VIDEO: Coley Testimony - HB3 Constitutional Tender Act

Coverdell Legislative Office Building (CLOB)
18 Capitol Square SW Atlanta, GA 30334

Atlanta, GA

Monday, March 7 · 9:00am - 12:00pm

After presenting testimony, I engaged in a dialog with Representative Bruce Williamson on fractional reserve banking. Bruce Williamson was a gentleman. He opened with a prayer that I would be blessed to hear and concur with any time. The problem we have is that neither Bruce, myself or government are the standard. A good man's character does not make an objectively immoral practice moral or right.

Representative Williamson claimed that Georgia banks don't create money, yet he later said:

I'm not disagreeing with the fact that it expands the money supply, but I don't see that that's inherently unhealthy.

Evidently Representative Williamson doesn't understand that "Expanding the money supply" creates new dollars and is inflation.

When I said that banks create dollars from nothing, Representative Williamson disagreed yet again, stating:

Its not nothing. Its promises to pay that provides the liquidity to shop keepers, to home owners...

And:

All you're doing there is allowing these promises to pay, that when you come to borrow the money to buy the automobile or piece of land or buy new shelving for your hardware store, all the bank's doing is turning around and lending you those dollars... It's not the collateral, its your promise to pay back.

In other words, his view is that the money is not created from nothing, rather it is created because the borrower promises to use his land, labor and capital to produce enough to pay the loan back, plus interest to the banker.  The banker has essentially no skin in the game.

If "its not the collateral", why does the banker take the borrower's collateral if the borrower doesn't pay?

In an honest system, the banker would have to loan out property that actually exists in order to earn interest. In the fractional reserve system, he creates money from thin air and then essentially loans your property to you - and gets paid interest for doing it. The bank brings nothing to the table except the legal privilege to create money.

When you borrow money for a piece of land, the money that you use to pay the seller comes from a ledger entry at the bank which is made because you agree to pay the money back. The only real asset in the transaction is the land. The banker has no equity or asset in the transaction at all. If you default, he gets the land.

Of course that ledger sheet trick works until the bubble pops, particularly when the bubble is combined with Sarbanes-Oxley and federal regulators.

Representative Williamson also stated plainly that leaving the gold standard was a mistake.

It all goes back to fiat inflation. I do not disagree one bit with the fact we should never have gotten off the gold standard. I think Steve Forbes has got it right, but all we are is dealing with the Federal Reserve Notes that our Federal Treasury is [unintelligible] the currency of the nation.

However, the Gold standard simply limited the amount of new money created from nothing by the Federal government. Creating money from nothing is always a problem because the mechanism makes an economy unsustainable. The economy is unsustainable because costless money causes a breakdown in the price mechanism and distorts the allocation of resources.  It also pillages and weakens the producers.  The banks create new money from nothing, much the same as the Federal Reserve. In fact, the banks are able to create nine new dollars for each one new dollar created by the Federal Reserve. Which is bigger? Nine or One?

If costless money is a problem and the banks create more than the Federal Reserve, then the banks are not innocent. They participate in inflating the money supply, or to use Representative Williamson's phrase in "expanding the money supply", which IS inflation. It disproportionately harms the weak and frugal. It enriches those who are granted a special privilege by government (banks) to create new money from nothing - at least from nothing that the banker owns. In the banks view, your property gives them the right to create money that didn't exist in order to charge you interest for using the money.  What a racket.  

There is so much more that can be said and the problems are far reaching and complex, but the bottom line is that fractional and fiat money cause theft and lead to poverty and oppression.

Inflation and the Fall of the Roman Empire

Liberty is enjoyed by those who control the profit from property and labor. If someone else controls your profit, then they also possess and enjoy your liberty. Your profit is that which you earn by producing more than you consume.

Capitalism employs the checks and balances of scarcity, labor and property to allocate resources and social authority to the most efficient producers and organizers of production.

Capitalism does not exist in a system that confiscates profit from producers, to reallocate to capable non-producers and those benefiting from favored business license. Such a system is socialist, which is marketed as capitalism to the masses, in order to march quietly toward a totalitarian system of government.

Costless money transfers production, labor, property and life savings from the working people into the hands of a privileged class. This theft must end if we are to have a future hope of liberty and justice for all. There is a solution. Learn it, speak it and pursue it with all passion and great haste. -- Shane Coley

Inflation and the Fall of the Roman Empire

The Case for Natural Money

Critical Article: The Case for Natural Money



Ethics of Money Production

What is the goal?

The greatest temporal challenge we face as a nation is our monetary system.

Destruction and Robbery

We labor under a monetary system which is designed to destroy.

Lenin plainly stated that the system we now operate under would end in our destruction as a free society. The Five Guys Analogy illustrates that the process of inflation causes a wealth transfer. Keynes, speaking about Lenin as well as Keynes own views, stated the following:

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some… Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

The Economic Consequences of the Peace, John Maynard Keynes, 1919

Our nation is being robbed. You are being robbed, or you are robbing others. There is no middle ground. We must understand this as a nation. It is true.

The Printer and the Producer

In terms of money, consider this very simple illustration. We will remove all the middle men and rules in order to have a clear picture of what is happening to us.

Imagine you own a house, which you worked hard all your life to pay for. Let's say it cost $100,000.

Now imagine that you are going to sell that house. There are two buyers who are interested in purchasing your home. One offers you paper money and the other offers you gold.

The paper money is identical to the dollars you use every day, but was printed in the garage of the first buyer the same morning he came over to make an offer.

The gold was mined from the ground and refined by the second buyer. The gold came from property the second buyer worked for and the mining and processing was done using labor and equipment he owned or leased.

To which one will you feel better about handing over your house keys?

Would you sell to the producer or the printer?

If you sell to the printer you are exchanging your labor and productivity for an illusion of value.

If you sell to the producer, you are exchanging labor for labor, productivity for productivity.

Further analysis will follow in another post to illustrate how fractional and fiat money provides for transfer of property into the hands of persons who have no right to the property.

Crisis Pregnancy and Planned Parenthood

Suppose you have a desire to protect unborn children. Maybe you hold the view that those female fetuses, young ladies who are a few days old, also have a right to life. Maybe they should have a choice. The fifth amendment states:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Our first property rights are for our own person. It seems that abortion would be illegal based on the fifth amendment, if for no other reason. Surely an unborn baby has broken no law worthy of death.

In any case, suppose you hold the view that abortion is wrong, as I do. If that is the case, then you want to work to protect the unborn.

The current environment we operate under is as follows:

Local Crisis Pregnancy Centers are under-funded and staffed by volunteers. They are strictly limited with regard to presenting the pro-life position in schools.

On the other hand, Planned Parenthood is provided with millions of dollars each year by the government, in order to promote the practice of abortion. They have open doors in the schools. In some places school officials can assist young girls with an abortion without parental notification. Their cause is promoted in the media and by the government.

Best Protection

The most effective action we can take is to cut off their funding and keep our own productivity. In this way the crisis pregnancy centers are strengthened, the propaganda is dramatically decreased and Planned Parenthood will have to raise money based on merit, rather than coercion of the people by government.

So... What is the goal?

Ideally we want to abolish the federal reserve and return to a sound money system. However, that is an enormous obstacle to overcome.

Here is what we can do now: We can tell the truth. We can educate our citizens. We can help people understand what government has done to our money.

Once we do that, let's see what follows. Maybe people will object to being robbed and demand real change.

The Federal Reserve System Explained