Safe storage was becoming an increasingly sizeable part of goldsmiths’ activity. Their receipts were taking root as a medium of payment. Then the idea – or rather the temptation – came: if there were more receipts circulating then corresponding gold in the goldsmith’s safe, who’d realise?

While goldsmiths were turning into bankers, they were also beginning to cheat. Certainly quite a lot of ways to speculate on the existence of those receipts, before, and on gold backed paper money afterwards, have been contrived since. Let’s have some idea.

The gold owner gives custody of his gold to the goldsmith, the goldsmith gives a receipt to the owner, the owner uses the receipt as money. And in the meantime the goldsmith loans the gold at interest making profit out of it, devoiding his receipts of the collateral to back them up toward the third parties who accept them as redeemable in it. We said that property is the legally protected right to the enjoyment of goods, and this includes lending them, and charging an interest for the loan. The goldsmith is not the owner of the gold, but profits from it as if he was. How is this called? Theft, embezzlement? But it’s easy to imagine how the goldsmith bargaining power increases over time to a point where he can dictate that as a straitjacket contract to the gold owners, isn’t it? As a result we now have one of the facets of banking: when we deposit our money in a bank, that money is not exactly ours any more, but we have a credit toward the bank for an equivalent amount. Suppose it was goods instead of money, and we deposited our house in a bank: the bank did not owe us our own house back, but an equivalent amount in “money”. It’s a subtle difference, which will reveal its deep meaning ahead, as soon as we will address what is that “money”.

The goldsmith loans at interest his receipts, redeemable in gold, without actually owning the corresponding amount of gold, and so without having the collateral to back them up towards those who accept them as redeemable in it, just as above. He profits from the fact that his receipts have acquired a value “as if they were money”.

Counterfeiter, who was this person? That who counterfeits money, not being empowered to by law. And who, in doing that, seizes the corresponding purchasing power created out of nothing. As a result we now have another one of the facets of banking – classic case of hiding something by putting it in plain sight behind a thin glass shrine made of those falsehoods “everybody knows as being the way it is and that’s it”: the banks do create money out of thin air, by doing so they violate the monetary sovereignty of the established power, they profit from it beyond belief, and they are allowed to do it without being prosecuted as counterfeiters – to say the least.

The reasons to label this type of money “ambiguous”?

First reason, it has an “in between” position, in that it is not “fiat” money without intrinsic value nor “gold” money having it, but it remains somewhat suspended between them. Or, to be less naïve and more precise, it is fiat money that pretends to be “gold” money and carries out its function as a suppression tool as long as this scam can be kept going and exploited. The “gold standard” “gold backed” paper money is but a promissory note that ends up to be no more redeemable in nothing at all – that’s why “gold backed” is in quotes here. It begins as a receipt for the actual value, meaning that it can be exchanged with the actual value at once, and progressively its being redeemable is more and more delayed and watered down and eluded and hindered and repudiated, until it totally vanishes. And while its being actually redeemable fades away, its exploiters profit from this to the detriment of people subjected to its concealed fading. It begins disguised as a “gold” money with intrinsic value, and ends up as a “fiat” money without it – without people becoming aware of it; and in the transition the whole key point of who is the owner of its “fiat” purchasing power the moment it gets born and of everything it yields in every possible form gets utterly and maliciously eluded to the criminal profit of its exploiters.

Second reason, in fact, this “in between” position is geared to be exploited. Those above are just a couple of examples of all conceivable swindles based on this ambiguous type of money, I chose them because they are basics going to lay the foundations of banking. But these all head us to a situation whereas there is more gold backed paper money circulating than actual gold in the reserves to back it up. And increasingly more and more paper than gold. A nice house of cards that invites to be blown away by a bank run – and what are the consequences when it happens?

Let’s return to Example Island. Gone is the time when someone induced intrinsic value into gold and profited from that, and now everybody agrees that one unit of gold is a valid medium of payment worth, say, 1,000 units of food. There still live 100 people, and each one owns one unit of gold; in all, 100 units of media of payment in gold. One of them becomes a goldsmith, and fifty other people entrust him their gold; not to forge it, just because they believe it’s better for handling and safety. The goldsmith in turn gives them 50 receipts for the 50 units of gold. People begin to accept those fifty receipts as valid security redeemable in actual gold at any time. As long as the 50 deposited units of gold sit in the goldsmith’s vault, the amount of gold media of payment circulating is still 100: 50 in gold and 50 in receipts redeemable at once. The deposit is a service so the goldsmith may be charging a fee for it, but its amount is trivial. As the receipts catch on, the gold sits more and more idle, and less and less of it gets actually handled. Too bad. So one fine day the goldsmith begins to take that gold from his vault and use it. If he uses it as if it was his own, for instance, he loans it at interest, and the interest ends up in his pocket. Otherwise he may agree with the gold owner on loaning it and divvy up the interest. If the goldsmith decides to loan the receipts, instead, he just agrees with the borrower to simply write them out of thin air – without any gold to back them up – and loan them to the borrower at interest.

Letting aside any criminal implications, I would rather concentrate on whether there is a common denominator, because if so, it would spare us to guess up all the possible ways to exploit such gold “backed” receipts. Not surprisingly, it can be found by adhering to basics: an inventory of the existing “gold” media of payment. The moment a gold unit and its related unit as a receipt are both circulating, that circulating “gold” unit of media of payment has doubled. Ensuing question is, as usual, who is the owner of this newly created unit the moment it gets born? Again we mention property as the legally protected right to the enjoyment of goods, including lending them at interest. So: on Example Island, first there are 100 units of media of payment in gold circulating; then there are 50 units in gold and 50 in receipts circulating against 50 units in gold deposited. Then suppose the goldsmith “uses” 40 of the 50 units of gold deposited in his vault, and therefore there are now 140 units circulating, 90 in gold and 50 in receipts, and 40 of these units of gold are yielding an interest to the goldsmith as if they were his own, which they are not. Or suppose the goldsmith does the same but divvies up the interest with the gold owner. Or suppose the goldsmith issues 100 additional receipts backed by nothing and loans them; now there are 200 units circulating: 50 in gold and 150 in receipts – with gold in his vault to back up only 50 of them – and those additional 100 receipts are yielding an interest to the goldsmith as if they were gold, or gold backed, which they are not, and as if they were his own, which they are not; and they are also allowing those who borrowed them to acquire purchasing power as if they were backed by actual value, which they are not.

By the way, that the goldsmiths are at the origin of this ambiguous type of money is supported by names: paper money is called banknote or bank note, the receipts−promissory notes issued by goldsmiths changed hands in their shops, and so it was consequential to nickname the shops banks and the receipts bank notes and then banknotes.

This said for sake of conceptual clarity on basic mechanisms, in actual fact the evolution of both banking and ambiguous money occurred in a more haphazard and scattered way in terms of space, time and progression that, for sake of the same conceptual clarity, I would summarize in this manner:

In pre−money barter phases the choice of certain reference goods as media of payment entails the establishment of storehouses, entrusted with ensuring the quality of these goods by rejecting those below the minimum requirements, and thus building up confidence in them as media of payment. Such storehouses get appointed of an increasing amount of issuing power, in the form of receipts that become IOUs (I Owe You), not only backed up by goods but also denominated in goods as their unit of measure. These goods incorporate intrinsic value, and the shift towards fiat money will begin only after the IOUs backed up by them that will begin to circulate in lieu of them will exceed the actual goods they supposedly ought to be redeemed in. In coined money phases, coined money adopted as medium of payment incorporates “intrinsic” value, too; the shift towards fiat money will take the form of clipping of coins or whatever overt or covert form of cheating with their supposed contents.

Media of payment being vital like blood for a living organism, their scarcity is a stop to survival, therefore on one hand both society and its governing bodies have their expansion – in ratio with the existing goods – among their inherent aims and duties, while on the other hand suppressive, potential trouble source, dishonest, stupid, ignorant or hostile individuals or groups have their shrinkage among theirs, in order to choke society to either exploit it or just murder it and that’s that. A case in point being the origin of the “American Dream” that is, easy opportunities for everyone: at the heart of it is the plenty of credit and media of payment produced by the established power taking it upon itself the historical advance of organization of credit, carried out by acting as first lender to society, and by doing so generously and with debt−free money, as opposed to British suppression perpetrated by enforced debt money and money scarcity.

Hence, the entrance of fiat money to expand the money supply by freeing it from the constraint of intrinsically valued raw material supply, but hence as well the greed induced in both established powers and private economic operators by the opportunity to overproduce fiat money, and the ensuing sprouting up of systems and attempts to infiltrate it to exploit and/or pervert it.

The development of fiat money with all its features goes from the I Owe You to the banknote, passing through any form of negotiable instrument. Their differentiation is simple: if an IOU is the debtor acknowledging his/her debt to the creditor, any form of negotiable instrument is the same, but with an official, legal value; a negotiable instrument is any way the debt of the debtor and the corresponding credit of the creditor can be proven, claimed, enforced before third parties and in court. And then, while each negotiable instrument can be apart from any other, as each one can have different debtor, different creditor, different amount and different conditions of redemption, every banknote brings about standardisation and legal tender. Standardisation because banknotes are all interchangeable with one another as they all have the same amount, the same creditor – the bearer, the same debtor – the issuer, the same conditions of redemption – on demand in something like gold or actual value, hopefully… Of course these features would make sense only as long as banknotes were actually backed up by real issuer’s goods but, alas, the legal tender feature opens the door to the loss of that very sense…
In fact, and in short, legal tender means that its acceptance is enforced: both public authorities and citizens are compelled to accept those banknotes, and debts paid with them are compulsorily settled. Now, to the degree one reckoned accepting banknotes to be a benefit, one wouldn’t need to be forced to, isn’t it? The less the banknotes are backed up by real value, the more the need to enforce their acceptance. If you’re owed a loaf of bread, you won’t consider it settled with a piece of paper unless it comes with a guarantee or a threat.

Legal tender itself, just as every feature of forms of payment, has not always been assumed; in this vast realm between “gold” money and fiat money, media of payment, negotiable instruments were used as having legal tender that in actual fact did not have uniform unit of measure nor were ratified as having any legal tender, while society might suffer for their scarcity, but certainly not much for their lack of these qualities – definitely not more than it will for all that is lurking behind ambiguous money.

And last – but not least, finally, notice how such banknote’s features subsist regardless of whom is its issuer, be it governing body or private bank – which means that a governing body may, who knows, enforce acceptance of fiat money backed by nothing issued by a private bank, leaving one and all wondering why this inexplicable favouritism. Indeed money, as it becomes more and more fiat, permits the issuer to be released from the burden of owning the intrinsic value to back it up – another way to say, permits to create purchasing power out of nothing – and this brings the desirability of its issuing power to a new order of magnitude. And consequently the efforts to put one’s hands on it, too.

At first, issuing IOUs, negotiable instruments, was regarded as mere part of any business’ operations, and citizens, businesses, banks, etc. issued, accepted, exchanged and redeemed in actual goods commercial papers. However obvious this may appear, it means a very precise freedom and independence: anyone is entitled and free to issue a medium of payment, and take the responsibility to back it up by one’s own promise to redeem it, and anyone is entitled and free to choose whether to accept that medium of payment, and thus give credit to, and enforce the responsibility to redeem it on anyone else or not. Compare this freedom with fiat debt money enforced as legal tender: a bit different, isn’t it? Later on and progressively banking developed and operated as a type of private business in itself.

Again, something very precise here: up to this stage, banks had to compete with one another and back their IOUs in actual value just as everyone else. Further on and progressively, the development of banking took the form of charters being devised and required for banking – maybe to protect bankers from their victims, rather than the opposite.

In fact, it is interesting to consider at this point how, while it is true that the idea precedes the intention, sometimes it’s the other way round, sort of, and it’s the ideas – less noble ideas – to stem from intentions – less noble intentions –. Just as everything else, charters and guilds can be used for honest or dishonest purposes: to ensure the quality of product delivered by members, but also to prevent having too many competitors to partake in the cartel. A matter of intention, of basic purpose. And as crooks realize fiat money is a golden goose, many intentions to get their hands on it arise. Supposing that there had to be ambiguous money or explicitly fiat money, then who would be entitled to profit from it? All of us is the only honest option: the owner of its purchasing power the moment it gets born ought to be the producer of the actual product, ideally, or all the citizens, or at least the government, on behalf of them – something that booms economy when applied, besides. Instead, curiously enough, theories arise to support the idea that the emission of fiat money ought to be not only granted to, but even appropriated by private entities. Ideas whose deployment, again oddly enough, ends up relegating to the backstage the basic very fact of who is the owner of that purchasing power the moment it gets born.
What kind of intention there may be behind such ideas, other than that of putting one hands on that purchasing power – called seigniorage, by the way? Before we even wonder how, let’s wonder who: before we mind about the ways such ideas can spread where it matters into society and culture, we better mind about what force exists behind those ideas that enables them to penetrate into society and culture, and reach acceptability and acceptance.

It could be said that the beginning of the answer is that theories in favour of granting the issue of fiat money as a prerogative of private entities emerged in parallel with the development of banking. It could be said that, in a sense, the history of banking and that of the debt money fraud are so intertwined to be two faces of the same medal.
It’s a crime in three phases: discovery, development, monopolisation. First, the goldsmiths figure out how being bankers could mean even more than being “just” money−lenders, by pushing media of payment onto the slippery slope of the ambiguous money; second, a chaotic anarchy of everyone against everyone ensues where bankers compete with one another for “better” ways to exploit the discovery at the expense of the society; third, the “rule of the worse” slowly prevails over anarchy, and the worse monopolise the bulk of the loot at the expense of both the society and the “less” worse. From government making loans and storehouses issuing receipts against goods, to land banks issuing negotiable instruments backed up by land, to the anarchy of private banks with issuing power, whom at least were forced by competition to back up their notes, until the establishment of the oligo−monopoly of the biggest competitors through the establishment of central banks, and the progressive fraudulent slide of ambiguous money from actually backed money to fiat money backed by nothing but issued as if it was. An involution increasingly driven by the increasing power of increasingly criminal intentions.

Considering, in fact, that in the meantime banking is developing and rather unrestricted, and so developing as well is its power to subjugate politicians, all this is likely to result in gang wars – pardon, bank wars. You know what it’s like, when gangs – pardon again, banks, compete for the power to squeeze the uttermost from people, provided that same people survives getting caught in the middle of their shootings? That kind of things can result in two different outcomes, depending on what sort of criminal has the upper hand…

Which hell, blind or knowing? Which torturers, savage barbarians or cold−blooded mass murderers? If they’re all brutes, it will just remain that sort of hell indefinitely; but if some of them will be cunning enough, an oligo−monopoly will clot, consolidate and emerge, that will steal it from the other gangs, leaving them with only the crumbs. Well, while people pays the price of it all anyway, how can some bank become more equal than others and steal it from the other banks? What form is this criminal monopoly going to take on? One that is going to come forth shortly along this line: central banking.

Anyway, back to the current core to sum it up, the philosopher’s stone, the monetary manipulation allowing the goldsmith−banker to seize purchasing power at such a pace and order of magnitude to raise him above his fellows, consists of creating accepted media of payment out of thin air of which he is the owner. A house of cards built on nothingness entails risks, when enough people realize the scam. As history has it, in the beginning a bank run – and the discovery of paper money circulating against empty vaults – may end up with some banker properly executed. But this custom must have been discontinued as we hardly hear about it, today. Oddly enough, today the whole society is called upon to fill those vaults found empty. Could we ever provide a better example of a 180 degrees shift? It took some time and work for bankers to build up their house of cards, but they must have been quite successful, though, as demonstrated by the difference of how this thing was handled then and is handled now. Just as any criminal, they consider the loot worth the risk of being caught; but that’s not all: as their grip upon society grows stronger, their risk decreases and the hell gets deeper for us all; after all, their basic goal is our suppression. How come that what cost bankers their necks before now is their legally ratified right?

This step could be defined, “paper money addiction”; goldsmiths turned into bankers had infiltrated just where the growing body needs more oxygen carried by more blood: their receipts provided the society with a better medium of exchange, more abundant and more easily circulating, therefore economy and society could improve thanks to that; expanded and expanding economy and society in turn needed an adequate and increasing supply of media of exchange, and they more and more depended on it. Here is where the goldsmiths−bankers have reached the power to blackmail the society and its established power: Oh, I see now you’re getting fussy about our shady profits on our “nothing backed” bank notes−banknotes? Well, no problem; just rule them out as legal tender. What do you say? The society’s economy would collapse? Would be too bad, isn’t it?

How come that the medium of exchange had to be an ambiguous type of money, and that goldsmiths−bankers had to have the oligo−monopoly of it? The same – or perhaps greater – positive social effects could be produced by media of exchange not subject to these two more than dubious arbitrary restrictions.

It was just a matter of establishing a “fiat” money, without intrinsic value, based explicitly and solely on social agreement, duly protected against counterfeiting and – the key point – honestly regulated as to who is the owner of its purchasing power the moment it gets born: the individual who produces is entitled to a quota of “fiat” money, a quota of its purchasing power commensurate to his/her valuable production. Simple as that. The more it’s simple, the more its concealment is evident and criminal.

It must be that the philosopher’s stone works well enough to produce enough purchasing power fast enough to co−opt enough dishonest or ignorant people powerful enough to make good use of the established power to cover up.

And in fact further such crimes have been committed: established powers use monetary manipulations to cheat and plunder, too. To be more precise, established powers are a primary target for such criminals because they are the most powerful amplifiers available for their criminal intentions, the hulking henchman any hangman could dream of. Originally, the Italian term “tirapiedi” (leg puller) meant the assistant helping the hangman by pulling the legs of the hanged person, which differs from the current role of established powers only in form, not in substance.

All moneypulations are basically forms of criminal exchange, and any criminal exchange is a crime against humanity because it provides an unlimited source of purchasing power our of nothing, hence an unrivalled competitive advantage, hence the foundation for building oligo−monopolies and sooner or later seize everything and everyone. This would be no good for us even if there were no suppressive, potential trouble source, criminal and humanoid individuals, let alone in their presence, when it allows individuals evil enough to conceive, plan and successfully set it all up to apply their suppressive intentions against humanity unrestrained. Let’s now see these ways to create purchasing power out of nothing in actual practice, these practical implementations of a crime against humanity.