Yes, it’s all true — the fiat money we have in the US is unconstitutional (read the constitution), but arguably legal by various statues (including the one that established the Federal reserve). No, things aren’t supposed to become legal if they’re unconstitutional unless an amendment has been made, but, hey, who’s keeping track anyway?

Apparently not most people, and that’s precisely what allows the system to keep chugging on. It’s really all a morass of convention and assumptions. Besides, there are too many “laws” to keep track of. Does anyone think the government even knows the laws itself? I’ve certainly witnessed plenty of evidence to the contrary. And it has become common knowledge that even our Chief Executive doesn’t seem to know or care what is “legal” either.

Details, details.

One thing is clear: fiat money is what we’ve got, and it is being horrifically abused, to the detriment of most of the American people. Inflation is one aspect. Credit/asset bubbles are another. The results are a deteriorating condition for the average joe (stagnating/declining wages, stratospheric debt burden, negative savings rate, etc., declining share of corporate profits, etc.), and the hazard of occasional financial ruin when joe tries to play like Donald Trump. Or maybe just when he can’t pay his medical bills.

This isn’t wild-eyed conspiracy theorist stuff. Just read the Fed’s own publications and the data it publishes itself. $3.5 trillion of financial system credit created on $30 billion of Fed monetization? Hmmmm. The Fed admits that the reserve requirement is effectively irrelevant, which is incidentally why so much credit ends up getting credit, but just for good measure, is moving to eliminate it formally. Hmmm, hmmm. And why eliminate M3 reporting? Maybe because they wanted to allow it to expand at an unprecedented rate? Nahhh, couldn’t be. People might notice a thing like that, and then everyone would revolt, right?

Hmmmmm!

Or maybe Goebbels had it: lie large enough and confident enough, and people won’t imagine you could possibly be fibbing, or have any malicious intent at heart.

I said you wouldn’t like this. Sometimes it’s necessary to muck around in foul smelling goop when you’re looking for something. As for that “very dark” business, they don’t call economics “The Dismal Science” for nothing. Things are going to get pretty ugly before we’re finished, and a lot of the players will be revealing their nastier sides before it’s over, your humble servant included. By the way, some pretty hairy stuff has come out of avuncular, bumbling, middle-aged men in recent years. Check out the career of Leo Szilard some time.

It is a lifelong habit of mine to point out the blindingly obvious in fields where I have no qualifications at all. Among the constellation of ideas and opinions our correspondent revealed, some of the material at [5] looks worthwhile and important. Fed notes aren’t real money. Griffin, regardless of his qualifications, if any, explains this pretty well.

Modern fiat currencies are a sort of social contract. Most essentially they are legal tender, which means you can always discharge obligations with them, including government imposed ones like fines and taxes. What really freaked out the bank in the Credit River scenario was that the judge didn’t accept the two dollars, when they had a clear right to appeal his judgement. The judge was certainly wrong there. It is routine for governments to restrict what can be bought, on the other hand. Congress recently refused to allow an American energy company to be sold to Chinese interests, regardless of the fact it was for sale and the Asian buyers had the dollars. This would certainly have happened even if the buyers had offered gold.

But more to the point, the government and financial services industry has an obligation to treat dollars as if they were real money. These overly bright hedgies and others in the system seem to have found flaws in the SFAS rules, or they are taking advantage of obscure ways to violate their letter and spirit. In short, they are not treating the currency with due respect. Working in finance is not a game, and winning should not be defined by how much personal wealth you’ve got at the end of the day. Therefore I see last month’s legendary bonuses on Wall Street and The City not as a cause for celebration of brilliance, but as a profound symptom of diseased morality. Getting rich just isn’t the point of being a fiduciary.

These financial types are hiding some of their work, and the marginal guys can sometimes shed a bit of light. That’s all.

And what is the “something important” these and many of your other truly bizarre sources have to tell us. They tell us that our house is almost worthess, our currencies are all worthless, our investments (excepting gold) will soon all fail, our pensions hollow promises, our courts a riged game, all because of a conspiracy by small, hidden,
greedy (insert your favorite hated group, Jew, Illuminati, succesful fund managers, the Canadian) powerful men who control all politics and the economy. Private property is theft,lending is dishonest usery, The state, labor and gold are the only true currency. All these statements are frequently as poisonously dishonest as that sign (from a time when such lunacy almost siezed the world) which welcomed those poor souls who were largely the targets of similar economic and “legal” theories with the motto that: “work will set you free.”

These “rise up, oh masses” messages invariably appeal to the less educated, less successful and most envious, who in some distorted self-deception really do not believe it is fair that a CEO’s job is worth more than menial work. They gladly borrow money and then damn the lender when he wants it back. And worse, at the darkest edges of this fringe,the ones who really think they are smarter and more abused than most, pick up a gun or a bomb and hurt somebody who just is living an honorable life.

Extremist nonsense that trades on fear, hatred and conspiracy theory is more than just harmless fun. It is not merely “another voice we can learn from.” In the US it is often, but not always, constitutionally protected speech(and I AM qualified on such topics), but that does not mean that men of good faith pass it on.

If you actually have reviewed the materials that you cited, and what they actually allege, and you were not really just kidding, then any further dialogue between us is a complete waste of time. And I feel sorry for Twist. She may be dealing with something very dark dressed up like a curious, sweet, old civil servant. Tell me it ain’t really so.

Unlike brush-pile polio, it sure looks like the Fed’s money really is unconstitutional, for whatever that’s worth. What may be more important than the legalities, though, is how the world’s favorite reserve fiat currency is performing within finance, and housing finance in particular. It’s in that space these people may have something important to tell us.

Not to get too technical,but even serious courts that actually create decisions which may be considered something more than merely binding on the parties involved (like State and Federal Appeals Courts) have a whole lot of silliness on the books. A series of decisions aroung the turn of the century upheld trial court damages against adjacent landowners(under a trespass theory) for brush piles that “caused” polio, an apparent trial lawyer favorite theory from that period(and now one is running for president, ain’t it a great country).

This new funny stuff you offer is much like those internet geniuses that every year urge people to not pay “illegal” federal income taxes( go directly to jail, do not pass go) by refering to similar nonsense. I’m sure that neither you nor any other doom reader will bet their actual liberty or wealth on such information. If anybody out there will, send me all that useless fiat money you can get your hands on and I will send you a “valuable”, completely natural new beauty product produced daily by my dog “Cesaer”.

You have, of course illustrated one of my pet points. Expertise matters. Legal opinions, (or even discussion of the differences between Courts of Law and Courts of Equity ) from those without training, experience, and (excuse me!), a license, even if well armed with a computer and serious wit, should be scrupulously avoided by serious people. The same is true of economics ,although I note that your Mr. Smith’s ( yes still useless) stuff now appears not as obviously alarmist, wonder why? Did Jan have a talk with him an tell him he was scaring cheese out of the Swiss?

Your posting today was good fun, clearly the result of some high level realization that the 11 th dimension allows all such things, a type of AtoZtome theory (why stick to boring old M theory). But alas, cosmology, like law, is a young mans game these days.If you ever get the opportunity to visit with your sources at a PPA convention, which I suspect looks a bit like a shabby Star Trek gathering but not as busy, be sure to wear your tin foil hat. And by the way, isn’t your friend Chairman Frank likily now very intensely investigating “The Mandrake Mechanism”?

I’ve got to go brush up on my Samual Glasstone now since your posting was obviously a sign.

As for the “physics speak” in economics, I would offer the latest one which is the Dark Matter theory of foreign trade where tghe US supposedly exports stuff but we just can’t measure it. Economists will borrow anything from anywhere to obfscate the reality that they really don’t know what they are saying. They just believe it in the way that Stepphen Colbert describes “Truthiness”.