A Worthwhile Re-post: About Money

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Many posts here say essentially: "The Fed is causing a massive increase in the money supply in order to head off Y2K panic, and this will surely fuel a terrible inflation." Wrong, on several counts.

First, realize that the Federal Reserve does not create money. Our banking system does that. It is a mundane, routine operation: banks create the money they lend out in the form of checkable deposits, even for your own mortgage or car loan. As these loans are repaid, money is destroyed. Most of the time, the creation process is only somewhat faster than the rate of destruction, so the total money supply grows at a modest pace.

Now the Fed has recently made a lot more reserves available to the banking system. But most are being held as "excess" by cautious banks and are not being used to expand loaning/money creation. Reserves themselves are NOT money, even when they are in the form of vault cash in the banks. Anything that qualifies as money must be in the hands of a spender, not the banks or the Fed. So what economists call the "money multiplier" that stands between reserves and the money supply is falling. And even if the newly-created reserves were being used to expand the money supply, the Fed could easily reverse course and drain reserves.

This all happened not long ago, back in October 1987 when the NYSE "crashed." The Fed pumped in billions in reserves, and later got them back. Money growth and inflation were virtually unaffected.

You may have heard that there has been rapid growth in a money measure called M3. But this very "broad" measure includes stuff like corporate CDs and Treasury bills and other semi-liquid assets that are hardly spendable. The much more sensible and narrower M2 measure of money continues growing at a modest pace, around 6% annually.

Now, two general lessons: first, money supply growth is inflationary only when it exceeds money DEMAND growth at zero inflation. And in our current economic boom there is sizable increase in the demand to hold money even if the price level remains constant.

Second: money demand can grow faster or slower for institutional or technological reasons. New financial institutions, new types of deposits, legislation, and deregulation all affect it. What this means is that the link between money supply growth and inflation is far more complicated than the simple proportional relation that was once the gospel of amateur economics popularizers (and perhaps still is).

The LACK of money is the root of all evil." -- George Bernard Shaw

-- Unreel (cometo@tention.net), January 03, 2000



Treasuries were purchased by the Fed. My guess is that there isn't enough demand for them and even prior to roll-over there wasn't much demand for them due to the maniac stock market. This means that the interest rates or yield had to rise. The Fed stepped in because he couldn't allow the spread to continue to increase. The real market interest rate is the 30yr Treasury. Not the mainpulated discount or overnight rates.

Inflation is incredibly high because of asset valuations. If you don't think this is true then how come so many deals are not for cash at all but for stock? The stock could be considered part of M3 based on the way it is behaving.

In short there isn't a lack of money and there is very little demand for dollars. The demand is in six or seven stocks in the NASDAQ and that is the only reason foreigners need dollars. If those stocks begin to tank, dollars will be repatriated at a hyper-inflationary rate. THIS ISN'T 1987 and just keep telling yourself this is 2000 not 1987 the same things wont work this time.

Anyway, how do you expect the Fed to DRAIN LIQIDITY.....He has to sell Treasuries to do so but that presupposes a demand. If there is no perception of a safe-haven investment then there is no demand to sell into. If he sells into a depressed market what does he have to do to move the papaer??????? He has to drop his asked price and this in turn RAISES YIELDS.....You are arguing against yourself at this point.

I suspect Mr. Greenspan made a horrible miscalculation. He expected that he could sell into the safe haven after roll-over and now he is completely F****D

-- William R. Sullivan (wrs@wham.com), January 03, 2000.

William: yes, the Fed bought Treasuries....from private bond brokers and dealers. That's what increases the reserves of the banking system. The Fed NEVER buys securities directly from the government, which you seem to imply -- at least not since the Treasury-Fed Accord of 1951.

There is never, and I mean never, a lack of a market for U.S. Government securities. Bond brokers live on the knife-edge, ready to buy from the Fed or sell to the Fed with small movements in bond prices.

As for inflation, it is a measure of the change in the dollars necessary to buy a representative bundle of goods and services. Financial assets are neither, and their prices do not belong in any sensible inflation measure.

Most "open-market operations," in which the Fed buys or sells government securities, are "repurchase agreements": the securities the Fed sells are automatically returned to them after a few weeks, on a prearranged schedule. So there is no need for the Fed to find a buyer.

-- Unreel (cometo@tention.net), January 03, 2000.

Yes, Greenspan threw a gutter ball. Oh my, there's no spare! End of game.

-- dinosaur (dinosaur@williams-net.com), January 03, 2000.

I've never done this before, so forgive me if it's not quite right:

In regards to the Fed providing reserves to the banks, Unreel wrote: "But most are being held as "excess" by cautious banks and are not being used to expand loaning/money creation."

Here goes:


Or, on a more serious note: http://www.siliconinvestor.com/insight/contrarian/

On borrowed time?... Last but not least, I want to share something that Dennis Gartman wrote late last week when I was out. It is the perfect period piece to capture the mood of what is really going on. To any sane person, it should be frightening; but then again, anyone who's frightened isn't having any fun. And those who are not frightened are making gobs of money speculating their heads off. Here's what Dennis said:

"As a final aside for the year, we went to our local branch bank yesterday to transact some business [Ed. Note: we actually got some cash for the Y2K `turn'...just in case!], and spent some time chatting with the branch manager. She does not know what business we are in, so when we asked her if she'd seen any increase in personal loans she replied out of hand that indeed she had. Indeed, the personal loan demand at her branch had escalated rather substantively.

"She then proffered that the sole reason for the sharp rise in personal loans was the investment in the stock market. She said that local doctors, lawyers, farmers, auto dealers... all of the leading figures of the local economy (and their wives) had been in recently to borrow money to `put into the market.' We asked her how long this had been going on, and she said that the branch had been making personal, signature loans like that for some while, but that the demand had really escalated in the past several months and has really become `hot' in the past several weeks. She wondered if it was too late for her to join in the market's enthusiasm! We said, `We don't know,' and left bemused and afraid.


Me says: This bull market has but *days* remaining.

-- Me (me@me.me), January 03, 2000.

Mr. Unreel,

If there is such a good repo market, how come the long-bond jumped 8 basis points today? How come we have such a large spread between the discount rate and the long bond? I think you are some kind of scholar, have you ever heard of junk bonds? What makes you think that the US Treasuries won't achieve that status even if no one ever calls it that to it's face. All you have to do is have Arabs, Japanese and other holders of those bonds want to trade them in.

As far as stocks not being money, what do you suppose payment in stock options amounts to. You should put down your economics book and look at what money really is. It is whatever people agree on as a common means of exchange for any given transaction. Ever hear of a BANK NOTE? I own a $5 Bank Note from the First Huntsville bank dated 1895. Interestingly, it is worth around $1100.

-- William R. Sullivan (wrs@wham.com), January 03, 2000.

That bank note was no doubt fully convertable into gold (aka real money)

-- Ishkabibble (ishman@home.com), January 04, 2000.

I dont think you mentioned derivitives...and also the velocity of currency....and the fannie mae and freddymac non banking money supply effect.

I think you need to continue your education on the money supply issue. You are not aware of all the money supply and credit creation factors. May I suggest the contraryinvestor.com Or prudentbear.com

-- billburke (bburke@here.com), January 04, 2000.

William: better reread my last response to you. I said that financial assets such as corporate stock are not GOODS OR SERVICES. So stock prices should not be in any measure of inflation. But then stocks are not money either, for they are certainly not media of exchange. Walk in to Wal-Mart and try to buy anything with shares of stock -- even Wal-Mart stock. Or just try to use that bank note. It may be a valuable asset, but it is NOT money.

Forget about the discount rate; it means very little now. At one time it did matter to day-to-day monetary policy, but those days are gone. Very little in reserves is ever borrowed from the Fed any more.

And why are you so afraid of interest rates rising -- because stock prices may take a hit? So what if they do? The stock market is much less central to the real economy than most people think. Less than 2% of new business finance is funded by it. Even wide swings in the DJIA or NASDAQ composite seem to have little impact on consumer spending (as in 1987).

Billburke: in a way, I did discuss the velocity of money. I brought up the concept of money demand -- which is an inverse way of bringing up velocity. Money supply can shoot up while its velocity falls because people desire to hold the extra money as wealth. The result is no increase in the rate of overall spending on GDP and no upward pressure on the price level.

By the way, don't get hung up on "currency." Most money is not currency, and in fact does not physically exist at all: it is numbers in accounts. Hey, it was this way in the U.S. when we were still British colonies.

-- Unreel (cometo@tention.net), January 04, 2000.


Any change in the rate of growth in the money stock or its functional equivalents above the rate of growth in nominal GDP is inflation. Period. There may be "demand" for this money, but there is no where productive for it to go. Hence, it is inflationary. An increase in the prices of a basket of goods would merely be a simple example of the MANIFESTATION of the inflation that already exists.

Since both the CPI "basket" of goods and the ECI are obscenely managed to appear benign, you need to look elsewhere for the inflationary manifestation. The ridiculous equities market is one example of current inflationary effects, so is the general real estate market, and, too, the general increase in services, fees, and hidden and not-so-hidden taxes.

Of course, if you don't WANT to see inflation, if you choose to ignore reality, it is easy enough to do, these days.

Oh, and the Fed DOES create money -- it monetizes the national debt, giving the US Government spendable credit balances at the financial institutions of its choice...$120 billion just this past quarter.

-- Nathan (nospam@all.com), January 04, 2000.

And the Fed is the one who determines who the Primary Dealers are, the one who buy and sell Bonds from the Fed. The Dealers, have their customers, who want to buy or sell bonds, and the dealers scalp those customers. But it's the Fed who controls the whole thing, and no, they don't buy a 30 yr bond with money, they pay NOTHING for it.

-- Gregg (g.abbott@starting-point.com), January 04, 2000.


Thanks for clearing up that the Fed pays nothing for its bonds.


You have no clue what you are talking about with respect to the Fed not printing money. They power to issue currency lies soley and completely with the Fed. If you don't belive me then explain to me why everybody and their son is talking about the $50B-$250B Greenspan and crew have just pumped into circulation? What then happens *after* the Fed creates is the banks can multiply the money through fractional reserves.

For those who would like to understand what the Fed is all about and why the debt can never get paid off as long as the Fed exists see my reply to Unreel's post in :

A simple question for the conspiracy-minded

-- Interested Spectator (is@the_ring.side), January 04, 2000.

Nathan: sorry, but your post gets a C- at best. If you were to list all the assets you own, a small slice of very liquid ones such as currency, checkable deposits, and savings deposits would be considered money. Your portfolio may be divided, say, 9% money and 91% non-money. Every economic participant manages that dividing line, and can change it any time. You could always liquidate some non-money assets and hold more money AS WEALTH. Say your split goes to 15%/85%. You have increased the demand for money, and the money supply as well. But there are no spending consequences. Money supply goes up, but its "velocity" goes down. Things like this happen on an economy-wide scale happen all the time. Like in 1985-86 when M1 growth was at 18% for a while. The Fed knew this was mainly an increase in the demand to hold money as wealth -- the new interest-bearing checkable deposits. And in fact there were no inflationary consequences. And get this: if you hold to the narrow M1 money defintion explain why M1 HAS BEEN FALLING SINCE 1994. Yes, M1 is DOWN more than $150 billion from May 1994, at the same time you say we have a raging inflation.

No, the CPI is not manipulated -- in fact its market basket has changed very little since its 1972 formulation. Your other price index acronym doesn't exist. But if you mean the GDP deflator, there is no way to manipulate that sucker. Its market basket is the entire GDP! And why do you want to throw in the prices of all kinds of things that do not relate to the cost of living, like stock prices and real estate prices? The cost of living is what inflation is supposed to account for, not every price that exists.

-- Unreel (cometo@tention.net), January 04, 2000.

2 Retired IRS Agents "EXPOSE" the income tax scam.

We are 2 retired IRS Agents and we have witnessed the IRS defrauding Americans for many years. It is destroying the freedoms of ALL Americans. It "MUST STOP" and it is now time to expose this fraud to ALL Americans.

We challenge you to ask ANY IRS Agent to show you a Statute that "REQUIRES" Americans to FILE Income Tax. They cannot find it. There is NO LAW that makes ANY American "liable" or "subject" to pay or file Income Tax. IRS fraud expert, Irwin Schiff 702-877-2833 offers a $5000 award to anyone who can find such a statute.

Bill Conklin from Denver offers a $50,000 reward. His phone number is 303-455-0837, in case you can find such a Statute. His web site is www.anti-irs.com He also offers a "free book" about the IRS that you can download and print up.

The IRS has for many years used Alcohol, Tobacco and Firearms Implementing and Enforcement Regulations (Title 27) to "ENFORCE" the Federal Income Tax (Title 26) and has used the ATF Regulations to fraudulently take homes and bank accounts away from Americans. Because the Income Tax is voluntary and un-Constitutional, the IRS Code has NO Enforcement Regulations! So in order to BLUFF Americans into paying Income Tax, the IRS uses Alcohol, Tobacco and Firearms Implementing Regulations to force and to defraud all Americans into paying Income tax that they are not required to pay.

The IRS is DEFRAUDING ALL Americans and is bankrupting and impoverishing America by "GIVING" all our Income Tax payments to the Federal Reserve Bank in payment for the "PHONY' Federal Debt. Look on the back of each and every check of Income Tax payment you have ever paid to the IRS. With the stamp shown below,the IRS has signed over ALL your Income Tax Payments to the Federal Reserve bank. YOUR INCOME TAX IS NOT USED TO RUN OUR GOVERNMENT. This fraud will BANKRUPT America.

The IRS has been defrauding Americans for many years. The IRS has even sent ALL your Social Security payments to the Federal Reseve Bank. Go check it out for yourself and then you will know FOR SURE that we are telling the TRUTH.

******************************************* THIS IS AN IRS CHECK ENDORSEMENT.

Pay any F.R.B. Branch or Gen. Depository for credit U.S. Treas. This is in payment of US. oblig; Must be paid in par N.P. Do not wire none-payment.20-09-0900 Dir.I.R.S. CTR. Kansas City, Missoury. *******************************************

The Federal Reserve Bank IS NOT a Federal bank, but is a private Bank owned by FOREIGN BANKERS who do not pay Income tax! Rothchild, (London), Lazard Bros. (Paris), Israel Seiff, (Italy), Kuhn-Loeb-Warburg,Lehman-Goldman-Sachs-Rockefeller, (New York). In fact, the Federal Reserve Bank has NEVER EVER been audited. Your Phone book PROVES that it is not a Federal Bank. They are listed in the Yellow Pages with all the other "PRIVATE BANKS." They put "Federal" in their name to deceive WE Americans. The Federal Reserve Bank is draining the American economy with the "phony" Income Tax.


The Federal Reserve Bank is destroying America! America "WAS" the richest nation on earth, until 1913, when the Federal Reserve Bank was created by foreign Bankers. This was passed in Congress on Christmas "EVE" 1913, when most Congressmen had gone home for Christmas. It was passed by Un-American Congressmen, who had been paid-off and bribed by the wealthy foreign bankers.

Now America is bankrupt with a $6 Trillion phony Federal debt, because EVERY single dollar in circulation has been "BORROWED" from the Federal Reserve Bank. The US Treasury prints our money and then "sells" it to the Federal Reserve Bank for the printing cost. The US Treasury then borrows it back and then we the people pay interest on the "FACE VALUE" of our money to the Federal Reserve Bank with our Income Tax payments to pay for the "PHONY" debt. This is the BIGGEST FRAUD in US history. This is a deliberate and planned bankruptcy to destroy America. Governments are the creators of money, and should not have to borrow it from a foreign private Bank.

Congressman Louis T. Mc Fadden, Chairman House Banking said..."The Federal Reserve Bank CAUSED the Great Depression by DELIBERATELY witholding money out of circulation"...Congressional Record May 23,1933. After 3 attempts on his life, Mc Fadden was poisoned at a banquet! Can you guess who killed him? They steal and plunder from America, but they even kill Americans.

Congress has been lying to you because it is mathematically impossible to pay off the debt or balance the budget with "BORROWED MONEY". President Woodrow Wilson confessed on his deathbed that he committed TREASON against ALL Americans. The Federal Reserve Bank will soon force America into bankruptcy when the interest on the debt has become un-payable. This will cause an economic collapse. This is when our corrupt Government will bring in the "New World Order" and we will be ruled by the United Nations. We will then lose our freedoms and Constitution.

We have already lost our Constitution and Common Law in the US Courts. All US Courts are now under Maritime Military Law with the New World Order, "Gold Fringed US Flag" (Army Regulations 260-10) "displayed" in every US Courtroom with a conviction rate of 97.3%. All US Judges have perjured their Oath to uphold the Constitution and are in CONTEMPT of the Constitution. Just seek the protection of the Constitution and the Judge will tell you to "shut up and sit down". This could NEVER happen in a Common Law Court.

All US Banks also display the Gold Fringed Flag. Many US Police Officers are starting to wear a gold fringed flag patch on their uniforms. Millions of Americans "unknowingly" pledge allegiance to the "Gold Fringed New World Order Flag" at schools, churches and scout meetings.


Henry Kissinger said, Nafta and Gatt are the major stepping stones towards the New World Order. Nafta and Gatt caused 28.6% unemployment in Clay County, Tennessee. In 3 years Nafta has cost Americans over 700,000 jobs and more to come! Congress has "SOLD OUT AMERICA.! By the way, what ever happened to the "CONTRACT WITH AMERICA?" How can they forget so easy?

America's Founding Fathers formed our Government to SERVE WE THE PEOPLE and to give us "FREEDOM". Our Government has defrauded WE THE PEOPLE and has turned this around and now ALL Americans are ENSLAVED by our Government by working 5 months EVERY YEAR to pay the Phony Income Tax. That should make you "MAD AS HELL. Read on and you'll get even MADDER.

Our Constitution, Section 9 reads......"No direct Tax shall be laid". This has NEVER been repealed. IT IS STILL LAW. The Income Tax is a Constitutional violation. The IRS Code, Title 26 has NEVER been enacted by Congress into POSITIVE LAW. The proof is in the inside cover of all Titles of US Codes at your local Library. Section 7401 of Title 26 claims that the IRS does not have the power to lien, levy or seize property WITHOUT a Court Order. The IRS NEVER uses Court Orders.

"Notice of Levy" or Lien is just that, a notice, THERE IS NO ACTUAL LIEN!

Americans, you need to challenge the IRS when they try to take your property or bank account away from you without a Court Order. Without a Court Order they DO NOT HAVE JURISDICTION to take ANYTHING.

The IRS has been illegally stealing and plundering from Americans for decades. It is a known fact among IRS Agents that the IRS is responsible for over 500 suicides per month, over half the divorces and 3/4 of the bankruptcies.


The proof....IRS Agents cars DO NOT have Government EX-empt License Plates! Most IRS Agents have no clue why. Plus.....the IRS puts 32 Cents Postage on ALL their mail. All Government Agencies get "FREE" license plates and "FREE" postage. Why not the IRS? IRS Agents don't even know why. Most of them have no clue.

Many years ago the Telephone Company "gave" the IRS a Government listing, because of many complaints from people who could not find them in the phone book. The IRS was created through a Puerto Rico Trust and is no more Federal than the Federal Express! As a private Corporation, the IRS is NOT registered to do business in ANY State! Without a Business License, by Law they cannot legally be engaged in business. A "heavy graduated Income Tax" is the Second Plank of the Communist Manifesto by Karl Marx 1848! Income Tax is the very core of Communism.

The IRS is only a collection Agency for the EVIL Federal Reserve Bank. The US Tax Court is located in Washington, DC. and has NO branches in ANY State! This is because the IRS ONLY has Jurisdiction (Authority) in the District of Columbia. Challenge their Jurisdiction and refuse to pay their $60 filing fee and your case will be DISMISSED. They only have Jurisdiction "IF" you pay the filing fee, because then you have entered into their arena.

Many IRS publications and IRS Agents handbooks claim that the Income Tax is VOLUNTARY. The word "mandantory" cannot be found in the IRS Code, Title 26. Why do you voluntarily pay Income Tax? Nowhere in the IRS Code can you find a Statute that says that ALL Americans are required to pay Income Tax........NOWHERE!

The US Supreme Court has ruled in Flora vs. USA 362 U.S.145. that the Income Tax is VOLUNTARY. They ruled that..."Our Tax system is based upon voluntary assessment and payment, NOT upon distraint" (Force). Tax liability does not appear on the 1040 Form and is not "defined" ANYWHERE in the IRS Code.

Every Statute says, "IF YOU ARE LIABLE" then you have to do this and do that. They also state that, "if you have a Taxable year"....."IF" means that YOU have to determine IF.... So if you determine that you are Liable and that IF you determine that you have a Taxable year, then you can "voluntear to pay Income Tax. If you determine that you are not liable or that you do not have a Taxable year, you are not "REQUIRED" to pay the Tax.

It is "YOU" who determines that you are liable by voluntarily filing a 1040 Form. Americans make themselves liable by filing Income Tax. If you don't file, you're not liable. Off course the IRS will try to "bluff" you into filing by sending you phony enforcement letters, with 32 Cent Stamps on it, quoting ATF Enforcement Statutes and Regulations.

Before you stop filing, to give you piece of mind, we suggest you place all your assets in a Trust. Your assets should be in a Trust anyway for all kinds of circumstances and protection. If you have no assets, no sweat. Then claim 9 dependents and stop filing and paying Income Tax. Then wisely invest the money saved and then retire in style as a millionaire. Then you will not need Social UN-Security.

The IRS Code, Title 26, only applies to Tax payers and NOT to NON-Tax payers. Always respond to their letters with this statement and tell them they have no Jurisdiction over you. This is called "THE BIGGEST INCOME TAX LOOPHOLE". In fact that this the name of a book by Otto Skinner. $45. P.O.Box 6609, San Pedro, Ca. 90734. This is one of the best books on the Income Tax. Plainly said...."the Income Tax Laws DO NOT apply to you if you do not file a 1040 Return, because you are not a Tax payer". If you are not a Tax payer, you are not liable for the Tax.


When you sign the 1040 Form under penalties of "PERJURY", you waive your Fifth Amendment Rights, which state that you CANNOT be compelled to give "POTENTIALLY" incriminating evidence against yourself. This makes the Income Tax Un-Constitutional. They get away with this by declaring that the income tax is "voluntary". This is why the IRS Code Statutes say..."If you are liable"... Because if you pay Income Tax, you volunteer to pay. When you volunteer, then you make yourself liable.

The Fourth and Fifth Ammendment of the Bill of Rights give you the right to "refuse" to show your records during an audit. Only if you voluntarily show your records, can the IRS Agent audit them. Americans, STOP VOLUNTEERING anything the IRS asks you to do. They have absolutely No Jurisdiction and Authority over you.


In 1991, the IRS reported that there were 163 Million Taxpayers. In a seperate report they claimed they received 111 Million Tax filings for that year. That is 52 Million that do not file Income tax. IRS Commissioner Peggy Richardson claimed in 1991 that one out of five has stopped paying Income Tax and that the Tax revolt is growing. None of them are in jail. Only a handfull is in jail because they yielded to IRS jurisdiction. In fact, you can only go to jail for falsifying Income Tax Returns, when you sign the 1040 Form under penalties of perjury. If you don't file, they DO NOT have jurisdiction. Without Jurisdiction they have no Case.

If they take you to Court,DO NOT HIRE A LAWYER. A Lawyer is an Officer of the Court and he will argue the Case for you because that is how he earns money. REFUSE to enter the Court and stay BEHIND the little fence and challege their Jurisdiction and DO NOT EVER argue the case. Once you argue the case, then you have yielded to their Jusrisdiction.

Become educated and eliminate fear of the IRS. Order the book "Economic Solutions" $8.95. Quality Press. 2888 Bluff Street. Suite 315. Boulder, Colorado. Also order "IRS under Indictment" and learn how to legally stop paying Income Tax. Advantage Publishing 1-916-222-4684.

Devvy Kidd, 12453 West Baltic Ave. Lakewood, Colorado 80228, also has very infomative books. Write her for a brochure!

Senator Henry Belmon in 1969 said....If Tax payers EVER discover that the IRS operates on 90% bluff, the entire system will collapse. Before 1940 there was no Income Tax. To finance World War ll, we paid a VICTORY TAX, which was repealed in 1944. Why are Americans still paying this VICTORY TAX? It is because Americans are COMPLACENT and have fear of the IRS, because the IRS has cleverly made Americans think that they are required to pay Tax.

Order Irwin Schiff's book, "The Federal Mafia" $25 from Freedom Books, Post Office Box 5326, Evansville, IN. 47716. This book is also a MUST. Irwin will show you that....No law requires you to file Income Tax returns! No law requires you to pay Income Taxes. No law requires you to keep books for Income Tax purposes. No law authorizes the IRS to audit you. No law authorizes employers to withold Tax from wages. Talk to Irwin about your Tax problem at 1-702-877-2833. Become educated and order his video's and audio cassettes. He can be found on the internet. His Web site is http:/www.ischiff.com If you have a computer, enter patriot, tax fraud, IRS fraud, etc, on your Search Engines and learn more of what we have been telling you in this letter.


President Ronald Reagan, May 1983.... "Our Federal Tax system is, in short, utterly impossible, utterly unjust and completely counter productive. It reeks with injustice and is fundamentally UN-American! It has earned a rebellion, and it is time we rebelled.


The IRS has admitted that repairs required to make their computers year 2000 compliant are IMPOSSIBLE to do. All IBM Mainframes will interpret the abreviation "00" to mean 1900 instead of 2000. This will wipe out ALL IRS Income Tax histories. This is a "gift" to all Americans from all the early computer programmers. The time is NOW to stop filing Income Tax.

Eliminate the IRS out of your life, explained on 2 video's,$40. 702-853-2342. IRS Jurisdiction investigated,$25, on video, call 801-377-0570. Weekly Newspaper "The Spotlight" exposes Government fraud. 1-800-522-6292. Their web site is www.spotlight.org

Congress MUST SAVE AMERICA and abolish the "GESTAPO" IRS, Federalize the Federal Reserve Bank, and throw out the foreign bankers from our money system and start printing interest free Constitutional money. (US Notes!) The Constitution only gives Congress the right to create our money and NOT a private bank, run by foreigners.

Income Tax will then no longer be neccesary. Excise Tax, Tariffs and Duties will then pay for Government. When the British Taxed the Colonies, John Adams, John Hancock and other Patriots had the "GUTS" to rebel against their 5% Tax with the Boston Tea Party and the American Revolution. Our country became free because of a 5% tax. Without these hero's we would still be paying Tax to the Queen of England. America needs HERO'S like that again to take our wonderful country back from the "BLOOD SUCKING MONEY CHANGERS".

Now Federal Taxes are up to 39.6%. THAT IS UNACCEPTABLE. All Americans MUST become Patriots and UNITE to restore Constitutional Government. Massive Civil disobedience is a "proper form" of Petition for Redress of Grievances and Political Protest. This is the ONLY way to wake up Congress. We Americans MUST force Congress to finally END the Income Tax scam. Imagine what your life will be like without Income Tax! You would be living a life of luxury.


You MUST sacrifice your time and effort to help us inform other Americans. Being complacent will not save America. Americans have been complacent long enough. Send this message to all your local Politicians, friends, neighbors and relatives. Also send to your local Talk Radio's. When 100 million Americans stop filing Income Tax, the IRS will be powerless and Congress will be forced to stop the "phony" Income Tax.

Mark Twain..."In the beginning of a change, the Patriot is a scarce man, brave, hated and scorned. When his cause succeeds, however, only then the timid join him". Our great country needs true Patriots again. Our Government is totally out of control. Our Government was created to serve We The People. Now we Americans have become the slaves and servants of our Government. Americans are not free anymore.

Our Government forces all Americans to obtain a permit or a license to do ANYTHING. Without these Permits and Licenses we would be breaking the Law. WHAT KIND OF FREEDOM IS THAT? Licenses and Permits are used to control us and to steal money from us. Our Government has taken away our basic God given freedoms! Our Government has TOTAL control over American.

If you want to be free again, we Americans need to overthrow the MOST corrupt Agency first and that is the IRS.

As retired IRS Agents we learned long ago about IRS and Federal Reserve fraud. Because we love America, we MUST expose the IRS Monster we have worked for. It is YOUR Patriotic DUTY to help us spread this news to ALL AMERICANS. UNITED WE STAND, DIVIDED WE FALL! Earl Sorensen & Fred Fuller.

-- bbb (bbb@bbb.com), January 04, 2000.

Why dont you post the irs thing on its own thread. Then, printing it out would be easy without a few pages of money supply info.

-- beezulbub (here@now.com), January 04, 2000.

I posted this last night to Rick Cowles' discussion groups in response to a discussion much like this one. In a previous life I taught investments for the Texas Society of CPAs to CPAs, and was coordinator for a third of Texas of Financial Planning for an international firm of CPAs. The only thing I would add to the following is that this morning the Wall Street Journal has an article to the effect that last year slightly more bonds were issued in the Euro than the Dollar. The emergence of the Euro as a deliberate challenge to the Dollar is a sea change. We have mercilessly manipulated the dollar to our national advantage ever since 1971 when we reneged on our Bretten Woods commitment of 1944 to redeem 35 dollars for an once of gold. The world is getting tired of us. WHY ARE INSTITUTIONS PULLING MONEY OUT OF THE STOCK MARKET? The reasons I submit are based on fundamentals.

Late in the year the Federal Reserve pumped M-3 (money, checking, credit card debt, etc) and reserves into banks at an unprecidented rate on a world wide basis. The Fed's assets have been growing at 12% for the last 12 months, and at 24% over the last three months. In contrast, the European Central Bank is growing at only 0.5% over the last three months and Japan is negative. Much of this money and credit created by the Fed and the banks has gone into the stock market bubble. The Fed has to raise interest rates and sop up this credit and money or risk a run on the dollar -- and do it fast. Apparently Greenspan believed there was a serious Y2K risk of a run on the banks, and now has to pay the piper. He will probably not want to wait until further into an election year to raise interest rates.

Longer term, the so called GDP growth of the U.S. economy over the last few years has been "cooked", primarily by assuming, for example,that in the 12 months ended 3/31/1999 that $5.4 billion increase in computer sales should be recorded as $146 billion chained dollars in new production due to the power of the computers being sold. Meanwhile the sales price of computers is declining and they are becoming obsolete very fast.. Over the years 1996-1998, according to Dr. Kurt Richebacher, U.S. GDP rose by $810 in chained dollars, or 4% annually. "Of this total, a stunning share of $310 billion, or 38%, accrued from investment in computer power (not sales of computers). Taking the computer power assumption out of the GDP accounting, the rest of the economy really had an annual growth rate of 2.5%. Last year (1998), it was just 2%." Welcome to Clintonian accounting! The real numbers are known to institutional investment managers. Only the large mass of voters is fooled. I have also been informed by a very expensive newsletter I get that areas of chronic unemployment have been dropped from the unemployment figures, but that if unemployment were computed like before Clinton, then our unemployment would approach Europe's unemployment, that is, close to 9% in our case. Will snarls in main frame computers, networks, and PCs cause an increase in unemployment?

Concerning debt, up until 1989, every new dollar of income created $1.36 to $1.43 of debt by the Fed Reserve and the banks. Now, for the first half of 1999, every new dollar of income created $2.88 of debt. Meanwhile, consumer spending has declined from $.67 for each new dollar of debt to $.42 cents of consumer spending for each new dollar of debt. The rest of the new debt went into the stock market bubble. These figures are all before the money pumped during the last couple of months by the Fed Reserve.

Further, the U.S. trade deficit, $26 billion last month and a trillion over the last five years since 1994, has left a lot of U.S. monopoly money in the hands of Red China, Japan, Europe, etc. When will one or more of these countries decide to exchange dollars for something better? Red China has upward of $200 billion of U.S. dollars and has announced they want to have several hundred tons more gold for their national reserves instead of a lot of dollar debt. The Wall Street insiders like Goldman Sachs have been quietly accumulating gold options and even buying and taking delivery on gold bullion. Where does this go? Does one invest with the elephants? Meanwhile, the Euro was designed to compete with the dollar as a world trade currency. If you held a 30 year U.S. Treasury bond as an investment or a central bank reserve, since 1971 the loss in value of your bond is 88% due to devaluation of the dollar (measured against gold where 35 dollars did buy one ounce of gold but now $285 is required to buy that ounce of gold); therefore, the world is not especially eager to hold dollar debt. The trade deficit and continuing devaluation of the dollar is a further risk to the dollar, which can only be met by the Fed by reducing the dollars washing around the world and by increasing interest rates. These two steps will hurt stock market prices.

Over the last year but particularly last fall in 1998 the Federal Reserve intervened directly in the bond and stock market, often on a weekly basis with up to a billion dollars. The means was coupon passes in the bond market (the monetizing of govt debt), and 1,000 or 2,000 S & P 500 futures contracts at a time through New York Investment firms. The Fed Reserve is influenced by the Clinton Administration and is owned by the banks, principly the New Yorkers. The stock market is purely a creation of this cabal, and will persist until world events and competitors such as the Euro overtake it. Black monday in October, 1988 was described by the WSJ and Forbes editorily as a run on the dollar. The market dropped 30% in a weekend. Granted, the Federal Reserve and the markets will take steps to stop this happening again, but they can't stop fundamentals forever, when the rest of the world is fed up with us. These things can develop very quickly.

I suspect these fundamental facts are concerning thoughtful institutional investment managers.

-- Alfred Hill, CPA (abhill@cyberhighway.net), January 04, 2000.


Your response makes no sense. You're the one with the narrow definition of money. M1 is a mere component of the money supply. The money stock components can rise and fall, but the aggregate is increasing on a rampage. The monetizing of real estate inflation alone dwarfs the effect of any trending decrease in M1.

The ECI is the Employment Cost Index - you know, wages and benefits.

One cannot measure the effects of inflation by selectively ignoring the prices of certain things, unless, of course, one is trying to "define" the existence of inflation away. Altering perceptions does not produce reality, though politicians and central banks the world over are wont to do so.

-- Nathan (nospam@all.com), January 04, 2000.

Nathan, sorry. Another C- on your reply. Most non-economists have a far too broad conception of money, equating it with wealth in general, including land, stocks, gold coins, and so forth. Money is a very select set of assets which are media of exchange (M1) or M1 plus items very easily converted into that media (M2). Even the broader M2, at $4 trillion, is a very small slice of financial assets alone. And it is not "increasing on a rampage." M3 may be, but that aggregate is too broad to be a meaningful measure of money anyway.

Pardon me, but what is "the monetizing of real estate inflation?" That makes no sense. Plus I repeat: inflation is a measure of the change in the cost OUT OF YOUR CURRENT INCOME of buying a bundle of CURRENTLY PRODUCED GOODS AND SERVICES -- in other words, a change in the cost of living. Real estate prices and asset prices have nothing to do with any sensible measure of inflation. And this is not an attempt to define away or cover-up anything. Measured inflation has been high, although not since the early 1980s.

Technical point the ECI is a cost index, not a price index. But I'll raise your grade to C for that :)

-- Unreel (cometo@atention.net), January 04, 2000.


Well, I tried. Your concept of economics is far too narrow to ever be of any use in the real world. Cause and effect cares little for such a limited scope.

"We learn through experience and experiencing, and no one teaches anyone anything. This is as true for the infant moving from kicking to crawling to walking as it is for the scientist with his equations. If the environment permits it, anyone can learn whatever he chooses to learn; and if the individual permits it, the environment will teach him everything it has to teach." - Viola Spolin (b. 1911)

Best of luck to you.

-- Nathan (nospam@all.com), January 04, 2000.

Nathan, best of luck to you too. But I must question your sanity after giving me that quotation, which may be the most absurd thing ever written. Experience alone teaches you nothing, no more than you can know how a heart functions just because you have a beating heart. You must learn how to evaluate experiences.

I guess you now claim that you are thoroughly self-taught. Well, that would explain you.

Take care.

-- Unreel (cometo@atention.net), January 05, 2000.

Experience alone teaches nothing?

Get real, Unreel.

-- Nathan (nospam@all.com), January 05, 2000.

Well, let's put it this way, Nathan:

Suppose you are out skiing and you tumble and break a leg. Would you just "open yourself up to the environment" around you until it shows you how to set that compound fracture, or do you cry out for a doctor trained at a medical school?

I thought so.

-- Unreel (cometo@tention.net), January 05, 2000.

Why are you so obtuse?

The breaking of one's leg is the "experience". An experience, from which, most people, perhaps even you, would learn a valuable lesson in self-locomotion.

The repair of the broken leg is another question entirely. Would you rather have your leg repaired by a green intern full of economist- like ivory tower instruction, or someone who had the actual EXPERIENCE of setting a hundred legs previously?

Here's hoping all economists aren't this dense.

Oh, and the macroeconomic backdrop of 1987 is nothing like today's. To assert that the excesses of today can be as readily dealt with as in 1987 demonstrates a complete lack of both qualitative and quantitative analysis.

Where do you teach?

-- Nathan (nospam@all.com), January 06, 2000.

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