[PDF]money_by_fiat

Money by

Fiat


all money created out of debt


/



Dean Bonkovich











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 10

Joint Stock Companies 20

Open Market Operations 22

The Federal Reserve 24

Goldman Sachs 31

The London Stock Exchange 38

The Hollow Sword Blade Company 44

The South Sea Company 47

The International Monetary Fund 50

The B.I.S. 52

The Reserve Bank of New Zealand 57

Derivatives 62


Page 5



The Official Cash Rate


64


Government Treasuries

69

Inflation Tax

70

Fractional Reserve Banking

71


Page 6



Joint Stock Companies | not a lot of difference


Page 7




s9a


y tf-ft/ '//ttZ/ti,/. fwf/'/to ■ 9-ir/tmt//.


it-, y.fA'eWtHlMii


CUSIP


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


RE GISTE RED


FIFTEEN YEAR 8%% BOND DUE 1993


UNITED KINGDOM


8 %%

DUE

1993


Page 8






















The National Debt of England



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


Page 9



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 1

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:


1 Great Britain. Bank of England Act 1694.’ Web: http://www.legislation.gov.uk/aep/
WillandMar/5-6/20/introduction


Page 10



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 2

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. 3

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.


2 Ibid, XIX

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 11



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


4 Raithby, John. 'XXV.' In Statues of the Realm, 483-95. Vol. 6. London: Great Britain
Record Commission, 1819. Web: http://www.british-history.ac.uk/statutes-realm/
vol6/pp483-495#h3-0025


Page 12



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). 5 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 6

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

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

6 Raithby, John. 'XXV. Statues of the Realm, 218-38. Vol. 7. London: Great Britain
Record Commission, 1820. Web: http://www.british-history.ac.uk/statutes-realm/
vo!7/pp218-238


Page 13



The Bank of England


a bankrupt. 7 Under the same act again:

“...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 8 9 .

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.

[“dureing the Continuance of the Corporation of the Governor and
Company of the Bank of England.. .,’79

First renewed in charter in 1708, and again in 1713, 1742,1764
and 1781. In 1797 the ‘Bank Restriction Act’ was passed into law in
England four years after 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.


7 Ibid, XLVII

8 Ibid,

9 Ibid.


Page 14



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 10

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 Unit¬
ed Kingdom owning any gold coin or bullion to an amount exceed¬
ing ten thousand pounds in value shall, on being required so to do
by notice in writing from the Bank, forthwith furnish to the Bank in
writing particulars of the gold coin and bullion owned by that per¬
son, 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 11

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


10 “Bank Charter Act 1844.” N.p., n.d. Web. 17 Aug. 2015. uk/ukpga/1844/32/pdfs/ukpga_18440032_en.pdf>

11 Currency and Banknotes Act 1928, § 13-11. http://www.legislation.gov.uk/ukpga/
Geo5/18-19/13/section/11/enacted


Page 15



The Bank of England


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

- The Gold Standard (Amendment) Act, 1931 12

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 1939 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). 13

“Between the 21 st and 31 st 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 14

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


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

13 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

14 Ibid.


Page 16



The Bank of England


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

Bank of England Act 1946 15

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


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


Page 17



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 18



‘I think if you were to go back and try to find and review the ratifi¬
cation of the 16 th 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 1


1 Sullivan v. United States (United States District Court for the Eastern District of North
Carolina March 21, 2003).


Page 19




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©g 0\E THOUSAND DO


TREASURY BOND
OF 2003-2008

Dated August 15, 1978
Due August 15, 2008


FOR VALUE RECEIVED PROMISES TO PAY TO THE BEARER THE SUM OF

ONE TIIOI SAXI) DOLLARS


ON THE DUE DATE, AND TO PAY INTEREST ON THE PRINCIPAL SUM FROM THE DATE HEREOF, AT THE
RATE SPECIFIED HEREON. THIS BOND AND INTEREST COUPONS ARE PAYABLE AT THE DEPARTMENT OF
THE TREASURY, WASHINGTON, D.C., OR AT ANY FEDERAL RESERVE BANK OR BRANCH. THIS BOND IS ONE
OF A SERIES OF BONDS, AUTHORIZED BY THE SECOND LIBERTY BOND ACT, AS AMENDED, ISSUED
PURSUANT TO THE DEPARTMENT OF THE TREASURY CIRCULAR REFERRED TO HEREOhL^L OR ANY OF
THE BONDS OF THIS SERIES MAY BE REDEEMED, AT THE OPTION OF THE UNITED S ^S||^^p,^ND AFTER
AUGUST 15, 2003, AT PAR AND ACCRUED INTEREST, ON ANY INTEREST DAY OR DAY^^^^^^^ MONTHS*
NOTICE OF REDEMPTION GIVEN IN SUCH MANNER AS THE SECRETARY OF THL PRE¬
SCRIBE. IN CASE OF PARTIAL REDEMPTION THE BONDS TO BE REDEEMED WILL BY SUCH

METHOD AS MAY BE PRESCRIBED BY THE SECRETARY OF THE TREASURY. FROM T^TO»j^|^f 1 MP T|0 N
DESIGNATED IN ANY SUCH NOTICE, INTEREST ON THE BONDS CALLED FOR CEASE.

THE INCOME DERIVED FROM THIS BOND IS SUBJECT TO ALL TAXES IMPOSED U Nt PlfRl^ nfev < & TERN A L
REVENUE CODE OF 1S34.THIS BOND IS SUBJECT TO ESTATE, INHERITANCE, GIFT OR -

WHETHER FEDERAL OR STATE, BUT IS EXEMPT FROM ALL TAXATION NOW OR
THE PRINCIPAL OR INTEREST HEREOF BY ANY STATE, OR ANY OF THE PQSjp'- ^g-^

STATES, OR BY ANY LOCAL TAXING AUTHORITY. THIS BOND IS ACCEPTA^^

PUBLIC MONEYS. IT IS NOT ACCEPTABLE IN PAYMENT OF TAXES.


Washington, D.C., August 15, 1978.
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