considering the latest installment in the state-bullion-depository stampede (article shared, with our thanks by W.G.):

Note what is said here:

Rep. Raymond Crews filed House Bill 714 (HB714) on March 1. The legislation would require the state treasurer to “issue specie and establish a currency as determined practicable,” as authorized by Article I, Section 10 of the Constitution of the United States

Specie is defined in the bill as “a precious metal stamped into coins of uniform shape, size, design, content, and purity, suitable for or customarily used as currency, as a medium of exchange, or as the medium for purchase, sale, storage, transfer, or delivery of precious metals in retail or wholesale transactions.”

Currency is defined in the proposed law as “the representation of actual gold and silver, specie, and bullion held in a depository account by a depository account holder. Such representation shall reflect the exact unit(s) of physical specie or gold and silver bullion in the pooled depository account in its fractional troy ounce measurement as provided in this Chapter.”

Under the proposed law, this currency would be considered legal tender in the state.

In establishing the currency, the treasurer shall establish a means to ensure that a person who holds the currency may use the currency as legal tender in payment of debt or readily transfer or assign such currency to any other person or state by electronic means. (Italicized emphasis added)

Now note the clever disguise of convertibility as a currency whose value is defined by a specific value of specie confected from a specific type of bullion, and its use as "legal tender" transferable by electronic means. In case you're wondering how that protects privacy, anonymity, and purchasing power, it doesn't, for as the article also states:

In practice, the passage of HB714 would allow any person to conduct business transactions using gold or silver.

In a nutshell, any person or business would be able to transact business using a debit card that seamlessly converts gold and silver to fiat currency in the background. 

No, not for me, because even though the word "converts" here is used, this is not convertability, because under normal circumstances the holder of the debit card is known, and that card can be intercepted, and participation in that system can be turned on or off at will. You'll note that there are now three levels of obfuscation involved, and also that only one element is not obfuscated, but indeed, is "perfectly known" (remember Ms. Fitt's "perfection of collateral observation?): the perfectly known element is the name on the debit card. The three obfuscated data remain: (1) the amounts of bullion available, (2) the amounts in a particular depository, and therefore, (3) the defined value of the money being "converted" into "fiat currency".  In a world where the data is controlled, it matters not how much bullion or specie there is, and we're once again back to my favorite warning about this emerging system: convertability and the necessity, the absolute necessity, of physical media of exchange like a paper bearer certificate of deposit (or an anonymous bearer debit card), that can circulate as money, and be taken to any bank and converted into specie. And the problem here, as Ms. Fitts has repeatedly pointed out, is how many people actually hold and own physical specie or bullion to begin with? Answer: very few. The only thing that would make this system work is if the debit card represents an anonymous holder, in other words, becomes a bearer certificate, only made out of plastic, and not paper.

You'll note that no one has been talking about the specifics of the system. If, say, I can take 5 troy ounces of 24 carat gold and deposit that gold in the Texas bullion depository to an account with no other identifier than a number, and get five Gold Texits credited to a debit card that contains that number, then, yes, we have convertibility if that card can be presented for any transaction or deposited to any bank account. But if that deposit is in my or anyone else's name and the debit card is issued to me in my or someone else's name, then privacy, and hence convertibility, are nullified, and what is supposed to be a "currency" is no such thing; it is merely a corporate coupon which may, or may not, work, depending on the whim of those managing the system, not the cardholders.

In short, we're back to convertibility, and to actual physical bearer certificates  - cold hard cash is the traditional term - once again. If these are lacking, all you have is a fraudulent system, and it's telling that we've been operating at least in part under such a system for so long most of us have forgotten what it was like to operate and transact within a system where fraud is not the foundational principle.

Which brings us to the possibility no one talks about, and one which I've mentioned in my bankster books, and one which Ms. Fitts mentioned to me in her email referencing some of her own thoughts on the subject. That other possibility is even more fundamental: suppose those units of account in South Dakota's bill were to be defined in a multitude of ways, not just specie, but commodities and finished products.  It's a strange-sounding idea, because it's a form of fiat currency we haven't seen for quite a while, namely, a fiat currency that is real money and not the facsimie thereof because it is not monetized debt nor created from thin air by a bank with interest attached, but is tied to the actual production of a country. Nazi Germany did it, and almost overnight eliminated both inflation and galloping unemployment. But there were two earlier attempts to do it, and in slightly different ways...

... and look what happened there: Abraham Lincoln was most likely shot for his efforts, and even though "they" managed to capture his opposite number Jefferson Davis, they never brought him to trial in spite of Mr. Davis' own insistence that they do so. Only after Mr. Davis was long dead did President Carter sign into law a posthumous restoration of Mr. Davis' citizenship in October of 1978, because by then, people were no longer capable of asking the sorts of questions that, rest assured, Mr. Davis would have insisted be addressed in the trial he so earnestly sought after the Confederacy's defeat and his capture. Sequere certificationum...

See you on the flip side...