The Most Common Scams and Fraud

Smart Decisions About Money

Part 1

As a professional advocate who works to protect people against financial victimization I am often asked about the most pressing scams and fraud, and occasionally about predatory sales tactics and manipulations.

Certainly American citizens need protection against the myriad of risks that threaten their wealth. Unfortunately the average American citizen goes to work each day and is totally unaware of their own financial victimization which is perpetrated by our own government. This hopefully can serve as a primer to help everyone become aware of how the U.S. government has long been confiscating the wealth of its citizens.

The following is taken from Michael Maloney in his “Guide to Investing in Gold and Silver” and this is not a pitch for Gold and Silver or metals. I just find that Mr. Maloney has an exceptional knowledge and understanding of the history of money and currency and that is a mandatory awareness for economic survival in today’s global economy. The author has simply done a wonderful job of simplifying and summarizing a very complex subject, so as a beginning point here is his words:

I used to have a hard time trying to comprehend the world monetary system. Chances are you find the system a bit mystifying as well. Thankfully, an analogy came to me one day that helped me connect the dots. Picture a very large room. In this room are the heads of the U.S. Treasury, the Federal Reserve, the rest of the world’s treasuries and central banks, all the world’s commercial banks, and a bunch of hot-shot Wall Street elites. Then picture them all frantically making out IOUs and passing them back and forth to each other as fast as they can. That’s the world’s monetary system.

Now the foundation for this system is a bond issued by a country’s Treasury, Ministry of Finance or whatever they call it in their country…for now we’re going to call it the government. These government bonds are the foundation of the world’s monetary system. Bonds basically say: “I owe you (IOU) X-amount of currency plus X-amount of interest.”

Many entities buy these government bonds. But when a country wants to create some currency, the government sells a bond to their central bank. The central bank writes a check against a zero balance in their checking account for however many dollars, euros, yen or whatever the government wants, and it buys the bond. The currency has now sprung into existence, and later can be used to redeem the bond. Therefore, the bond is an IOU for the currency. But since the currency is also a claim check to redeem the bond when it matures, the currency is an IOU for the bond. Get it? No, me neither. That’s because it’s crazy. If you or I did this, we’d be accused of fraud.

The point everyone needs to take from this is how the Federal Reserve creates currency from nothing, this is commonly referred to as counterfeiting. This is also how mortgages are created and the end result is more currency floods into the market place reducing the value of the already existing currency in the marketplace. This creates price increases which are commonly referred to as inflation. (Tomorrow we will present Part 2)

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