Modern Monetary Mechanics – Part 3 – The Shills

Every confidence game has multiple players and this one is no different. You have the Con Man (Mastermind), the Mark (that is you) and the Shills (those who assist that Mastermind and benefit from the con). In this section we discuss the Shills and what they gain by conning you.


In last segment we discussed the setup and briefly touched on the Masterminds. I want to continue going down this road so you recognize who they are and why they are doing what they do.


#1 – Bankers


When I say bankers I am not speaking of the lowly 24 year old cute brunette that works behind the teller window at your local bank. She is as much a slave as you are caught in the system that was created to enslave us. The fact that she works for a bank does not make her a banker, just a banker’s peon. I will also show some kindness to the local small community banks and the Credit Unions. Although they are part of the system, blaming them for the evil would be like blaming the train conductor of a train driving SS troops. They are part of the system and are trapped by it. I am referring to the Too Big to Fail monstrosities that are at the core of the World Banking Cartel and are senior members of the Federal Reserve Board. Although exact ownership of the Federal Reserve Banks (12 in total) is a touchy subject for the Federal Reserve, we know that they are by law and court decision a Private Organization (1982, Lewis vs U.S.(1))


As an example of the ownership of the Federal Reserve and more exactly the Primary Dealers that can create money by loaning to the Treasury, this is the list of Primary Dealers of the New York Fed as of today (2):


Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
SG Americas Securities, LLC
UBS Securities LLC.


Interesting list, don’t you think?

Considering what power these banks have, it is enlightening to know who they are.

So, how do these banks benefit from controlling the currency supply of the U.S.?


Not only do they get to create currency out of thin air, they get to do it before the additional currency inflate (or devalues) the purchasing power of the currency! Every bank can create currency from their customer deposits and MBS but these banks get to “borrow” currency from an organization they own thru a mechanism called a “Repurchase Agreement” or repo. In a repo the Federal Reserve Bank deposits funds into the Primary Dealers account and the Primary Dealer then purchases bonds with the guarantee that the Federal Reserve will accept the bond as a re-payment for the loan(3), while allowing the bank to keep the balance as a reserve in their accounts. Free money people, free money.


Add to this the ability to loan 90% the value of the reserve funds into existence and you can see the benefit.


Let’s bring our friends Joe and Bill into the picture again. Let us say that Joe and Bill open a Payday Loan store. One of those places where you write a check today and they give you a loan but will not deposit the check until pay day. So, you go to Joe and write him a check, Joe goes to Bill and asks Bill to loan him the funds. Bill fires up his trusty computer and adds the funds to Joe’s bank account from thin air by ‘expanding his balance sheet”. Joe then writes you a check against the new funds in his account and gives Bill the check to extinguish the debt. Bill deposits the check as an asset in Joe’s account and extinguishes the debt. You get the money from Joe, Joe got the money from Bill and Bill creates it out of thin air. How does that benefits Joe? Not only does he gets to charge you interest on the loan but, since the cash is still in his account with Bill, he gets to loan 90% of the balance to the next sucker that walks thru the door.


#2 – The State.


I am using here the generic term the State referring to any group of individuals who claim the legal right to use violence against another group of individuals, called citizens, within a defined geographical area, in order to extort wealth and force compliance to their wishes.

Why would the State permit the Banks to hold such a power over the citizens and, more importantly, how do they benefit?

The State power comes from two primary sources. The voluntary compliance of the tax cattle and failing that, the existence of enforcers within the population of tax cattle to use ridicule, intimidation, coercion and ultimately violence to stay in power. You see, being a member of the ruling class is actually a really good gig. They get to tell the rest of the population what to do, receive adoration and praises for it and after they conclude their turn at the wheel, they get to be taken care of for the rest of their lives both economically and socially. But the ruling class does not actually produce anything. They just get to tell the tax cattle what to do and then steal part of their production. So how do you get such a sweet gig? By bribing those who can help you get the job.


Let’s say that you want to run for congressman. It takes a lot of money to influence the cattle to vote for you. All those sponsored political advertisements cost a lot of money. Where do you get the money? As payment for services yet to be rendered. You see, no individual, organization or corporation will give you a penny unless it will benefit them somehow. You wouldn’t hire a plumber not to work on your plumbing and J.P. Morgan will not contribute money to a candidate unless they thought the candidate will be worth the investment. So politicians, like any good salesman, promise special favors and benefits to anyone who will pay. Anyone who doubts this must explain the purpose of the thousands of lobbyists registered in Washington D.C.


As an example, let’s say that you want the campaign contributions and votes from the United Auto Workers Union. Now, the UAW receives their funding from member dues that are legally extorted from anyone that wants to actually work as an auto worker. It is in their interest to elect politicians that will protect their franchise. So, you promise to push thru legislation to “protect worker’s rights” (meaning the UAW’s franchise) and they pay you off with a portion of the member dues they coerced out of their workers. Sweet right? But once you get in, how can you stay in. After all, if you steal money from one group to bribe another group the first group will contribute to your opponent. And that is messy and not very gentlemanly. So how can you promise 3 dollars in bribes from every dollar you collect? Well, by making the theft of funds invisible.


The Whiskey Bottle Gambit


Lest look in on our buddies Joe and Bill. Now let us say that Joe has a teenage son named Joe jr. Now, Joe Jr. is in with the popular crowd in High School and wants to stay popular. There is a party going on in Marcie’s house and her parents are out of town. Jr. needs to impress his peers so he decides to steal some whiskey from Joe’s liquor cabinet. Now, he is a teenager, not an idiot (or at least he thinks he is not an idiot). He knows that if he just takes the bottle, Joe will notice. He decides to take just 1/3 of the bottle. Now he has a problem. Joe’s formerly full bottle is only 2/3s full. There is no way that Joe will not notice the missing whiskey. So in a stroke of brilliance he decides to replace the missing volume with tap water. He takes the stolen goods and has a brilliant time at Marcie’s house. That Friday, Joe invites Bill over for some drinks. He pours the whiskey over some ice and they proceed to enjoy some drinks. Yet, for some strange reason they need more whiskey per drink to get the same results. Joe ignores the strange occurrence and pours another drink.

Next weekend there is another party and Jr. decides to try the same trick. This time he figures that he can take 2/3 of the bottle since Joe did not notice it the first time. Once more Bill and Joe sit in Joe’s man cave drinking and once more they notice that it takes 3 drinks to get the same effect that they used to get from 1. This goes on for months and finally Joe realizes that his whiskey is getting weaker every bottle he buys. Who does Joe blames? Well Jack Daniels Corporation of course!


That is exactly what the Federal Government is doing. They have created a system in which they get to water down the whiskey without you noticing it. Every time the Federal Government borrows from the Federal Reserve every “dollar” added into circulation makes every existing “dollar” less valuable. This process is called inflation and it is not only legal but a stated goal of the Federal Reserve! They are bribing the sheep by stealing from them and the sheep don’t even notice.


Such a system had its limitations under a specie standard (actual metals). You can only take so much gold out of the gold coins until people realize that it is no longer gold but gold plated copper. And when they notice it, you get the blame. After all the mint coins the money so the mint is responsible for the content.


But under a fiat system you cannot be blamed. If coffee is more expensive it must be the evil farmers and their donkeys. If gasoline is more expensive it must be the evil Big Oil. If medicine is more expensive it must be evil Big Pharma. Get it? Such a sweet deal. You get to steal the wealth from the sheep, their very lives and blame “capitalism” for the theft. And here is the best part, you get to promise the sheep to bring the greedy capitalists under control if they just vote for you again!


#3 – The Foreign States


Foreign governments are just as much players in this game as our own Federal Government. A short history lesson is in order here so, those of you who already know the history of the US dollar, are about to be bored.

Throughout much of history gold was considered the universal specie for commerce. Silver was extensively used as money due to the rarity of gold, but gold was the international standard for commerce (except with China who was on a silver standard). Governments had to have gold in order to trade with other nations.

After WWII the National Banks of most of Europe were empty. Wars are expensive. The only nation with any significant amount of gold left, since they had “nationalized” it in 1931 was the United States. So, in 1944, in a conference in Brenton Woods, Georgia the European nations agreed that instead of funding their treasuries with gold they did not have, they would fund their treasuries with U.S. Dollars. It was a great deal really. They would get dollars from the US, which forced them to import most of their goods from the US while the US would reconcile their international demands with notional gold backed by the nationalized gold in FT Knox. The U.S became a supplier of the wealth while the other nations got to rebuild their countries with U.S. dollars as reserve in lieu of gold. But where would these dollars come from? Well from the U.S. government itself in the form of the Marshal Plan.

Great Scott, what a brilliant idea. The U.S. government would borrow currency from the Federal Reserve (indirect theft from the tax cattle), give it as a gift to the European Nations and then sell them U.S. manufactured goods in dollars. In exchange the European Nations could, using fractional reserve banking with the dollar as the reserve, print as much currency as they wanted in order to rebuild their economies.

To simplify. The US holds gold as reserve. The US Government borrows currency from the Federal Reserve and gives it to the European allies. The European Allies use these gold backed dollars in lieu of real gold as reserves and print 9 times more local currency than the value of the dollars they keep in reserve. Then European Allies buy U.S. manufactured goods with the newly created money in order to rebuild their infrastructure. Brilliant!

Small problem though. This scheme, although allows the Europeans to be as generous as they want to be bribing their tax cattle, depends on the US government been frugal. You see, if you value your currency based on the dollar and the U.S. government inflates the dollar, your currency inflates exponentially. This is a problem. The only solution to this problem is to call the U.S. bluff on the whole thing and settle the trades in gold. Then you can use the gold to back your currency evading any foolishness by the US government. This is precisely what happened thru the 1960’s culminating with President Nixon closing the gold window in 1971 effectively turning the U.S. dollar into a full paper lie (4).

So, how do the Foreign States benefit? Well, since their currencies are backed by dollars and the biggest market in the world is the U.S. consumer, they get to sell their slave labor created goods and receive dollars (promises of U.S. citizen’s future labor) in exchange. They can then use these dollars to purchase real wealth. Things like, oil fields in Texas and gold mines in Africa or ship building facilities in Greece. Let me walk you thru a typical exchange.

Kuang Chon manufacturing produces $100MM worth of iCraps for the consumer market each year. They sell them to U.S. distributors and receive $100MM dollars. By keeping their own currency inflated, they can minimize their internal costs in Yuan and maximize their profits. Then they use those profits to buy lumber or gold or oil in the international market, with dollars, and gain control of real wealth.

It’s a really good racket. You use slave labor to sell crap to gullible Amuricans and receive an international currency to buy real wealth. Talk about efficient tax farming!

And what happens if the Federal Government tries to devalue their currency? You devalue yours by buying their bonds! This is actually exciting. Let’s say that the U.S. government decides they need additional bribe money. The Treasury prints some bonds and sells them at auction. You do not want the dollar to be devalued against other currencies but do want your currency devalued against the dollar. A strong dollar and a weak local currency means that you get more wealth for your dollars and spend less Yuan in payrolls and local expenses. So, you buy some bonds, add them to your reserves and create additional currency based on those bonds. This devalues your Yuan against the dollar and strengthens the dollars you are receiving in payment for your iCrap. The U.S. government doesn’t really mind because they get to export the inflation to you. Basically they get to tax your cattle instead of their own. And you get to maximize your profit by reducing your local costs.

Of course this only works if you; one, keep your local costs to the minimum and two, you are a net export country. If you start importing more than exporting or if your local costs go up, the game is over. Ask Portugal, Ireland, Italy, Greece and Spain how well they are doing today.


Last but not least #4 – The Financial Group


In this group I place Financial Planners, Investment Firms, Wall Street Gurus and anyone else that stands to profit from the market.

Since we are in a full fiat standard and the stated goal of the Federal Reserve is to devalue the currency by one to two percent a year, you are in a quandary. You need to save money for when you can no longer work. You slave for forty or fifty years, at some point is time to say enough. But, you know that if you just place currency under you mattress, like our grandfathers used to, you will be homeless and starving in your old age. So what can you do? You “invest” in the market. 401Ks, IRAs, Defined Benefit, you name it. You surrender part of your wealth today with the promise that it will flourish and allow you to retire to Florida to play golf at 65. So you give your “money” to a financial firm. They tell you that if you just follow the green line, there will be lollipops, rainbows and unicorns on the other side. So, what happens to your money? The fund managers get to play games in the market with it. They leverage (borrow) against you money, buy and sell stocks and other notional tokens of wealth and they get to charge you a “small transaction fee” every time they trade. And if they lose? Well my friend, you are out of luck. They got paid whether they made you money or not. Hell, they can even bet against the investment they made on your behalf by shorting the trade and make money from you losing money. In a land of thieves and all that.


The saddest is that you do not think you have a choice. If you do not invest, you will be hungry when you can no longer work. And if you do invest, you take all the losses while the financial managers make most of the profits. And even if you were to decide that you do not want to play, where do you think your company / union / State funded retirement money is? Managed by the same bastards that you were trying to evade to start with.


Next up – The Hook







4 comments to Modern Monetary Mechanics – Part 3 – The Shills

  • trailhiker

    Goldsaver, you sir or madame are wonderful! I thought I posted these comments but it appears to have been vaporized in cyber space.

    I was taught this from my first instructor in economics nearly 24 years ago, but have never been able to articulate this to others so as to give them an ability to see such wise and serious truths as you do now. I will be using your recent writings on this subject to re-share with those whom I care about to help them understand the importance of the deciet which they have lived under. Several years ago I got out of the paper market and into true assets, now only silver, as SS and many others on this site have done, and it is because of persons like yourself by your abilitiy to communicate so well, that others may hopefully see the light of day that does exist. Thank you

  • Goldsaver…..
    You do have this down to a science. A 400 level course, in 101 level terms.
    I too shall share your article.
    RON PAUL 2012

  • Trailhiker and PlannetPrisoner, I thank you kindly for your praise. I must warn you that my primers are just that, primers. I generalize a lot of things in order to convey the result of the process. When you share these, many people, specially those who are closest to the system, will fight you and pick on small details in order to discredit the message. Do your own research beyond the basic mechanisms and ideas I show here. As you noticed, I have started to add links and, while trying to fall asleep last night I decided that I will add a resources appendix or post-mortem to the series. A mind that is still trapped in the matrix will resist the monstrosity of the truth, but this is a case where only the truth can set you free.

  • […] [TO READ THIS AWESOME ARTICLE IN ITS ORIGINAL, here is the link:] […]

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