[PDF]Money By Fiat

Money By Fiat


All rights reserved.
Copyright © 2016 by Dean Bonkovich.


No part of this book, any of its contents, may be
reproduced, copied, modified or adapted, without
the prior written consent of the author.


ISBN: 978-0-473-38008-3





Contents


The Bank of England

Joint Stock Companies

Open Market Operations

The Federal Reserve

Goldman Sachs

The London Stock Exchange

The Hollow Sword Blade Company
The South Sea Company

The International Monetary Fund
The B.I.S.

The Reserve Bank of New Zealand


Derivatives


Page 4


10


20


22


24


31


38


44


47


50


52


57


62





The Official Cash Rate
Government Treasuries
Inflation Tax


Fractional Reserve Banking


Page 5


64


69


70


71


A British Government Treasury Note














REGISTERED


FIFTEEN YEAR 87% BOND DUE 1993






‘on the first day of May, 1 N registered holder hereot, from the first ay of May or November, as the case ma
Gate hereof isa May 1 oF Non interest on such ‘uiy provided fr, ‘ase from the date hereof. or uniess the date hereof Is prior te the Srst ay
00 m i






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te r ) J ATE. rs GE
Ii £ Wi tr on Whe o wef 5 Mee Lido Conant fe Mer Sneyestys ieas
Wulain and hodhow, Sulanbfursuantto dne. acborisahin by fnhuveg


fi æ Seca lo Hor Phajestys Devas.







DATED:


COUNTERSIGNED FOR AUTHENTICATION:


MORGAN GUARANTY TRUST COMPANY
OF NEW YORK







A bill fo the treasury of the British
Government at 8.875% interest.


SEE REVERSE FOR
CERTAIN DEFINITIG





Page 6


The National Debt of England











2013: £1.377 trillion pounds | ©








1931: The gold standard is abolished in England |


O


| 1694: £1.2 million pounds








a 1,147,500% increase in British Government debt over 319 years


Page 7








The Bank of England


Defeated in naval engagements against France at the battle of Beachy
Head in 1690, and in arrears due to the ongoing financial cost of
defending England’s shores from the nine years war (1688 to 1697),
and the number of British naval ships destroyed in this particular
encounter (Beachy Head); led to the British Government seeking a
loan of £1.2 million pounds of gold, at the rate of repaying £100,000
pounds in interest per annum, for the purpose of building a far
more powerful navy, at a time when its financial resources stood
in disarray.

Followed shortly thereafter by the Government of England's draft
of the bill that is now informally known as the ‘Tunnage Act’ (the
Bank of England Act 1694):


[An act for granting to their Majesties several Rates and Duties
upon Tunnage of Ships and Vessels and upon Beer Ale and other
Liquors...’;]
— Bank of England Act 1694!

which under the same act allowed for the creation of £1.2 million


pounds in British Government bonds in exchange for subscriptions,
with incorporation to:


Page 8


The Bank of England





“all and every such Subscribers and Contributors theire Heires
Successors or Assignes to be one Body Corporate and Politick, by
the name of The Governor and Company of the Bank of England;”


— Bank of England Act 1694?


Was adjoined in due haste by the purchase of £1.2 million in Bank
of England shares from Mercers chapel within twelve days of
invitation, by 1,268 subscribers in return for incorporation as The
Governor and Company of the Bank of England (and £1.2 million
pounds worth of British Government debt as collateral for share
subscription), with tunnage to be charged to merchant traders
upon arrival at port.

Out of the 1,268 people who purchased ownership of the Bank of
England’s first share issue, eight people purchased the maximum
amount permissible of £10,000 of Bank of England stock each, with
John Houblon a Royal Commissioner to the British Navy, and King
William III and Queen Mary II amongst these eight subscribers.’

Granted passage into law by royal charter on 27 July 1694 (the
Bank of England), as an incorporated loan with remuneration for
perpetuity, as dividends on shares on any publicly listed corporation,
have no date of expiration (1694 to 1706 at £100,000 pounds of
interest per annum equals £1.2 million pounds in interest).

From 1694 to 1697 the Bank of England was governed by John
Houblon, who served as the Lord Mayor of the City of London
Corporation in 1695, with the City of London Corporation retaining
its position as the municipal authority, that is responsible for
governing the area that encompasses London’s central financial
district (the square mile) as of the time of writing.


3 The Bank Of England. Index to the Book of Subscriptions 1694. London. 1-41. http://
www.bankofengland.co.uk/archive/Documents/archivedocs/originalsubs/Typed_
transcript_original_subscribers_1694.pdf


Page 9


The Bank of England





Joined by Charles Montague the then secretary of the British
Treasury (John Houblon), and Robert Harley, a then Minister of
Parliament; Robert Clayton President of the Honourable Artillery
Company, and Gilbert Heathcoate a prominent buyer of government
treasuries, as shareholding directors of the Bank of England; with a
pre-requisite of holding £4,000, £3,000 pounds or £2,000 pounds
worth of Bank of England stock required respectively, to stand for
the position of Governor or as deputy Governor, or as a director of
the Bank of England’s court (of directors).

Able to offer the Bank of England’s ownership of British Government
debt, as collateral to private banks under its terms of charter:


“The said Corporation shall not borrow above £1,200,000, except
upon Parliament Funds.”


— The Statutes of the Realm, 488. Vol: 7.4


in exchange for term deposits held by the general public with
private banks who are members of the country’s central bank.
Allowed (allows) for the Bank of England to purchase a further
£1,200,000 of new British Government treasuries (new British
Government debt) and allowed (allows) for private banks that are
member banks of England’s central bank, to pay interest on term
deposits by accepting British Government bonds as collateral in
return for loaning term deposits to the Bank of England.

Removing the inconvenience imposed on the country’s politicians
in consulting with more than one financier to raise additional monies
for the government to spend (the creation of a central bank), and


Page 10


The Bank of England





with Bank of England notes backed by the security of being
overseen by royalty and highly esteemed entrepreneurs (John
Houblon and Gilbert Heathcoate for example).

Left few people in doubt towards the use of notes, printed by
this incorporation or towards safekeeping coin with the Bank of
England for a fee, or towards making term deposits with this newly
created entity.

By November 10th, 1696, the Bank of England had issued of
£764,196 in running notes, for which there were only £35,664
pounds of gold to back (running notes are receipts for demand
deposits of coin held with a bank not term deposits of coin held
with a bank).° In 1697 new legislation was passed into law by the
British Government, for the purpose:


“..of making good the Deficiencies of several funds therein men-
tioned and for enlarging the capital stock of the Bank of England
and for raising the Publick Creditt’;


— the British Government ê


Which allowed for the sale of additional Bank of England stock
(enlarging the capital stock of the Bank of England) which in turn
gave (gives) the British Government’s lender of last resort, the Bank
of England the opportunity to purchase more British Government
treasuries; with the amount of tax payable to the Government
of England raised by the same act (raising the Publick Creditt).
Under the same act, all investments in the Bank of England were
exempted from taxation, with no member of the bank to be adjudged
a bankrupt.’ Under the same act again:


5 The Bank Of England. Bank of England Liabilities and Assets: 1696 Onwards, 1972,
159. Web: http://www.bankofengland.co.uk/archive/Documents/historicpubs/qb/1967/
qb67q2159163.pdf

7 Ibid, XLVII


Page 11


The Bank of England





“..dureing the Continuance of the Corporation of the Governor
and Company of the Bank of England no other Bank or any other
Corporation Society Fellowshipp Company or Constitution in the
nature of a Bank, shall be erected or established permitted suffered
or countenanced, or allowed by Act of Parliament within this King-
dome...”


— The Statutes of the Realm, 488. Vol: 7°.


In the same year (1697), the ability to redeem notes for coin was
suspended in England, with the grant of the ‘temporary’ right to issue
the country’s banknotes exclusively unbacked by gold given to the
Bank of England.


First renewed in charter in 1708, and again in 1713, 1742, 1764

and 1781 (the Bank of England), in 1797 the ‘Bank Restriction Act’
was passed into law four years after the Government of England’s
declaration of war against France, to protect the Bank of England’s
reserves from the ensuing increase in redemptions of notes for coin
by domestic and foreign noteholders.
By 1814, enough bank notes had been loaned into circulation in
England, to claim on £28.4 million pounds of gold for which there
was only £2.2 million pounds worth of gold to back. In 1844, the
Bank of England’s charter was renewed again:


8 lbid,


Page 12


The Bank of England





‘...be it enacted, that on upon the thirty first day of August One thousand

eight hundred and forty-four, there shall be transferred, appropriated,
and set apart by the said Governor and Company to the Issue Department
of the Bank of England Securities to the Value of Fourteen million Pounds,
whereof the Debt due by the Public to the said Governor and Company
shall be and be deemed a Part.’


— The Statutes of the Realm?


Eighty-four years later (1928), the Currency and Bank Notes Act
was passed into law in England


“with a view to the concentration of the gold reserves and to the
securing of the economy in the use of gold;”


“any person in the United Kingdom owning any gold coin or bul-
lion to an amount exceeding ten thousand pounds in value shall, on
being required so to do by notice in writing from the Bank, forth-
with furnish to the Bank in writing particulars of the gold coin and
bullion owned by that person, and shall, if so required by the Bank,
sell to the Bank the whole or any part of the said coin or bullion.”


— Currency and Banknotes Act 1928'°

Three years later in England the gold standard was abolished:
The bank of England are hereby discharged from all liabilities in
respect of anything done by the Bank in contravention of the said
subsection (2), at any time after the eighteenth day of September,


nineteen hundred and thirty one, and no proceedings whatsoever


shall be instituted against the Bank, or any other person in respect
of anything so done as aforesaid.


Page 13


The Bank of England





- The Gold Standard (Amendment) Act, 1931"


Passed into law one year after the incorporation of the Bank for
International Settlements, which was (is) incorporated under the
Hague Agreements of 1930; on the 21st of March 19309 five days after
the German army’s invasion and occupation of Czechoslovakia, a
request was received by the Bank of England from the Bank for
International Settlements, to transfer approximately £5.6 million
of gold from Bank for International Settlements no. 2 account
(presumed by the Bank of England to be the Czech national bank),
to the no. 17 of the Bank for International Settlements (presumed
by the Bank of England to a German Reichsbank)."


“Between the 21st and 31st of March the gold received on the No.17
Account was disposed of, about £4 million going to the National
Bank of Belgium and the Nederlandsche Bank and the remainder
being sold in London.”


— Bank of England’?
In 1946, the Bank of England was nationalized:


“the Treasury shall issue to the person who immediately before the
appointed day, is registered in the books of the Bank as the holder
of any Bank stock, the equivalent amount of stock created by the


Treasury for the purpose (hereinafter referred to as the “Govern-
ment stock)”.


11 Great Britain, Parliamentary Papers, House of Commons, 1930-1931, 227, vol. 1, p.
763.

12 The Bank of England. ‘IX.’ In Unpublished War History (1939-45), 1293. Web: https://
www.bankofengland.co.uk/-/media/boe/files/archive/ww/boe-1939-1945-partiii-chapterix

13 Ibid.


Page 14


The Bank of England





— Bank of England Act 194614


Allowing for all shareholders in the Bank of England to exchange
their holdings of stock in the Bank of England, for the equivalent
value in new British Government treasuries (Government stock)
all banknotes issued by the country’s central bank (the country’s
lender of last resort) are legal tender for all debts public and private.


14 Bank of England Act 1946, § 27-1. http://www.legislation.gov.uk/ukpga/Geo6/9-10/27/
section/1


Page 15


The Bank of England | first board of directors





John Houblon — Governor
Michael Godfrey — Deputy governor
William Paterson
Abraham Houblon
John Smith

Henry Furnese
William Gore
Theodore Hansen
James Houblon
Gilbert Heathcoate
John Lordell
Thomas Abney
Thomas Goddard
John Lordell
James Denew
Thomas Goddard
John Ward

James Bateman
George Doddington
Edward Clerke
Samuel Lethullier
Oradiah Sedgwick
Nathaniel Tench
Brook Bridges
John Huband
Robert Raworth


Page 16





T think if you were to go back and try to find and review the ratifi-
cation of the 16th amendment, which was the internal revenue, the
income tax, I think if you went back and examined that carefully,
you would find that a sufficient number of states never ratified that
amendment.’


— U.S. District Court Judge James C. Fox!


Page 17





TREASURY BOND
OF 2003-2008
Dated August 15, 1978
Due August 15, 2008


CUSIP 912610 CC 0
Redeemable on call on and after
August 15, 2003
CIRCULAR No, 19-78













































































































































































































































































































































































































































































































































































Page 18





TREASURY BOND
OF 2003-2008


Dated August 15, 1978
Due August 15, 2008


CUSIP 912810 CC 0


Redeemable on call on and after
August 15, 2003
CIRCULAR No, 19-78




















Government Treasuries


As all Government bonds and Treasury bills are batch printed
promissory notes (unless created electronically or by any other
means), that offer to repay the depositor(s) the deposit required
for their receipt plus returns over the specified term (Government
stock...); any form of Government debt is created by its issuing
government, to offer as collateral — in exchange for finance for that
Government to spend.

Government treasuries are not loans granted by the country’s
Government, nor debts for the Government to receive. All
Government debt is sold in denominations of the bank notes issued
by the country’s lender of last resort (the country’s Government
only goes there occasionally...).

All bank notes issued by the country’s lender of last resort which
is the country’s central bank, that are used to monetize these debts
— are then forwarded to the country’s Government’s reserve account.
Government debt can not only not be repaid, it can only grow larger.


Page 19


For only under the rules of double entry book keeping and zero as
the fulcrum of balance, can one million dollars worth of capital, be
simultaneously known as one million dollars worth of liabilities.


Page 20





The Federal Reserve


The fourth central bank of the United States and signed by President
Woodrow Wilson on the December 23rd, 1913 (the Federal Reserve
Act):


[‘The shareholders of every Federal reserve bank shall be held indi-
vidually responsible, equally and ratably, and not one for another,
for all contracts, debts, and engagements of such bank to the extent
of the amount of their subscriptions to such stock at the par value
thereof in addition to the amount subscribed, whether such sub-
scriptions have been paid up in whole or in part, under the provi-
sions of this Act;’]


— Federal Reserve Act!


and joined in the year of its incorporation, by the 16th amendment
to the United States Constitution (the supreme laws of the U.S.):
>>>