Anat, pt ii

Anatomy of a General Plunder

Part ii

Why did ‘collateral’ for Federal Reserve notes go missing?

And how is it related to the Occupation of America by the Alliance among Mexican and Columbian Drug Cartels, Chinese Triads, and the Chinese Communist Party… as revealed by testimony before Congress?

Natural-law copyright by Anthony

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Part one of Anatomy dealt with unprecedented events relative to bank borrowings and bank reserves; events that carried the developing financial crisis to new areas of uncharted territory.

This Part Two deals with another unprecedented aspect of the crisis; here, I approach the question, ‘Why did it happen?’  “Approach” is the key word; for, here, I only identify organizations that are complicit in the crime; it remains to identify individuals that directed it, benefited from it and aided it.

To properly understand this Part, it is necessary to understand procedures related to issuing Federal Reserve notes into circulation.

We start with data copied from the “Statistical Release H4.1”, dated 2007 Nov 29, and issued by the Federal Reserve. It is titled:

“[Table] 5. Collateral held against Federal Reserve Notes: Federal Reserve Agents’ Accounts.

Billions of dollars.

[Table] 5

Note 1 for the above reads, “Includes [a] face value of U.S. Treasury and agency securities held outright, [b] compensation to adjust for the effect of inflation on the original face value of inflation-indexed securities, and [c] cash value of repurchase agreements. [Brackets added]

Commentary: Federal Reserve notes do not fall from the sky: they are not issued into existence “out of thin air”; as if somebody merely runs them off a printing press and then goes shopping with them.

They are also not a “fiat currency”; neither do they come into existence merely by “wishful thinking”, both of which imply the “printing press” method.

It is much worse: it involves, and requires, a particular kind of cannibalism.

Federal Reserve notes come into existence in exchange for U S government securities; just as, one hundred and sixty years ago, paper dollars were issued into existence in exchange for gold.

As such, these U S Treasury securities become the collateral for issued Federal Reserve notes; just as gold was formerly the collateral for issued paper dollars.

But government debt, as evidenced by U S Treasury securities, is only paper, with no intrinsic value – a value derived from rational and voluntary human actions.  If collateral is to serve its purpose, it must be something that has intrinsic value – a value equal to, or greater than, the thing collateralized.

Still, some people attach value to U S Treasury securities.  Imaginations that give such securities value – that causes dollars to be accepted by people as if they had value is the belief that, someday, a) the U S Treasury will be able to collect taxes from future American taxpayers and b) that such tax proceeds will then be able to be converted into real economic goods that will have intrinsic value equal to, or greater than, dollars surrendered for conversion.

Government debt, in other words, is the mechanism by which one generation of people financially cannibalizes following generations.

This debt cannot be collected practically or constitutionally.

The process of laying taxes on following generations began during the Civil War. Such debt cannot be collected practically because men will not cannibalize themselves. Ask a man to bite off his finger and eat it. Will he do it? Of course not; nor will he do the equivalent regarding the imposition of taxes. If such debt is ever to be collected, it must be done before power passes from the cannibalizing generation.

Such debt cannot be collected constitutionally for several reasons:

One: every tax must receive the consent of those taxed (such consent is impossible to give or withhold when such tax is made necessary before a taxpayer’s birth);

Two: the tax must benefit those who are taxed,

Neither has the legislature any constitutional right [authority) to create a public debt, or to lay a tax, or to authorize any municipal corporation to do it, in order to raise funds for a mere private purpose. This would not be legislation. Taxation is a mode of raising revenue for public purposes. When it is prostituted to objects in no way connected with the public interest or welfare, it ceases to be taxation, and becomes plunder. Transferring money from the owners of it, into the possession of those who have no title to it, tho it be done under the name and form of a tax, is unconstitutional for all the reasons which forbid the legislature to usurp any other power not granted to them [sic]. [Brackets, bold and italics added] Sharpless v. Mayor, 1853, 21 Penn 147, 168.

In other words, when a legislature authorizes a debt that necessitates a future tax, both the debt and tax are unconstitutional.

This makes the dollar a money of cannibalism, just like any other paper money issued by a central bank.  Such money cannot have value without the widespread belief that total cannibalization of future generations of Americans can be performed.  It will be total because government debt on U S Treasury books today is so great that a 100% tax on the income of every American would not even pay the interest on it.  Thru legislation that created the Federal Reserve and the income tax, Congress has mandated the cannibalization of future generations of Americans to the end of time.  See Bad News for the Alternative Health Industry…

It is not the only such money on this globe; but, for now, we will only deal with this currency that Americans use, along with the rest of the world.

When people describe Federal Reserve notes as “issued out of thin air’ or as a “fiat currency”, they represent central-bank-issued currency as a harmless, but slightly disrespectful way, of getting money.

They give, at best, a tepid warning of the terrible price the world must pay for cannibalizing its young.  An Old-Testament genocide gives you a hint of what happens when people eat their children.

There are several obstructions between the wishful promise to cannibalize future generations of Americans and the reality of it.  It appears that the effort to wish away these obstructions has been evaporating at an unprecedented rate, as shown by the unfolding story depicted on Federal Reserve balance sheets since 2007 December.

The table shown above explains details for Federal Reserve notes issued into circulation, as of 2007 Nov 29.  It reports that 783+ billion had been issued, and needed “to be collateralized.”

The “collateral” consists of (a) “gold certificates”; (b) “special drawing rights” and (c) “U S Treasury and agency securities”; here, ‘agency’ means Fannie Mae, Freddie Mac and Ginnie Mae; all three of which guarantee certain types of residential mortgages.

The substance of this collateral is nothing more than paper; it may even be less than paper: it may be electronic charges in a few computers.

A “gold certificate” is a piece of paper collateralized by all gold at Fort Knox… I mean, if there is any gold there.

A “special drawing right” (SDR) is play money issued by the International Monetary Fund (IMF).  Its value is derived from a basket of half a dozen or so major currencies; its value is as substantial as those currencies.  If the dollar is a house of cards, these other currencies are also houses of cards.  This means that the SDR is a house of cards built on top of several houses of cards.  It is used mainly among central bankers to settle payments among themselves.

To understand what follows, it is necessary to explain two concepts that appear in the above table: “pledged” and “eligible to be pledged”.  Here, “eligible” is probably a euphemism for “lawful”; or, assets permitted by law to be pledged as collateral for Federal Reserve notes.

Sometimes the amount “pledged” is identical to total “eligible” assets; and, other times, it is a fraction of this total.

This is shown in the chart below.

Chart 1: Data as of 2007 Nov 28, billions
(Sources: Statistical Releases H4.1 issued by Federal Reserve, various dates)

Anat2 T1

Table 1: Data for Chart 1, billions

This chart covers fourteen years and shows four sets of data: a) “FR notes to be collateralized” (FRn), b) ‘eligible (lawful) assets pledged’ (Tot Elg Pldg), and c) ‘total eligible assets’.  The fourth set of data represents d) “borrowed reserves”; this is included to show a time relationship between it and the other three sets.  At the time of this table, this fourth set of data is comprised of such tiny amounts that its line never appears above the zero line.

For the first one third of the chart, a), b) and c) are identical; for the remainder, total “eligible” assets slightly exceed the other two.

This chart shows data from 1997 to 2007 Nov 28; and the numbers on that date are,

FR notes “to be collateralized”: 783,675 million,

Eligible assets pledged: the same number,

Total eligible assets: 791,383 million,

Borrowed Reserves: 300 million.

Thus, total eligible assets slightly exceeded those that were pledged.

The first three sets of data show a rather unremarkable activity from the beginning to the date given.  During this time, ‘eligible’ assets were equal to or slightly greater than FR notes “to be collateralized”; and “eligible assets pledged” were always equal to FR notes “to be collateralized”.

This chart also demonstrates the almost inconceivable magnitudes that we deal with.  As of 2007 Nov 28, American banks had borrowed $300 million to meet their reserve requirements.  Most people cannot conceive the immense magnitude of this number; and, yet, when this number appears on the chart, it never leaves the zero line.

Federal Reserve notes are generally issued only to member banks.  When such a bank needs currency, it must buy that currency from the Federal Reserve with U S government securities, or equivalent.  If a bank wants a million dollars of currency, it must give U S Treasury securities to the Federal Reserve with a face value of a million dollars.

A hundred years ago, the process involved banks giving government bonds to the Comptroller of the Currency in exchange for U S dollars.  It had been that way since the enactment of the National Banking Act of 1863 – this legislation was a response to the suggestion made by Karl Marx that called for the centralization of all credit into the hands of the state treasury.  Thru a series of transactions, ‘government bonds’ replaced gold as collateral for the dollar; gold still freely flowed; but its days were now numbered.  The Federal Reserve Act of 1913 was little more than a revision of the National Banking Act.

Prior to the NBA, the issuance of currency into circulation was done by private banks as they issued their own bank notes in exchange for gold or silver.  Private bank notes were driven out of existence by the combination of the NBA and Jesse James; the first imposed a tax on private bank notes while the second only robbed banks that resisted the drive to centralize credit into the hands of Washington bureaucrats.

In a very real sense, FR notes are nothing more than ‘small change’ for Treasury securities.  You get experience with this idea when you ask a clerk to give you four quarters in exchange for a piece of paper with “One Dollar” written on it.  Both quarters and dollar have no intrinsic value – so baseless have men’s brains become.  Treasury securities come in denominations of a thousand, ten thousand, twenty-five thousand, and so on – very inconvenient for common, everyday transactions.  The Federal Reserve merely breaks them into smaller change.

Now, why is the current method ‘much worse’ than issuing paper money against “thin air”?

When a money is backed by promises – as is the case when U S Treasury securities comprise the collateral, people accept that money as they trust the other party to the contract (promise) to deliver on his promises.

As noted, the nature of that promise is the ability of the U S Treasury to collect taxes, sometime in the future, for the benefit of those who want to redeem their dollars for something of real value – such as real estate, gold, automobiles, or factories; whatever pleases the dollar holder.

It is not possible that the assessment or collection of such taxes would be constitutional.  American taxes are constitutional only so far as they are levied for constitutional purposes, as defined in the Preamble of the constitution: for the “common defense”, the “general welfare” (as limited by Article 1, section 8), to establish “domestic tranquility” (the establishment of constitutional courts), and, for good measure, the “blessings of liberty”.

The purpose of a preamble is to declare purposes for which a government is created.  If actions of such government do not serve a purpose declared in the preamble, its actions are not constitutional.  See, for example, Advisory Opinion of Maine Supreme Court, (1871) 58 Maine 590, 607.

Thus, American taxes cannot be constitutionally assessed or collected for the purpose of arming an enemy, such as was done thru Lend Lease during World War II; nor for financing the delivery of two million human beings to hands of demonic murderers – as was done thru Operation Keelhaul.  This is why these operations, and thousands of others, were financed thru government debt rather than collected taxes.  To impose such taxes would have required public debate; but, in this case, to express the nature of the purpose would have defeated the proposed tax.  Thru a long series of roll-overs, such debt has never been redeemed.

It is also practically impossible to collect taxes for their final redemption.

If a generation of people is to successfully cannibalize following generations, the act must be completed before the first generation surrenders its power; for, no man will voluntarily cannibalize himself; much less, a whole generation of men.

There is another principle that must be observed in order to make an intergenerational tax constitutional: every American tax must be levied for the benefit of the people who pay the tax.  In other words, a tax cannot be levied in one county to pay for a road in another county; a tax cannot be levied on a generation for the benefit, folly or crimes of a previous generation – especially when that previous generation intended, or consented, to cannibalize later generations for its benefits.  This intention, or consequence, would void a tax levied to redeem such debt.  Sharpless v. Mayor, (1853) 21 Penn 147, Headnotes 15 and 17.

Chart 2: Data as of 2008 Jan 23, billions
(Sources same as for Chart 1)

Anat2 T2

Table 2: Data for Chart 2, billions

(Sources: same as for Chart 1)

This chart advances the data eight weeks, 2007 Nov 28 to 2008 Jan 23.  The sets of data are now:

FR notes to be collateralized: 774.7 billion,

Eligible Assets Pledged: 721 billion,

Total eligible assets: the same number,

Borrowed reserves: 50.7 billion.

Within the context of this chart – and probably for the first time in the history of the Fed’s existence, issued FR notes are not fully collateralized.  A whisper of this is cause for bank runs of staggering proportions; just as a rumor of missing gold, a hundred years ago, would have done.

So far, the whisper was confined to those who knew what to look for, at least for now.

How did it happen?  Here are the pertinent sets of data.

Anat2 T3

Table 3: sources: Statistical Releases H4.1 (various dates) issued by the Federal Reserve.

The Federal Reserve publishes a balance sheet every week.  The Asset Statement lists several categories of assets.  ‘Treasury Bills’ is one of those categories, and the only category that displayed “suspicious” activity during the time in question.

These Treasury bills are normally included as “eligible” collateral for FR notes, as indicated by the table that details such collateral.

What we see here is that, for the week ended 2007 Dec 12, someone purchased $5 billion of Treasury bills from the Fed, and they were purchased with bank reserves and other types of FR liabilities – not FR notes.  Please notice that currency actually increased for the week, $193 million.

Please remember, when a change occurs on a balance sheet, it requires equal and offsetting entries somewhere else on that balance sheet.  In our case, the $5 billion decline in Treasury bills was partly offset with a $3 billion decline in bank reserves (which was immediately replaced by an increase of $3 billion of loans to banks).  The remaining offset of $2 billion was distributed among other accounts, details of which would carry us beyond our purpose.

Owing to the offsetting requirement, if those bills had been purchased with FR notes, “currency in circulation” would have shown a similar decline.  It didn’t happen.  Instead, banks’ borrowings increased (by a nearly unprecedented amount) to replace reserves that had been drained by the purchase of bills.

That the sale amount was exactly $5 billion points to the possibility that it was the result of a single decision or transaction.

During the first week, Dec 5-12, we see one nearly unprecedented event (borrowed reserves increased from 340 million to 3,050 million) and one unprecedented event (FR notes not fully collateralized) – added together they represent a rather unprecedented coincidence.

We need to dwell on this a moment. Bank reserves are the foundation stone of a bank, without it, a bank cannot operate. Such reserves are composed of two categories: vault cash and deposits at the Federal Reserve. Since 1959, reserves of the American banking system have ranged between $10 billion and $60 billion (see Chart 1 of Anatomy… part 1). During that time, vault cash represented approximately 60% to 80% of those totals; thus, FR deposits ranged between 20% and 40%. During the weeks in question (Table 3), these deposited reserves ranged between $10.1 and $4.5 billion.

In the following week (ended 2007 Dec 19), another decline of $5 billion of bills was transacted, exactly; and “nearly” was omitted as a qualifier for unprecedented for bank borrowings ($4.6 billion).  As for uncollateralized currency, it increased its status of unprecedented.

The next week the total for the decline of bills was $15,163 million.  This could have been one transaction of $15,000 million plus one or more trades for the remainder.

During this three-week period, borrowed reserves went from 340 million to 24,900 million (more than half the total of all reserves of the American banking system) and Treasury bills taken off the Fed’s balance sheet added to 25,163 million.  The second was cause for the first, and turned smoldering tinder into a classic firestorm.  Something very serious happened; and not a single news editor in the world noticed.

Another factor: all of these trades were done on Thursdays, the day after the published report.  This put as much time as possible between each trade and the public report of it.  I believe it is a generally accepted rule in the business of robbery to conceal knowledge of a crime as long as possible.  Did this rule operate in these transactions?

Since 1959, borrowed reserves barely bounced of the zero line 2 or 3 times (Chart 1, part 1). When the FR drains $3 billion of bank reserves in one day, it is cause for concern in a number of bank board rooms; when it happens two consecutive weeks, the concern borders on panic; three consecutive weeks leads to an unprecedented catastrophe.

There is a troubling aspect about these transactions.  The bills in question were owned “outright” by the Federal Reserve.  It was under no obligation to sell such bills. In fact, the FR was under a legal obligation to continue its possession of those bills, as they were “pledged” as collateral for issued currency.

If the bureaucrats at the Federal Reserve actually aimed at maintaining the stability of the currency, they would have known that a sale of such magnitude would have drained a dangerously large amount of FR notes or bank reserves, and that this would have caused disruptions in financial markets all over the globe.  They would not have allowed the sale of this amount of five billion; much less, the subsequent sales of twenty billion.

Some might suggest that these “sales” were the result of the Treasury redeeming some of its debt.  This is not a likely possibility; for, if that had been the case, Fed bureaucrats, again, would have known that such redemptions would have drained dangerously large amounts of reserves from the banking system; they would have counter-acted that possibility with acquisitions of new Treasury securities, thus adding reserves to the system.

That such sales did take place leads to two possible conclusions, a) Fed bureaucrats allowed these trades to take place intentionally, with full knowledge of disastrous consequences… or b) that the Fed decision to sell these bills in question was a simple act of stupidity.

It doesn’t really matter: the principle of ‘constructive knowledge’ makes each alternative intentional; and, each alternative is evidence of a globe-shattering problem: how did conscious thieves – or blathering idiots – gain control of the world’s currency?

‘Constructive knowledge’ holds that every office holder – whether baker or bureaucrat, general or factory owner – possesses full knowledge of duties and limitations of his office; and makes every act intentional.  Thus, if an office of a government perpetrated a crime, the law holds that every member of that office had full knowledge of that crime.

The precise amounts of these trades, the timing, and the complicity of the Federal Reserve all point to the conclusion that this prelude to an unprecedented crisis was not an accident: it was deliberately planned and executed.

And, we have barely begun.

Chart 3: Data as of 2008 Sep 10
(Sources same as for Chart 1)

Chart 3: Data as of 2008 Sep 10, billions

(Sources same as for Chart 1)

Anat2 T4

Table 4: Data for Chart 3, billions.

This chart carries data forward to 2008 Sep 10; the explosion of bank borrowings had begun, and only a few financial writers had noticed; but no news editor had done so.  Five days later Secretary of Treasury Henry Paulsen would go before Congress and demand $700 billion or he and Goldman Sachs would impose marital law on the country.

The numbers are,

Currency that needed “to be collateralized”: $797.6 billion,

Eligible Assets Pledged: $577.2 billion,

Total Eligible Assets: the same number,

Total Borrowed Reserves: $199.2 billion.

Twenty-eight percent of all Federal Reserve notes are now without collateral.  This missing collateral and the amount of borrowed reserves went to new levels of unprecedented.  The average person on the street and financial analysts with no knowledge of accounting principles knew nothing of it.  But in board rooms of banks and meeting rooms of a few Federal agencies the red button of panic was pushed.  That they (missing collateral and missing reserves) occurred at precisely the same time points to the conclusion that one was probably cause for the other.  To know precisely, we would have to get into the heads of hundreds, maybe thousands, of brains that produced the crisis.

Chart 4: Data as of 2009 April 15, billions
(Sources same as for Chart 1)

Chart 4: Data as of 2009 April 15, billions

(Sources same as Chart 1)

Anat2 T5

Table 5: Data for Chart 4, billions.

This chart carries us from 2008 Sep 10 to 2009 April 15, a period of seven months.  For the first time since 2007 Dec 12, Total Eligible Assets equal or exceed Federal Reserve notes that “need to be collateralized.”  The numbers are,

Currency “to be collateralized”: $865.2 billion,

Eligible Assets Pledged: the same number,

Total Eligible assets: $888.8 billion,

Total borrowed Reserves: $1,179.7 billion.

Please also notice that the scale has changed.

During this time period (2008 Sep 10 to 2009 April 15), the lowest amount for ‘Total Eligible Assets” was $456 billion as of 2009 Feb 4.  This collateralized only 53% of ‘currency in circulation.’  Again, not a news editor noticed.

During the time that the dollar was under-collateralized, the FR report added an amount, labeled, ‘Other Assets Pledged’, to make the total collateral (“eligible” and non-eligible) equal currency that needed to be collateralized.  There was no explanation to describe what these ‘Other Assets’ consisted of; nor were they described as ‘Eligible’.  In an earlier time, 1996 June 27 for example, when additional assets were needed, beyond the usual, to collateralize FR notes, the deficiency was supplied by “Other Eligible Assets”.  But, at the time of the chart above, the word, ‘Eligible’, was omitted.

If we examine the Federal Reserve balance sheet to guess what those “other assets” might have been, we see that there are two general categories of assets: “owned outright” and those not owned outright, or, those that represent different classes of loans to “financial institutions”.  In other words, there is no obligation to sell or relinquish the first category of assets.  With regard to the second category, we deal with loans that have been collateralized by various assets provided by financial institutions and other privileged borrowers.  Here, we deal with maturities that range mostly between fourteen to eighty-four days.  When the loan is paid back, collateral is returned to the borrower and everything is taken off the Fed’s books.

Thus, whatever collateral was provided to the Federal Reserve by American banks was also used as collateral for FR notes.  In other words, such collateral was used twice, probably without knowledge of those who provided it.  If you or I had done it, we’re talking jail time.

This collateral ranged all over the map of private debt: there was the Asset-backed loans, which included, mortgage servicing loans (companies that made mortgage payments missed by homeowners), consumer and small business loans, student loans, car-floor-plan loans, SBA loans, credit card loans, private and public shares of companies – to name a few.  See the Federal Reserve press release dated, 2009 March 19, available on the FR website.

Mortgage servicers?  Student loans?  Credit-card loans… as collateral for the currency that serves as the basis for most of the world’s commerce?

These Federal Reserve bureaucrats plumb new depths of insanity.

A large portion of this private debt was put on the Fed’s books under the title, ‘Mortgage Backed Securities’ (MBS).  These first appeared on the Fed’s books 2009 Jan 14; on that date also, these securities were included as ‘Eligible Assets’ that could be used as collateral for FR notes.

It was the accumulation of these MBS that allowed the Fed to reverse the loss of FR-note collateral and bring it back to equality with FR notes outstanding.

These MBS purchased by the Fed were guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae; such guarantees pertain to mortgages in amounts of less than $220,000.

So now, 2009 April 15, the Federal Reserve currency is backed (or collateralized) by U S Treasury securities and by homes of middle- and lower-class Americans.

By the process of purchasing private debt securities, the Federal Reserve did what it was never intended to do: it monetized private debt.

In communist and socialist gabble, the establishment of a central bank is always a primary goal; and, its purpose is to monetize government debt – not private debt.

In recent times people with collectivist ideologies like to call themselves ‘progressives’.  ‘Regressives’ would be a more accurate, and very gentle, label.  When we view ten thousand years of their experience, all we see is a path, stretching back to a pre-historical mist and to every acre of habitable land, strewn with societies (or civilizations) that have been laid waste – from which none has risen again.  Many have disappeared from human memory – without a whisper of a trace.

The purpose of a central bank, as regressives would tell us, is to provide unlimited financing (by turning government debt into money) for every pea-brained idea of bureaucrats – not for every pea-brained idea of evil capitalists.  That there are evil capitalists is beyond question; and, if we dig beneath their surface, we always find that these pariah employ the instrument of government to destroy their competitors; this is what allows them to be evil with impunity.  When these “evil” capitalists conduct an unprecedented plunder of a nation, the scene absolutely scandalizes most regressives – who thought they were supposed to monopolize the practice.

In the regressive’s view of the world, the totalitarian state is god and men of commerce are jackals.  Most regressives are rather simple-minded, as well as single-minded: they destroy civilizations with a zeal and joy that would humble any theologian.  When we view their work, we are seized with a feeling that we have witnessed a miracle – with a sense of awe that there is still human life on this planet.

Now, let us turn our attention to Red China.

I imagine that central bankers of Red China have been very nervous as they accumulated the largest stash of U S Treasury securities on earth – especially when they saw the dollar go without collateral for fourteen months (from 2007 Dec to 2009 April).  There must have been a great amount of hand wringing by Chinese Regressives and frantic assurances by American Regressives to calm their Chinese counterparts.

Did the latter demand larger amounts and more substantial collateral for the dollar?

Let us further scandalize them.

Chart 5: Data as of 2011 March 23, billions
(Sources same as for Chart 1)

Anat2 T6

Table 6: data for Chart 5, billions.

The numbers are,

FR notes to be collateralized, $962.5 billion,

Eligible assets pledged, the same number,

Total eligible assets, $2,322 billion,

Total borrowed reserves, $1,029 billion.

We get to use that word again, unprecedented: the chart shows how greatly eligible assets exceed FR notes that need to be collateralized.

Why would the Fed do this?

An easy answer is that it was done to pacify someone who held large amounts of dollars (in the form of U S Treasury securities) and was powerful enough to make such a demand.

It all makes sense now.  During the Nixon administration, negotiations were begun with Red China to open trade activity between America and Red China.  One of the major issues that had to be settled was method of payment.  It was obvious that, with the wealth inequality of the two nations, goods would flow east while money would flow west.  How would America pay for these goods?  Not with dollars; but with U S Treasury securities.  You see, dollars earn no interest while Treasuries do.  Dollars received by Red China would be sent back to its deposit account at the Federal Reserve Bank of New York; then converted to U S Treasuries.

In other words, the real reason for opening trade with Red China was not trade, but to use its economy to finance the operation of the U S government thru Treasury debt.

But Red Chinese regressives were not dummies (in their opinion): U S Treasury securities gained in trade would never leave American soil.  When foreign central banks purchase U S Treasury securities, they are kept in the custody of the Federal Reserve Bank of New York.  How could Red Chinese regressives be persuaded to purchase, and “hold” such securities?  It is a monotonous repetition in man’s history that countries rarely keep promises made in treaties.  What collateral could the United States government give to Red Chinese regressives that would calm their fears?

How about the Panama Canal Zone?

Accordingly, thru efforts of the White House and the Senate, the Panama Canal was turned over to Red China in 1999.  Strictly speaking, the Canal was turned over to the dictator of Panama, who was obligated, according to the Carter-Torrijos Treaty, to select a private company to operate the canal.  The company was to be selected by competitive bidding.  American citizens established a company for this purpose and submitted the highest bid; but the Panamanian government rejected this bid, without comment, and gave the contract to a company, Hutchinson Whampoa, setup and controlled by the Red Chinese Army.

The Red Chinese then established control of the Panamanian government thru a series of bribes, including $4.5 million to smuggle into Panama 150 high-level Chinese triads crime bosses, who were subsequently smuggled into the United States.  Triads are to China what the MAFIA is to the Western world.

After securing control of the Panamanian government, Chinese communists then made an alliance with Mexican and Columbian drug cartels and Chinese triads.

All this, and much more, was revealed in testimony before a committee of the House of Representatives, 1999 December 7-9, see (

What are they doing… and, who are they?

Let’s review this situation as it pertains to Red China; we’ll start with a list of related facts: 1) more than a trillion dollars in US Treasury  (UST) securities held by the Red Chinese central bank; 2) control of the Panama canal by Red China; 3) the alliance comprised of Chinese triads, Mexican and Colombian drug cartels, and the Chinese Communist Party; 4) 150 high-level crime bosses of Chinese triads smuggled into Panama and then into the United States; 5) nearly a trillion in Mortgage Backed Securities (MBS) owned by the Federal Reserve; 6) such MBS is used as collateral for Federal Reserve notes (currency in circulation); 7)  nearly 1,000 billion dollars of reserves held by American Banking system (from 1959 to 2008, this number ranged between 10 and 60 billion) (see Part 1); 8) while Fed maintained a discount rate at 1% from 2001 to 2006 and while Congress mandated banks to issue subprime loans, real estate prices doubled and tripled nationwide; 9) when the Fed raised the discount rate to 5.25%, real estate prices plummeted 50% to 70% nationwide; 10) the Fed is currently maintaining discount rate at less than 0.25%, and has declared an intention to keep it there thru 2014, possibly longer; 11) despite this near-zero interest rate, real estate prices continue to drift lower, while banks issue large amounts of subprime loans.

What will higher interest rates do to a struggling – or declining – real estate market?

Actually, who needs a brain to answer that question?

That’s right… they will precipitate another real estate crash.

Now, let’s try to organize above facts into a plausible explanation.

For the past twenty years or so, the UST has used the Chinese economy to finance UST debt.  This was/is done by importing Chinese goods in exchange for UST securities.  Normally, this exchange would be gold for goods – but, with this method, such exchanges would strip away US gold three to four times over – presuming there is still gold at Fort Knox and disregarding claims from other nations.

Apparently, before China agreed to this arrangement (goods for UST debt), Chinese communist/crime bosses demanded effective collateral.  Mere ownership of UST securities would hardly qualify as collateral since most, maybe all, UST securities owned by foreign institutions (such as central banks) are physically held by the Federal Reserve Bank of New York.  Hence, by this arrangement, the UST, Federal Reserve, or Congress could, with the stroke of a pen, void every UST security owned by Red China; this would result in the practical destruction of the Chinese banking system.

No, paper collateral was not good enough; Chinese political hacks wanted something more substantial than promises made by American political hacks.

Like, possession of the Panama canal, thru which nearly 25% of America’s foreign trade passes.

With this choke point regarding international trade, Red China could demand any concession from American political hacks.

Accordingly, the UST, Congress and the Federal Reserve are legally poised to confiscate 20 to 50 million American homes (thru the foreclosure process) for the benefit of Chinese communists, as well as other foreign countries that own UST debt.

They, apparently, don’t want to do it now – since the Fed has declared an intention to keep the discount rate near zero for two or three years more.

When the Fed raises the discount rate from the zero level, that will be the signal it is about ready to drive real estate prices to new lows.

The resulting foreclosure frenzy will leave a vast majority of Americans homeless, drowning in debt, and little more than serfs.

It will be a classic example of reducing a nation, once relatively free, to a mass of rotting slaves freely available to any chance warlord – and wanted by none… or the most base.


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Timely, and related, pages,

Summaries of articles pertaining to Financial Grievances:

Since most of my articles run 5-35 pages, I thot it would be more time efficient to have one page to summarize each article with one paragraph. Please visit.

Pawn or Fool?

When a professor (or some other licensed “expert”) tells us the government is a guardian of our rights, some may ask, “Is he, or she, a willing pawn – or a gullible fool?”… It doesn’t really matter: whether pawn or fool, the result will be the same… A very large fraction of Americans can be classified into either of these categories; and the main thing you need to know about them is that they will die, or kill, rather than correct their self-destructive habits. These people control instruments of power across the globe; as far as they are concerned, if destruction of civilized society is necessary to secure rule by thieves, it shall be done… And the problem, from our perspective, is, ‘How do we protect ourselves from their murderous political system?’ How, for example, do we protect our property (from physical gold, to businesses, to stocks and bonds (domestic and foreign)) from false allegations provided and protected by the act of Congress that established the DHS? This could be a problem with all existing forums of redress controlled by criminal and useless classes – a major problem. Please read more.

Locate or Establish an Assembly: The law and procedures of assemblies are almost totally unknown to all but a few Americans; thus, before, or concurrently with, using information from this page, I strongly advise that many potential or actual members of an assembly study the book, The Lost Right (edition 3.5 or later) BEFORE they establish an assembly…  My role in this project is to function as a facilitator and a consultant.  In other words, if any action I suggest is to be done, it will require many resources beyond by own labor and capital; unless such resources come forward, nothing will happen.  My role as consultant will be similar to a teacher or guide – not a leader.  We organize assemblies so men can learn how to become their own leaders and “law’ makers.  Free men, in other words, have no leaders, apart from themselves.  Read more.

The Lost Right

Among the many rights officially declared by American Founders is the right to withhold taxes until the government redresses grievances. This was adopted unanimously by the Continental Congress as one of the “three grand rights” intended to be secured by the Revolution. And who knows it? Here, in this book, is the history, law and procedures of this lost right.

Turn Back the Clock.

Have I discovered the fountain of youth? Men frequently declare that they would like to go back in time to re-live certain events or to take back unkind words. Well, I can’t send men back in time; so, I haven’t invented a time machine. But I can reduce one’s biological age to the condition one should have had as a teenager. In my case, I’ve reduced my biological age by 50 or more years. So, how can I prove or demonstrate this claim? My primary exercise is hitting baseballs (go to YouTube, search for “1668-85”); I’ve had many former pro and college players tell me that, if I played competitive ball at the level of a major college, I would “wreck,” or “lead,” the league with a “.700 average”; that I’m a “hitting phenomenon”, among other comments. Those who play college ball are about 20 years of age; I’m over 70. This is what I have done despite a current living arrangement that prevents me from complying completely with my health regimen. Still, I’m looking forward to another fifty years with the health and physical condition of a near-professional athlete. Thus, I fully expect, at the age of 120, to have the same or better condition. If it comes to pass, I’ll have another 50 years. It raises the question, ‘Will it ever stop?’ Check back in 50 years and I’ll let you know. Better yet, maybe you, also, would like to give it a try. Your age makes no difference: my regimen will benefit anyone, at any age: from a year before conception to elderly. It is especially important for the young; for, if they do not get proper nutrients at proper times, they will not develop to their full potential. No, I can’t erase those unwanted events or unkind words; but I can give you the strength and youthful condition to play another, and better, game.


Here are excerpts from The American Inquisition which explain three points on which internal taxes are unconstitutional relative to “we the people… and our posterity”.

Who Owns City Hall?

Several years ago I stumbled across CAFRs, Comprehensive Annual Financial Reports. These are issued by cities, counties, special districts, states, among others. Of all those I examined (several dozen), the entity in question had enough cash on hand to operate for up to six years without collecting a penny of taxes. I eventually learned that California governments (city, county, state et cetera) had amassed surpluses equal to $20,000 to $50,000 for every man, woman and child in the state, depending on whether you read the foot notes or not. Two questions eventually arose in my mind, “Why are they still collecting taxes?” and “When do I get my dividend?” (See my other articles on this topic, Of Lords and Cattle and Tale of Two Bribes.) Walter Burien and I are the pioneers that brought this topic out of darkness. When we did our work, CAFRs were comprised of about 120 pages of financial statements and foot notes; now these statements and foot notes are limited to about a quarter of a page.

One Response to Anat, pt ii

  1. Pingback: Summaries | redressone

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