We are all about EMPOWERMENT, not ENTITLEMENT!

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. Arthur Schopenhauer    German philosopher (1788 - 1860)



A Workbook on Bank Reserves and Deposit Expansion
Federal Reserve Bank of Chicago 

This complete booklet is was originally produced and distributed free by: Public Information Center Federal Reserve Bank of Chicago P. O. Box 834 Chicago, IL 60690-0834 telephone: 312 322 5111 But it is now out of print. Photo copies can be made available by 

The purpose of this booklet is to describe the basic process of money creation in a "fractional reserve" banking system. The approach taken illustrates the changes in bank balance sheets that occur when deposits in banks change as a result of monetary action by the Federal Reserve System - the central bank of the United States. The relationships shown are based on simplifying assumptions. For the sake of simplicity, the relationships are shown as if they were mechanical, but they are not, as is described later in the booklet. Thus, they should not be interpreted to imply a close and predictable relationship between a specific central bank transaction and the quantity of money.
The introductory pages contain a brief general description of the characteristics of money and how the U.S. money system works. The illustrations in the following two sections describe two processes: first, how bank deposits expand or contract in response to changes in the amount of reserves supplied by the central bank; and second, how those reserves are affected by both Federal Reserve actions and other factors. A final section deals with some of the elements that modify, at least in the short run, the simple mechanical relationship between bank reserves and deposit money.
Money is such a routine part of everyday living that its existence and acceptance ordinarily are taken for granted. A user may sense that money must come into being either automatically as a result of economic activity or as an outgrowth of some government operation. But just how this happens all too often remains a mystery. 

What is Money? 


Banking, Finance, and the Money System. 

© Copyright. Brian McDermott  

It's time the people of Queensland and Australia knew the alarming facts about Banking, Finance, and the Money System. Test your own knowledge of these facts by the following questions:  

"The process by which banks create money is so simple that the mind is repelled. “Professor J. K. Galbraith. 

Do you know that no bank lends money deposited with it? 

Do you know that when a bank lends money it CREATES it out of nothing? 

Do you know that bank loans are merely pen and ink entries in the credit columns of a bank's ledger? And these days, are simply pixels in a computer? They have no other existence. 

Do you know that practically all the money in the community – and the country - comes into circulation as a debt to the banks? 

Do you know that money loaned by a Government bank is just as much a debt to the people as if it were loaned from a private bank? 

Do you know that “fixed deposits” are a plausible screen to hide the creation of credit? 

Did it ever occur to you that the banks enjoy this unique facility of creating credit and putting the nation progressively into debt-bondage because they create FINANCIAL credit against the REAL credit created by the people? 

Do you realize that every time a Government borrows money for a public work, the people are debited with the liability (in perpetuity), but are NEVER credited with the value of the asset? 

Do you know that every repayment of a bank loan cancels the amount of the loan out of existence? 

Do you know that Treasury Notes are Government I.O.U.'s — national pawn tickets for pledging the assets of the country to the private banks for the loan of OUR OWN financial credit? 

Do you know that banks purchase bank sites, build premises, and acquire assets at no real cost whatever to themselves — by the simple process of honoring their own cheques? 

Do you realize that not one politician in a thousand, in Queensland, or Australia, or anywhere for that matter, understands this? It is not taught in universities, or anywhere. It is a well-kept secret, and has been for hundreds of years.  

Sound incredible? Then read and study the rest of this article. 

 The respective Australian governments, both state and federal, (not the people) have run up public debts over the years to near breaking point, and debiting those debts to us, the people, BUT WE, THE PEOPLE HAVE NEVER EVER BEEN CREDITED WITH THE ASSETS,THEREBY DEFRAUDING THE AUSTRALIAN PEOPLE OF OUR BIRTHRIGHT, AND DISPOSSESSING US OF OUR LEGITIMATE ASSETS, I.E., THE COMMON  WEALTH OF THE LAND KNOWN AS THE COMMONWEALTH OF AUSTRALIA.  

The policies of every federal government, irrespective of which party is in power, and most state governments over the last fifty (50) years have been nothing more or less than thinly veiled, incrementally introduced , warmed-up Marxism, under the appearance of, and masquerading as a constitutional monarchy. 

“The Bank hath benefit of interest on all monies, which it creates out of nothing.”   That is the boastful statement of the co-founder (and the Financiers’ ‘Front Man’) of the (privately owned) Bank of England, William Patterson, upon its foundation in 1694. 

“He who takes up usury for a loan of money acts unjustly, for he sells what does not exist. It is wrong in itself to take a price (usury) for the use of money lent. And as in the case of other offences against justice, one is bound to make restitution of his unjustly acquired money.”  This is the Statement of St. Thomas Aquinas. 

“We must go forward, cautiously, and consolidate each acquired position, because already, the inferior social stratum of society (the common people, Ed.,) is giving unceasing signs of agitation. 

“Let us make use of the courts . . .  

“When, through the law’s intervention, the common people shall have lost their homes, they will be more easy to control and more easy to govern, and they shall not be able to resist the strong hand of the Government acting in accordance with . . .the control of the leaders of finance.  

“We must keep the people busy with political antagonisms. 

“We’ll therefore speed up the question of reform  (of tariffs within) the Democratic Party; and we’ll put the spotlight on the question of protection …(for) the Republican Party.  

“By dividing the electorate this way, we’ll be able to have them spend their energies at struggling amongst themselves, on questions that, for us, have no importance whatsoever.” 

United State Bankers magazine, 1892. 

As quoted in the Michael Journal, Jan-Feb., 2003 

“The most hated sort of money-making and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it – for money was intended merely for exchange, not for increase at interest. And this term interest, which implies the birth of money from money, is applied to the breeding of money, because the off-spring resembles the parent. Whereof all modes of money-making, this is the most unnatural.”  

Statement of Aristotle on Usury, 350 BC.  

“The function of money is not to make money, but to move goods.  Money is only one part of our transportation system. It moves goods from man to man. A dollar bill is like a postage stamp, it is no good unless it will move commodities between persons. If a postage stamp will not carry a letter or will not move goods, it is just the same as an engine that will not run. Someone will have to get out and fix it.” Statement of Henry Ford.  

“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in iniquity and born in sin…..bankers own the earth. Take it away from them, but leave them the power to create money, and with a flick of the pen, they will create enough money to buy it back again…….take this great power away from them and all the great fortunes like mine will disappear, and they ought to disappear, for then this would be a better world to live in …… but if you want to continue to be slaves of the bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.”  

The writings of Sir Josiah Stamp, President of the Bank of England, at the University of Texas, 1920. 

“Of all the discoveries and inventions by which we live and die, this totally improbable helix of credit is the most cunning, the most liable, the least comprehended, and, next to high explosives, the most dangerous. All that bankers themselves know about it is how it works from day to day. Beyond that, it is a bit from Pandora.”    Statement by Garet Garret, author of “The Bubble that Broke the World”, and regarded as “the clearest expositor of economics in the United States”: 

“When banks grant credit by creating or adding to deposits subject to check . . new dollars are created. They are credit dollars and they are created by the stroke of a pen rather than by dies and the stamping machines, but their purchasing power is not less than that of the dollars coined at the government mint . . . the principal way in which dollars are created in modern economic society is by borrowing.” Statement of Sumner H. Slichter, Professor of Business Economics at Harvard: 

“We have already learned that the most important kind of money is credit. The most important kind of credit is credit created out of thin air by the banking system. Eighty per cent of the volume of business in Canada uses money that isn’t there. Banks lend it out of nowhere to people, and when it is paid back, it returns to nowhere. It can’t be seen, yet it can make the difference between full employment and mass unemployment. MOST OF THE REVENUE OF BANKS IS INTEREST ON MONEY THAT DOES NOT EXIST.” Statement of W. Trimble of Ryerson Institute, Toronto, writing in “Understanding the Canadian Economy”: 

“The money power preys upon the nation in times of peace, and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its methods, or throw light upon its crimes.”  Statement of William Jennings Bryan: 

“I am afraid that the ordinary citizen will not like to be told that banks can and do create and destroy money. The amount of money in existence varies only with the action of the banks in increasing or decreasing deposits and bank purchases. We know how this is affected. Every loan, overdraft or bank purchase creates a deposit, and every repayment of a loan, overdraft or bank sale destroys a deposit. And they who control the credit of a nation direct the policy of governments, and hold in the hollow of their hands the destiny of the people.”  Statement of the Rt. Hon Reginald McKenna, former Chancellor of the Exchequer, and Chairman of the Midland Bank, addressing a meeting of the shareholders of the bank on January 25, 1924 (recorded in his book, “post-War Banking”): 

“A credit in the Bank of England’s books is regarded by the financial community as ‘cash’, and this pleasant fiction has given the bank the power of creating cash by the stroke of a pen, and to any extent it pleases, subject only to its own view as to what is prudent and sound business.  Statement of Hartley Withers in his book, “International Finance”. 

“ . . .  Today in Australia, as in most other modern economies, all money is a debt of the banking system.”   statement by the Bank of N.S.W. in its Special Article ‘Sources of Money’ in the ‘Bank of New South Wales Review’, October 1978: 

It has been clearly established, in Australia and other countries, that the banking system creates credit. In 1937 an Australian Royal Commission investigated Finance and Banking. In his summing up, the Chairman, Sir Mellis Napier, of the Royal Commission stated, 

"That the Commonwealth Bank (Reserve) can make money available to Governments or to others on such terms as it chooses even by way of a loan without interest or even without requiring either interest or repayment of principal." 

“We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination and legislation. The courts must be called to our aid. Debts must be collected, bonds and mortgages foreclosed as rapidly as possible. Where, through a process of law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of government, applied by central power of imperial wealth, under the control of leading financiers. The truth is well known among our principal men now engaged in forming an imperialism of capital to govern the World. While they are doing this, the people must be kept in a condition of political antagonism. … By thus dividing the voters we can get them to expend their energies in fighting over questions of no importance to us”. 

From the United States Bankers’ Magazine of 1892. 

The war-time Labor leader, John Curtin advocated the use of national credit. 

 In a speech in the Sydney Town Hall at the outbreak of war, Curtin said, 

"...Everything must be paid for, not by reducing wage standards, but by the use of the National Credit. Because the Labor Government was in Federal Parliament, there is a Commonwealth Bank. It was created as a means of releasing National Credit. But because Labor lost office the National Bank (Commonwealth) has been transformed by our opponents into a mere puppet of the private banks... The costs of war can be met without piling up huge debts, and without interest payments sucking our national life-blood..." 

The British historian, Sir Arthur Bryant had a clear understanding of the use of new credits.  

In "The Illustrated London News", March 1983, Bryant wrote: "To exercise the right inherent in every sovereign state of creating and issuing a sufficiency of money to make financially possible what is physically possible and morally desirable, would enable as much real wealth  to be brought into existence as, with its immense inventive and scientific potentialities, the nation is capable of making. It would give Government a freedom of action which its present dependence on borrowed money denies it..." 

“I sincerely believe that banking institutions are more dangerous than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”  Thomas Jefferson: 

“If the American people ever allow private banks to control the issue of their currency, . . . . . the banks and the corporations which grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered.”A further statement by Thomas Jefferson:   

“I have two great enemies; the southern army in front of me, and the financial powers behind me. Of the two, the enemy to my rear is the greater foe.” The famous statement of President Abraham Lincoln during the Civil War:  

 “The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of the government, but it is the government’s greatest creative opportunity.   

“The financing of all public enterprise and the conduct of the treasury will become matters of practical administration. Money will cease to be master, and will become servant of humanity.”  The writings of Abraham Lincoln, shortly before he was assassinated: 

“It is advisable to do all in your power to sustain such prominent daily and weekly newspapers, especially the Agricultural and Religious Press, as will oppose the greenback issue of paper money and that you will also withhold patronage from all applicants who are not willing to oppose the government issue of money. To repeal the Act creating bank notes or to restore to circulation the government issue of money will be to provide the people with money and will therefore seriously affect our individual profits as Bankers and lenders. See your congressman at once and engage him to support our interest that we may control legislation."  

James Buel 

 Secretary of the American Bankers Association, 1877 

“We have stricken the shackles from 4,000,000 human beings and brought all laborers to a common level, but not so much by the elevation of former slaves as by reducing the whole working population, white and black, to a condition of serfdom. While boasting of our noble deeds, we are careful to conceal the ugly fact that by our iniquitous money system, we have manipulated a system of oppression which, though more refined, is no less cruel than the old system of chattel slavery . . . . . . . . the concentration of capital and the growth of their turnover is radically challenging the significance of the banks. Scattered capitalists are transformed into a single collective capitalist. When carrying the current account of a few capitalists, the banks, as it were, transact a purely technical and exclusively auxiliary operation. When, however, these operations grow to enormous dimensions, we find that a handful of monopolists control all the operations, both commercial and industrial, of capitalist society. They can, by means of their banking connections . . . first ascertain exactly the position of the various capitalists, then control them, influence them by restricting or enlarging, facilitating or hindering their credits, and finally they can entirely determine their fate.” Vladimir Ulyanov (Lenin): 

“There is no better way to destroy the capitalist system than to debauch the currency.”  A further statement of Lenin: 

"The process by which banks create money is so simple that the mind is repelled. "Professor J. K. Galbraith  

“I set to work to read the Act of Parliament by which the Bank of England was created, and all the Acts about loans, and funds, and dividends, and payings, and sinking funds and I soon began to perceive that the fate of the Kingdom must finally turn upon what should be done with that accursed thing called the National Debt. The sum at first borrowed was a mere trifle. The inventors knew well what they were about. Their design was to mortgage by degrees the whole of the country... to those who would lend money to the State... the deep scheme has from its ominous birth been breeding usurers of every description, feeding and fattening on the vitals of the country, till it has produced what the World never saw before - starvation in the midst of abundance!” 

William Cobbett  

MP in the reformed Parliament of 1832 and author of “Rural Rides” 

“Give me the control of the credit of a nation, and I care not who makes the laws.” The famous boastful statement of Nathaniel Meyer Rothschild, speaking to a group of international bankers, 1912:  

“The few who could understand the (banking) system will either be so interested in its profits, or so dependent on its favors, that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”  The gloating statement by Rothschild Bros. of London, in a letter to New York bankers, 1863. 

“When a bank lends, it creates money out of nothing.”   Statement of R.G. Hawtrey, former Assistant Under-Secretary to the British Treasury; in his book, “Trade Depression and the Way out”: 

“Banks create credit. It is a mistake to suppose that bank credit is created to any important extent by the payment of money into the banks. The bank’s debit is a means of payment, it is credit money. It is a clear addition to the amount of the means of payment in the community.” Statement in Encyclopedia Britannica, 14thEdition, under the Heading of Banking and Credit (Vol. 3, Page 48): 

“If a nation can issue a dollar bond, it can issue a dollar bill. The elements that make the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the constitution, pays nobody but those who contribute in some useful way. It is absurd to say that our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer, while the other helps the People.”    Statement by Thomas Edison: 

“Whoever controls the volume of money in any country is absolute master of all industry and commerce. And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.”  Statement by USA President James A. Garfield: 

“The hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” Statement of Napoleon Bonaparte: 

 The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banks can inflate, mint and un-mint the modern ledger-entry currency.” Statement by Major L. L. B. Angu 

“The banks can create and destroy money. Bank credit is money. It’s the money we do most of our business with, not with that currency which we usually think of as money.”   Governor Eccles, former head of the Federal Reserve Bank Board of the United States, made in evidence before a Congressional Committee: 

"Although most writers still confuse and underestimate the matter, banks certainly create credit or, more exactly, they create money. Creation of money by the banks is a simple process."Dr. Jim Cairns 

 “There can be no doubt that all deposits are created by the banks.”  Statement of Lord Keynes, economist and former board member of the Bank of England: 

“The percentage of cash to credit necessary for a bank to hold, demonstrated over a period of years, is 2 ½%, with 7 ½% as a reserve with other banks.”  Statement by Professor H. Kniffer, in his “American Banking Practice”: 

“Banking is little more than book-keeping. It is a transfer of credit from one person to another. The transfer is by cheque. Cheques are currency (not legal tender). Currency is money.”   Statement of Sir Edward Holden, an eminent British banker: 

“In other words, every Reserve Bank in the Federal Reserve System purporting to issue these "Federal Reserve Notes" as money to its member Banks and every member Bank issuing them to its customers is legally insolvent, because they cannot ever redeem such a "Federal Reserve Note" in lawful money of these United States of America. Further, they are also willfully committing Fraud upon their customers, because they know (even if their customers do not know) that they cannot redeem those "Federal Reserve Notes". 

U.S. Congressional Report on Money (1964) 

 BE MINDFUL of the fact that the above situation has in fact been accomplished, due to a consistent, progressive and continuous programme of deceit, subterfuge, cunning and make-believe on the part of the banks, and by successive, subservient Fabian socialist/Masonic “governments”, both state and federal, in violation of their oaths of office, and to the gradual detriment and destruction of the assets of the people of Australia. 

“If the American people knew and understood the banking and financial system as I do, then I believe there would be a revolution before morning,” Warning by Mr. Henry Ford 

“It was not accidental. It was a carefully contrived occurrence. .  The international bankers sought to bring about a condition of despair here, so that they might emerge as rulers of us all.”  Statement by Rep. Louis T. McFadden, Chairman of the House Banking and Currency Committee, regarding the 1929 Wall Street crash: 

“After World War 1, Germany fell into the hands of German international bankers. Those bankers bought her, and now they own her, lock, stock, and barrel. They have purchased her industries, they have mortgages on her soil, they control her production, and they control all her public utilities. The international German bankers have subsidized the present government of Germany, and they have also supplied every dollar of the money Adolph Hitler has used in his lavish campaign to build up a threat to the government of Bruening. When Bruening fails to obey the orders of German international bankers, Hitler is brought forth to scare the Germans into submission . . . Through the Federal Reserve Board . . .  over $30 Billions of American money has been paid into Germany . . . You have all heard of the spending that has taken place in Germany . . . modernistic dwellings, her great planetariums, her gymnasiums, her swimming pools, her fine public highways, her perfect factories. All this was done on our money. All this was given to Germany through the Federal Reserve Board. The Federal Reserve has pumped so many billions of dollars into Germany, that they dare not name the total.” Further warning Louis T. McFadden, eight years before Hitler invaded Poland, re the rise to power of Adolph Hitler. 

“Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men . . . The money changers have fled from their high seats in the temple of our civilization.” Statement by President of Franklin D. Roosevelt, March 4th, 1933 (before he did a back-flip and became their subservient tool): 

“The powers of financial capitalism has (a) far reaching (plan), nothing less than to create a world system of financial control in private hands, able to dominate the political system of each country, and the economy of the world as a whole.  

  This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. 

“The apex of the system was to be the Bank for International Settlements, in Basle, Switzerland, a private bank owned and controlled by the world’s central banks, which were themselves private corporations.  

 “Each central bank . . . sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence co-operative politicians by subsequent rewards in the business world.”   Statement of Professor Carroll Quigley, Georgetown University, former "insider," and author of the book, “Tragedy and Hope”: 

"Communism is fascism with a human face. 

- Susan Sontag   

“The Federal Reserve definitely caused the Great Depression by contracting the amount of currency in circulation by one third from 1929 to 1933.” Statement by Milton Freedman, Nobel Prize winning economist, in 1996: 

“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”  Statement by Lord Acton: 

“This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood, and the defects remedied very soon.”   Warning by Robert H. Hemphill (former Credit Manager of the Federal Reserve Bank, Atlanta Ga.): 

"This (Federal Reserve) Act establishes the most gigantic trust [monopoly] on earth. When the President (Woodrow Wilson) signs this bill, the invisible government by the Monetary Power will be legalized. The people may not know it immediately, but the day of reckoning is only a few years removed. The trusts will soon realize that they have gone too far even for their own good. The people must make a declaration of independence to relieve themselves from the Monetary Power.  This they will be able to do by taking control of Congress. Wall Streeters could not cheat us if you Senators and Representatives did not make a humbug of Congress...The greatest crime of Congress is its currency system. The worst legislative crime of the ages is perpetrated by this banking bill. The caucus and the party bosses have again operated and prevented the people from getting the benefit of their own government." 

- Congressman Charles A. Lindbergh, Sr., 1913 

“History records that the money-changers have used every form of abuse, intrigue, deceit and violent means possible to maintain their control over governments by controlling money and its issuance.” Warning by U.S. President James Madison, shortly before he was assassinated: 

“The Federal Reserve is one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this Nation is run by the International Banks.”  Warning by Congressman Louis T. McFadden: 

“Most Americans and Australians, and for that matter, most people of the world have no real understandings of the operation of the international money lenders.  The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress, and manipulates the credit of the United States, and for that matter, the credit of the entire world.”  Warning by Senator Barry Goldwater: 

Be mindful of the fact that all money which comes into existence, does so as debt to the banking system, and that the banks do not create the interest, so that there is never enough money in existence, anywhere in the world, to repay both the debt and the interest, resulting in a situation where there is a deliberate, world-wide, artificial scarcity of money, and therefore an ever-increasing debt to that banking system.  

Be mindful of the fact that such a debt-based money system (where the capital is created out of thin air by the banks, at the stroke of a pen, and then loaned out by the banks, to the borrowers, whereby the borrowers are expected to pay back the capital, plus interest, which interest does not exist in the first place) is not only mathematically an inherently flawed, impossible system, but deliberately fraudulent. Be mindful of the fact that where money speaks, there all law is silent. What is the alternative?                                                                                                                                                                   

Read this article and then ask, “Would I want to do business with a bank like this?”  

If the answer was yes, contact me immediately for more information as to the only viable 100% Gold Backed Bank on the planet! 

Thank you for reading and educating yourself! 

Gary  D Holmes 



Discovered by BUSINESS CANNONS Business Group 8/21/2009 

November 07, 2008 

Monetary Reform: Gold And Bills Of Exchange 

by Antal E. Fekete 

Address before the Civil Society Institute at Santa Clara University 

November 3, 2008 


The Great Depression of the 1930's was not due to the 'contractionist propensities' of the gold standard as alleged by John M. Keynes. Nor was it due to fractional reserve banking as alleged by Murray Rothbard. Rather, it was due to the government's sabotaging the clearing system of the international gold standard, the bill market. 

Adam Smith's Real Bills Doctrine reigned supreme in monetary science throughout the 19th century, and rightfully so. It explained how it was possible to refine division of labor, and to lengthen production processes in making them 'more roundabout' in order to improve the efficiency of labor and capital -- without causing monetary contraction through unnecessarily invading the pool of circulating gold coins, and without tying up savings in order to finance circulating capital. It also explained the 'miracle' how weekly wages can be paid to workers whose product will not be sold for perhaps as long as 13 weeks. Clearly, additional fixed capital can only be financed through increased savings. Additional circulating capital, however, need not involve savings: it can be financed through improvements in clearing. Circulating capital can be self-financing, provided that the goods involved are demanded urgently enough by the consumers. 

In this address I look forward to the release of the gold standard from a forty-year quarantine, to become one of the pillars of the reconstruction after the present credit collapse has run its course. In order to be viable, the new gold standard has to have a valid clearing system. Bill circulation would spring up spontaneously. In other words, we have to have a gold standard of the type that prevailed in the world prior to 1914, when international trade was financed not through gold flows across national boundaries, but through trading bills of exchange drawn on London. It would not be a gold exchange standard as that of the years 1920-1971, with government promises to pay replacing real bills. But it would not be Murray Rothbard's so-called 100 percent gold standard either, which is phantasmagoria. 

Self-liquidating credit 

In spite of obvious differences between the two, it is customary to extend the concept of credit to include clearing. In more details, in addition to credit arising out of the propensity to save that finances fixed capital, we also consider self-liquidating credit arising out of the propensity to consume that finances circulating capital. The latter does not involve lending; it involves clearing. 

Goods making up circulating capital must be in the final phases of production and distribution, and they must move sufficiently fast to the ultimate, gold-paying consumer. Thus, then, the bill of exchange is the embodiment of self-liquidating credit -- so called as the credit is liquidated directly with the gold coin surrendered by the consumer in 91 days or less (91 days being the length of the seasons of the year in the temperate zones, forcing a change of the types of merchandise in greatest demand). 

Detractors of the Real Bills Doctrine studiously avoid reference to its prestigious pedigree and its author, Adam Smith. They also ignore the fact that, as a matter of merchant custom, producers and distributors hardly ever pay cash for the maturing merchandise as it is passed on from one hand to the next. Instead, they endorse the bill of exchange and, in doing so, assume liability to pay it at maturity. This transaction is called 'discounting' as the payee applies an appropriate discount, calculated at the current discount rate, to the face value of the bill, proportional to the number of days remaining till maturity. Banks need not be involved. 

Chicken or egg? 

Such a bill circulation was universal in the city-states of Italy during the Quattrocento and, more recently, in 18th century in Lancashire before the Bank of England opened its branch in Manchester. This was duly observed by Ludwig von Mises in his 1912 treatise The Theory of Money and Credit, although he stopped short of investigating the economic forces animating spontaneous bill circulation. 

Unlike the question whether chicken was first or the egg, the question whether bills or banks came into existence first has a definite answer. Logically and historically, bills predated banks. What is more, it is perfectly feasible to have an economy without banks, where circulating bills emerge as suppliers deliver semi-finished consumer goods to the producers. Instead of recognizing this fact, detractors link bills and banks as if they were Siamese twins. They are not. 

A 'fairy' tale 

Let us look at another historical instance of clearing that was vitally important in the Middle Ages: the institution of city fairs. The most notable ones were the annual fairs of Lyon in France, and Seville in Spain. They lasted up to a month and attracted fair-goers from places as far as 500 miles away. People brought their merchandise to sell, and a shopping list of merchandise to buy. 

One thing they did not bring was gold coins. They hoped to pay for their purchases with the proceeds of their sales. This presented the problem that one had to sell before one could buy, but the amount of gold coins available at the fair was far smaller than the amount of merchandise to sell. Fairs would have been a total failure but for the institution of clearing. Buying one merchandise while, or even before, selling another could be consummated perfectly well without the physical mediation of the gold coin. Naturally, gold was needed to finalize the deals at the end of the fair, but only to the extent of the difference between the amount of purchases and sales. In the meantime, purchases and sales were made through the use of scrip money issued by the clearing house to fair-goers when they registered their merchandise upon arrival. 

Those who would call scrip money "credit created out of nothing" were utterly blind to the true nature of the transaction. Fair-goers did not need a loan. What they needed, and got, was an instrument of clearing: the scrip, representing self-liquidating credit. 

Goods in bottoms 

Another example of clearing in action is world trade prior to 1914. Suppose a cargo ship is ready to sail from Tokyo to Hamburg carrying in its bottom consumer goods in urgent demand. The sea-voyage takes up to 30 days with several stops en route. Does the importer need to raise a loan to pay the supplier for the goods in the bottom prior to sailing? Hardly. The merchandise has a ready market upon arrival. The cargo is insured against losses at sea. Accordingly, the supplier bills the importer for value received f.o.b. Tokyo, payable in 30 days in London. The importer endorses the bill, attaches the insurance documents, and sends it back to the supplier. The boat is now ready to sail. The supplier has an instrument he could use as ready cash to pay his own suppliers, or he can keep the bill to maturity as an earning asset. When the boat docks in Hamburg, the local wholesale merchant pays for the cargo with a sight bill on London with which the importer can meet his maturing obligation. No loan or lending is involved in all this, only clearing. The pool of circulating gold coins has not been invaded, nor are savings tied up for 30 days while the goods in urgent demand move from the Far East to Western Europe. 

The tale of the cuckoo's egg 

1909 was a milestone in the history of money. That year, in preparation for the coming war, the note issue of the Bank of France and of the Reichsbank of Germany were made legal tender. Most people did not even notice the subtle change. Gold coins and bank notes kept circulating as before. It was not the disappearance of gold coins from circulation that heralded the coming destruction of the world's monetary and payments system. It was the advent of legal tender. It was the French and German government's decision to stop paying civil servants in gold coin who were now forced to accept paper money. Private firms immediately followed suit: they also started paying their employees with bank notes. Never mind that the bank notes were redeemable in gold coin; this change effectively meant sabotaging the clearing system of the international gold standard nevertheless. It short-circuited bill circulation. Bills were supposed to be paid at maturity in the form of a present good, the gold coin, obtained from the consumer who, in turn, was supposed to get paid in gold by his employer on every payday. Now they were paid in the form of a future good, the bank note. Legal-tender coercion created an irreparable leakage in the gold circulation process. 

The banks continued using real bills as an earning asset to back the note issue. But other subtle 

changes were to alter the character of the world's monetary system beyond recognition. The cuckoo has invaded the neighboring nest to lay her egg surreptitiously. In addition to bank notes originating in bills of exchange, bank notes originating in finance bills (including treasury bills) have made their appearance for the first time. In due course the cuckoo chick would hatch and push the native chick out of the nest. In five years, by 1914, the lion's share of bank portfolios would be replaced by finance bills. The real bill has become an endangered species. In another few years it became extinct. Note that, unlike real bills, finance and treasury bills are not self-liquidating. The change-over from bank notes backed by real bills to bank notes backed by finance bills was the last nail in the coffin of the clearing system of the international gold standard. 

Borrowing short and lending long 

Finance bills are backed by the odds, never the certainty, that a speculative inventory of goods, or equities, or investments in brick and mortar, may be unwound without a loss. If the odds do not play out in time, the finance bill will be 'rolled over'. This is tantamount to borrowing short and lending long -- invitation to disaster. By contrast, a real bill is never ever rolled over. If not paid in gold upon maturity, the drawer of the bill will go bankrupt and his name will be blacklisted at the clearing house for good. 

Finance bills made the portfolio of banks illiquid. Potential demand for gold coins, should holders of bank notes want to exercise their legal right to redeem them, could no longer be satisfied. To take away this right was the reason for making bank notes legal tender in the first place. Redemption would never be a problem as long as the banks' assets consisted of real bills exclusively. Every single day one-ninetieth of the outstanding bank notes would mature into gold coins, which were available for redemption. Normally this would suffice to satisfy daily demand. 

But what about abnormal demand? Well, a real bill is the most liquid earning asset that a bank can have. At any time somewhere in the world there is demand for it. In particular, banks that have a temporary overflow of gold would be more than anxious to exchange it for real bills. Thus banks would not have the slightest difficulty to get gold in exchange for real bills in the international bill market. The assumption that there will always be takers for real bills offered is just as safe as the assumption that people will want to eat, get clad, keep themselves sheltered and warm tomorrow and every day thereafter. 

The chimera of fractional reserve banking 

This explodes the blanket condemnation of fractional reserve banking. Detractors are barking up the wrong tree. They should condemn the practice of discounting finance bills. Actually, 'fractional reserve' as applied to banks with nothing but real bills in their portfolio is a misnomer. The reserves are gold plus bills maturing into gold. The reserves are not fractional, as they fully back the note and deposit liability of the bank. By contrast, if the bank portfolio has a component of finance bills, the designation 'fractional reserve' is appropriate. Finance bills are not maturing into gold like real bills are. It may not be possible to get gold in exchange for them when the crunch comes. 


The process of retiring bank notes, after the merchandise serving as the basis for their issue has been removed from the market by the ultimate gold-paying consumer, is called 'reflux'. Some authors, including Ludwig von Mises, have ridiculed the concept of reflux calling it deus ex machina. They argued that banks were only interested in credit expansion, not in reflux. Not for one moment would they entertain the idea of voluntarily withdrawing bank notes from circulation when the underlying real bill matured. Instead, they would lend them out at interest again and again, to enrich themselves at the expense of the public. 

This is not a valid argument. For the stronger reason, you could also ridicule the entire legal system in asking the rhetorical question: "what is the point of making laws when they will be broken anyhow?" You cannot judge the merit of an institution by the behavior of those who are set upon destroying it. 

Birth of the wage fund 

The havoc that the silent monetary revolution of 1909 ushering in legal tender bank notes would wreak upon society had not been foreseen. Nor was the causal relation recognized between the expulsion of real bills from bank portfolios and the massive unemployment that followed it. In Germany alone, 8 million people, or nearly 50 percent of the trade union membership lost their jobs after 1929. Economists have failed to point out the causal nexus between the two events 20 years apart. Here is the explanation of what happened. 

Real bills finance the movement of consumer goods, including wages paid to people handling the maturing merchandise through the various stages of production and distribution. That part of the circulating capital paid out in wages is called the wage fund

The birth of the wage fund is due to the real bills market. Without it, payment of workers producing consumer goods would not be possible until the sale to the final consumer. The size of the wage fund needed to move the mass of consumer goods through these stages, if financed out of savings, would be staggering. Quite simply, it could not be done. No conceivable economy would produce savings so prodigiously as to be able to finance circulating capital that society needed in order to flourish at present levels of security and comfort. 

The highest achievement of the human spirit and intellect 

Fortunately, there is no need to employ savings in such a wasteful manner. Circulating capital can be financed through self-liquidating credit. The discovery of this fact is one of the great achievements of the human spirit and intellect. The impact on human life of the invention of the circulating bill of exchange is fully commensurate with that of the invention of the wheel. Detractors of the Real Bills Doctrine have missed one of the most exciting developments of ourcivilization: the discovery of self-liquidating credit as it emerges in the wake of the disappearance of risks at the end of the production process, when maturing goods get within earshot of the final gold-paying consumer. They have missed the fact, without real bills circulation, wages could not be paid in advance of the sale of goods, except under the constant threat of unemployment. 

Destruction of the wage fund 

This near-perfect system was allowed to disintegrate in the wake of the 1909 legal tender legislation. By 'crowding out' real bills from the monetary system, governments have inadvertently destroyed society's wage fund. It was there to allow wages to be paid as much as 91 days in advance of merchandise being sold to the ultimate consumer. When real bills were replaced by non-self-liquidating finance bills, payment of wages has become haphazard. Employment was made touch-and-go, hiring, 'hand-to-mouth'. This threatened with unemployment on a massive scale, unless governments were willing to assume responsibility for paying wages. Eventually, to avoid undermining social peace, they had to do just that. 

Governments invented the so-called 'welfare state' paying out so-called 'unemployment insurance' to people who could have easily have found employment had the wage fund been preserved through ensuring the proper functioning of the bill market, the clearing system of the gold standard. 

What has been hailed as a heroic job-creation program appears, in the present light, a miserable effort at damage control by the same government that has destroyed the wage fund in the first place. Economists share responsibility for the disaster. They have never examined the 1909 decision to make bank notes legal tender from the point of view of its effect on employment. They should have demanded that, instead of treating the symptom: unemployment, governments remove the cause of the disease: the destruction of the clearing system of the gold standard, the bill market. Had the governments allowed bill circulation to return at the end of the hostilities in 1918, the wage fund would have been replenished at once. Unemployment would not have arisen. Recall that it was not a problem before 1909. 

The greatest fiasco of all times 

The problem of destroying the clearing system of the gold standard by expelling self-liquidating credit in 1909 was further aggravated in 1971 when the gold standard itself was destroyed. By 2008 the festering crisis has become a fully blown credit collapse, encompassing the entire globe. We must have the humility to admit that it was our reckless experimentation with irredeemable currency and synthetic credit that resulted in this fiasco greater than any other man-made disaster in history. The runaway Debt Tower of Babel is toppling, and the quadrillion-dollar-strong global derivatives monster is vaporizing. There is no bottom to this collapse. The financial system is self-destructing. It is in a death-spiral. Every wave of losses in the mortgage market, in the stock market, in hedge funds, or in derivatives triggers a new wave of losses. This will continue until total exhaustion is reached. It is futile to expect the Fed and the Treasury to regain control of the careening financial system, even if all the central banks of the world pool resources. There are not nearly enough dollars in existence to cover the derivatives losses, despite the Fed's endless stream of bailout money, and despite the Treasury's endless stream of bailout bonds donated to the Fed for collateral, which the latter needs but hasn't got, to create more bailout money. Halving interest rates again and again is oil on the fire. It has been the main cause for capital destruction, and contributes directly to unemployment. 

The way out 

In discussing the necessary monetary reform to be introduced after the dust settled, the rehabilitation of the gold standard and its clearing system, the bill market, must be a matter of first priority. The main cause of the disaster was the elimination of self-liquidating credit from the international monetary system, a process that started in 1909 with the introduction of legal tender bank notes. It took almost a full century for the process to run its devastating course before the financial system started unraveling in February, 2007. That is the date, it will be recalled, when the cost of credit-default swaps shot up first, the salvo marking the beginning of the end. During that unfortunate century, the 20th, self-liquidating credit based on positive value, gold, was forcibly replaced with 'synthetic credit' based on negative value, debt. Once the regime of irredeemable currency was in place there was no way to rein in the fast-breeder of debt in the system. We are forced to draw two conclusions: 

1. There is just no alternative to self-liquidating credit. That is to say, the production and distribution of consumer goods must be financed through bills of exchange. 

2. There is just no alternative to the gold standard. The regime of irredeemable currency is based on debt. Once adopted, the fast breeder of debt is engaged and will, before long, start spinning out of control. 

Solving the problem of the monetary system will also solve the problem of unemployment. Once real bills start circulating, the wage fund will be replenished at once, out of which wages can be paid to all those eager to earn them for work in providing the consumer with goods and services in most urgent demand. 

If we want to exorcise the world of the incubus of unemployment with which it has been saddled by greedy governments in making their bank notes legal tender, not only must we return to the international gold standard, but we must also rehabilitate its clearing system, the bill market. In this way the wage fund can also be resurrected. Then, and only then, can the so-called welfare state, paying workers for not working, and farmers for not farming, be dismantled. 


The author has a course entitled The Real Bills Doctrine of Adam Smith, consisting of thirteen lectures, that can be accessed at the website: 

Calendar of events: 

Canberra, Australia, November 11-14, 2008 

Gold Standard University Live, Session Five. (This is the last session of GSUL since our sponsor, Mr. Eric Sprott of Sprott Asset Management, Inc., has withdrawn his support saying that in his opinion the results do not justify the expenditure. Come along and judge for yourself.) 

This 4-day seminar is a Primer on the Gold Basis -- Trading Tool for Gold Investors, Marketing 

Tool for Gold Miners, and Early Warning System for Everybody Else. 


Canberra, Australia, November 15, 2008 

Panel Discussions: The chickens of 1933 and 1971 are coming home to roost and take out bank capital. 


Szombathely, Martineum Academy, Hungary, March 2009 

Panel Discussions: When Will the Gold Standard Be Released from Quarantine? The Vaporization of the Derivatives Tower. 

Further announcement will be made on the website: 

Antal E. Fekete 

Professor, Intermountain Institute of Science and Applied Mathematics, Missoula, MT 59806, U.S.A. 













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Real Bills and Gold 

Saturday, October 30, 2010 – by  Dr. Antal Fekete 

Dr. Antal Fekete  

The Daily Bell published an interview with Dr. Lawrence H. White, Professor of Economics, George Mason University, on October 24, 2010. One of the questions the interviewer asked was this: "Please comment on real bills and how they work." 

In his answer Professor White gave the following example. Joe the Baker buys flour from Bob the Miller and gives him a bill promising to pay $1000 in 90 days. 

1. There are several problems with this description. In actual fact it is not Joe who issues the bill but Bob. The bill is drawn by Bob on Joe who must accept it before it can have any value. In common parlance Bob bills Joe. Professor White puts the cart before the horse in confusing the concept of a bill with that of a note. A bill originates with the payee, the note originates with payer. This is no hair-splitting. The difference is important. A note is evidence of debt. A bill is evidence of value to be added. There is no loan, no lending and no borrowing involved in Joe's purchase and Bob's sale of the flour. None whatever. The transaction cannot be understood except in the context of merchandise maturing into the gold coin that only the ultimate consumer can release — a process that makes the relationship between Joe and Bob one of coordination rather than one of subordination. If anything, Bob could be considered the subordinate. Joe is one step closer to the boss, the consumer, and he is the one to get the gold coin first. He dispenses bread that is in general demand. Everybody eats bread. Flour that Bob dispenses is only in special demand. It is not as "liquid" as bread, if liquidity products is defined how far removed from the consumer's gold coin they are. 

It is preposterous to suggest that Bob is the lender and Joe is the borrower. To two men are partners in a joint enterprise, made ad hoc, in order to provide the consumer with bread. Their role is like that of the two blades of a scissor: neither can do the job by itself. This is not to deny that Bob extends credit to Joe. But extending credit is not the same as lending. To suggest that Joe is in debt to Bob as a result of borrowing is entirely fallacious. Joe is in a strong position: the bill he has accepted can circulate as money for 90 days. The note of a mere borrower cannot. 

2. Professor White goes on to say that Bob the Miller can either wait 90 days for his money, or he can go to a bank and sell his bill. The banker will pay Bob something less than $1000 because he takes interest due for 90 days out of the proceeds. 

Again, there are several problems with this description. The main one is the suggestion that banks are necessary for real bills to be effective and useful. This representation makes facts stand on their head. The question whether bills came first or banks is not a "chicken or egg" problem. We have the facts certified by Ludwig von Mises, no friend of the Real Bills Doctrine that bills did. Moreover, we have it on the authority of Adam Smith that real bills do circulate as money on their own wings and under their own steam. By contrast, legal tender bank notes circulate by virtue of the strong arm of the government. 

It would have been more correct for Professor White to say that Bob, if he wanted cash (read: gold coins) immediately, then he would go to the bill market and discount his bill (read: exchange it for gold coins at a price discounted by the number of days remaining to maturity, at the prevailing discount rate). 

I repeat: the $1000 face value of the bill does not represent debt and the discount does not represent interest on debt. Rather, it represents value to be added to the underlying merchandise and it is incumbent upon Joe the Baker to accomplish this feat. Time preference has nothing to do with it. The height of the discount rate is governed by considerations entirely different from those governing the height of the rate of interest, as we shall presently see. Confusing the two rates is the worst mistake economists have ever made, and are still making. 

3. Professor White condescendingly admits that bills, while they were still tolerated, used to command a low interest rate because of their "low default-risk". This remark confuses the issue further. Risk of default has nothing to do with the height of the discount rate which is determined not on a case-by-case basis but, rather, across the board. In fact the risk of default is so low that it can be taken to be zero. I ask you: how many bakers go bankrupt for each banker that does? 

To understand what determines the height of the discount rate, as opposed to that of the rate of interest, we have to go not to the saver but to the consumer. The height of the discount rate is determined, not by the propensity to save, but by the propensity to consume. In more details, the discount rate varies inversely with the propensity to consume (whereas the rate of interest varies inversely with the propensity to save). 

A higher propensity to consume means that Joe the Baker experiences increased cash-flow (really, an increased flow of gold coins). It prompts him to get rid of the gold coins by prepaying his bill outstanding. Rather than buying his own bill back, which may have been endorsed and passed on a dozen times and would hardly be possible to track down, he simply goes into the bill market and buys any bill with three good signatures with his gold coins. The demand for bills has thus increased, making the bill price rise. This means that the discount rate is lower as a direct result of the increase in the propensity to consume. Conversely, a fall in the propensity to consume decreases demand in the bill market as retail merchants have a reduced cash flow and fewer gold coins to get rid of in prepaying their bills outstanding. The decreased demand shows up as a lower bill price or, what is the same, a higher discount rate. 

Our argument clearly shows that the credit represented by real bills has absolutely nothing to do with the propensity to save. The source of commercial credit is not savings, it is consumption

The reason why real bills have been and are badly misunderstood by most students of credit is a poor understanding of gold itself, and the "second best thing" to it. Undoubtedly, the next best thing to gold is the bill of exchange representing merchandise in most urgent demand that is moving to the ultimate gold paying consumer apace, and will be purchased by him before the season of the year changes (causing fundamental changes in the character of consumer demand) that is, in not more than 90 days. The process of supplying the consumer is a maturation process of merchandise which is parallel to the process of real bills maturing into gold coins. 

The consumer is fickle, and changes in his taste are unpredictable (to say nothing of hers). The army of merchants and producers must stand on their toes to serve consumer demand efficiently and instantaneously. It is the gold coin that makes the consumer king. If you removed gold coins from circulation, as European governments started doing exactly 100 years ago, then merchants and producers would start serving another sovereign. From then on, they would rather serve the issuer of "legal tender" bank notes. This change in the person of the sovereign corrupted the economy and caused an upheaval in the Wealth of Nations. 

Professor White says that "real bills were an important source of business credit in the 19th century, and a major category of assets in a typical bank portfolio." This sounds as if our grandfathers lived in backwater not realizing that there are other, more appropriate sources of commercial credit. But the fact is that is was not progress or enlightened thinking but, rather, chicanery, malice, and vindictiveness on the part of governments that eliminated real bill circulation. 

Two dates stand out. (1) In 1909 first the French government, and then hard on its heels the imperial German government introduced legislation making the note issue of their central banks legal tender. This paved the way towards financing the coming war with credits. (2) In 1918 the victorious Entente powers decided not to allow the spontaneous return of real bill circulation for they were afraid of multilateral trade. They would have liked to continue the wartime blockade of Germany. As it was not possible to do in peacetime, they had to settle for something less: replacing multilateral with bilateral trade. In this way they hoped to control German imports and exports. In effect, this was a relapse from indirect exchange to direct exchange alias barter. The collapse of the international gold standard was a consequence of this malicious and vindictive decision. The gold standard could not survive the destruction of its clearing house, the bill market. 

The world is still suffering the consequences. There was no such thing as "structural unemployment" while real bills financed multilateral trade. The elimination of real bill circulation has destroyed the wage fund out of which workers producing merchandise that will not be exchanged for the gold coin of the consumer for up to 90 days can be paid. Structural unemployment, plus a periodic outburst of horrendous world-wide unemployment is the result. The 1930 episode was blamed on the gold standard. This argument is exploded by the present episode which in the fullness of times will be far worse than the earlier episode. Real bill circulation as well as the gold standard have been eliminated yet unemployment is still with us. No one is asking the question how it is that the removal of these arch-enemies of government omnipotence has not removed the threat of deflation, depression, and unemployment. 

I shall continue my comments with a concluding article entitled More Real Bill Fallacies 

More Real Bill Fallacies 

Wednesday, November 03, 2010 – by  Dr. Antal Fekete 

Dr. Antal Fekete  

In the first article of my two-part series on the Real Bills Doctrine (RBD), in commenting on the Daily Bell's interview with Professor Lawrence H. White on October 10, 2010, I made the central point that the source of commercial credit is not saving but consumption. The following example will dramatize this point. Assume for the sake of argument that all banks in the whole wide world succumb to the sudden death syndrome simultaneously. What does this mean in terms of the production and distribution of consumer goods? Would we have to go back and start from scratch to save in order to replenish society's circulating capital? Saving is a time-consuming process and people have to get fed, clad, shod, and sheltered in the meantime. We could not restore circulating capital through saving for the simple reason that before we could we would die of starvation. 

Luckily, there is no need to go through such a regimen to satisfy the dogma that the only source of capital is saving. Consumption per se is a ready and instantaneous source of commercial credit. Real bills drawn on merchandise in most urgent demand will supply all the credit society needs so that consumption can continue without interruption — and the banks be damned. It does not matter if very little gold is available to pay the bills upon maturity. My detractors' 100 percent reserve banking would be confronted with sky-high prices on account of the scarcity of gold. Under the RBD prices need not be high: the burden of adjustment will not fall on prices, as the quantity theory of money falsely teaches; it will fall upon the discount rate. There is only one interdiction, namely, real bills must not mature in mere promises to pay gold — the proviso of Ludwig von Mises notwithstanding that "claims to gold are a complete substitute for gold in markets where their security and maturity of those claims is recognized." (The Theory of Money and Credit, Chapter 15.) Claims to gold are useless. Bills at maturity must be paid in gold coins, not in claims thereto. Claims to gold coin are inferior to bills that must mature into something superior. The only thing superior to a real bill drawn on consumer goods in most urgent demand is the gold coin. A bill maturing in a mere claim on gold will not circulate

In commenting on the first part of this paper several of my correspondents asked why the discount rate is getting lower when the bill price is getting higher. Here is the relevant arithmetic. Suppose a bill of $1000 maturing in 91 days (or 0.25 years) circulates at $990. This corresponds to a discount rate of 4 percent per annum, because 1000(1 – 4(0.25)/100) = 10(99) = 990. If next day the bill market quotes the same bill at a higher price, say at $995, then there is a corresponding decrease in the discount to $5, half of the earlier discount of $10. Thus the discount rate has fallen from 4 to 2 percent. 

Let us return to the Daily Bell's interview with Professor White. Observing that the RBD has been important in the history of monetary theory, he goes on to say, "It is a mistaken idea that if the banking system lends only by discounting real bills, then it cannot over-expand. It is also a dangerous idea ... because rather than letting interest rates rise to reach their new equilibrium level whenever the business demand for credit rises, the banks will actually make money over-expand." 

This is tantamount to blaming the loot, rather than the thief, for the thievery. Why did it allow itself to be stolen? There are uses and abuses of credit. Over-extension of credit is an abuse. For example, drawing two or more bills on the same merchandise is an abuse, and so is rolling over a bill at maturity rather than paying it, regardless whether or not the underlying merchandise has been sold. Such abuses should be dealt with by the Criminal Code in the same breath as dealing with the forgery of bank notes. 

Professor White's remark assumes that the discount rate is the same as the short term rate of interest. I shall not pause here to repeat the arguments of my previous article refuting this misconception. Instead, I shall describe what has actually happened when banks first put in an appearance to take a piece of the action in the already flourishing bill market. 

Banks have arisen because they had a legitimate and useful role to play: (1) Their credit has a high name-recognition; (2) Bank credit in the form of bank notes come in standard denomination which is easy to count and make payments with. 

The banks in discounting real bills paid with bank notes of their own issue. Thus they substituted their own credit, enjoying high name-recognition, for the sometimes obscure credit of traders in the periphery. Also, they offered standard-denomination bank notes to replace bills with odd amounts as face value that circulated more easily. Because of this, bank notes were welcome: you did not have to scrutinize the credit standing of the drawer and the drawee of the bill. People were glad to pay for this service in the form of foregone discount which accrued to the bank for facilitating the circulation of real bills further. 

The good banks strictly followed the market rate of discount. Upon the expiry of the underlying bill they punctiliously withdrew a corresponding amount of bank notes from circulation. There is no sense in which the reserves of these banks could be called "fractional." Bank liabilities were backed 100 percent by reserves, either in the form of gold, or the next best thing to gold: real bills maturing into gold in 91 days or less. Such banks were not exposed to the nemesis of poorly managed banks: the bank run. Every business day on the average as much 1 2/3 percent their portfolio of real bills matured into gold coins. That was sufficient to meet normal demand for gold coins. If the demand for the gold coin was abnormally high, then the banks had to go to the bill market and sell unexpired bills from their portfolio for gold, in order to meet the extra demand. There was no problem involved in selling real bills for gold. Some other banks experiencing an overflow of gold coins would be scrambling to get earning assets and would buy the extra supply of real bills eagerly. To call these "fractional reserve banks" is to bark up on the wrong tree. 

However, inevitably, there were bad banks as well that did not bother withdrawing their bank notes from circulation when the underlying bills expired but made fresh loans with them on which they collected interest. This was very profitable business for them. Nevertheless, their profits were illegitimate and their loans were fraudulent. In effect, the bad banks were borrowing short in order to lend long. I call such a transaction illegitimate arbitrage between the bill market and the loan market, to take advantage of the spread between the higher interest rate and the lower discount rate. Illegitimate arbitrage is unsound because the short leg of the arbitrage has to be moved forward every quarter and it may not be possible to do at the old rate. The new discount rate may well be higher, and if it is higher than the interest rate on the long leg, then the bank ends up with a loss rather than a profit. In addition, the bank is guilty of false pretenses. It pretends that its bank notes are covered by real bills drawn on fast moving merchandise demanded most urgently by the consumers — which could circulate on their own in the bill market. In reality, however, its notes were covered by anticipation bills and accommodation bills or notes of debtors — that could not so circulate. Illiquid and dubious paper: expired real bills on unsold or unsalable merchandise; accommodation bills drawn on the dreams of lunatics, notes of speculators was being aided and abetted by the fraudulent bank that gave shelter to them in its portfolio that was not open for public inspection. Note the difference: bills circulating in the bill market are completely transparent making fraud and conspiracy easy to detect. The common earmark of bad banks is that their assets cannot be readily sold except maybe at a loss. 

I have mentioned the notes of speculators that are ineligible to figure among the assets of banks. This is no condemnation of speculation per se. Speculators in agricultural commodities render a great service to society. Trouble starts when they speculate with other people's money without their knowledge and concurrence. The best example of this is the conspiracy committed by Dick the Grain Merchant and Bob the Miller who anticipate an increase in grain prices from which they want to benefit. Lacking money of their own to buy grain, they decide to put Dick-on-Bob bills into circulation drawn on grain the movement of which has been arrested. 

This conspiracy is criminal. The bill market must not be used to finance speculation. The market for real bills must be recognized as a social institution that has evolved spontaneously for the benefit of everybody, to facilitate the most expeditious movement of consumer goods in the greatest demand. Sabotaging the bill market, whether by speculators, or the banks, or by the government itself, is a crime against society. 

The low discount rate is there to benefit the consumer, and the consumer only. Luckily, by virtue of its openness, the bill market exposes such conspiracies. Trouble starts when the bank is participating in the conspiracy and gives shelter to fraudulent Dick-on-Bob bills. 

It is possible to brand the bad banks "fractional reserve banks" to reflect the fact that a portion of their credit outstanding is not covered by gold coins or real bills maturing into gold coins. The existence of such delinquent banks, however, does not justify disparaging the entire banking system calling it "fractional reserve banking system." The suggestion that there are no "good" banks and that, in discounting real bills all banks create money out of thin air, is fanciful and untrue. 

The Daily Bell concludes the interview by commending Professor White for "simplifying the Real Bills debate." It adds that "the real bills debate has raged for some time and Professor White's perspective has clarified matters." With all due respect to Professor White's perspectives, I demur. Far more careful analysis of real bills and clarification of the difference between the discount rate and the rate of interest is needed than Professor White is willing to offer. Just as my detractors, Professor White has declined to debate the issues on the premise that the merit or demerit of real bills must be decided in the context of complete absence of banks, since real bills can and do circulate on their own wings and under their own steam. Such refusal is especially regrettable at the present juncture, in view of the unprecedented world banking crisis. There is a real danger that all the banks may simultaneously succumb to the sudden death syndrome. I imagine that Professor White would not dismiss this assumption of mine as outlandish. 

Professor White is one of the important and respected protagonists of the hard money movement. In the interest of success, and also to save the world from unnecessary ordeal and much suffering, we should admit that further study of the RBD is needed, including an impartial inquiry about the circumstances under which governments forcibly blocked real bill circulation at the end of hostilities in World War I, and enforced the ban until the gold standard, such as it was, collapsed. It had to collapse because it could not survive the destruction of its clearing house, the bill market: its most vital organ. 

It is a fallacy to assume that real bills, thankfully, faded away into oblivion for reasons of being obsolete. It is wrong to conclude that the RDB is a stale, "mistaken" and even "dangerous" idea. 

The RBD, in making a comeback, may protect lives. 

It may also save our Western civilization. 







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Copyright © 2010
A. E. Fekete
All rights reserved 


 An open letter to Paul Volcker, Chairman of the Board of Governors of the Federal Reserve, 1979-1987; Chairman of President Obama's Economic Recovery Advisory Board, presented to him, in person, last year  

 Antal E. Fekete  

 Dear Paul: 

In 35 years our paths have crossed for the second time. In 1974/75 you and I were Visiting Fellows at Princeton University. Now, in 2009, both you and I are attending the Santa Colomba Conference on the present debt crisis at the invitation of Bob Mundell. 

In 1975 you conducted a seminar on the international monetary system and invited me to contribute a paper on gold which I did. Those were halcyon days by comparison. The United States, after the turbulence of 1971, successfully consolidated the international position of the dollar and could confidently lift the 42-year old ban on the ownership and trading in gold. On December 31, 1974, trading of gold futures contracts started in New York and Chicago. It showed a robust contango at full carrying charge, that is to say, the gold basis (the spread between the futures and the cash price) was at its peak. It indicated that monetary gold was available in great abundance to meet any demand for any reason. It showed that the gold futures markets could serve as the fulcrum in seeking out the equilibrium between the supply of and demand for gold. They could act as a safety valve, releasing occasional pressures that, in the absence of paper gold, may be a threat to the monetary system. It looked as if the gold problem has been solved for once and all. 

But as I feared, and as the intervening 35 years have proved, rather than moving towards equilibrium we have been constantly moving ever farther away from it, as measured by the gold basis. The secular vanishing of the gold basis is a most ominous danger signal. It indicates that monetary gold is increasingly unavailable, and in case of a crisis it can no longer be relied upon to come to the rescue. Basis started out at 100 percent of the prevailing interest rate, but has been steadily eroding all the way to zero percent today. Permanent gold backwardation (negative gold basis) is staring us in the face. The gold basis is trying to tell us something. It heralds the greatest monetary crisis of all times. It warns about the possible collapse of the international monetary and payments system. 

Let me explain. Gold is the only ultimate extinguisher of debt. Other extinguishers do, of course, exist but they are not ultimate in that they have a counterpart in the liability column of the balance sheet of someone else. Gold has no such liability attached. Gold is where the buck stops. It is this property that makes gold unique as a financial asset. Historically, gold discharged its function as the ultimate extinguisher of debt through the gold clauses written into the bonds of the U.S. government before 1933. Gold could also discharge this function, albeit rather imperfectly, under the gold exchange standard of 1934 with gold redeemability limited to foreign holders. It could still work under the system of fluctuating gold price introduced in 1971, thanks to the availability of paper gold. Imperfect as though these stratagems were, they served as a pacifier to the bond market. But as the threat of permanent backwardation indicates, all offers to put monetary gold at the disposal of the international monetary system could be abruptly withdrawn. In that event there would be no ultimate extinguisher of debt. The world is totally unprepared for such a momentous development. I ask: are there contingency plans in the U.S. Treasury and in the Federal Reserve what to do if backwardation makes monetary gold unavailable for the indirect retirement of debt? 

The message to debt holders would be: suave qui peut. There would be a rush to the exit doors and people would trample one another to death in trying to get out. The debt crisis of 2008 was a dress rehearsal. It gave the world a foretaste. This crisis is a gold crisis. It is a crisis indicating the threat of a shortage of the ultimate extinguisher of debt, without which our runaway debt tower is doomed. When it topples, it will bury the world economy under the rubble, as the Twin Towers buried the people working inside in 2001. 

All kinds of ad hoc explanations have been offered for the debt crisis. But the real explanation is that under the threat of gold backwardation creditors are scrambling for liquidity. There will be no recovery unless provision is made for the orderly retirement of debt through a mechanism using gold as the ultimate extinguisher. The alternative is a Great Depression worse than that of the 1930's. To understand this we have only to contemplate the shock to the world if it was all of a sudden revealed that the debt of the U.S. government was in fact irredeemable. The Emperor is naked. As long as bonds carry a gold clause, or the bond market is supported by the trading of paper gold, bonds are deemed redeemable. But once permanent backwardation makes monetary gold unavailable, debt becomes irredeemable in the eyes of the bondholders. Paying U.S. bonds at maturity in F.R. notes does not establish redeemability. The latter is just evidence of debt secured by the former as collateral. This reveals that bonds are not really redeemable at all. At maturity, an interest-bearing bond is replaced by non-interest-bearing debt, that is, by an inferior instrument. All you do is shuffle various forms of irredeemable debt. When the world wakes up to this prestidigitation, the international monetary system will not be able to survive the shock-waves. The chaos that will engulf the world is appalling. 

The solution is evident. The world's monetary gold should be remobilized. This can be accomplished by opening the U.S. Mint to the free and unlimited coinage of gold. There should be no attempt to fix, cap, or otherwise control the dollar price of gold. The gold coins of the United States ought to be made available to bondholders in order to provide for an orderly retirement of debt, if that is what the bondholders want. When they become convinced that this avenue is open to them through the unlimited availability of gold coins of the realm, the scrambling for liquidity will peter out and stability return. If other great nations wanted to join, and open their Mints to the free and unlimited coinage of gold, so much the better. It should not be beyond the power and the wit of the U.S. government to rein in this crisis and make a decisive move in the direction of full recovery through opening the U.S. Mint to gold, as demanded by the Constitution. 

Gold is a great world resource. It would be foolish if, for parochial or ideological reasons we failed to enlist it in the cause of economic development and stabilization - even in the absence of a great crisis. But given the present unprecedented crisis, remobilization of gold is imperative. 

Yours very sincerely,
Antal E. Fekete 


Santa Colomba, July 10, 2009 


Volcker: "The financial system is broken." In a bleak assessment delivered on September 23, 2010, he also said, among other things, that the financial system is as broken today as it was in 2008. The real economy was in disequilibrium, and that's why it is so difficult to get out of this recession. He was chastising banks and CEO's, he trashed regulators and inept business schools. He had a broadside on the Fed; he bombed money market funds. 

In fact, Volcker spared no one in his broad critique - except himself. He was present at the Camp David meeting, as the Undersecretary of the U.S. Treasury for Monetary Affairs that, where the decision was made to default on the international gold obligations of the United States, as announced by president Nixon on August 15, 1971, almost forty years ago. 

Volcker still does not see the connection between that fateful decision and the present crisis. Once you remove gold from the international monetary system and prevent its rehabilitation, as the U.S. has been doing it through chicanery, duplicity, and arm-twisting, you have in fact removed confidence, and prevented its return, to international relations. It started as a slow process as it was turning the granite at the foundations into putty. It took forty years, but it has happened. Volcker still does not see that, and he still could not bring himself to uttering a word about gold in his assessment of the crisis at the 13th annual International Banking Conference. 

Volcker: "The financial system is still at risk!" Yes, indeed, and only bringing gold back as the ultimate extinguisher of debt into the international financial system will change that. 

If the United States government hasn't got the moral fiber to admit its past mistakes, and make the necessary changes to correct them, then other countries will bypass it, as will history. Then the United States can join the Club of Disgraced Empires, and the U.S. dollar can join the garbage heap of worthless fiat currencies of history, right next to the Zimbabwe dollar. 



September 24, 2010 



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Also by Antal E. Fekete  



(Excerpts from notes of a conversation with a MCVP) 

There is a total misconception of what is going on in the world of banking! For example, who do you have your bank account with? Where? Do you have any money deposited in your account there? Let’s say you have $1000.00 USD that you have deposited in your account, what would you have in your account? A $1000.00 USD right? No, actually you have more than that but you don’t have what you think! You don’t have $1000.00 USD because they stopped existing in 1971! So now you have Federal Reserve Notes not USD. Ok, let’s say they are CDN $, do CDN $ have value? Yes they do but when you deposit any currency into any bank you don’t have $1000.00 anymore! What you have is a ledger entry in that bank that is supported by the assets of the bank. So it is not fiat currency, it is not a currency with nothing backing it, what you have in that bank is true value currency, the problem is you don’t know what the true value of the assets of the bank are do you? You see each bank has its own internal currency, they are NOT dealing with USD/CDN/Francs/Euros etc. it is their own currency, their own version of ZCASH/CHIPS and SPURT! They just call them ledger entries in their bank but it is NO DIFFERENT THAN ZCASH/CHIPS and SPURT!  

The situation is that if I am going to have my funds deposited into any bank I want it to have the most solid asset base possible because I plan to hold them there not just put them in and take them out again correct? Solid asset base, doesn’t that make sense? With the banking crisis of the last few years who can trust the bank’s assets? The rating companies, lied, the banks lied so who can you trust? How many banks have gone bankrupt over the last two to three years? How many more will fail, how many countries will fail? Let’s see, Greece, Spain, Portugal, Ireland and many more are close as well. Banks, countries, this is a very uncertain world!  

If I want to have the most solid asset based bank in the world there is only one bank that fits that description and that is the St STEPHEN CROWN DEPOSITORY (SCD) I am not interested in taking my funds from the SCD and depositing them into any other bank because the moment I do that I am downgrading the value of my funds and my security! The only value of moving funds to any other bank is that I get to play in their sand box and will have to and can play by their rules and I will do this if there is a definite advantage to do so otherwise why would I take the risk. I will not be playing in USD/CDN/Euro etc. but rather I am using their bank ledger entries!

When you grasp and understand this life can get a lot simpler!  

If I am a person that says, for example, to a supplier that is insisting they get paid to their bank, then I can go through the whole system of correspondent banks that will eventually connect us or we can all deal with SCD.  

We can wait until SCD completes their infrastructure of correspondent banks, that will take however long that it takes or the supplier can also set up their account with SCD and receive a ledger entry transfer from my account to theirs and have a completely safe and secure asset base within which to do business. They have their funds and I have my products! 

I am never going to move funds from SCD! What I will do is set up an RLOC and pay you from borrowed funds if you choose to put your funds at risk by having them moved to your local bank, this process will happen when it happens as the correspondent channels open up or the other option is to use the CEK (CHIPS EXCHANGE KIOSK).

What I will do is to request an “SCD CASHIER'S CHECK” through my SCD RLOC with the required 100 TICKETS ($1000.00USD) for 1 UAWS. For this example we will use $1MM USD as the amount for the Supplier/Vendor transaction. We now need to get $1MM USD to move from our SCD RLOC account to their account somewhere in the world. So the SCD CASHIER'S CHECK may be presented to any bank anywhere in the world!




The correct collection procedures are on the bottom of the SCD CASHIERS CHECK.

Or you may choose to use the BROKERAGE BOOK (see:

But why would we go through all thes extra steps? This is in realization that we live in a very uncertain world! We live in a time in which we know there is a $50T problem out there but no one can tell me where it is situated! We need to transfer funds through SCD using ledger entries from one account to another then our funds our secure. If we transfer funds from SCD to your bank and your bank or a correspondent bank in the middle fails like so many banks are doing I am out my $1MM USD not you. I am not into that type of risk are you? This $50T monster has been created by the banking system and it is consuming everything it runs into, people, companies, banks and countries so how can we get around that?  

Let’s review: 

 I pay to your SCD account and the money stays in SCD and we build a new economy with everyone using the SCD’s gold backed digital currency, everyone wins, no one loses! We develop the SCD to a point where everyone on the planet we want to work with uses it and by doing so we all have the ability to buy/sell with complete security within this private gold backed economy. 

Our Global Game Plan is to use SPURT, ZCASH and CHIPS and periodically use other currencies only when needed! Remember, each time ZCASH is used it creates a new set of CHIPS for someone and there is a three times value in the ZCASH Protocol so please educate the world on the benefits, security and wealth that the Commerce through Capitalism model perpetuates!  

Many States, Utah, Arizona, Tennessee, Maine, even communities like the ones listed in the article here are choosing their own internal currencies! Facebook now has its own currency called “Credits” 


JULY 28TH = UPDATED MAY 13, 2016

Today I received this email from . It is one of the newsletters I receive and it had this very interesting "pitch" on BITCOIN! You need to read it and see how they "advertise" BITCOIN digital currency!  

I will comment in bold font and green highlight for my comments and things that I think you should really review will be in yellow highlight. With all the publicity on BITCOIN now is the time to contact every business you know and show them why our ZCASH and CHIPS are so much better! Especially when you can get ZCASH for advertising it, see our updated  site and soon the new role play overview! 

So let’s get to their pitch on BITCOIN, here’s SuccessCouncil’s email: 

Dear Gary, 

I have a question for you: 

How would you like to quadruple your wealth in
the next 12 months? 

G: (remember Gary’s comments are in green highlight) You can double your money just by joining ! If you follow the protocols you can fund any project you have for pennies using the ICC protocols! 

Well, if you know the answer to this simple riddle, then you have a very good chance of doing so. 

Here it is: 

Do you know what a fax machine, a credit card, and the internet have in common? I am going to tell you the answer in exactly 5 minutes. 

But in the meantime, I'd like to tell you a quick story, about a businessman named Frank McNamara. 

You see, it was a blistery cold evening in 1949, and Frank had invited a number of his most esteemed colleagues to dinner at Longchamp's Restaurant located in the Empire State Building. Little did he know that at the end of the meal, he would make an embarrassing mistake that would end up changing the world forever! 

Among other things, this fateful error would 

  • Ultimately spawn a 21.6 trillion dollar industry, 
  • Redefine the way business was done in nearly every country on earth, and 
  • Launch countless Fortune 500 companies. 

In just a moment, you'll learn what this mistake was. But more importantly, you'll discover everything you need to know about new groundbreaking technology that could bring the 64-year old industry McNamara unwittingly created to its knees. 

Not to mention, force thousands of companies all over the world, perhaps even your own, to completely rethink the way they do business. Investors who get in early on the secret behind this world-changing technology stand to make some truly legendary profits. 

Exactly how much are we talking about? 

  • Well, if you invested just $1,000 in December 2011, that $1,000 would be worth $266,000 today (a 26,000% return). 
  • If you bought a Silver MBTM in 2009,10 or 11 and followed the ICC protocols your business opportunity along with the $1000.00 cash outlay to buy the Silver MBTM through commercial transactions by requesting a $100K UAPN then doing the work necessary to request a $10MM UAPN then transfer that to IBOM @ a minimum of 25% compound interest per month would equal in one year: 


Year Interest  

Total Interest  



$ 135,519,152.28  

$ 135,519,152.28  

$ 145,519,152.28  

Standard Calculation 

Base amount: $10,000,000.00
Interest Rate: 300%
Effective Annual Rate: 1355.19%
Calculation period: 1 year

Then with the revaluation of BVK to USD on a one to one basis you would have $582,060,609.12!!!!! Most of you who did this have a lot more don't you? Now does BITCOIN even compare? Even though that opportunity no longer presents itself we have many ways to get all the funds you need to do any legitimate purchase you want to do! Look at  

If you invested $1,000 in January 2013, when I told our subscribers to invest, that $1,000 would be worth $50,000 today. Many folks followed my advice, made a 5,000% return, and send me thank you emails all the time. 

Many folks followed my advice, made a 5,000% return, and send me thank you emails all the time. 

Now think about your own investment portfolio for the last few years. Have you seen 5,000%, 100% or even 10% returns? 

If you haven't made this money, don't worry. I have some GREAT news for you. 

I have even better news for you! You can get ZCASH just for advertising how to get it! No cash outlay! NOTHING IS BETTER THAN THAT! 

I think the trend is going to continue upward for at least the next few years, and we will continue to see returns in the hundreds, and possibly thousands of percent. 

So what is this mystery, new technology? 


You may have heard about it on the news, but I can guarantee that you don't have the whole story… 

But who am I to be making such predictions? My name is Max Wright, and I'm the author of The Bitcoin Revolution: Ending Tyranny For Fun and Profit.  

I certainly believe we are in a much better situation to do that than BITCOIN! Why? Because we can wipe out government debt at no cost to the governments, all they have to do is follow and promote our protocols! Our ZCASH is gold backed and doubles in value every time you use it! Other digital currencies including Bitcoin are backed by NOTHING and are volatile “investments”. Our ZCASH is based on the unit value of the Constitutional DOLLAR, read “What is a DOLLAR” and is a true measure of value; all other digital currencies are “means of exchange” like an “FRN” see the difference here: and the CROWN OF ST STEPHEN/SCD see: 

And according to Amazon readers, it's rated hands down the best Bitcoin resource available. 

I published the Bitcoin Revolution in May 2013, back when Bitcoins were just $150 per coin. 

5 months prior to that, I told all of my paid members to buy Bitcoin. In January 2013, Bitcoin was just $12 per coin. 

Now, I don't make that statement to brag or boast, but rather to convey to you the importance for you to keep watching this video. 

Yeah, I know - another strong statement, but the reality is, events like the creation of the Bitcoin technology only roll around just a handful of times each century… and if you're not paying attention this time around, you'll miss it. 

In fact, knowing about this technology today is like being in on Intel just before PCs started showing up in every home and office in America. And I'm convinced that this could be one of the best investments of the century. 

Once you hear everything I'm about to tell you, I'm sure you'll see what I mean. And I think you'll agree that this is one of the most intriguing and potentially lucrative investment opportunities you've heard about in quite some time. 

  • Imagine if you bought AOL stock in 1994, just before everyone and their mother started racing to get "online" and its stock shot up more than 10,000%. 
  • Or in 1997, just before "e-commerce" became the buzzword of the decade and its shares began an 11,006% climb. 
  • Or in 2004, just before everyone started booking travel online and its share price rocketed up over 5,390%. 

If you add all of these up, it still doesn't even compare to the gains which I think you can make with Bitcoin. 

This little secret has skyrocketed over 65,000,000% since its invention just 5 years ago, and I believe it is still headed sky high. And just in case you were wondering… no, that is not a typo, it really has increased 65 MILLION percent, and I'm sure you'll agree that's pretty impressive. 

By participating in the ICC protocols many of you are billionaires and some are even trillionaires, nothing is better than what you have! All you have to do is get to work and you will have a bounty beyond any that could ever be received by buying into BITCOIN! Remember in our CURRENCY EXCHANGE PROTOCOL we buy BITCOIN @ $1000.00 USD value in ZCASH and when you use the ZCASH you get the equivalent of $1000.00 in CHIPS so you DOUBLE your money plus have more depending on what you paid for your BITCOIN! You can then use the CURRENCY EXCHANGE KIOSK to exchange ZCASH and CHIPS to FRNs. 

In fact, it's so big that we have to step all the way back to a frigid February evening in 1949 to put everything into perspective. As I already mentioned, on that fateful night, a businessman named Frank McNamara made a mistake that would change the world forever. 

You see, McNamara had just finished dinner at a plush New York restaurant with his lawyer and the heir to the Bloomingdale's department store fortune… 

When he discovered something that horrified him! 

McNamara had an incredibly busy work day prior to the dinner, and forgot to swing by the bank to withdraw cash to cover the dinner expenses. You see, back then, if you missed the 3:00 p.m. cut-off, the bank closed, and you lost all access to your money until the bank re-opened. There were no ATMs. 

So there was Frank, unable to pay for the lavish meal to which he had just treated his associates. Eventually, Frank was forced to call his wife and have her bring him enough cash to cover the bill. 

He was so thoroughly humiliated by the ordeal that he became obsessed with developing a way to never have to worry about carrying cash ever again. 

Now at the time, a handful of gas stations and other businesses were issuing "charge cards" that allowed their customers to run up a tab and then pay for everything later. But Frank was determined to take this concept even further by developing a single, multipurpose "credit card" that could not only be used in place of cash, but would also be accepted at a variety of different business all over the city. 

Sure enough, one year later, Frank returned to the exact same restaurant with the exact same friends, and yet again, no cash whatsoever. 

Only this time, rather than having to get his wife to bring him money, he simply paid for the meal with a small piece of cardboard that later became known as a Diner's Club card. 

Initially, Frank issued about 200 of these cards to friends and business associates. And at first, they were accepted at just 14 locations. But soon, Frank's little experiment sparked an all-out revolution.  

As you might expect, as news of this new, easier way to pay for everything, from clothes to groceries, spread more people began wanting to get their hands on the credit card Frank had created. 

And before long, things really started to snowball because as more and more people started using them, more and more businesses were forced to start accepting them or risk losing customers to competitors who did. 

And, once more and more businesses began accepting them, even more people wanted to start using them. It began snowballing rapidly. In fact, just over one year after Frank paid for dinner with his Diner's Club card, over 42,000 people were using them regularly in major cities all over the country. 

2 years later, they were being accepted in places as far away as Canada, Cuba, Mexico, and the UK. And by 1955, they'd taken hold in Europe, the Middle East, and Asia. By 1959, over one million people were carrying the card Frank had invented, meaning its usage had grown 5,000-fold in less than a decade. And by 1967, it was accepted in over 130 countries around the globe. 

Strangely enough, it's that wildfire growth in the credit card industry that brings us back to our original question. 

What does a fax machine, credit card, and the internet have in common? 

Using the power of the "Network Effect" they reached a critical mass, or the "Tipping Point" to become world-changing technologies. 

And just like the fax machine, credit card, and the internet, Bitcoin is about to do the same. I will explain this in just a second, but first let’s find out what the network effect is. 

Put simply, the more people who use it, the more powerful it becomes even for people who were already using it. 

Let me explain:  You'd agree the first fax machine was pretty useless, right? You could not send fax to anyone. But the millionth fax machine meant that for the first time ever, you could send documents around the world instantly! And most importantly, the millionth fax machine made the first 999,999 fax machines even more useful because there was one more location they could send a fax to. 

Likewise, each new credit card user made being a credit card accepting business more valuable. And each new business made being a credit card holder more valuable. The two feed into each other making for very rapid growth! 

The same goes with the internet… the first person "online" could not send an email because there was no one to send an email to. But today we all use email. The more users have an email account the more valuable it is. 

Bitcoin is at the very beginning of its network effect lifecycle…With each new user, the network becomes more valuable. 

So just how fast are users joining bitcoin? 

Well, just like with credit cards there are 2 sides to understanding this growth. Having a bitcoin wallet is like the consumer having a credit card. And a business accepting bitcoin is like a business accepting credit cards. 

So how many people are getting bitcoin wallets? 

Here we see just 1 company (Blockchain), has gone from zero to nearly 2 million users in just 24 months. That is like 2 million people getting a Visa credit card. 


Another company Coinbase, reached 1 million user wallets in less than 2 years. That is like 1 million people getting a MasterCard. And there are dozens of Bitcoin wallet companies exploding all over the world. 


So users are growing fast… What about businesses accepting bitcoin for payment? 

Here is the co-founder of Bitpay. Just one company that helps businesses accept bitcoins. They are called Bitcoin payment processors. 

We have the COMMERCIAL EXCHANGE KIOSK, ready willing and able to convert multiple currencies, all you have to do is your side of the opportunity and bring new business members to the realization that we have a much better opportunity that any other digital currency out there! We are paying $1000.00 for 1 BITCOIN to exchange for our ZCASH digital currency and you double your money by doing so! Check it out! 

Coinbase also report adding approx. 1,000 new businesses each week.  How could they be doing this? EASY, they are working! They are advertising! Remember each one of these businesses is buying into BITCOIN! Spending money! They can join us and learn how to build their wealth for FREE! We just need to get the GOOD NEWS OUT THERE! 

And these are just 2 companies in the US. And just like with Frank McNamara's Diners Club card, bitcoin is exploding internationally as well. Bitcoin payment processor companies have started up in Europe, Asia and South America all in the last 12 months. 

Just like credit cards all those decades ago, the bitcoin payment system is taking the world by storm, but it’s still very early days yet. Which is great for you and I, because that spells opportunity for us.  

Now let’s talk about the moment a new technology reaches the point of critical mass, or its "tipping point." This concept was made famous by the book The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell. 

Gladwell describes the concept of the "tipping point" as "the moment of critical mass, the threshold, the boiling point." 

And once this point is reached, mass adoption explodes in just a few short years and is then considered "mainstream." Once this explosion in growth is finished the opportunity for incredible, life-changing profits has passed. 

The key is to get involved just before the tipping point. Once everyone is using it, doing it, or knows about it… it is probably too late to invest and expect incredible gains. 

So let’s look at how close we are to Bitcoin's "Tipping Point": 

The innovators are the pioneers who see the technology's potential.

ICC is the true innovators as we started digital currency in 1996 for ZCASH and 1999 for CHIPS in our “Private Members Only” CLUB 

The early adopters are the entrepreneurs and tech-savvy folks who build the infrastructure around the technology to make it useful. 

The early majority can use the "new" technology with relative ease, and the "late majority" comes along once all the problems are solved. 

The old-timers or laggards, straggle behind, as they probably don't like change, and want to stick with what they know. But the curve eventually forces everyone into adoption. Because the new way is simply better

With the internet, tech geeks were the innovators in the early 1990's, working with C:// and run DOS run in order to send a single email, which took about 10 minutes to do, and only a few people who actually could receive it on the other end. It wasn't until the infrastructure was built that made sending email as easy as compose-type-send. That is when the early and late majorities and laggards came along. Now it is so easy that your grandmother is sending emails with ease, and probably even has her own Facebook account. 

Bitcoin is very much like the beginning of the internet.  SPURT, CHIPS and ZCASH are even better! When you buy ZCASH you double your money when you use it! BITCOIN does not do that! 

It is my opinion that we are actually still in the innovator/early adaptor stage and on the cusp of hitting the tipping point. That point where usage explodes because the innovators create the technology that makes it as simple as compose-type-send. They make it grandmother ready if you will. And those who get involved before the early and late majorities will make heaps of money as the masses climb on board. 

And this is where bitcoin shines. You see, let’s say you were back in the 90's and you knew that the internet was going to be the next big thing. How do you make money on it? Unfortunately you still have to pick a horse. You could invest in Google or Alta Vista or Excite or one of the many other search engines we don't remember. 

You could not just invest in "the internet". The internet is just a protocol that all of these companies use. It was free and unlimited and anyone could use it. There was no way to make money without investing in a company. Not true! If you use ZCASH you double your money every time you use it! NOTHING is better than ZCASH and CHIPS! 

Bitcoin is a protocol too. And yes there is hundreds of millions of dollars of VC money racing to build the next "Killer App" in the bitcoin world. Some will succeed and some will fail. But because Bitcoin is limited and all of these companies need bitcoin to make their business work. It is possible to not worry about which company will create the next best thing…. As long as one of them succeeds, the value of bitcoin will go up. But not double every time you use it! 

Rather than bet on a horse… Its possible to own the race track. I want you to write that down. 

With Bitcoin, rather than pick a horse, it's possible to own the race track. 


I am not alone in my opinions on this topic by the way. In the last few months, I have been to tons of Bitcoin Conventions in Texas, New York, Toronto, and Amsterdam - and all of the experts agree on one thing: 

It is the early days for Bitcoin, and the earning potential in the next few years is HUGE.   

This is also good news for ICC as we can ride on the coat tails of their massive advertising effort! 

Here are a just a few opinions from thought leaders in technology and finance: 

  • "Bitcoin is a technological tour de force." Bill Gates, Microsoft co-founder. 
  • While Al Gore, former US Vice President and Nobel Peace Prize winner stated, "I'm a big fan of Bitcoin… Regulation of money supply needs to be depoliticized." 
  • And eBay CEO John Donahoe said "We think bitcoin will play a very important role in the future… It's on our radar screen." 

Even Sir Richard Branson owns bitcoin 

So what do these tech and business geniuses know that the masses don't? 

That Bitcoin is here to stay, and there is a ton of money to be made in the process. 

And let's be honest, we're here today to talk about making money. So let's talk money. 

As of April 2014, Bitcoin venture capitalists have increased their investments by more than $27 million, totaling $113,200,000 in the first 4 months of the year. 

This is a 29% increase over the total amount for the whole of last year, which stands at $88,000,000. And in 2012, bitcoin startups raised just $2,100,000.  


Check out these quick clips to see how much VC money is pouring into the bitcoin eco system. 

Again, what do these Venture Capitalists know that the masses don't? 

The answer is coming in second. 

The good news is, most investors are still completely in the dark, meaning you can take advantage of the general population's ignorance, and get in before the masses start driving the price of each bitcoin through the roof. 

But if you want to maximize your upside potential, you have to act now. Of course, if you are anything like me, you're probably a bit skeptical when it comes to new technologies. 

You may be wondering if Bitcoin could really be as big as Credit Cards, PCs, or even the Internet. It's a fair question, and while there are certainly no guarantees, you should probably know this, some of the world's most brilliant minds are betting big on exactly that. 

  • Google has secretly been "working in the payments team to figure out how to incorporate bitcoin into [their] plans." 
  • Amazon has been awarded a bitcoin-related patent. And 
  • Even Apple, who initially acted anti-Bitcoin, have come around and is now allowing "approved virtual currencies" like Bitcoin in their app store. 

So what does Google, Amazon, and Apple all know? 

The adoption curve is coming - and it will be very, very steep. The famous hockey stick graph is certainly what leaps to mind. In my opinion, those who get in now, have the opportunity of the century to make life-changing gains. Those who wait, will just enjoy the benefits of this amazing technology, but will not profit from what you are hearing right now on this video. 

After all, any time a market that big is about to experience a major shift, investing in the technology behind that shift is a no-brainer. So why hasn't everyone and their grandmother piled on too? Simple: because up until this past year, it was too hard to use. 

It’s just like the internet back in the early 90's. Before Google. Before Facebook. Before YouTube. Back when it took 10 minutes and computer coding skills to send an email. Back when very few folks used the Internet. 

But just like the Internet, Bitcoin is changing, and fast. And as soon as it does, your grandma will be using Bitcoin, and it will be too late to make big gains. 

Even better, SPURT, ZCASH and CHIPS are easier to get and worth more that BITCOIN will ever be worth! Why? Because we have our own banks and trade platform and we can create money through trades and BITCOIN can't! ICC is not an investment! It is a place that has all the tools to create all the wealth you will ever need, all you have to do is learn the protocols and promote the CLUB and it has never been easier! 

By now, I imagine, you are ready to hear more about the incredible way Bitcoin is revolutionizing money. 

And that is exactly what I have in store for you today. 

Because you have chosen to be an early adapter, someone who is willing to learn about this world-changing technology before the masses, you could be rewarded, massively. 

I hope by now you can see how SPURT, ZCASH and CHIPS digital currencies are so superior to BITCOIN! 


Here you will find everything you need to get started AND it is absolutely FREE!  

And the rewards start right now. 

Today, on this page only, you will have a one-time opportunity to get hold of a Special Magazine Report detailing exactly why Bitcoin is poised to take over the payment world, and how you can position yourself to make incredible gains in the next few months. 

Right below this video, you will find your special invitation to access this Exclusive Free Bitcoin Report, called yBitcoin Magazine, sent directly to your doorstep. 

yBitcoin Magazine does just that: it tells you WHY Bitcoin is working, and explains the basics, in plain English about What Bitcoin is, and How Bitcoin works. 

If you're like me when I first heard about it, you may be thinking, "This crazy internet money will never work." 

Or you may also have heard some things about Bitcoin being only for drug-dealers, or a "ponzi scheme," or having gone bankrupt. 

I don't blame you. I thought the EXACT SAME THING. 

But its all false reporting from people who do not understand it. The truth is… 

Bitcoin is being used by fortune 500 companies to improve the way we send and receive money. And for many big banking institutions, this is a scary reality. Within the next few years, Bitcoin will take over the way we transfer value for goods and services, just like the internet has taken over the way we share information. 

Knowing about this before the general public has incredible value for business, investing, and growing your personal wealth. 

And you will learn more about that in the Bitcoin Magazine, as well. 

You will also: 

  • Get a Quick and Simple understanding of how Bitcoin will change the way we think about and use money. 
  • Learn How To Effortlessly Make Money in the Bitcoin economy in the next 6 months. 
  • Meet movers and shakers in the Bitcoin world, opening up new investment and business opportunities for your portfolio. (Think Microsoft before it went public!) 
  • This world-class publication also features Bitcoin Experts, like me, on the future of Bitcoin, and the businesses environment growing up around the new technology so you can position yourself in front of the tidal wave of money coming its way. 

If you're still on the fence, I totally understand. I mean, this is a brand spanking new technology, and most folks won't get involved until the late-adoption period. But as we saw earlier, once this happens, the potential to make a lot of money on this investment will have passed. 

That is why I want to make it a no-brainer for you to get started learning, by taking out nearly all the risk from getting your copy of the Bitcoin Magazine. 

As my father always said, "Knowledge is no load to carry." And this particular knowledge has the potential to make your retirement 10 years sooner than it would otherwise be. 

Now, I know we could easily charge $47 or more for this type of information, but it is my personal mission to spread the knowledge and the wealth about Bitcoin. 

That is why, on this page only, you can access the Limited Edition Magazine, For Free. 


That is right. This professional created 76 page magazine is yours today absolutely free.  


All I ask is that you pay the costs of shipping and handling. 

I have a limited number of copies, and once they are gone, they are gone forever. That is why, if you want this information, for free, you MUST ACT NOW you will not see this offer again anywhere. 

Simply click the "Get My Free Copy" link below, add the quantity of magazines you would like to receive, (this is limited to 3 magazines per order). Then, just indicate which shipping option works for you, fill in your credit card details, and we'll ship your free copy directly to your front door. 

What you do from there is entirely up to you. But before I let you go, I feel I need to warn you about my personal Bitcoin story. 

I learned about Bitcoin from a friend of mine over dinner back in October 2012. And once I satisfied myself that this "magic internet money" could actually work, I started buying a few Bitcoins. 

Now back in 2012, they were under $12, so I set up an online wallet, bought $100 worth, and gave about $100 worth of thought to protecting my Bitcoin. 

This turned out to be a huge mistake. 

As Bitcoin started increasing in price, first from $12 to $30, then from $30 to $260, I bought more and more, until I had 1,400 Bitcoins, which was worth $180,000 in April 2013. 

On April 22, I logged into my wallet to count my earnings (embarrassing, but true) and found that someone had stolen my password, hacked my wallet, and taken all $180,000 worth of Bitcoins. 

I was devastated. 

But since then, I learned some incredibly important lessons about setting up a wallet, bitcoin security, and how to PROPERLY get started buying Bitcoin. 

I tell you this, because once you get the free magazine, I know you'll want to get started buying your first Bitcoin right away. I want to make sure that you don't make the same mistakes that I made. That is why, along with the Bitcoin magazine, I would like to give you access to a product I created called the Bitcoin Starter KiT 

This is a step by step video tutorial program, that will teach you how to: 

  • Create a Bitcoin Wallet in less than one minute for free. 
  • Safely Buy Bitcoin without getting ripped off. (By the way, you can start with as little as a dollar) 
  • Sell Bitcoin and rake in major profits. 
  • Trade Bitcoin for goods, services and trips. 
  • Safely store your Bitcoin with peace of mind that it will be there in your secure "cold storage" wallet. 
  • Accept Bitcoin for payment, a great way to get Bitcoin for your goods or services and, 
  • The Very Best security practices, so what happened to me will NOT happen to you! 

Security is actually one of the most important aspects of Bitcoin and one of the most little understood. 

The bitcoin starter kit will give you step by step instructions on best practices to keeping your bitcoins safe. 

The Starter kit is a must for every beginner to learn the basics and to protect themselves like a pro, and we sell the Bitcoin Starter Kit for just $97. 

However, like I said before, I want everyone to get started right away using Bitcoin. So right now, on this page only, in addition to your special invitation to get a free copy of the Bitcoin Magazine, I am also going to give you a one-time chance for a 50% discount on our Bitcoin Starter Kit. 

Today only, if you choose to grab your free copy of the Bitcoin Magazine, you may also get the Bitcoin Starter Kit for just $47. That is a $150 value for just $47! 

But this offer is only available right now on this page. It will not be honored anywhere else – and this is your only chance to take advantage of these huge discounts. 

So just below this video, you will see three options: 

  1. Get Your Free Copy of the Bitcoin Magazine (Free + S&H) 
  2. Just Get Started Now! With The Bitcoin Starter Kit ($97) 
  3. Get $100 worth of FREE STUFF including Bitcoin Magazine + Bitcoin Starter Kit ($47) 

Once you make your choice, you will be sent to our secure check out page where you can enter your details, and get started right away. 

But you must hurry, because the quantity is limited, and once we are out of magazines, this offer expires. 

So make your selection below and I Will see you soon. 

For $65.00 USD you will get your own SPURT ACCOUNT and EARN OVER 1MM in SPURT in one year or less from now for completing the ULTIMATE COLLEGE OF COMMERCE CURRICULUM! Plus if you do what is shown you can earn whatever goal you set for yourself! You can't do that with BITCOIN! 


Step 1. Choose Your Product Below  

 1 FREE Limited Edition Magazine (Plus S&H) 

 $97 Bitcoin Starter Kit Only 

 $47 Special Offer: $47 For Bitcoin Starter Kit +
  FREE Limited Edition Magazine