From real cash to unreal digital money

by Prof. Dr Eberhard Hamer*

(4 July 2022) “The biggest and most far-reaching economic scandal of our days is currently taking place through the manipulation of the monetary and currency systems. For the first time, monetary fraud has a global dimension, because it takes place on a worldwide scale, that can no longer be controlled, stopped or prevented by any national government, and because it is formally legal even under outdated national laws”.¹

According to financial theory, money is a legalised medium of exchange that is also intended to serve as store-of-value. Because of its real value, its issue was therefore a state privilege in the past (coinage sovereignty). The gold, silver and copper coins circulating as money had state minting. The state thus guaranteed the purity of the metal and the weight of the coins, so that everyone in every country knew how much this coin was worth. Thus, the metal coins were both a medium of exchange and a permanent value.

The stock of precious metals was thus the basis for the circulation of natural money in precious metals. Such gold circulation currencies still existed until the First World War.

Indirect gold currency

However, any gold circulation currency had the disadvantage that gold could not be multiplied as much as the economy grew, so that a certain deflationary money shortage could hinder stronger economic growth. Therefore, many countries went for an indirect gold currency. They had a certain stock of gold and issued government central banknotes on this basis, which were easier to transport in daily use, to count and also to store in higher sums.

The value was based on the fact that banknotes could be exchanged for corresponding gold or silver at the central bank at any time (gold core currency). However, since not all noteholders insisted on exchanging their banknotes for gold, a volume of less than 10 percent gold was usually enough for a 90 percent higher currency volume of banknotes.

The system worked worldwide because even countries that did not have gold themselves guaranteed the holders a fixed exchange rate to other currencies, which in turn had a gold core. In this way, citizens could at least rely on an indirect guarantee of the value of money (gold foreign exchange currency).

FED’s private banking cartel buys money reserves

The decisive step away from state money was the establishment of the private Federal Reserve System in the USA in 1913. A private banking cartel around the two high finance groups Rothschild and Rockefeller had created a private central bank with the right to issue its own money, which became legal tender and was initially guaranteed by the American central government. After World War I, the world’s money reserves were bought up by this private bank, with the result that many national currencies could no longer maintain their gold standard and collapsed in deflation (first monetary crisis).

Toward the end of World War II, therefore, a new gold-dollar standard was again adopted at Bretton Woods in 1944, from Germany’s wartime bankruptcy and payment for the armaments of the warring nations, the Federal Reserve Bank collected over 30,000 tons of the world’s gold – more than half of the available gold – which served to back the dollar standard. The dollar was now the world’s main reserve currency. Therefore, central banks everywhere used dollars to buy commodities for it, which were traded only in dollars (petrodollars). Dollar domination of the world had begun.

In 1971, President Nixon terminated the obligation to redeem dollars in gold and, at the same time, the government’s liability for the dollar because the Fed had put an excessive number of dollars into circulation and the other central banks had demanded gold cover for them. The gold supply had dwindled, the coverage of the dollar in gold could no longer be maintained, the dollar became worth less and less, was only a printed legalised payment paper.

Unbacked currencies are useless as store of value

An unbacked currency can be forced by law to become an official medium of exchange, but not a means to store value. This requires the confidence of the banknote holders that their money is secured in value over a long term. The long-term exchange value – the confidence – of a free “quantity currency” depends, in turn, solely on the scarcity of money or on the quantity of money in relation to the quantity of goods. The problem: while the quantity of goods in the world has increased only fivefold in the last 50 years, the quantity of money has increased sixtyfold.

In its statutes, the German Central Bank (Bundesbank) has the obligation to ensure monetary stability. It was therefore a disruptor in the chorus of money supply multipliers and inflationists of the world monetary system and was therefore incorporated into a European Central Bank that was also supposed to ensure monetary stability but never did, especially not under the dubious President Draghi and even less so under President Lagarde, who has a criminal record for corruption.

No longer a currency with a real basis

In the meantime, not a single currency in the world has any real basis of value; once the money of the world has been detached from any underlying material value, it is reprinted as paper without restraint and constantly devalued through constant multiplication.

Through clever manipulation of exchange rates, an apparent value ratio of the currencies is still fabricated so that people continue to use it as a medium of exchange. But it has long since lost its function to store value.

Role of US High Finance

The US high finance controls through its FED the money and the currencies of the whole world. The dollar is the private money of US high finance, guaranteed by no one but itself, yet misused to the best of its ability, multiplied and misused as an instrument of its world domination and as a tool for the theft of all important raw materials and material assets.

Through the unrestrained multiplication of the dollar, of course, the dispensing US high finance has unlimited liquid resources, which they used to buy up the entire world and, above all, the world’s raw materials. But also the American government was able to spend more and more than it took in through dollar multiplication and incurred in the meantime nearly 90 trillion dollars in debt.²

Likewise, America’s debts towards foreign countries increased dramatically. The U.S. government is therefore being supplied with ever greater quantities of material goods from around the world in exchange for worthless dollars – a modern form of tribute. In practical terms, this means that the central banks in China, Japan, Europe, etc. are accumulating ever larger stocks of the dollars they receive in exchange for their domestic export of tangible goods as an allegedly valuable currency reserve. In practice, however, they become more and more worthless and all other currencies become worthless as well.

Thus, it is up to the US borrower to decide to what extent it wants to deprive its creditors – defraud them – by means of devaluing the dollar and thus reducing debt at their expense, because 70 percent of all dollars are held abroad. Any devaluation of the dollar would therefore discharge the debtor and defraud its creditors.

From paper money to digital money

A billion fold misused and devalued paper money is nowadays less and less kept in bills, instead more than 80 percent of it is already transferred digitally from account to account. Instead of paper money, banks and corporations hold only digital accounts and claims against each other. The remaining visible paper has dissolved into an invisible legal claim that exists and is traded only digitally.

The central banking system, led by the FED, is therefore looking to replace the paper currency with a digital currency for a long time.

The obstacle of cash transactions

The obstacle to date has been the use of cash. According to the legislation, only cash equals money. Coins in circulation and printed paper money are actually still the legal means of payment. In Germany in particular, a high percentage of the population still pays “in cash” instead of using their bank or digital account.

The right to pay in cash has now been abolished by the Federal Administrative Court and the European Court of Justice, at least when it comes to paying government taxes. So you can no longer pay taxes, social security contributions and mandatory public broadcasting fees, etc. in cash, but you have to pay them using your bank account. As a result of this regulation, cash as the only legal means of payment, has been undermined by the supreme court ruling, just as big business, finance policy and the banks wanted, i.e., digital currency and payment.

For the same reason, it was required in 2015 that everyone should be entitled to a bank account, thus securing the basis for digital payment from one account to the next.

Digital payment account for everyone

If, however, payments for private legal transactions are no longer to be made in cash in the future, but only digitally from account to account, this means,

• that our economic existence is at the discretion of the bank. If the bank blocks our account, we can no longer pay, no longer shop, no longer exist,
• that not only the bank, but also the state has total control over our account movements (the transparent man),
• that the possibilities for money manipulation by banks and states increase even more: they can forcibly carry out devaluations and currency reforms just by the click of a mouse, i.e. deprive creditors of their deposits and their value without them having any legal remedy against it.

In India, a total digitisation of the currency was attempted 10 years ago and failed because the rural and elderly population couldn’t cope with it. The European Court of Justice has already ruled on a ban on cash in favour of digital public taxes, but not yet for private payment transactions. Attempts to fully digitalise private payment transactions have been met with great resistance in Germany. More than 40 percent of the population still want to pay cash.

Pressures from big business, the FED and its central banks, as well as financial policy, to make the digitisation of private payment transactions mandatory would fail, according to the Middle Class Institute Lower Saxony (Mittelstandsinstituts Niedersachsen), because invisible, third-party payment transactions do not replace the feeling of performance and consideration in the eyes of the general public.

Performance and consideration

Regardless of cash, there is still in villages today a keen awareness of real performance and consideration, practically a “silent claim to compensation”. If a villager has performed some service for a neighbour and has not taken any money for it, the beneficiary still has the feeling that he still has something to repay his neighbour, and the performer still has the feeling that he has something owed to him from his neighbour. For decades, the author has experienced this a hundred times in rural environment.

So if this moral feeling of performance and consideration cannot be satisfied digitally and may no longer be satisfied with cash payment, other payment modalities will prevail, such as payment in kind against payment in kind, like after the Second World War, where there was a “cigarette currency” and purchase options for food against silverware, pictures or similar material assets until the currency reform. Where money fails, e.g. has become worthless or cash payments are prohibited, barter economies automatically set in. So it could be that instead of digitisation, a growing barter market replaces the monetary system.

This also includes the fact that gold or silver coins have always been the universal medium of exchange throughout history. “When payment is no longer allowed in money, payment is made in gold,” as my father already knew. Gold has always been accepted as payment throughout history.

Banking slavery with digital money

Nevertheless, the ECJ’s decision, which violates all previous monetary law, should wake us up: if paper money no longer has any real value, if cash should or may no longer be used for payment, and if we do not trust bank slavery in digital money, we will return to a barter economy based on payment in kind, as was the case after the Second World War.

In a village in Lower Saxony, the author provided free legal advice as a lawyer to almost every farmer. These farmers, however, always said: “we still owe you something”, they provided it free of charge.

The author has also experienced how after the Second World War you could not buy anything with money, but you could get scarce food in exchange of silver pieces, jewelry or pictures.

So when the barter economy comes back after the age of money, it will be decisive for us whether we are able to barter. This can be with gold or silver coins, with jewelry or other valuables, it can also be a service necessary for others, for which something in return is given. After the Second World War, such services were, for example, craftsmen’s services, doctors’ services, etc. Whoever can do something that others need will also remain “solvent” in the barter economy.

Don’t trust the fake

On the other hand, those who only have ecology, egoism, fun theories or alternative politics to offer will hardly be able to expect anything in return. In any case, the barter economy brings our society back to reality.

So after the ban on cash, it’s time to prepare for the barter economy: Do I have skills that others need and for which I can expect to receive a return? If not, do I have gold and silver coins or other valuables that I can use in the barter economy? If not: there is still time to acquire barter assets while the precious metals market is still functioning.

However, if you trust the fake, you should probably take your chances and go down with them.

* Eberhard Hamer, born 1932 in Mettmann (parsonage), hum. Abitur in Krefeld, studied economics, law and theology; Dipl. rer. pol., Dr rer. pol., lawyer, professor of economic and financial policy in Bielefeld until 1995. 1975 founder and since then president of the Middle Class Institute Lower Saxony in Hanover, founder of the new middle class economics of the personal economy and the owner enterprises. In addition, more than 30 books and about 1000 essays. Professor of medium-sized business economics in Xian/China, also himself an entrepreneur of a law firm and a forestry business. Founder and President of the German Middle Class Foundation.

Source: © Prof. Dr Eberhard Hamer published in: Goldseiten, https://www.goldseiten.de/artikel/539977--Vom-realen-Bargeld-zum-irrealen-Digitalgeld.html?seite=1 on 22 May 2022.
Reprinted with kind permission of the author.

(Translation “Swiss Standpoint”)

1 Eberhard Hamer. Der Welt-Geldbetrug. Hanover 2005, p. 61 ff.

2 The creditor is the FED as the creator of these loans and debts.