Thursday, April 04, 2013

1933: American Cyprus

It's hard to believe that Franklin Delano Roosevelt was able to pull this off without an insurrection.

While people around the world may be appalled at the actions of the Cyprus government to close their banks and confiscate a portion of certain accounts, many in America claim it “will not happen here.” Perhaps they are correct for at least the immediate future, but far worse was done to Americans in 1933 and it could happen again.

On April 5, 1933, approximately one month after first taking office, Franklin D. Roosevelt commanded, via Executive Order No. 6102, “All persons are hereby required to deliver on or before May 1, 1933, to a Federal reserve bank … all gold coin, gold bullion and gold certificates now owned by them or coming into their ownership on or before April 28, 1933[.]”

By his executive order Roosevelt deprived Americans of their property “without due process of law” under the Fifth Amendment. To add injury to insult, he also ordered up to a $10,000 fine or ten years in prison or both for anyone who willfully violated any provision of his executive order.

America was deep into a financial crisis of its own at the time, known as the Great Depression, and his executive order was his chosen method for resolving it...

...In 1933, US paper currency, the Federal Reserve Note (FRN), was backed by gold, which required by law all banks to provide gold on demand to their depositors in exchange for FRNs. Since banks did not hold enough gold to meet the demands of the depositors who had lost confidence in the banks, the banks would have to liquidate their business to pay back the gold they owed.

By making it illegal for American citizens to own gold after May 1, 1933, Roosevelt gave the banks a “legal” recourse to default on their contractual agreements. Roosevelt saved the banks by confiscating the gold from American citizens and having Fort Knox built, at tax payer expense, ... store the gold he stole. His decree, in effect, made the normal, unavoidable uses of money a justification for “the seizure of that money from its rightful owners, in order supposedly to “protect the currency system” of the people based on”[1] the money he was confiscating.

Roosevelt used the term “hoarding” to describe the actions of people who lost confidence in their banks and withdrew the gold they had deposited in them. “What Roosevelt actually had in mind, but did not dare say in so many words, was that as a practical matter “hoarding” meant “withdraw[ing] and withholding” gold from the banks – and that therefore [our] gold could be confiscated in the bank’s interests...

If any of this sounds vaguely familiar, it is because similar actions were taken in the 2008-2009 bank bailouts in the United States. The only difference is that instead of gold confiscated from American citizens, the national government confiscated future earnings via liabilities placed against future tax revenue to bail out the banks.

Why should you care?

Well, earlier today Japan opened up a new front in the currency wars by announcing it will print money at a rate unseen since the days of the Weimar Republic.

The easiest prediction I've ever made? This won't end well.

1 comment:

The MUSEman said...

ObamaCare already levies a 3% fee on any gold transactions over $600, so we're already on the slippery slope. However, I suspect Obama will attempt to nationalize the 401K accounts first - it's just too big a pile of money to ignore, and it fits well with his "Government knows what's best for you, even if you don't" narrative.

Besides, you can't eat gold and it's becoming too expensive anyway - that's why precious metal firms are hawking silver now. 1988, anyone?

Thanks for reading!