Home » Creeping Fascism » Fiat Currency and the Emerging Police State

Fiat Currency and the Emerging Police State

by John Rubino on October 14, 2012 · 32 comments

Our transition from more-or-less free country to police state is accelerating. The NSA’s Utah data mining facility, ever-tighter restrictions on offshore accounts, the Internet “kill switch”, the Patriot Act’s many assaults on the Bill of Rights, the militarization of local police, the spread of drones for domestic surveillance; each has a role in the high-tech updating of a very old idea: that the state is paramount and the individual a slave to public order and national power.

But why is this happening now, rather than in 1950 or 2050? The answer is that we’re reaping the whirlwind that always accompanies fiat currency. We created a central bank in 1913 and freed it from the constraint of gold in 1971. Give the government or the big banks the power to create money out of thin air and you eventually get a dictatorship. “Eventually” just happens to be now.

Laissez Faire Books’ Wendy McElroy covers some of the theory behind this idea in a recent review:

Paper Money = Despotism
“Fiat” is money with no intrinsic value beyond whatever an issuing government is able to enforce. When it enjoys a monopoly as currency, fiat inevitably turns the free market functions of money inside out. Instead of being a store of value, the currency becomes a point of plunder through monetary policies such as quantitative easing. Instead of greasing society as a medium of exchange, the currency acts as a powerful tool of social control. The second harm is far less frequently discussed than inflation, but it is devastating. The personal freedoms that we know as “civil liberties” rest upon sound money.

In his classic book The Theory of Money and Credit (1912), the Austrian economist Ludwig von Mises argues, “It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically, it belongs in the same class with political constitutions and bills of rights.”

A key reason Mises viewed sound money as a necessary protection of civil liberties is that it reins in the growth of government. When a government prints money without the restraint of competing currencies — even if the restraining “competition” is a gold standard — runaway bureaucracy results. Wars are financed; indeed, it is difficult to imagine the extended horrors of World War II without governments’ monopoly on currency. A white-hot printing press can finance the soaring numbers of prisons and law enforcement officers required to impose a police state.

Floods of currency can prop up unpopular policies like Obamacare or the War on Drugs. That is why government holds onto its monopoly with a death grip. In The Theory of Money and Credit, Mises observes, “The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion, policemen, customs guards, penal courts, prisons, in some countries even executioners, had to be put into action in order to destroy the gold standard.”

Another way a currency monopoly threatens civil liberties is by permitting government to monitor virtually all transactions through the financial institutions with whom it maintains an intimate partnership. Total surveillance is a prerequisite to total control, which is what the government wants to establish as quickly as possible. For example, prior to establishing the Suspicious Activity Report (SAR) in 1996 — a form that financial institutions submit to the U.S. Treasury — banks were required to automatically report any transaction over $10,000. Now any activity deemed “suspicious” is vulnerable.

The monopoly facilitates a vicious attack on privacy and has become a main building block of the American surveillance state. As libertarian Mark Hubbard stated, “Civilization is a movement toward privacy, a police state the opposite, and tax legislation has become the legislation of our new Big Brother states.”

Much of the tracking is a pure money grab, but it is also an attempt to ferret out and punish “unacceptable” behavior, like dealing in drugs or politically dissenting. Indeed, it is criminally naive to believe the government will not use these massive and valuable data to target its critics. Thus, people can be discouraged from speaking out. Controlling the information, however, means controlling the currency. Otherwise, anyone could mint gold coins in the middle of the night and release them covertly into the wild.

 

Some thoughts
I was going to start this article with a sentence like “Every time you turn on the news there’s another story about the growing intrusiveness of the US surveillance state.” But that’s not actually true. When you “turn on” the news, which is to say watch it on TV, you see little or nothing about this. It seems that all those “corporate media” complaints are accurate. America’s evolving police state infrastructure is one of the biggest stories of this lifetime, yet the mainstream news organizations seem to be ignoring it.

Now that we’ve created the infrastructure, all that remains is for some desperate/corrupt future leader to flip the switch. From that moment on, every communication in and out of the US will be captured, logged and mined, and each citizen will have a growing file that details their social, professional and financial activities. The state will set about silencing all emerging threats through intimidation, financial pressure (our hyper-complex tax code will be weaponized and turned on anyone who speaks out), and, when all else fails, the designation of dissenters as terrorists and their imprisonment without trial. All the tools are there, just waiting to be used.

In this scenario, social media will  be useless as a counterweight to Big Brother. When every communication is monitored, an attempt to organize a protest via Facebook will just create a list of people to be rounded up.

Can dystopia be avoided? Short of electing Ron Paul on a platform of tearing it out by the roots, it’s hard to see how. But McElroy does have one suggestion that’s aimed at the heart of the fiat currency dictatorship: end the state money monopoly and let other currencies circulate:

Yet the best solution to the harms caused by fiat is often dismissed even by staunch free market advocates; namely, allow the private issuance of money that freely competes with fiat as currency. This would involve removing all prohibitions, other than fraud, abandoning monetary controls such as legal tender laws and all reporting requirements. In turn, this might well eliminate the Federal Reserve, although people would be free to accept whatever money they wished.

The currency monopoly is vital to both the rise of a police state and the targeting of individual civil liberties. In arguing for a free market in currencies, it is important to claim the moral high ground by stating and restating what should be obvious: Civil liberties require sound money. And nothing ensures the quality of a commodity as surely as competition.

 

 

 

{ 29 comments… read them below or add one }

Terry October 15, 2012 at 12:30 am

That’s an excellent article and excellently describes the current, rapidly accelerating, downward spiral into Fascist Police State that the US follows. Also, that it appears almost perfectly ‘Text Book’ in its progress and implementation.

As the US descends into this ever darker area of public oppression and surveillance I wonder how long the controlled media can continue to claim that Americans are free?

I’ve frequently traveled to the US & can personally testify that your international airports (and the security at your transit points & borders) offer anything other than an image of a land of the Free and the Brave. It’s much more 1984 than locals appear willing to admit. In fact, I’d probably prefer a much more civil level of security and take my chances against any ‘Terrists’ that will probably never encounter.

Talking with locals, while I’m there, and its apparent that they’re actually convinced it’s the right thing to do. They’ve been so utterly brainwashed by their media and politics. I’m worried for some of my American friends and colleagues. Real scary stuff. The population of the US seem to be suffering a nationwide, collective and acute case of ‘Stockholm Syndrome’.

It’s obviously a case of ‘Not if, but when’ & how long will it continue before that ‘trigger’ moment inevitably arrives and the switch is finally flicked?

Isn’t it an ironic joke, of cosmic proportions! Will we actually be witness to a situation where US citizens are actually required to ‘Escape or Defect’ to regain some level of freedom?

‘Welcome to your new reality – The Federal Reserve Police State of North America – (Formerly the U.S.A). Please smile for the drones & would you like Fries and a Coke with that?’

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Patti October 15, 2012 at 1:50 am

Except the fries are an “approved” GMO half ounce of oven baked and the Coke is a small diet. Have a nice day!

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Rock Canyon Flyer October 15, 2012 at 2:09 am

Islam abhors debt, luckily. Wish Christianity did too.

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Thomas Lee October 16, 2012 at 9:02 am

Uh…. Christianity does look down on debt (you cannot be a slave to two masters…). Lending to others is not forbidden in the Christian Bible as it is realized that sometimes lending is a good way to help others. It’s irresponsible borrowing that is the problem. Furthermore, who cares what Islam abhors. They also abhor anybody that doesn’t worship Allah. D’oh!

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mijj June 21, 2013 at 1:40 pm

> “They also abhor anybody that doesn’t worship Allah.”

tut tut .. you’re projecting your qualities.

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Soaring with the Eagles October 16, 2012 at 1:24 pm

Rock Canyon Flyer doesn’t quite have it right. Hundreds of years ago in England and worldwide, the Catholic Church prohibited usury. That is, the Church prohibited high interest rates and the financial gaming of the system. After all, greed is one of the seven deadly sins.

Bankers and other new world financial interests promoted the so-called English reformation in the 1500′s. They weren’t the least bit interested in heaven or the eternal. Rather, they wanted to overthrow the restrictions the Church had placed on civil society so they could financially game the system.

You could argue that this is where the NWO began. Calvinism and Calvinistic philosophies gradually took hold in Europe and spread to the Americas. People that were not interested in any real religious values adopted Calvinistic philosophies in regard to economics and financial gain. It became a part of a secular religion.

There is nothing inherently evil or sinful about debt. The MISUSE of debt is sinful, especially if it is used in an attempt to get something for nothing. Then, it’s a form of stealing. RCF’s statement, “Islam abhors debt, luckily. Wish Christianity did too” is like saying “Islam abhors sex, alcohol, and respect for women. Wish Christianity did too. Perhaps RCF should live in an Islamist country for a few years and then come back and let us know how he liked it.

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John October 16, 2012 at 10:16 pm

The bible states that the borrower is a slave to the lender and usury interest rates are forbidden. Among other things to prohibit excessive debt

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Rock Canyon Flyer October 17, 2012 at 11:14 pm

Just saying that it’s lucky that islam doesn’t finance big wars and i wish we didn’t too. Debt, fiat and war all go together.

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Antiehypocrite October 15, 2012 at 2:31 am

Perhaps the ‘think tanks’ have determined that we have hit peak cheap oil (oil many times more expensive now in real terms than in 1970) and that there are no alternatives (there are not).

Effectively they can see we have hit the end of growth because of this and the symptoms we are experiencing in the global economy are the beginning of something very bad indeed.

So they have been ramping up police states to deal with the chaos to come?

Could this be what we can all expect in the near future as the futility of money printing becomes obvious and the real slide begins? http://hongkong.asiaxpat.com/on-location/bahrain.html

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Jim October 16, 2012 at 12:34 am

How do you conclude that oil is “many times more expensive now in real terms than in 1970?” In 1970, a gallon of gas was about a quarter. That same (90% silver by weight) quarter is today worth about $8.00, making the same gallon of gas cost about 11 cents in 1970 money. I think you might not understand what “real” means; oil is dirt cheap today in real terms, it is only expensive in nominal terms, which is the whole point of this article. You are blaming the wrong thing.

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Adam Goodwin October 18, 2012 at 5:41 pm

I see you aren’t really familiar with the Peak Oil arguments. Richard Douthwaite in Fleeing Vesuvius (a very good and diverse read, btw) argues persuasively for the link between energy and money. This link is not metaphorical, but physically demonstrable. As oil becomes increasingly more difficult to extract (EROI decreases over time) the price rises (both in real and nominal terms) commensurate with the extraction difficulty. The US dollar went from being gold backed to OPEC oil backed in 1971. Floating currencies are an illusion that distracts us from the real economic base–energy, specifically oil, because of its energy density, importance in transportation/logistics networks, and manipulability as a chemical substance. The oil price reached its all-time apex of $147/barrel in 2008 right before the crash and subsequent bail outs.

One can’t understand the economy without first understanding energy trends. This is the primary lesson of peak oil. The other lessons lead to a deeper understanding of the untenable nature of centralization, the limitations of governance, and the importance of locally sourcing food (our most fundamental energy source–all other energy sources come secondary). The Oil Drum and Energy Bulletin our two important Web sites to give thorough treatment to these timely issues.

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Robert October 15, 2012 at 2:40 am

Actually Americans LOVE their police state. It is a country of terrified weenies who want perceived security at ANY price. They will flock like sheep to the polls this November to vote for a Democrat or a Republican who will give them exactly the same thing,

There will be no control of borders which will continue to destroy the wage base of the working poor, Whatever is left of the US industrial base will continue to be exported and with it what is left of the old lunch pail working man, The bankers will continue to be allowed to play the world as an international casino. Heads they win. Tails the American people lose. After the losses are calculated the DemoPublican arguments (supported by the media which will only give a voice to this fake debate) will only be should we make the fools pay more or take away their benefits.

There will be no serious investigation into the biggest organized criminal syndicate in the history of the world. No not drugs, not illegal arms but flat out government corruption. That means fraud, kickbacks and theft. That is beyond Friction which are laws written by a corrupt government to legalize what should illegal activities.

The American Medical mafia will continue to loot and steal anything that’s not tied down. This together with the bloated overpriced university system will continue to make mass access to health and education (which created the middle class to begin with) more and more unfordable.

When the inflection point comes, the currency collapses, the police state surfaces as a real matter, Americans will learn the hard way that tyranny can happen here. And if they want to know who is to blame well just look in the mirror.

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Adam Goodwin October 18, 2012 at 5:23 pm

I think anyone has their breaking point. If the elite push the buttons of enough people, there will always be resistance. The question remains when…I think the ‘sheeple syndrome’ will expire with the dollar collapse. Nothing like an evaporation of everything you’ve counted on your entire life to shake you back into reality–just ask any people the US have bombed over the past 60 years.

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mijj November 8, 2012 at 1:54 am

> “the ‘sheeple syndrome’ will expire with the dollar collapse.”

that will be accompanied by a full-media-spectrum paranoia promotion to divert anger and energy into the public fighting itself. There will be a big uptick of “random” comments on the net accusing the usual convenient minorities of being the cause of everyone’s problems.

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Adam Goodwin November 8, 2012 at 3:09 am

What makes you think the net’s gonna still be up and fine ready for trolls to post comments? What makes you think that the powergrid’s gonna be going just fine to let people turn on their TVs? There’s gonna be a hell of a lot more going on when the just-in-time delivery system of food and other provisions catastrophically collapses. Have you read the FEASTA report entitled Trade Off: Financial system supply-chain cross-contagion – a study in global systemic collapse by David Korowicz? Here it is: http://www.feasta.org/2012/06/17/trade-off-financial-system-supply-chain-cross-contagion-a-study-in-global-systemic-collapse/

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Rob1911a1 October 20, 2012 at 4:31 am

One important thing to remember. This is a nation of over 300 MILLION people. However, local, state, and Federal, there are only about 800,000 law enforcement officers in this contrary. And, except for veterans or SWAT team guys, they are not ‘combat’ trained. Also, even couting the (illegal) use of the military – many of whom would rightfully NOT obey an illegal order – most military personnel are NOT heartbreakers and lifetakers. Actually combat trained personnel is probably far below a million. More importantly, they are needed to do the job they are doing; pulling them away to fight U.S. citizens would leave us vulnerable to our enemies; unlikely. Any that they did use would be going against 300 million people, of whom ~80 MILLION own firearms (and many of us are vets), what can they really do? There are active secession efforts already in Alaska, Hawaii, Vermont, Montana, and other states. This is not 1861; no one is goint to accept a bloody civil war that would destroy America.

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#OccupySF October 15, 2012 at 4:38 am

You nailed it! I see it on a day to day basis protesting in front of the “Federal” “Reserve”. Fyi, not all the cops want to enforce the oppressive policies, but they got to get that “$” :/

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disqus_smWiOrvPtd October 15, 2012 at 12:47 pm

Fiat money will eventually get you a dictatorship? Moving from facts to illusion certainly will. Quote, George Orwell: “One does not establish a dictatorship in order to safeguard a revolution; one makes a revolution in order to establish a dictatorship.”

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D October 15, 2012 at 4:08 pm

Agreed! The “money” our central banks produce is quite worthless. If we let them have their BS currency and simply rely on our own, the problem would eventually be solved. If you have no need for the US Dollar, you have no use for the central banks and subsequently they wither and go away.

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Dan Buckles October 15, 2012 at 6:29 pm

Where did the political agenda come from to deregulate the
banks and invade Iraq?

The deregulation of banks started with Reagan and the
S&Ls. Phil and Wendy Gram were the Republican activists pushing for it. When
the S&Ls failed the Democrat Congress re-regulated them at the end of
Reagan’s term in office, and as he was leaving he stated he was disappointed he
didn’t get the banks deregulated. Not to worry, years later the Grams and a
Republican Congress finished that job.

On the Iraq question, that started a few years before G.W.
Bush took office with the right wing think tank, Project For The New American
Century, of which Cheney and Rumsfeld were members.

The progressive, liberal, Democrats never had plans to get
rid of the Glass Steagall Act that allowed banks to become casinos, or had a
think tank to invade another country. It was the neocons and neoliberals that
created this economic downfall and the lies to go to war. Your fate awaits you at the voting booths and stop blaming
liberals.

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Dan Yates October 16, 2012 at 2:20 am

Klinton , not President Bush, recalled Glass Steagall

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Dan June 21, 2013 at 6:23 pm

So what congress was in charge under both presidents? A Republican Congress, 1996 to 2006. Clinton couldn’t have done it all by himself. The financial sector has become a parasite on us all by being able to move their debt on to the public debt. Neoliberalism is destroying our economy as we deindustrialize it under the straight jacket of the WTO.

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Thomas Lee October 16, 2012 at 9:04 am

you have selective memory…. or you’re just a real poor student of history…..

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John October 16, 2012 at 10:35 pm

Andrew Jackson referred to bankers as a den of vipers and stated that if the people knew how the banking system was run there would be a revolution by morning.this has been going on for many years. When are people going to learn the difference between parties is illusory? They both push the police state! Jesus kicked the money changers (bankers) out of the temple and they had him killed. Get wise! The bankers have known for centuries how to control the polical process!

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Paula Fether October 16, 2012 at 1:24 pm

“Now that we’ve created the infrastructure, all that remains is for some desperate/corrupt future leader to flip the switch. ” Future? Any of the globalist leaders today is desperate and corrupt enough; the only thing future is the proper crisis to serve as plausible deniability. This future is upon us, with unprecedented cosmic and earth changes. I have the feeling that said leaders all have their itchy trigger fingers poised to strike.

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stanley October 17, 2012 at 10:39 pm

This is a VERY GOOD ARTICLE, except it left out ONE VERY IMPORTANT FACT. It has to happen now because, the powers that created the Central Bank in 1913, also created the IRS and Income tax the same year to pay the interest on this credit and money printing. Moreover, the lease on the Federal Reserve act WAS ONLY FOR 99 YEARS. Do the math, 1913 and 2012. It’s been 99 years so the Federal Reserve Act expires this year 2012. So ALL THE DEBT (Gov’t social programs, Defense, wars, Foreclosure meltdown and fiasco. is all deliberate. This is EXACTLY why Alan Greenspan and Ben Bernanke DON’T want Glass Steagle Act, they don’t want any regulation so they can manipulate and allow the ponzi scheme and reckless gambling with tax payer bailout. So they can continue to create such losses as to say U.S. is Bankrupt). Then they will introduce the new currency AMERO backed by gold/silver. And it WILL NOT BE A TRANSFER OF WEALTH. It will be a THEFT OF WEALTH BY DESIGN.
Also be advised that on Dec. 31, 2012, the 100% protection for deposits that FDIC insures up to max of $250k expires. That means no more 100% protection for those deposits.
Once they crash the Dollar they might give you 60 cents on the dollar of your deposit if you bank is still in business. Close accounts at BofA, CitiBank, Chase, Wells Fargo and use a Credit Union. Credit Unions are owned by it’s members.

Solution? ICELAND SOLUTION.

They Voided out the agreements for Sovereign debt, Fired the entire cabinet, Elected new officials that WERE NOT FUNDED OR BOUGHT OUT BY BANKSTERS, and put the people first and gave the banks the left overs. 2 years later they are now recovered.
In addition they prosecuted and locked up the banksters and responsible politicians.
As we should do: Indict and Lock up:
Alan Greenspan, Ben Bernanke, Timothy Geithner, Gary Gensler, John Paulson, Henry Kissinger, David Rockfeller, Rothschilds, Wolfowitz, Dick Cheney, Condoleeza Rice, Donald Rumsfield. George Bush (Sr, & Jr. HW & W), Hilary Clinton, Leon Panetta, Obama-Rama, and Eric Holder to name a few.

Crimes to be indicted are.
Conspiracy to commit Grand Fraud on the American People. Breach of Fiduciary Duty. Breach of Better Business Judgment Rule, Treason for False Wars to prop up Petro-Dollar aka Dollar-Reserve-Currency and Murder for the deaths of U.S. Service men & women and civilians of those foreign countries from those resulting Wars.

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Play Watcher October 19, 2012 at 12:14 pm

The USA has become the USSA (Union of Socialist States of America) not much different from the USSR which we fought in the Cold War. It has turned into an out-of-control welfare/warfare/police state where money will soon not be worth the paper it’s printed on. But part of the solution is not to return to a simple gold standard, as gold is easily monopolized & controlled by the Central Bankers. We need at least a dual gold/silver standard, which is what we had in the past making it very difficult for Central Bankers to monopolize both gold & silver… or perhaps another combination of precious metals/commodities… whatever has intrinsic value & is acceptable by the people as a medium of exchange & the Central Bankers can’t monopolize & control.

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lynnybee October 24, 2012 at 1:31 am

Remember when we were younger and we’d say, “hey! i can say whatever i want to, it’s a free country!”

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Erick Dean November 21, 2012 at 7:16 am

Well, some of the possible governmental intrusions mentioned in this article though
seemingly far fetched are unfortunately quite possibly occurring as I type this! The unfortunate thing as far as the american public is concerned is its ignorance of history complements of the stealth oriented american public ‘educational systems’ no doubt,
for what college professor with a family to feed dares teach the truth about significant
major events ignored by the history books for fear of reprisal, tenure loss, or firing?
A number of questions from bright eyed, trouble making college freshmen in history
class would be exciting though. How about 1) Why does the term ‘democracy’ not
appear in the american constitution? 2) Why was the constitutional convention itself
boycotted? 3) Why did only two people attend Thomas Paine’s funeral and only one
cemetery agree to accept his body for burial, was it something he said? 4) Why did Mr. George ‘Founding Father’ Washington come out of the white house as chief executive
and don full military dress to lead over 13,00 federal troops to quash the second of two
civil uprisings (The so called ‘Whiskey Rebellion’ of 1791-94 following the first such
incident Shay’s Rebellion of 1786-87) four years of civil war before the War between
the States?

Someone in one of the comments given earlier was half right, “Old Hickory’ abolished
the First National Bank of the United States (chartered by famous world manipulating
off spring of Moses Amshel Bauer’s litter, Nathan Rothschild!). Word has it that the
attempted assassinatioin of Andrew Jackson was in response to this boldness on his
part in defiance of the banking baron’s wishes! It was actually automobile magnate
Henry Ford (most highly decorated foreigner by the Nazi Government in Germany
shortly before the Second World War) that said glibly: “if the american public really
understood how the banking system works there would be a revolution tomorrow!”
Now that says a lot about the brightness of the collective american mind doesn’t it, as
this year is 2012 if I’m not mistaken and nothing resembling so much as a dead rat’s
fart has yet to occur! Or maybe my olfactory nerves are not working properly now.

At any rate, let me not bore you with anymore untaught history, but close with this tid-
bit so you all can get back to your domino’s pizza and one of those air-brained sit-coms.
If you think that the american ‘public’ will experience some epic, earth shaking revelation, throw the tyrants out and “get this country back into the hands of the people” better think some more because if you want my opinion on all this Adolph Hitler was right on when he commented: “The most wonderful thing for governments is that people DON’T THINK!”. Got it? Get it!

P. S.

Let me throw a little Christmas gift at ya. Just got finished reading a copy of “Destined
to Witness, Growing up Black in Nazi Germany” by Hans Jurgens Massaquoi the book
is available at less the price of shipping and handling at Amazon.com and the film is available on “You Tube”. It appears that Mr. Hitler insisted on diplomatic relations with
Liberia until Liberia decided to join the winning side and declared war on Germany at
the very end of that war! Hans Jurgens was the grandson of the Consul General to
the Weimar Republic from the Republic of Liberia in the 1920s and he was born in
Hamburg Germany. Very informative and educational reading which surprised even me.
As a music student in Freiburg Germany in 1970 I had seen more Africans that I had
known in our student exchange program at Roosevelt University in Chicago, Illinois
but had no idea there were anything other than blond,blue eyed Nordics in Deutschland!
What doesn’t make it into the american mind could fill all the libraries all over the planet! It’s the lying fairy tales, historical trash and other brainwashing so deeply ingrained in it that’s so tragic and shameful!

Tally ho!

Erick Dean Tippett
Retired Musician/Teacher
Chicago, Illinois

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