The Real Truth About Your Money

The Real Truth About Your Money


The Birth of Dollars

The New Dollars Have Children and Grand Children

Pat, I Would Like To Buy My Own Debt

Where Does the “Worth” Come From?

So Where Did Our Money Go?

Interest the Inescapable Trap

Where Your Income Tax Actually Goes

The Real Issue is Private Control of Public Money

What Is Money

Metals as a Store of Value

Returning To a True Public Currency

Learning How to Think From a Though Experiment

Building a Private Barter Currency

Declaring Individual Sovereignty

Resources for Independence

The Real Truth about Your Money is that on Some Levels it is 100% Worthless!

If you are reading this web site odds are one way or another you came into possession of a piece of AOCS Currency, perhaps an ounce of copper or an ounce of silver. If someone gave you that coin thank them if you ever get the chance because on this site you will learn some shocking facts about the U.S. dollar.

A few things we want to tell you right up front before you proceed…

First – There is nothing to buy here; we are not going to try to sell you anything, not even really an idea.

Second – This is not a “gloom and doom” publication it is simply factual and explains exactly where our money comes from and how we end up paying for it.

Third – We will make no attempt to convince you of anything, we will simply provide you the real story and everything is easy to verify. Once informed we leave it to you to make up your own mind as to what if anything you decide to do differently in your life going forward.

So Is Your Money Really Worthless?

The answer is both yes and no. It isn’t worthless because after all you can buy stuff with it. It pays for your housing, food, entertainment and many other things. However, it is in a way worthless because it has absolutely nothing backing it other then debt. That is right every United States dollar is honestly, “loaned into existence” in fact if we paid off the National Debt the result would be that there wouldn’t be any money left in existence.

Did you get that? When the people of the United States start to pay off debts on a meaningful level money actually vanishes back into thin air! Does that sound insane? Unfortunately it is 100% true and if you go to the website of the Federal Reserve and look this up you will find that they themselves state this.

But how can this be?

Hold on I am about to take you on a trip where we will see how dollars are born and how they give birth to children, grandchildren and many generations of great grandchildren. Each birth will be the result of another debt and of course interest to go along with it.

Chapter One - The Birth of Dollars

It is a typical day, which of course means the U.S. Government wants to spend money it doesn’t have. So the congress asks the U.S. Treasury for some money, say 1 Million Dollars. Now most people think the Treasury will create the new 1 Million Dollars but they don’t. What they actually create are U.S. Treasury Bonds. These bonds are nothing but pieces of paper that state that if you buy them, the government will pay you your money back plus interest at some point in the future.

Now what the Treasury does next is sell these bonds to anyone who wants to buy them, China, England or even you, anyone can buy a bond like this. So far though no money has been created, the bond is simply traded for money that you, the Chinese or say the English already have. So since there isn’t any new money the money supply has not yet increased, no money has been “printed” yet.

Now when it is decided that we need more dollars in comes an organization you have likely heard a lot about on television, The Federal Reserve. Now, “The Federal Reserve” that sounds quite governmental doesn’t it? The thing is the Federal Reserve is NOT part of the government, it is a private corporation made up of both U.S. and International Banks. Did you know that? To be blunt the Federal Reserve is about as “federal” as Federal Express!

So now the Federal Reserve decides it wants to create 1 Million Dollars new dollars and then get them into the economy to stimulate spending (this is called inflation at the most basic level). So the Federal Reserve goes to a big bank that has 1 Million Dollars worth of those U.S. Treasury Bonds and buys them and with that abracadabra 1 Million new dollars are created.

But wait! The Fed bought the bonds right, where did the new money come from. Well, get this Federal Reserve doesn’t actually give money to the bank that it buys the bond from. Instead the Fed at that moment creates one million new dollars simply by typing some numbers into a computer and entering it as a “deposit” into the bank that sells the bonds.

What? Wait? Huh? Well that is how most people feel so don’t feel bad. The process is so simple as to appear complicated.

It works like this, the Federal Reserve simply buys the bond with nothing but a computer entry, the bank gets 1 Million Dollars and the Fed gets 1 Million Dollars worth of Bonds. The new money is “real” the bank can spend it or more likely loan it to people and businesses at interest. Now here is the scam! The United States now owes the Federal Reserve 1 Million Dollars, plus interest of course. In return the Federal Reserve didn’t really do anything except make an electronic entry into a computer. A task the average 8th grader could accomplish.

Happy Birthday Dollars! One million new dollars were just created via one million dollars in new debt plus interest all payable to whom? That is right a group of private banks called the Federal Reserve. But we are just getting started, now those new dollars are ready start reproducing and have a bunch of kids and grandkids.

Chapter Two – The New Dollars Have Children and Grandchildren

Remember the new money created by the Fed went to the bank that sold the bonds. Assuming the bank is all caught up on paying bonuses to its executives it will want to use that new money to make more money. We all know how banks do that right? Of course by loaning the money to someone; in this case let’s say to buy a really big house.

The bank of course got 1 Million dollars in new money and now can loan up to 90% of that money in a system called “fractional reserve banking” which will let our new dollars create 900,000 children of their very own. When someone shows up and borrows 900,000 dollars from the bank to buy that awesome house in the city the bank doesn’t actually give the person the 900,000 dollars they got from the Fed. I mean come on the creating money thing is a good scam why should only the Fed get to do it? Remember the Fed is made up of private banks; in fact the bank giving the 900K loan may be part of the Fed!

So just like the Fed this bank simply creates an entry in their books and gives the buyer 900,000 new dollars. Of course the buyer signs the check over to the seller in exchange for the house. The seller though doesn’t shove 900,000 into their mattress; they deposit it in the bank and perhaps use much of it to pay off money they owed on the house prior to selling it. Either way that 900,000 ends up as a new deposit in a new bank or may be even the bank that made the loan. Yep you got it, that 900,000 is brand new money! Created out of thin air!

So the original 1 Million has now become 1.9 Million. But we are not done yet! The bank that gets the 900K wants in on this too right, so they can loan 90% of it out or 900,000 x 90% or another 810,000 dollars. So now we have 810,000 grand children! Look at all that new money!

1,000,000 + 900,000 + 810,000 = 2,710,000 dollars created and 100% of it is debt due back plus interest!

And it keeps going, the next banker in the stream can loan 90% of the 810,000 or another 729,000 dollars making our new total 3,439,000 dollars again all of which is loaned into existence. Eventually this can go on and on and that original 1,000,000 dollars of debt can become over 9,000,000 dollars, all debt, all due back with interest and 100% of it created out of thin air.

This might sound totally impossible or at least hard to believe. Well the Federal Reserve says this is exactly how it works, the following is a quote from one of their publications called, “Putting it Simply”

When you or I write a check, there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money.”

Well, okay so the Federal Reserve creates money out of thin air, but you sort of knew that already right? I mean that is their job to “print” our money so this isn’t a huge shock, someone must create new money. Yet what about the banks, can banks really do the same thing, when you borrow 100,000 from a bank are they really just making a journal entry and creating new money? Absolutely and again the Federal Reserve itself says so.

One of the most quoted references regarding money creation is the Federal Reserve publication called Modern Money Mechanics. If you simple search Google for “Modern Money Mechanics” you will find many places you can actually download a copy to read. If you turn to page 6 it says in rather clear language,

“Of course, they (banks) do not really pay out loans from the money they receive as deposits. If they did this no additional money would be created.”

So there you go, according to the Federal Reserve itself all money is nothing other than a certificate for debt.

Pat, I Would Like To Buy My Own Debt

At this point you may really feel we have a big problem in our money supply. Take a dollar bill, or a twenty, or a five out of your pocket right now, look at it, it isn’t money, nope just a promise of money backed by a debt.

Well, as bad as this may seem it can actually get worse! You see the one saving grace to what we have discussed so far is there is a control on how much debt/money can be created. Remember first the Treasury issues a bond and auctions it, then the Fed can buy it with a bookkeeping entry and that creates more money. With that there is a lid on the money supply because unless you or I or someone is willing to first buy a bond and show “faith” in the currency the Fed can’t go to a bank and “buy” the bond.

Have you ever heard the term, “monetizing the debt”, it gets bounced around the news at times but most people have no idea what it means. It really amounts to buying NOTHING with more NOTHING and creating SOMETHING. To understand this let’s look at a popular game show that has been on T.V. for decades, “Wheel of Fortune”.

On the show of course people spin a wheel and when it lands on say 500 dollars they pick a letter in an attempt to solve a word puzzle. Say they pick a “T” and there are 4 “Ts”, well they get 4 x 500 or 2,000 dollars into their “bank”. When a player misses the next player gets a turn. When someone solves the puzzle they get the money in their bank but what happens to the money in the other player’s banks. Well it simply vanishes, only the winner gets the money!

Now along the way a player can select any letter they want as long as it is a consonant, they have to “buy vowels”, they can buy a vowel only if they have money in the “bank” to do so. Of course in reality they are not buying anything, they simply reduce their potential winning in hopes of solving the puzzle. In effect they buy a vowel with nothing. If they lose they don’t get a bill for say 500 dollars for the vowels they purchased.

Now you might wonder what this has to do with the Federal Reserve and money as I explain the parallel will become evident and help you understand just how ridiculous what I am about to tell you really is.

See sometimes the government wants money to spend that they don’t have, we call those week days. Yet even with the system you know about now they can only tax us so much and only sell so many bonds. When the money supply starts to get out of control and interest rates drop sometimes they can’t sell those bonds anymore or can’t sell enough to meet their spending requirements. Now what you and I do in this situation is cut expenses but not the government, they simply buy a vowel with nothing!

Here is how it works; the Federal Reserve simply buys the bonds directly from the U.S. Treasury instead of from a bank that is holding them. That is it and the debt is “monetized”. Many people wouldn’t see that as a big deal I mean hey they “bought the bonds”, right? Yet many people don’t know what you now know, how does the Federal Reserve “buy U.S. Treasury Bonds”. Do they do it with money? Nope they do it with a journal entry in a computer and that actually creates money.

What this means is even when businesses, nations, private individuals and banks start to say no to loaning the government more money they just buy more of nothing, using nothing and create new money backed by nothing. And with that on any day they can add a million, a billion or god forbid a trillion dollars in money to the economy. This is the point where they are truly printing money out of thin air.

The key is this money isn’t “free” we as a nation now owe 100% of it back to the Federal Reserve plus interest. Are you starting to put 2 and 2 together and ask, well if all the money is debt and it all has interest due, where does the money to pay the interest come from? If so good you are starting to really get it, if not don’t worry we will get to that soon enough.

Additionally the Fed knows this looks bad so sometimes they run a double scam, frequently this is referred to as quantitative easing. To hide the fact that they are buying their own debt they simply announce that they will buy a certain amount of bonds, the date they will do so and worse how much they will pay for the bonds. The price will inevitably be higher then what you can buy them from the treasury for. Why? So they can buy them from a bank and hide the fact that they are buying their own debt, oh and pass free money on to the bankers and investment firms.

See thing is you can’t go sell bonds to the Fed during a quantitative easing (fancy word for stuffing money into the economy) you have to be really big to get in on this scam, big like well, Goldman Sachs. So what happens is the Fed basically tells companies like Goldman go buy 500 billion dollars in bonds and we will buy them from you a month from now for 530 billion or what ever they decide is necessary to get the deal done.

So Goldman gets 300 million in profit with zero risk, the fed gets 500 billion in new bonds that we owe interest on and the American people get the bill. The big scam is that the Fed gets to claim they didn’t buy their own debt and yet the entire thing benefits their buddies at Goldman and costs the American people an extra 300 billion plus interest. The final scam is they only do this when otherwise they couldn’t sell enough bonds to raise the funds. In other words when the rest of the world says hell no “we won’t loan you more money” the Fed just sets up a back door deal and creates the illusion of outside investment.

Where Does the “Worth” Come From?

I have stated that on some levels that your money is worthless and I think you should be starting to understand what that means now. The other side though is money (at least right now) isn’t actually worthless, hell it buys stuff right? So do to the fact that our money is nothing but debt the logical question is how does our money derive its value?

The answer is simply that it does so because our nation has intrinsic value. We produce goods and services, we have resources, we trade with other nations etc. This is what they mean when they say our money is “backed by the full faith and credit of the American people”. This, in some ways works, our functioning economy despite its problems proves this. You work, you get paid you use that money and you buy stuff, pay bills etc.

The key is that the “worth” of our money fluctuates in two ways; one is deflation (prices go down) and inflation (prices go up). There is more to it than that but at this point a simple definition is sufficient. You experience this when the item you had been buying for 500 dollars (say the rent for an apartment) goes up to 525 dollars. You now do the same work to earn 500 dollars but those dollars buy less for you, which is basic inflation.