Membership is $20 per year, which allows you to bring two guests. As a member, you can come in and merely hang out without being expected to spend money. Until further notice, it is BYOB, but cigarettes are not allowed. Hope to see you all Sunday at 5.

Editor’s note: This is a special Private Club edition of Social Sundays. Abunara accepts members over 18 years of age and younger people are allowed with their parents. This event is in addition to the current 3pm public event at the other location. See this forum thread for details.

PART THREE: THE FEDERAL RESERVE SYSTEM – THE MAGICAL MONEY MAKING MACHINE

“The world is governed by very different personages from what is imagined by
those who are not behind the scenes.”   – Benjamin Disraeli, English Statesman 1844.

In the preceding pages, a quick sojourn through time has shown the many seemingly innocuous and worthless items that have been used as money.  We have also taken a brief jaunt alongside the continued attempts to build a centralized banking regime in America and the subsequent fall of each. In this section, that basic framework becomes the context with which the merits of the Federal Reserve System are called into question. The question was posed in the opening paragraphs of whether or not there should be an all-mighty arbiter that controls the creation and flow of money. That is precisely what the Federal Reserve is.

Llewellyn Rockwell, Dean of the Ludwig von Mises Institute, has a less flattering view: “It’s no different from a burglar in your home wanting to steal your money – that’s what the Federal Reserve does. It depreciates your savings, it takes away your economic security and it ought to be treated as an institution that does that rather than something of alleged benefit.”

What is the alleged benefit of the Federal Reserve system? In October of 1929, speculators who borrowed heavily on margin to buy stocks saw the market lose one third of its value. Bank loans totaling more than $7 billion were left outstanding. Stocks bought on margin use that purchased stock as consideration (collateral) for the loan. The dip in stock values prompted the lending banks to call in those margin loans. As speculators defaulted on loans, bank failures spiraled out of control and the Great Depression began. The primary alleged benefit of the Federal Reserve system is that it safeguards against a depression by being a lender of last resort. In case any bank got into trouble, they didn’t have to worry – they could get the money from Washington. The legitimacy of such an argument is thinly veiled as the artificial fluctuation of interest rates by the Fed result in an initial inflation of the money supply and thus abundant credit, the boom, and the eventual contraction of that credit that creates the bust of the so-called business cycle.

Hans Hoppe, Economics Professor at the University of Nevada Las Vegas, questions whether or not it is even desirable to have such a thing as a lender of last resort. “The correct position appears to me,” he says, “that every single bank should be responsible for the its own debts and contractual obligations. And if banks, through imprudent policy, then go bankrupt, this should be considered a magnificent thing because the danger of bankruptcies is precisely what makes banks adhere to sound policies” (MBFR). Let us examine how the Federal Reserve system operates.

The previous sections explained the concept of fractional reserve banking. Initially, all Federal Reserve notes were backed by 40% gold. That is to say for every Federal Reserve Dollar in circulation, forty cents of that were represented in their reserves by actual gold. The other sixty cents were pure faith. The Federal Reserve is not a government institution, but rather a privately owned enterprise that prints money and loans it to its customer, the U.S. Government, at interest. Seven presidentially appointed board members oversee the Fed and its twelve regional reserve banks located in San Francisco, Kansas City, Atlanta, Boston, Minneapolis, Chicago, Philadelphia, Richmond, Dallas, St. Louis, Cleveland, and New York. The creation and distribution of “money” follows this course: The U.S. Government sells securities in the form of bonds to the Federal Reserve which then makes a loan for a specified sum – let us say $10 billion for this illustration. Now that money comes bearing interest which must be repaid, but it does not go to the government to disperse as it sees fit. The $10 billion is given to a Federal Reserve member bank and used as the basis for loans to various subsidiary banks that in turn use the money as loans to its customers. As current regulations stand, the requirement for this banking system is 10% of total liabilities as the “required reserve”; anything beyond is categorized as “excessive reserve” and used as the basis for new loans. Thus, the initial $10 billion can be used to create another $9 billion in non-existent money. One would think that would mean that any loans would come directly out of that $10 billion, but that is not the case. The newly created $9 billion is added to the initial principle, inflating that $10 billion to $19 billion. (Zeitgeist: Addendum) The process continues in every bank that money encounters. Consider the chart below for clarification.

DEPOSIT MONEY CREATION / LOAN CYCLE

$10,000,000,000     1    $10,000,000,000
$9,000,000,000     2    $19,000,000,000.0
$8,100,000,000     3    $27,100,000,000.0
$7,290,000,000     4    $34,390,000,000
$6,561,000,000     5    $40,951,000,000
$5,904,900,000     6    $46,856,000,000
$5,314,410,000     7    $52,170,000,000
$4,782,969,000     8    $56,953,000,000
$4,304,672,100     9    $61,258,000,000
$3,874,204,890     10    $64,744,784,320

The table illustrates how money creation works within a fractional reserve framework. Each subsequent loan only requires a 10% reserve, and the resultant new money is piled on top of every other loan. By the tenth revolution of the loan cycle, a potential for creating nearly $65 billion exists with only about $4 billion in reserve to satisfy a demand for withdrawal. Couple that with the fact only 40% of that original $10 billion was backed by gold, it then becomes glaringly apparent that $65 billion in claims exist against $1.5 billion in equity. “Interestingly,” says Murray Rothbard ,”while Fed liabilities are no longer redeemable in gold, the Fed safeguards its gold by depositing it in the treasury, which issues gold certificates redeemable in nothing but 100% gold bouillon from treasury stocks deep within Fort Knox” (The Case Against the Fed, p.141)

In testimony before the House Committee on Banking and Currency on April 27, 1936, chairman of the New Economic Group Allen B. Brown made the following critique of the Federal Reserve. “The banks manufacture, without borrowing it, the monetary credit which they loan to the Government. For every dollar they themselves contribute to the loaning process, they manufacture 10 credit dollars, and call them their own, although they base the credit dollars on human sweat and labor and productive genius that is not
their own” (Martin).

It is imperative to note that this type of lending practice is what created the housing bubble and the financial crisis that plagued Wall Street in the tail end of 2008. The “easy money” practices of the Federal Reserve system and the irresponsible lending by government backed brokers Fannie Mae and Freddie Mac are a classic example of what happens when a bank or lender holds a forty-to-one debt to asset ratio and when reserves are over-extended in risky, high interest loans. The banks pursue a debt-based investment strategy; their investments are no longer financed by equity but out of debt; the money created as a loan and dealt out to the customer as a liability is treated instead as an asset and used as the basis for creating even more money. Does this seem like a rational expansion of the money supply? Or is it a pyramid scheme? What are the implications of acknowledging that the banking system loans money that is actually does not have?

Take, for example, the very interesting 1969 case of First National Bank of Montgomery vs. Jerome Daly. Mr. Daly was the holder of property with a mortgage claimed on it by the bank in question. Mr. Daly had fallen behind in payments and the bank foreclosed on his house and sold it from under him at auction. Mr. Daly argued that the contract with the bank required both parties to each put up a legitimate form of property. This is called consideration in legal terms. Mr. Daly’s consideration would be either a down payment as a portion of the loan or the property itself. The lawful consideration on the part of the bank would be the money they loaned to Mr. Daly, but as demonstrated in the preceding pages, that money was not real property of the bank, nor did it exist in real equity, The judge’s memorandum states that, “the money and credit first came into existence when they created it. Mr. Morgan (president of First National Bank of Montgomery) admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the note. The Jury found that there was no consideration and I agree. Only God can create something of value out of nothing.” The foreclosure was not only denied by that ruling, but the entire claim to the land or any lien on it declared null and void. (http://www.constitutionalconcepts.org/creditriver.htm)

Two years later, then president Richard M. Nixon eradicated the convertibility of the U.S. dollar into gold. In an address to the nation Nixon stated that he “directed secretary Connelly to suspend temporarily (time would show this to be permanent) the convertibility of the dollar into gold or other Reserve assets except in amounts and conditions determined to be in the interest of monetary stability and the best interest of the United States.” Bollocks!

PART TWO: THE UNITED STATES, THE GOLD STANDARD AND CENTRAL BANKS – A BITTER MENAGE A TROIS

The first coins to be struck in the New World, the Spanish dollar, were pressed at a Spanish mint in Mexico City in 1536. (MBFR) These silver coins eventually found their way up to the English colonies on the eastern coast of the North American continent.  The mercantilist policies of the British Crown deliberately tried to keep precious metals out of the colonies, fostering a dependence on Bank of England notes and the debt they inherently carried. In light of such policies, the Spanish dollar became the unofficial currency of colonial America.  For smaller transactions, the Spanish dollar was often divided into eight pieces termed bits, hence the term “pieces of eight.”

The American governments first foray in to the realm of paper money came with the Revolutionary War and the need to fund it. Continental dollars, with no standard of value to back them, were printed out of thin air and at such a rapid rate that the currency quickly depreciated to no value. In 1781, at the height of the Revolution, Philadelphia merchant tycoon Robert Morris was given a charter by Congress to establish a privately run central bank. That institution, the Bank of North America, was granted the monopoly privilege to print and issue paper notes, and was the depository of all congressional funds (Rothbard, “The Case Against the Fed” p.70).

In light of the failure of the Continental, in 1791 Alexander Hamilton founded the first central bank of the United States, despite warnings from his contemporaries, namely Thomas Jefferson. The bank, whose charge it was to expand the supply of money for the benefit of the government and the commercial banks, was dismantled twenty years later after a cascade of personal bankruptcies of mostly poor farmers who had eagerly jumped at the cheap, plentiful credit – a collapse labeled the Panic of 1819 (DiLorenzo). The men who penned the United States Constitution delegated the power of money creation and control to themselves, the Congress. Article 1 Section 8 of the U.S. Constitutes grants the Congress the authority “To coin Money, regulate the value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States.”

1816 saw the second attempt at an inflationary central bank in America. President Andrew Jackson denounced the creation as a “monster bank” and famously slew the beast in 1836. He regarded such an institution as not only a threat to liberty, but as an affront to sound money. He echoed Jefferson’s warning saying that, “the bold efforts the present bank has made to control the Government are but premonitions of the fate that
awaits the American people should they be deluded into a perpetuation of this institution, or the establishment of another like it.” (MBFR) More than simply abolishing the inflationary central bank, Jackson introduced the gold standard to American banking in 1834; the value of the dollar being fixed at 1/20 of an ounce of gold, or $20 an ounce. Today, that $20 will not even buy one gram of gold! Adjusted to current inflation rates,
one troy ounce of gold (31.1034 grams) is valued at approximately $733.00 (www.goldprice.org)

The importance of a gold standard backing a currency is self-evident. If an abstract commodity like paper money is to be of any use in trade, it must be redeemable in one concrete form rather than to float amorphously and be traded for anything based on little more than faith in its value. Austrian free market economist Murray Rothbard echoes that sentiment in saying that, “a crucial fact in any economy is that all resources are scarce in relation to human wants. If a good were not scarce, it would be super-abundant, and therefore, like air, would be priced at zero on the market”  (Rothbard, The Case Against the Fed p.19).  Money, as a commodity, must also be regarded in the same manner. A super-abundance of a monetary unit would devalue it completely to zero. A gold standard also keeps banks honest to the extent that they cannot create vast amounts of money by simply adding zeroes to paper as it rolls from the presses. The U.S. economy saw an extended period of expansion and prosperity under the initial period under the gold standard. However, not all was well and southern planters began to resent the northern textile tycoons for seeming disparities between price offered for their cotton and the price of textiles. Of course, they did not take into account the effect the number of planters would have on the cotton market; with an abundance of cotton supply, the value accordingly dips. More than slavery, the Confederacy sought more economic freedom (most likely to levy import taxes and tariffs on the United States) and free itself of an alliance no longer desired, as was their right. Seeking to shrug off the power of the United States, the Confederacy opened fire on Fort Sumter in 1861, thereby dealing the first blow of the American Civil War.

That following year, 1862, president Abraham Lincoln suspended the gold standard to fund his war effort. The new notes, called Greenbacks for their trademark green ink, were printed endlessly. They held no intrinsic value, were not redeemable in gold or silver, but nonetheless were “legal tender.” How can that be? The greenback was what is called fiat money, that is an inconvertible paper money made legal tender by a government decree. Like the Continental dollar before it, the sheer volume of Greenbacks coupled with their inherent worthlessness forced the government to reinstate a gold standard in 1879. (LVMI) The high profile banking elites of the early 20th century, most notably J.P. Morgan and J.D. Rockefeller, favored a central bank that could create cheap credit and an inflated money supply to finance an expansion of their respective empires, be they financial or industrial.

“If the American people got wind of the idea that this bank was not in their interests, if they in fact understood it was in the interests of the financial elites, who would use it to inflate the money supply and in doing so increase their own revenues, there would have been hell to pay. The legislation would have to be sold to the people as making their money more elastic” says Pace University Economics Professor Joseph Salerno.

1907 saw a series of catastrophic runs on prominent New York banks. The revered Knickerbocker Trust became completely insolvent, and several other banks teetered on the brink of bankruptcy, despite a $35 million bailout from none other than J.P. Morgan. It is widely contended that Morgan himself spread rumors about the insolvency of a few of these prominent banks, prompting the run on deposits. The reason a bank fails on a run is do to the fractional reserve policy; the amount of demand to pay in circulation far exceeded the reserves of gold or other securities. Such is the folly of basing credit on non-existent securities. In 1908 the National Monetary Commission was formed and preceded to lobby and push for a central banking system in America. Interestingly enough, and quite un-coincidently, the committee was chaired by Senator Nelson Aldrich – son-in-law to John D. Rockefeller Jr.

In November of 1910, several prominent bankers boarded a train for a duck-hunting trip. Their actual destination, Jekyll Island Georgia, is now legendary – a veritable Island of Dr. Moreau where a select few financial elites created the abomination that is the Federal Reserve Bank. Among the few men to pen the Federal Reserve Act that weekend were two men representing the interests of John Rockefeller -Nelson Aldritch and Frank Vanderlipp from the National City Bank of New York – and two agents of J.P. Morgan – Henry P. Davidson from Morgan Bank and Trust and Charles D. Norton, President of Morgan’s First National Bank of New York. Signed into law by president Woodrow Wilson in 1913, the Federal Reserve Act established a monopoly cartel of money creation and distribution in the United States.

]]> http://freekeene.com/2008/12/15/in-nothing-we-trust-part-25/feed/ 7 http://freekeene.com/2008/12/12/in-nothing-we-trust-part-15/ http://freekeene.com/2008/12/12/in-nothing-we-trust-part-15/#comments Sat, 13 Dec 2008 04:28:09 +0000 Josh Kern http://freekeene.com/?p=975 Part one of a paper I wrote this past semester on the nature of money, central banking, and the Fed. I’ve broken it up in several sections so that it will be able to be read and critiqued in installments, probably one every few days. Feedback is of course appreciated. Enjoy.

IN NOTHING WE TRUST: THE TRUTH ABOUT THE FEDERAL RESERVE

by Joshua R. Kern

“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”   — Thomas Jefferson

Money, they say, is the root of all evil. They, who need any number of products and services to simply stave off the night cold and morning’s hunger regard the simple common medium of exchange that allows them bread (from the wheat they did not plant or harvest) as evil. That which they can exchange for heat from the furnace they did not invent (fueled by the oil they did not locate, drill, refine and deliver) is a tool of Satan. That slip of paper, a promise to deliver a good or service relative to the perceived value of that note, they say, is an abomination unto this Earth. How then are the inhabitants of this Earth supposed to live any sort of life that is not wholly devoted to eking out a meager existence of whatever can be produced by their own time, labor, skills and intellect? Novelist and philosopher Ayn Rand, in her magnum opus Atlas Shrugged, clarifies:

“Or did you say it’s the love of money that’s the root of all evil? To love a thing is to know and love its nature. To love money is to know and love the fact that money is the creation of the best power within you, and your passkey to trade your effort for the effort of the best among men. It’s the person who would sell his soul for a nickel, who is the loudest in proclaiming his hatred of money – and he has good reason to hate it. The lovers of money are willing to work for it. They know they are able to deserve it.”

Scrawled on papers in a checkbook, fattening leather wallets, rolling from the presses or staring back from a computer screen as a monolithic column of numbers, the money Americans use is taken for granted as a constant of our lifestyle. Money makes the world go round and Big Money goes around the world, but what exactly is money? Who or what creates it and who (if anybody) does or should control its availability and value? Furthermore, is a paper money more desirable than a money system born from the market itself? A brief glimpse at monies through the ages, and an overview of some key events in the baking history of the United States are critical before attempting to answer those questions.

PART ONE: MONEY THROUGH THE AGES

Since the dawn of man, he has traded his skills and his products for the skills and products of others. That is the simplest form of economy. The occupations commonly called trade skills are not a misnomer; they are specializations in the only universal and inexhaustible value of exchange – labor. A rational and civilized society deals with one another as traders, that is, exchanging a value for an equal value. Those with meager skills or abilities with which to trade for the goods or services they need or desire trade with one another, each offering something of value to satisfy a double coincidence of wants – that is, a mutually consensual and beneficial trade of values. This type of exchange is called bartering, but barter has limitations in the marketplace.  Robert L. Hetzel (Senior Economist and Policy Adviser in the Research Department of the Federal Reserve Bank of Richmond) says that “economic specialization rests on two pillars: free trade and stable money. Stability of the purchasing power of money makes possible roundabout exchange instead of barter.” (p. 11)

A man offering carpentry services may not need or be willing to accept whiskey, eggs, or hats for his work. He may instead accept some other commodity that another person is likely to also accept in an indirect exchange of values. Money, regardless of its form, is an abstraction of the division of labor allowing the satisfaction of a double coincidence of wants. The most commonly sought commodity in a society becomes valued as a medium of exchange, conforming to certain preconditions: the commodity must be small and easily mobile, have a high value to weight ratio, and be relatively scarce or difficult to produce. The Ludwig von Mises Institute (an international affiliation of free market economists based in Auburn, Alabama) points to several historical examples of seemingly worthless commodities valued as media of exchange:  The Mayans traded feathers from the ketsel birds up until the 15th century. Tealeaves pressed into bricks were traded in Asia through the 1800’s, Native North Americans traded belts made from wampum shells, and the lifeblood that sustained the Byzantine Empire was simply olive oil. Every civilization to have ever roamed the Earth has traded furs cut from bested beasts. Campaign after bloody campaign was waged to procure spices and fine silks, instigating seafaring explorers to seek alternate routes to the Far East.

The tiny island of Yap is noted by many economists (Keynes, Friedman, Furness) as an example of a culture with an unusual yet highly valued medium of common exchange – massive, round stones. Their appearance would imply being millstones, but no mills have ever existed there. The stones are “crystalline” in appearance and imported from distant islands making them relatively scarce (Goldberg, p.960). The larger stones are considered entirely beyond price. Essentially, the stones are Yap’s version of gold, only without the functional utility of gold and silver.

As the human being’s capacity for abstract thought gave way to increasing ingenuity in the crafting of tools, new resources were discovered and new tools developed for extracting and producing things of even greater value: pearls, precious stones, minerals and metals; metal coins began to emerge in Greece and Asia Minor in the early seventh century B.C.E (LVMI)
Exalted above all else in Western societies, gold and silver became the standard of indirect exchange. While too soft to serve any purposes of physical utility, their pleasing appearance and luster became valued for ornamentation in the decorative arts. Being of a limited supply, easily divisible, and in high demand, gold and silver satisfied the prerequisites of a stable medium of exchange. While portions of iron would over encumber a trader, pieces of gold and silver of the same size weigh next to nothing and are not a nuisance but a pleasure to carry.

So valuable had gold become by the 13th century that the major powers of European monarchies dispatched their agents to newly “discovered” areas of the world, not yet trod upon by Europeans, in search of anything of value to return to the lord. Thus began the conquest of the Americas by Europeans. The English and French monarchs grew richer with furs and timber. The Spanish and Portuguese swam in a bounty of gold and slaves.
The occupation of goldsmith emerged to satisfy a new market need – security to possessors of gold. Depositors turned an amount of their gold over to a goldsmith, paid them an additional fee for storing and protecting the gold, and were issued a receipt. The receipt, a promissory note, was a guarantee for the goldsmith to exchange a given amount of gold for the note. By that act, goldsmiths became the first banks. (Money, Banking and the Federal Reserve)  In an essay entitled “Gold and Economic Freedom” (featured in a collection titled Capitalism: The Unknown Ideal”) former Federal Reserve chairman Alan Greenspan explains the emergence of banking in a gold trading society: “If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society’s divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits), which act as a substitute for, but are convertible into, gold.”

A fatal breach of ethics in goldsmith practices is now the model for modern banks and the eventual destructor of all monetary systems – fractional reserve banking. A depositor holding a note has in effect made a loan to the bank, allowing the bank to use his money to in turn loan to its customers. This is done on the premise that the note he holds is redeemable on demand for the money leant to the bank, inflated with interest as an incentive. Fractional reserve lending occurs when a bank produces and distributes more redeemable receipts than it has assets to exchange them for. This greatly increases the amount of money available in the economy than actually exists in real commodities, creating the illusion of wealth. It is not a system composed of wealth, but rather one of debts. The longevity of a bank that operates this way is beholden to the trust its note-bearers have in it. When that faith is lost, a run on the bank may occur. In that instance, the demand for redemption in hard assets far outweighs the actual reserve of assets
resulting in a failure of the bank – complete insolvency. That can be correctly condemned as an ethical breach as the implied contract with depositors is that their deposit is secured and redeemable in full on demand. A fractional reserve lending policy violates that basic trust by issuing claims to securities the lender does not have, therefore endangering the depositor’s assets.

That does it for Part One. If any frequenters would like to read the remaining four sections, I will post them one every day or so. Thanks for reading. No Gods. No Masters.

Professor Weed,

I’ve been having a tough time in class, as evidenced in my brief and sputtering tirade today.  I feel the need to explain what the political landscape looks like to a large amount of people in this country (numbering in millions) that have no voice in the pageantry called democracy. These people, myself included, can no longer turn a blind eye nor participate in, nor give our sanction to a system that has perpetrated the greatest evils the world has known. It has empowered and enabled the kinds of dictators around the world that it itself claims to protect us from.

You asked me something about public education. The reality is that it can be funded publicly AND voluntarily. Take for example the recent vote on increasing taxes in Keene, or at least using that money, to fund the construction of the new middle school. Instead of taking the money from people to fund education via taxation, let them keep the money to fund the education of their own children! Can’t afford it still? I will refer you to the same case with the school. When the appropriation of funds was rejected, an anonymous donor stepped and donated something to the tune of half a million dollars for survey and architectural design fees. You can’t expect me to believe such a benefactor would not leave private schools with endowments for students of promise who lack the necessary means to a higher education. Furthermore, compulsory public education operates on the basic premise that the State knows what is best for your children, and that the one size fits all schooling is the best option. It has been awhile since you were within its walls, but i’ll tell you that even in the New Hampshire public schools (most of them free of metal detectors and prison-style regimentation) are still glorified day-care centers for disruptive youths that not only do not want to learn, but hinder the ability of those who actually do. The forced age segregation is another disastrous effect of the public schools – a policy that expects a child to gain a social consciousness by limiting their interaction to people their own age. It used to take a village to raise a child, now apparently it takes home room. Do you ever stop to think what happens in the mind of a child tormented constantly by children he would never freely associate with? Think about what happens when he is punished for acting on the innate human instinct to defend oneself. From the earliest age, the public schools teach children that they themselves have no power to shape their lives, and that such power lies in the authorities they grow up around.

The cost of education would fall considerably if some of the following were implemented: 1) No more mandatory schooling beyond the eighth grade, private public home or otherwise. By that point, a child has developed enough and is capable of continuing on his own decision. If he or she hates school that much then perhaps trade apprenticeship is the logical course. I do however applaud vocational programs for giving those young adults the options they want.  2) Funds for education are not funds for sports. Private schools have any right to manage their funds as they see fit, but publicly funded education has the responsibility and obligation to reduce costs and cut pork. 3) Stop teaching for awful standardized tests that by their very nature are designed to produce an educational system as good as its lowest common denominator. While it may identify intellectually deficient students, it does not care to investigate why those who score in the 90th percentile were not challenged and how they can be. This is the reason for smart kids that still rank in the bottom of the class. 4) Most would laugh if I called public schools a mandatory day prison for children, but how else should I interpret detentions, demerits, suspensions and expulsions? Slight deviations from established protocol, violation of some arbitrary dress code, or even something as benign as not having an instrument with which to write have all landed me in forced detention after established school hours. The penalty for “failure to appear” is of course more time added to your sentence; the thirty minute “teacher detention” presided over by the complaining “teacher” then becomes the hour long “administrative detention”, the guard on “duty” determined by a rotating schedule. No Professor Weed, I do not acknowledge any claim of authority over me and it was the public schools that are responsible. Any one of these changes would help the situation considerably. Those who rail against public schools are simply fed up with their money being stolen to fund the types of institutions I have mentioned.

I mention what I do about the public schools to show that they are a microcosm for the society at large; by observing the way the children are treated one gains a more detailed perspective on how intrusive government really is. Within its architecture, a person has limited to no choice of how they can express themselves and no recourse with which to redress grievances. They cannot even withdraw themselves from school. As evidenced recently in a Texas court, attending school is “not optional” to the extent that truant students are now subject to constant tracking via an ankle bracelet that they cannot even remove in their own homes! So sayeth the court. What greater good is this serving? The majority of people do not connect the system with the violence it perpetrates. You want me to somehow see the value in a system that claims my life and the lives of everyone else as its own, that claims their property and their labor as its own, to dispose of as it sees fit. Taxation is nothing more than institutionalized theft! Article 1 of the New Hampshire Constitution states that the right to govern comes from the “CONSENT of the governed.” I have withdrawn my consent. I no longer consent to the assertions that a group of men calling themselves “government” have the power to claim any part of my life as their own. That is what I mean by personal secession. In the end, the government is a business, but unlike private business it operates on a completely coercive basis with force as its only market motivator and tool of negotiation. They seek my voluntary compliance – the faith that is my cooperation and the vote that is my sanction. If I do not voluntarily comply their only recourse is force; i will either be kidnapped, my property confiscated, or my money stolen – my life broken. Democracy is nothing but the tyranny of the majority. It is an absurd ad populum argument that allows a majority of a small minority of voters to run rough shot over the lives of any dissenting minority opinion. Democracy claims to give everyone an equal voice, but that is not the case. In a democracy, minority rights matter not to the demands of the majority. The Civil Rights movement is a perfect illustration. The system that actively suppressed an entire class of persons only acknowledged their rights when they withdrew their consent and went into action. I too have a dream and it is that the world awakens from this nightmare.

To most of you, this old hat. But for a seasoned public official and man who is also the department chair of political science at Keene State College it might be something totally new. Also do not take this as an attack on the character of Charles Weed. He is a great and highly intelligent man with a more than healthy cyncism for the system. However, he is one of the insiders that thinks they can fix the system via the sytem – logic that is akin to renovating a crumbling house with bent and rusty nails. With any luck, I’ll form a constant dialogue with Professor Weed on these issues. I would be nice to have another vanguard of liberty in the system.