the voluntary state
A New Political Concept

IN primitive conditions, food and shelter are man’s  primary  considerations.  Within  a complex  modern  society  these  necessities  are  lacking  for  few.   But the same complexity, which man uses to fill  so  many  needs,  in  turn  generates  a  different kind  of  problem,  unknown  to  simpler  societies.

A complex social and economic structure is beyond an individual man’s control, so that his security depends upon his confidence in the ideas, people,  and  institutions  that  make  up  the foundation  upon  which  he  builds  his  future.

Anything   which   shakes   this   confidence,    or even   requires   him  to    question    it,   frightens   him because  he  cannot  protect  himself  against something which is wrong in such a complex structure.  If the structure as a whole is faulty or corrupt and he is warned about it, the entire foundation of his life must be seen to be at risk.  This can breed anger and even panic, so that the bearer of warnings about the safety of his society is likely to encounter either anger or fear.  In either case,  further  communication  on  the  subject becomes almost impossible _ the door closes.  People, in general, cannot tolerate threats to  their  security  which  they  little  understand  or,  worse,  are  helpless  against. 

That is why the effort to expose something as  powerful  and  evil  as  central  banking _ such  as  our  Federal  Reserve  system  _  which is  held  in  awe  by  the  financial  establishment  as  well  as the political establishment, is so difficult.  Nobody wants  it  to  be  true,  and  people  cannot  bring themselves  to  consider  that  such  a  respected fixture of national life could be a fraud.  They immediately ask themselves, Why have I never heard  this  before?   The  clearest  short   answer  has  to  be  that  we  all  have  a vested financial interest  in  its  not  being  true.   The  financial collapse of a society is not something that anyone wants.  So  the only  question  left  is,  would  we  be  better  off  if  we  attempt  to  solve  the  problem  now,  or  wait  for  the  inevitable  collapse  which  will  sweep  away  so  much  that  is  held  dear  by  everyone?

How could the institution founded, ostensibly, to guard the   value of our money be fraudulent? Are these officials, on    whose words  so  much  depends,  frauds?  The immediate  answer  is  that  these  officials  are  doing  the  best  they  can  in  the  situation  in  which  they  find  themselves.

The  reason why central  banking  is,  under all conditions,  fraudulent  is  that  it  was  never instituted  to  guard  the  value  of  money,  as  we are told.  Central banking is fraudulent because its  purpose  is  to  give  the  politicians  a  means  to  spend  more  than  they  can  collect  in  taxes. 

The central bank’s function is to enable  banks  to  inflate  or  expand  the  money  supply  by creating  credit  “deposits”  out  of  thin  air.   Then,  as  a  result,  it  confronts  the  difficult  problem of concealing   and   controlling   inflation,   because   an   increase   in   the   supply    of    money   or  credit  is  inflation.   To  sum  up,  people  are  told  this institution is guarding the value of their money  when,  to  the  contrary,  the  central  bank  is  the  instrument  that  is  destroying  its  value.

What is the point of it all, it should be asked?  To create money the politicians can use to buy votes  from  interest  groups  in  order   to    retain    the     power     of     office. 

Central banking, then, is an inflation engine.  It is the root of the almost universal corruption which  is  destroying  the  world,  along  with  the moral values which underlie Western  civilization.

Were  voters  to  learn  the  source  of  the corruption  which   is destroying their lives  and also  their  families  _ by  spreading  dishonesty throughout the fabric of our society _ they, the voters,  would   have  the  information  they  need  to put a stop to it.  The jig would be up for the corrupt political game which is now so condemned by  the  voters,  while  the  cause  and  reason  for  it  are  kept  secret  from  them.

This, then, is the rationale for attempting to penetrate  the  reluctance  of  people  to  face  the rotten foundation of the institution upon which they have based their trust, and upon which their  sense  of  security  has  been  built.

There  is  no  easy  way  out  of  the  terrible dilemma  created  by  the  coming  death  of  the welfare state which the politicians have created and  its  consequence,  which  is  the  bankrupting  debt.

The  Federal  Reserve  controls  the  world through the United States dollar.  The dollar is now the reserve currency of many other countries, which permits the Federal Reserve to export the United States inflation to the other countries.  The  damage  the  Federal  Reserve  Bank  can  do  is  almost  unlimited.  

Unless we call a spade a spade, we will deny  ourselves  the  wonderful  tool  of  truth. 

So,  let  us  tackle  further  this  matter  of our own central banking system, the Federal Reserve Bank, which is protected by all the euphemisms   of   our   language.

To start, the central bank is not a government-owned    agency, it is a creature owned  by  private banks.  While  all  countries  have  central  banks these days, we  can  confine  our  discussion  to  the  United  States central bank.  The primary function of the Bank is to create controlled inflation to the profit  of  the  private  banking  system,  in  the  process  of  financing  the  activities  of  the government  over  and  above  its  tax  revenues.

The members of the Board of Governors are appointed  by  the  President,  and  they  help coordinate the borrowing of the government with the private banks.  This permits the private banking  system  to  influence  the  politics  of     the country, and the Federal Reserve, as the lender  of   last  resort,  to  be  the  deciding  factor   in financing  foreign  wars  which  would  never  be  fought  if  left  to  a  vote  of  the  people.    All  of  this  carefully  concealed  activity  of  the banks, which brings them great profit as the money supply is  continuously  expanded,  is  presented  to  the American  public  as  careful  protection  of  our money  against  inflation  when  it  is,     in  fact,      creating  the  inflation.      In  truth,  the  principal activity of the Federal Reserve is inflation pure and simple,  but  in  such  a  manner  that  the  public  is  not  aware  of   what   is    destroying    the    value    of    their    money.

The definition of inflation is an increase in the money supply, nothing more and nothing less.  The Federal  Reserve  system  is  the  means  by  which  the  banks  create  money  out  of  thin air,  as  they  establish  accounts  for  borrowers who then spend the  newly  created  money  from     their     accounts.     This    is how the money  supply  is  increased _ meaning, this is how our money supply is inflated or,  still  more  simply,  this is what causes inflation.

Inflation  is  the  purpose  of  the  system,  to provide the borrowed money the government uses to finance everything, from wars to welfare, that  costs  more  than  taxes  provide.

We  do  not,  here,  need  to  go  into  the intricacies of how the government issues bonds in return for money created by the banking system.  Suffice  it  to  repeat  that,  whereas  we  are  constantly  told  that  the  Federal  Reserve Bank is acting to prevent inflation, it is doing precisely the opposite.  It  is  busy  concealing,  and  trying  to  control,  the  inflation  it  is  creating  to     give     the     politicians    the    money    with     which  to  buy  votes. This is the sole and constant activity of the Federal Reserve  Bank.  It  should  be  abolished,  so  that people’s  savings  would  again  be  safe  from  the  politicians. 

Taking  1913,  the  date  when  the  Bank  was established, as the beginning of the operation of the great inflation engine which is the Federal Reserve, let us review the judgment as to the cause of  the  1929-1933  economic  disaster.

Many  still  target  the  tariff  enacted  at  the  time  as  the  cause  of  the  disaster.   They  are  wrong.

That  reason  was  and  remains  an excuse  to  cover  the  real  cause,  which  was  the  Federal   Reserve.

Very few, even now, see clearly what happened :  our  central  bank  pumped  things  up and then let the air out.  In other words, they deliberately created massive inflation and then deliberately deflated.  Boom.  Bust.  It was a colossal blunder by a very rough and inexperienced  inflation  machine.

The officials of the Federal Reserve did  not  know,  at  that  time,  that  deflation  is  no  cure   for   inflation,  and  that  to  deflate  after  inflating  is  to  add  another and  greater disaster _ the  results  of  deflation. 

Their mistake caused a world-wide depression  which still frightens    us    like  a  ghost   that  won’t  go  away,  because  of  the  mystery  surrounding   it.

Thus,  the  public  still  does  not  have  an explanation that rings true. They  need  the  truth  about  the  real  cause,  the  deflation  by  the  Federal  Reserve.

The  foundation  of  our  self-confidence and  our  belief  in  our  system  was  shaken  in  those  years.

The problem the deflation caused lingered until the Second World War when the central bank pumped up the money supply (the inflation)  again  to   pay   for   another   war   we     didn’t  want.

The Federal Reserve has caused untold  sorrow  for  the  United  States.

Until we are sure that what caused the long depression  is  no  longer  there  to  cause  it  again,  the  fear  of  that  ghost  will  remain.

When people understand what caused it, the Federal Reserve will be abolished, and the sureness  of  honest  money  will  restore  our belief  in  ourselves.

The great inflation machine has ever since been seeking a way to expand and restrict credit in a way that is described as fine tuning.     This means managing  the  inflation  so  that  it  proceeds gradually, the purpose of a central bank, with restrictions as necessary to keep inflation in check.

The  fallacy  behind  central  banking  is  the    belief    that    inflation    can    be    controlled.   All  history  denies  that  this  can  be  done.  The  truth    is    that    inflations    cause    bubbles    that  eventually    burst.

The ultimate tool the inflation machine has to prevent  a  runaway  inflation  is  a  sufficient restriction to cause deflation (depression.)  Those     guiding     the     central     bank     would     no  longer,   knowingly,   take  such  a  risk. 

But a real risk remains that those in charge may, unknowingly, cause deflation in their effort to keep the inflation from accelerating into  a panic   in   the   financial   markets.

It  is  wrong  that  decisions  of  this  gravity can be exercised by central bankers.  The voters    cannot    control    these     banking     officials,  as would be possible with elected officials in The Voluntary  State.

Why should our country be exposed to such dangerous consequences of central banking when, with honest money, there would be no inflation  because  there  would  be  no  central  bank   to  cause  it?

At best, the inflation will continue the theft of the value in people’s savings until and unless the Federal  Reserve  is  abolished  because  the  people  have  finally  realized  the  purpose  of  our  central  bank.

The  rulers  once  stole  the  value  of  the    people’s      money     by    actually     clipping     their

coins  or  reducing  the  amount  of  precious  metal  in  their  coins.

They do it today through central banks that steal the value out of people’s savings by inflating in such a way that people do not know what is being   done.

Once the value has been stolen it cannot be restored.  There  is  nothing  that  can  be  done about inflation except for the politicians to stop inflating.  Abolish the Federal Reserve, and this will  be  done  as  of  the  day  it  ceases  to  exist.

Of course the politicians would, then, no longer be able to spend money created out of  thin  air  to  buy  votes  to  get  re-elected.

The Voluntary State could accomplish this.  There is no other way.



Chapter 9