AN AMERICAN FREE PRESS SPECIAL REPORT
The U.S. Financial Crisis:
WHY WE ARE WHERE WE ARE AND WHAT WE CAN DO ABOUT IT
FED CHAIRMAN
BEN BERNANKE
Formula Saves Big Bucks on Mortgage
ou can save big bucks on
Y
your house with loose
change. Round figures will
be used here. Say you pay
$300 a month on a 30-year mortgage.
Your amortization schedule shows that,
on your first payment, $287 goes to in-
terest and $13 to equity. So, write a
check for $313 and you have knocked
an extra month’s payment off your bal-
ance. Do this every month and your
house is paid for in 15 years, not 30.
Of course, as the months and years
go by, the share of your payment that is
applied to the loan grows as the interest
portion drops. That’s why it’s best to do
this early in the game.
As homebuyers grew wise to this,
some banks inserted a clause in their
loan agreements that rendered early
payments moot for the first one or two
years. So, in settling on a home pur-
chase, ask if the lender has such a rule
and how long does it apply.
If you are already paying for a home,
ask your bank the same question, get an
amortization schedule and start making
“extra” payments.
What Can Average Americans
Expect to See in Near Future?
By Mike Finch
any prominent economic
M analysts are predicting bear
markets, recession and
even possibly a global de-
pression in the years to come because of
banking and federal mismanagement.
“We think that the markets could de-
cline 50 or 60 percent. We hate to say
something so somber, but it’s not the time
to be optimistic or pessimistic, it’s the
time to be realistic. Our whole system
has been built on credit expansion—we
have to grow credit year after year in
order to keep things going. The economy
is not going to grow, it’s going to suffer
recession, and once it enters recession it’s
going to cascade on itself,” David Tice of
Prudent Bear Fund said in a 2007 televi-
sion interview.
The market has not yet come close to
the 50 to 60 percent devaluation mark,
potentially because of the maneuverings
of the Fed. But Tice primarily blames the
Federal Reserve for the devaluation of
the dollar.
“The Fed screwed up,” Tice said. “The
fed should not have kept interest rates so
low in the past. We should have experi-
enced some mini-recessions along the
way. Right now the bubble has gotten so
big . . . that it’s going to be very traumatic
[when it bursts].”
Billionaire financial commentator
and Ron Paul supporter Jim Rogers also
predicted a recession in a 2007 interview
with the Financial Times. He had been
predicting a big recession for about 10
years (as has AFP), and is finally seeing
his predictions come true. He blames
both the federal government and the Fed-
eral Reserve.
“The U.S. dollar is a terribly flawed
currency. As recently as 1987 the U.S.
was a creditor nation. We are now the
largest debtor nation the world has ever
seen. In only 20 years we owe the world
over 13 trillion—with a ‘T’—dollars.
That’s a bad number, but what’s worse is
our national debt is increasing at the rate
of one trillion every 15 months. It’s sim-
ple arithmetic at how fast it’s going to go
up, but its pretty terrifying arithmetic,”
Rogers said. “It does not take a genius to
figure out that it’s a currency that is
going to be going down for some time to
come.”
Rogers’ outlook has not changed
since 2007; in fact it has gotten worse.
“I’m extremely worried,” Rogers said
in a February interview with CNN
Money. “I have been for a while, but I
just see things getting much worse this
time around than I expected.”
Rogers said that the Fed’s attempts to
save the country from a recession are in
fact making things worse.
“Conceivably we could have just had
recession, hard times, sliding dollar, in-
flation etc., but I’m afraid it’s going to be
much worse,” he said. “Bernanke is
printing huge amounts of money. He’s
out of control and the Fed is out of con-
trol. We are probably going to have one
of the worst recessions we’ve had since
the Second World War. It’s not a good
scene.”
Rogers looks at the Fed’s willingness
to add liquidity to an already inflationary
environment and sees the history of the
1970s repeating itself. One example of
an area of the Fed’s mismanagement is
how they are dealing with bailing out the
housing lenders.
This month Bloomberg.com broke
down Rogers most recent interview
about an example of the Treasury De-
partment’s mismanagement and money
creation.
“The U.S. Treasury Department’s plan
See EXPERT’S SEVEN-POINT, page B-6
B.2 AMERICAN FREE PRESS • August 2008 THE U.S. FINANCIAL CRISIS: A SPECIAL REPORT FROM AFP

The U.S. Dollar vs. the Euro:

Predicting How Low Will it Go
By Pat Shannan met as they have tried to absorb some of the loss rather
than pass through the price increases to consumers.
hen currency exchange rates change, busi-

W
nesses must adapt quickly. In this era of
international trading, knowing how a
weaker American dollar is likely to affect
one’s business may avoid some critical mistakes.
The dollar has shown continued weakness against
other currencies as well, including the British pound,
Australian pound and Japanese yen. However, the most
dramatic losses have occurred against the euro. From its
low of 84 cents in July 2001, the euro has risen steadily
in value, stopping just short of $1.60 on July 11, 2008.
When it rose to the then-record of $1.29 on Jan. 13,
2004, Jean Claude Trichet, European Central Bank
(ECB) president, signaled mounting concern over the
euro’s rapid rise by saying “brutal moves” in the dollar
and “excessive exchange rate volatility were not wel-
come and not appropriate” and that Europe’s policy mak-
ers were concerned. His remarks and those of other
European officials triggered a sharp fall in the euro.
However, observers note that talk without supporting ac-
tion usually produces only short-term results, and the
dollar continued to trend downward in value.
In recent years, Ferrari, the Italian sports car maker,
reported that it is losing money on each car it sells in the
U.S., its largest market, because of the falling value of
the dollar. Other European carmakers, including BMW,
Volkswagen and Porsche, have seen their profits plum-
Is Money the 12th and FINAL Religion?
A few European shops and restaurants have refused to
accept dollars from American tourists this summer be-
cause the business owners don’t know what the exchange
will cost them when they go to the bank the next morn-
ing. Others have simply added an extra 5% tariff over
and above the known exchange rate of that day in order
to protect against that unknown of tomorrow’s rates. In
some countries in the last century, the hyper-inflating
currency got so out of hand that people were paying for
their restaurant meals at the time they ordered, fearing
that the cost would increase before they could finish eat-
ing.
This brings to mind an anecdote from the 1923 post-
WWI hyperinflation in Germany. A woman was standing
in line outside the grocery market holding a bushel bas-
ket full of deutschmarks, waiting to buy bread and a few
other staples. Suddenly, her four-year-old child broke and
ran from the sidewalk into the dangerous street. The
young mother set down her basket full of cash and ran there no longer is anything behind it to keep it sound,
after the child, grabbing and scolding him. When she re- and no fiat currency is any more intrinsically valuable
turned only a half minute later, her paper money was than another.
dumped on the sidewalk, and someone had stolen her Richard Russell, who is sensitive to changes in mar-
basket. ket sentiment, commented on his web site July 7, 2008:
This is the ultimate result of any paper currency un-
backed by something of intrinsic value, and no fiat cur- To start with, my instinct tells me that we are
rency in the history of this planet has ever survived. The moving into an era of momentous events. I believe
term “sound as a dollar” is gone with the wind because that huge changes are being thrust upon us. I don’t
think these changes are being recognized as yet. I
believe that underlying those changes will be the
subject of fiat money and the importance of central
banks throughout the world. The creation of

What Does the Bible Teach About Money? “wealth” through the mechanism of fiat money is
basically irrational and yes—immoral. You cannot
mandate prosperity through the process of printing
money. Yet nations and their politicians and central
AL L -NE W BOOK FROM
T HE BARNES REVIEW MONEY: banks have been doing this since 1971. My guess
is that we are fast moving toward the period in
which “the piper will be paid.” That’s the big pic-
ture as I see it.
THE 12TH & FINAL RELIGION The U.S. dollar index was 120 seven years ago. It is

A UTHOR R. DUANE WILLING gives you the key to understanding why the illumi- now 72, a decline of 40 percent. Market participants be-
nated ones of the New World Order need to substitute secrecy for justice. Learn how God lieve that the dollar will continue to fall against the
Moloch, devoid of any capacity for either mercy or forgiveness, is moving with brute euro. Forecasts that the euro will continue its increase
force for world control behind the myth called Israel. The Moloch myth conceals the invention of are rampant as the once great American dollar continues
credit based money. Belief in money drives the human condition to prey on the planet and its in- its decline. U.S. firms that export their products to Eu-
habitants. Money creation has Biblical consequences called usury. The key to usury is hidden in the rope can look for another banner year. U.S. firms that
legend of the Holy Grail. The covenant obligation to take dominion and prosper in harmony with import from Europe should protect themselves by hedg-
nature is subverted by secretive organizations. There is talk of Bilderbergers, and various councils ing in foreign exchange markets, say the experts. And
and globalist corporations. As if by design, the collective mind remains hypnotized by their Moloch what are the implications for U.S. citizens? One financial
magic of central banking with its perpetual (national) debts, money at interest and stock exchanges writer put it this way: “Have you ever seen the Grand
and income taxes. Canyon?” Consider yourself forewarned. ★
Money: The 12th & Final Religion
Pat Shannan is the assistant editor of American Free Press. See more
Softcover, 193 pages, #508, $17. TBR subscribers take 10% off price above. Order from TBR BOOKS, 645 Pennsylvania Avenue SE, Suite 100, from Pat at www.patshannan.com or www.AmericanFreePress.net. He is
the author of One in a Million: An IRS Travesty from AFP. Softcover, 270
Washington, D.C. 20003. Inside U.S. add $3 S&H. Outside U.S. add $10 S&H. Call 1-877-773-9077 toll free to charge to Visa/ or MC. pps., $20. Call 1-888-699-NEWS toll free to charge to Visa/MC.
THE U.S. FINANCIAL CRISIS: A SPECIAL REPORT FROM AFP
Retail Store Closures Symptomatic ofAiling Economy
By Pat Shannan
ollowing on the heels of the surge of small
F
business closings all over the country, dozens
of chain stores have announced massive cut-
backs and closings of less productive outlets.
Among the larger chains, Home Depot said it is closing
15 stores due to the slumping economy and poor housing
market. This is the first time the world’s largest home im-
provement chain has ever closed an outlet for performance
reasons, and the move will affect over 1,300 employees.
Shoe seller Foot Locker announced a year ago that it
had begun drastic clearance sales to move out the inven-
tory of 250 of its stores prior to closing the doors, and
CEO William Dillard II announced earlier this year that
Dillard’s Inc. will continue to focus on closing underper-
forming stores, reducing expenses and improving its mer-
chandise in 2008.
Late last year the Bombay Company closed all 384 of
its U. S.-based stores. The company’s online storefront has
discontinued operations as well.
The clothing industry, especially women’s apparel,
Common Cents Solutions Exist to U.S. Energy Crisis
By Pat Shannan
mazing how $4 a gallon gas has made
A every politician in the country ready to
help solve the energy crisis, isn’t it? Well,
not quite everyone. Nancy Pelosi and the
Democratic leadership in the House of
Representatives are refusing to allow a floor vote on leg-
islation to allow drilling in the Alaska wilderness or off-
shore.
The solution to this so-called energy crisis was being
discussed 30 years ago, and the answers are still the
same. Everyone who can read knows that there’s oil
buried under the oceans and the arctic tundra. We may
not know exactly how much. We can, however, be fully
confident that it’s more than we’re getting now. Mean-
while, any chance of finding how much there is and get-
ting our hands on it is being blocked by Nancy Pelosi
and her cohorts in the Democratic leadership.
Of course, this is not an energy crisis but a leadership
crisis, and we have to think back a long way to remem-
ber when there was a worse example of “leadership” in
Congress. This is the most blatant betrayal of America’s
interests—and the clear wishes of an overwhelming ma-
jority of the American public—that’s happened in years.
Once again, we’re permitting Congress to stick it to
us, and just how much more evidence do we need to see
that the crisis is contrived.
For the past 30 years or more, former Alaskan
pipeline Chaplain Lindsey Williams has been citing the
United States government-mandated policies that were
absolutely guaranteed to create an energy crisis in this
country. Consider:
We prohibited new drilling off the Atlantic and Pa-
seems to be suffering the worst impact of the recession.
Eddie Bauer, established in the northwest in 1920, has
shuttered 27 stores already and has earmarked at least two
more for shutdown by the end of the year. Ann Taylor is
closing 117 nationwide; the owners of Lane Bryant, Fash-
ion Bug, and Catherine’s have earmarked 150; Women’s
retailer Cache announced “20 to 23”; Talbots knocked
about 78 last year and will close 22 more this year; Pa-
cific Sunwear of California, having closed 74 outlets in
2007, has now announced that the remaining 154 are to go
away in 2008.
Gap Inc. is closing 85 stores. In addition to its name-
sake chain, Gap also owns Old Navy and Banana Repub-
lic. The company said the closures—all planned for fiscal
2008—will be weighted toward the Gap brand.
Both Levitz and Wickes, longtime furniture retailers,
are going out of business. Wickes, a 37-year-old retailer
that targets middle-income customers, filed for bank-
ruptcy protection last month. Richard Levitz opened his
first furniture store in Lebanon, Pa. in 1910, and the next
generation introduced the warehouse-showroom concept
to its customers in the 1960s. Another furniture retailing
giant, Ethan Allen, is closing 12 of its more than 300
cific coasts.
We went apoplectic at the thought that anyone would
disturb the caribou in the remote northern corner of
Alaska by trying to drill for oil.
We refused to allow any new refineries to be built in
the U.S.—even in places that were desperate to have one.
We also refused to build any new nuclear power
plants—even though the evidence is overwhelming that
nuclear is the safest, most efficient way to generate elec-
tricity that has ever been invented.
We’ve also refused to allow any new pipelines to be
built, to import natural gas from Canada.
Now, George Bush is getting headlines for finally lift-
ing the Presidential ban on offshore drilling. “It’s all
Congress’s fault,” the White House declares—hypocrit-
ically ignoring all that the administration has done—and
is still doing—to prolong the energy crisis.
Why didn’t the White House lift the ban seven years
ago? Why doesn’t it release some of the billions of dol-
lars worth of oil and gas that are locked up in its “strate-
gic reserves?”
If you want to lower prices, there’s no better way to do
it than by increasing supplies.
In regards to the energy crisis, the United States has
two choices, and only two choices, before us today.
• We can determine to do everything possible to pro-
duce more energy here. Despite the negative laments you
hear from Washington, there’s a great deal we can do,
starting here and now, to increase domestic energy pro-
duction. Specifics to follow.
• We can face the terrible consequences of doing
without. Remember the last time we had gas lines and
fuel shortages and more than a few people muttered,
“will folks be freezing to death in the dark?” Before this
August 2008 • AMERICAN FREE PRESS B.3
stores in an effort to cut costs.
Both Sharper Image, known for its high-tech novelty
gadgets, and Lillian Vernon, which sells low-cost gifts and
gadgets through it catalog and website, have filed for
bankruptcy.
Other store names, some better known to Americans
than others, that have closed, are closing or are in a “cut
back mode” are Zales and Piercing Pagoda from the jew-
elry industry; Walt Disney, Children’s Place and KB Toys
for children; Sprint/Nextel and CompUSA in the com-
puter and electronics market; Macy’s Department Stores;
Movie Gallery and Hollywood Video stores; Wilson’s and
the Leather Experts; Lowes and Office Depot.
Even the great department store chain, reborn in the
1930s through the efforts of one of its founders, James
Cash Penney, following the crash of 1929, is scaling back
in an effort to avoid another wipeout. J.C. Penney’s revival
was one of the great business success stories of the De-
pression Era. Now it could be over.
Meanwhile, the Bush administration and Ben Ber-
nanke at the Federal Reserve Bank continue to insist that
the economy is stable. And they’ll keep telling you that as
long as you’ll believe it. ★
crisis is over, that dire warning could literally come true.
There is no third choice. We cannot purchase enough
oil or gas from other countries, no matter how much
we’re willing to pay (with shrinking “dollars” many
don’t even want), to preserve and protect our present
lifestyle.
Our present policies are costing us a fortune. They are
reducing our standard of living. And they are financing
the enemies of freedom. Isn’t it long past time to change
them?
Where are we going to get the energy we need? Here
are three places we can start:
• Coal. The United States has rightly been called “The
Saudi Arabia of Coal.” We have enough of the black stuff
underground to supply a major chunk of our energy
needs for at least another century. Let’s figure out better
ways to extract it and cleaner ways to burn it. Sixty years
ago, Germans invented technology to turn coal into oil.
Why can’t we do it today?
• Nuclear. There is absolutely no question that nuclear
power is the cleanest, safest, most efficient way to pro-
duce energy that we’ve ever discovered. Why have we
allowed a handful of hysterics to keep us from building
one new power plant in the past 30 years?
• Oil and gas. It is absolutely insane not to encourage
the people and the companies who can produce more en-
ergy for us to go out and do so. Instead, we permit a
handful of demagogic grandstanders in Washington to
treat the oil companies like criminals. Instead of prom-
ising to seize all their so-called windfall profits, how
about we give them incentives to produce more energy?
Insanity out of Washington? What else is new? It’s al-
most like the whole thing has been planned for a long
time, isn’t it? ★
B.4 AMERICAN FREE PRESS • August 2008 THE U.S. FINANCIAL CRISIS: A SPECIAL REPORT FROM AFP

Fiat Money:
Transferring your wealth to the wealthy—as planned
By Pat Shannan Are you really concerned that Social Security will
soon be broke? What an out-of-focus worry that is. Some
hile the benefits to the money creators go

W
blowhard senator planted that fear in your mind last year
beyond this basic reason, the very purpose so he can claim to have fixed it next year. Note this: no
of the invention of paper “money” was to government-funded program will go broke as long as the
transfer all production and wealth to the printing presses and credit computers are operating.
state and the banksters without payment. Americans have been living in this fantasy world
Anything that can be created to infinity with political since June 24, 1968—the day that the banks quietly
incentive eventually becomes worthless. There are no ex- closed the window on silver redemption for the lawful
ceptions. So while so many of the common phrases in Federal Reserve notes promising to “pay to the bearer on
today’s rhetoric are no more than double-speak, there is demand” the designated amount of lawful money. In
one that is very real—inflation—and with it we see the short, the banksters reneged on the promise because they
destruction of the American economy before our very had created too much paper to possibly redeem with real
FORMER FED CHAIRMAN
eyes. specie. Such a move did manage to postpone the in- ALAN GREENSPAN
Most Americans simply do not understand that gaso- evitable, but now the chickens are coming home to roost.
line prices are not up, but that the dollar is down. The re- 12 USC 152: “The terms ‘lawful money’ and ‘lawful
cent doubling in the amount of Fed notes necessary to money of the United States' shall be construed to mean to portray) at this time last year. All of it is smoke and
own gold and silver is but a reflection of the shrinking gold and silver coin of the United States.” mirrors.
value of the paper currency. As more is created, such as The “notes” that have been issued since June 24, 1968 Their economic theory states that there are four major
with the harebrained scheme called “Economic Stimu- (and for five years before) are not lawful because they do factors that determine the exchange rate between two
lus,” where 130 million American households got $1,200 not offer to pay anything to the bearer. In effect, the “re- currencies: the comparable interest rates; the relative in-
or so, nothing is stimulated except the soon-to-arrive hy- ceipt” for the gold and silver in the storehouse was trans- flation rates; the comparative level of income; and the
perinflation. The modern “dollar” is a myth. formed into the entity. A “dollar” was no longer a macro policies of the respective governments—with a
With imaginary money, such things as the “national measurement of gold or silver but a simple piece of whole lot of blah-blah-blah in and around each citing.
debt” and “taxpayer’s money” are imaginary, too. How paper claiming to be the actual dollar. It was sort of like We say that there is a much simpler way for Joe Av-
can there be such a thing as “taxpayer’s money” when the hatcheck girl telling the patron that she was keeping erage in the street to understand why his favorite ciga-
there is no lawful money circulating in existence? The his hat but that he could now wear the check on his head rettes are now $50 a carton and why he now has to think
income tax funds nothing. Everything is “paid” with the because it was the same thing. twice before taking his car out of the garage. There is no
creation of “money.” The people are “taxed” to maintain Mainstream media “economists” like to write about government hocus-pocus or gobbledy-gook here: the
the illusion that they are actually funding something and the government’s curbing of inflation and that it is more paper “money” pieces you insert into the system,
“paying their fair share” to keep the nation operating. “down” to 4 percent this quarter when it was “up” to the less each individual piece becomes worth. Very little
Nothing could be further from the truth. eight percent (or whatever imaginary figure they want education is sufficient to understand this.
Short term interest rates and trade deficits be damned,
fiat money is tyranny, and it guarantees a criminal gov-
The Lost Science of Money: ernment.
All modern wars are paper money wars. Paper money
pays the politicians their lavish profligacy, and they all
The Mythology of Money—the Story of Power (except Ron Paul) keep their mouths shut about the fiat
Stephen Zarlenga’s new book, The Lost Science of Money, system. All the tyrants in modern history did their dirty
traces the money power through three-and-a-half millennia from work with paper “money.” Governments suppress the
barter to the euro. This book draws fascinating, previously lost mon- truth (with control of the press) and oppress the people
etary principles from ancient Greece and Rome, from the experi- (by arming more agents to enforce unconstitutional
ence of the Moslems, Venice, the Templars, the Jews, the Bank of statutes) with the power of a paper currency creatable at
Amsterdam and the Bank of England, plus the Federal Reserve Sys- will. Fiat money from its inception was created to de-
tem. fraud.
The book also shows that the question of usury is far from set- The phony monetary system builds the centralized
tled, and that monetary reform is more a matter of morality and law power within the state and diminishes the individual. It
than of economics. Zarlenga’s book also demonstrates that a good
bestows all power on the money creators and enslaves
the people. Paper money, personal freedom and privacy
money system must be based in law, not in commodities. The book
are incompatible, and while its own inflation will be its
also defines the essential elements needed to remove structural in-
ultimate destroyer, the process will first take the wealth,
justice from our money system.
life savings, land and homes from a large percentage of
The Lost Science of Money (hardcover, 724 pages, item # 1070, $80—AFPRC Members pay $70)
the people. ★
is available from FIRST AMENDMENT BOOKS, 645 Pennsylvania Avenue SE, Suite 100, Washington,
D.C. 20003. Call 1-888-699-NEWS (6397) toll free to order by Visa or MasterCard. Pat Shannan is the assistant editor of American Free Press. See more
from Pat at www.patshannan.com or www.AmericanFreePress.net.
THE U.S. FINANCIAL CRISIS: A SPECIAL REPORT FROM AFP August 2008 • AMERICAN FREE PRESS B.5

GOLD STANDARD:The Remedy for Rising Prices?

By Antonius J. Patrick plies. While it is true that governments have fraudulently The key to economic growth is savings. Savings al-
found ways to debase commodity money throughout his- lows for production which takes place over time. Sav-
s nearly every American is painfully tory, such underhandedness is difficult to do so on a rou- ings “pays” for the wages, purchases the supplies and

A aware, prices of just about all goods, es-

pecially fuel and food, have escalated sig-
nificantly over the past year. Even the
government, which is loath to admit such
things, has confirmed the obvious with the latest Labor
Department report for the month of June showing a 1.1
percent increase in consumer prices.
The notion, often put forward by the clueless media,
that the rise in overall prices is the result of higher fuel
costs is a fallacy. Instead, the rising prices which Amer-
icans are suffering through is the result of the expansion
of the money supply by the Federal Reserve.
The Federal Reserve is able to do such mischief be-
cause the U.S. dollar is not tied to a commodity (gold or
silver) which thus allows the Federal Reserve, which has
monopoly control of the money supply, to increase it ad
infinitum. There is no check on such power.
The Fed’s reckless expansion of the money supply (in-
flation) has been going on since the start of the current
financial bust as monetary officials have sought to avert
a general collapse by bailing out the mortgage industry.
The “cost” of the bailout has been higher domestic prices
and a fall in the purchasing power of the dollar overseas.
Until there is a limit put on the nation’s central bank
to print money or a different system is put in its place,
price inflation will continue. The only viable solution to
the current situation and the key to sustained economic
growth is a return to a gold-backed monetary system and
the termination of the Federal Reserve.
Under a gold standard, the only way money can be
“produced” is by mining it or converting existing sup-
tine basis. The present fiat system (today a feature of
every nation) is a counterfeiter’s, dream.
The “value” of a dollar, under a gold standard, would
be determined by “market forces,” not arbitrarily at the
behest of the power elite. A gold standard would benefit
all, but especially wage earners, retirees, and those on
fixed incomes while it would impose a mighty check on
bankers and governments from inflating.
One of the great misconceptions of the present era is
“The Federal Reserve is able to
do such mischief because the U.S.
dollar is not tied to a commodity
which thus allows the Federal
Reserve to increase it ad infinitum.”
that the money supply is needed to be increased to sus-
tain economic growth. Nothing is further from the truth.
Money, by its very nature, is a medium of exchange.
It facilitates exchange, without it, mankind would
quickly revert to primitivism becoming completely self
sufficient and desperately poor.
Unlike any other good, money is not “consumed” in
an exchange such as food or gasoline. Since money is
not consumed, it remains in “circulation.” Thus, increas-
ing its supply will only decrease its “value” (purchasing
power).
resources during the period of production before an
eventual good is brought to market. Increases in the
money supply will only dilute its purchasing power. Ad-
ditional saving allows for more production and thus, in
the long run, greater amounts of goods and services.
Under a gold standard, money (which is gold) cannot be
increased without it being mined and minted—an ardu-
ous process. In contrast, under central banking, the Fed-
eral Reserve can create money virtually costless without
restraint, by merely printing paper bills.
The existing political establishment wants nothing to
do with a gold standard. Elites understand that if the U.S.
or other nations convert to a gold standard, one of their
chief power-enriching mechanisms would be lost. This is
why they have tried to marginalize one of this era’s great
proponents of the gold standard, Ron Paul, in his recent
presidential bid.
No one should be surprised that in a time when nearly
every social institution is in steep decline, the lifeblood
of economic life should also be corrupted. Gold has long
since proven to be the supreme monetary medium of ex-
change. It is “honest money” which is why the Estab-
lishment has always sought to discredit it and those who
have championed it.
Until there is a return to a monetary system based on
gold, American consumers can expect rising prices, eco-
nomic stagnation and the continual devaluation of the
dollar. ★
Antonius J. Patrick is the pen name of a college professor who lives
in the Washington, D.C. area.

This incredible

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B.6 AMERICAN FREE PRESS • August 2008
BAD MONEY:
Reckless Finance & the Global Crisis of U.S. Capitalism
By John Tiffany
ith an unconstitutional, privately
W
owned central bank, our monetary
system is based on a dollar that is
based on nothing solid. If it is based
on anything, it is based on debt.
Smaller banks operate on the basis of a “fractional re-
serve system” that is nothing else than legalized crime.
Our economic system is a house of cards. In a new book,
Bad Money: Reckless Finance, Failed Politics and the
Global Crisis of American Capitalism, onetime Repub-
lican strategist Kevin Phillips documents in painful de-
tail how those cards started tumbling.
This reality should, in the words of Thomas Jefferson,
wake us up and “fill us with terror.”
Yet even now, most of the media refuses to expose the
disaster facing us. Where are the investigations of the
greedy and unscrupulous billionaire speculators? That’s
who gave us the subprime crisis, or, in Phillips’s words,
the “reckless finance,” that brought the market down,
sending prices and joblessness up.
You can’t really track these mounting problems by
watching TV or even reading many of our so-called
newspapers, which failed to cover the crisis as it was
building steam from 2002 to 2006, and when it might
have been stopped.
Deregulation, especially of the banking and financial
services sector, and privatization policies, started by
Carter in 1978 and continued by all American presidents
Expert’s Seven-PointAction Plan Makes Good Sense
Continued from page B-1.
to shore up Fannie Mae and Freddie Mac is an unmiti-
gated disaster and the largest U.S. mortgage lenders are
basically insolvent, according to Rogers. “Taxpayers will
be saddled with debt if Congress approves U.S. Treasury
Secretary Henry Paulson’s request for the authority to buy
unlimited stakes in and lend to Fannie Mae and Freddie
Mac,” Rogers said. “They’re ruining what has been one
of the greatest economies in the world,” Rogers said.
Bernanke and Paulson “are bailing out their friends on
Wall Street but there are 300 million Americans that are
going to have to pay for this.”
Many share the sentiment put forth by The Last Trum-
pet Newsletter:
“The United States of America is a malfunctioning and
dying corporation. The economy of our nation is termi-
nal, and all indicators reveal that there is great trouble just
ahead.”
The current state of the dollar is affecting the economy
in several ways.
“Our GDP grew an anemic 0.9 percent in the first
quarter,” Martin Weiss from Safe Money Report said.
“Corporate America is shedding jobs, driving unemploy-
ment claims to the highest level in four years. Banks are
THE U.S. FINANCIAL CRISIS: A SPECIAL REPORT FROM AFP
since, has converted the United States into speculator-
type economy, where financial sector firms seek to ex-
tract a profit by the manipulation of balance and income
statements. The goal, seemingly, is to get money without
any actual production of goods or services.
The government lies to itself as well as us. As a re-
sult, we are now $50 trillion in debt.
Phillips points out that over the last 30 years, incred-
ibly, “financial services” have nearly doubled, to a record
20% of GDP, while manufacturing’s share has halved, to
13%, greatly imperiling the economy.
Along the way, Washington has provided government
bailouts and/or liquidity when big banking barons got
themselves into trouble (e.g. S&L crisis; Citibank forced
into technical failure, but allowed to stay open; bailing
out junk bond investors by lowering the federal funds
rate etc.). This only encourages bigger problems down
the road.
The positive impact of borrowing has declined
tremendously from the 1970s and 1980s, when such
monies would mostly be used for useful things like fac-
tory and highway construction, compared to today’s in-
creasingly likely use for increasing leverage for hedge
funds, leveraged buyouts and other forms of speculation.
Meanwhile, the likelihood of families experiencing a
huge (say 50 percent) drop in income has increased dra-
matically from 1970
Our own awareness of our problems has been covered
up with tricky revisions to the CPI (understating costs of
home ownership) and unemployment measures (not
tightening lending standards. Home prices are falling at
the fastest rates on record, while the surging cost of virtu-
ally everything else—gas, food, airline tickets, utility bills
and more—is swallowing up $117 billion of economic
stimulus checks. And everywhere, the debts are coming
due—massive debts accumulated over decades that can-
not be refinanced, often cannot be paid and, ultimately,
cannot even be papered over by the Fed or Congress.”
Many around the world, including the Royal Bank of
Scotland, are warning of the possibility of a global de-
pression.
That’s right, it could get worse. Safe Money Report pre-
dicts double-digit global inflation with three “explosive
forces” driving inflation. First, the global food crisis; sec-
ond, the world energy crisis; and third the huge emerging
markets that are “growing at a breakneck pace.”
So what can the average reader do in response to such
dire predictions?
Donald S. McAlvany in The McAlvany Intelligence
Advisor has seven “Foundations” to live by:
1. Put faith and family first—remember finances are
merely a means to an end.
2. Live within your means—spend less than you make.
3. Stay out of debt.
BAD MONEY
Hardback, #BAD, 239 pages, $26.
Just $23 for AFPRC members.
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counting those who gave up and quit looking for a job).
This is the modern equivalent to the coin clipping and
debasement of yore, when money consisted of gold
and/or silver coins, says Phillips.
Phillips makes numerous comparisons between the
U.S. today and the Great Depression (e.g., total indebt-
edness was three times the size of GDP in 2007, higher
than the prior record set in the years of the Great De-
pression), as well as the declines of Rome, Holland,
Spain and Britain. ★
4. Save and invest.
5. Elect politicians who will protect our freedoms and
our country’s sovereignty over capital appreciation
6. Buy gold as a hedge against the eroding dollar.
7. Diversify your investments.
Rogers said the commodities bull market has “a long
way to go.” Many other analysts agree. Rogers advised
buying agricultural commodities and investing in China
and the East. In 2007 Rogers moved his family to Singa-
pore because he wanted to be where he thinks the action
will be during this century. Safe Money agrees—energy,
commodities, overseas investments and precious metals
are the staples of an inflation-ridden market.
The maneuverings of the Fed and the government
could stabilize the economy for a while, but eventually the
bubble will burst. Several economists are saying that if
bigwig decision makers continue as they are now, we are
headed for a major economic disaster within the next 10
years regardless of any maneuvering by bankers. ★
Mike Finch is an intern for AFP. He has a Master’s degree in journal-
ism and is working on his Ph.D. in Communication. At the end of Mike’s in-
ternship, he promises he will continue to submit articles to American Free
Press on important, under-reported topics.
THE U.S. FINANCIAL CRISIS: A SPECIAL REPORT FROM AFP August 2008 • AMERICAN FREE PRESS B.7

Bailout of Mortgage Giants May Kill Bond Market

By Pat Shannan Roosevelt’s New Deal. It was intended to be a private en-
tity, although “government sponsored,” that would enable
ot long ago there was an eruption of polit-
“If Bernanke continues to provide Americans to finance buying of homes as part of the

N ical correctness because the National

Weather Bureau named hurricanes after
women only, and the inevitable result was
that the storms are now bi-gendered. How-
ever, the coming financial storm could appropriately be
tagged with a name of dual gender—maybe “Fan-
nie/Fred”—as the nation continues its nosedive toward
financial Armageddon.
Far from calming financial markets, the announce-
ment by U.S. Treasury Secretary Henry Paulson, together
with Federal Reserve Chairman Ben Bernanke, that the
U.S. government will bail out the two largest guarantors
of the country’s housing mortgage debt—Fannie Mae and
Freddie Mac—has confirmed what so many financial
watchers have been warning: the financial tsunami that
began in August 2007 in the relatively small “subprime”
high-risk mortgage securitization market is only gather-
ing momentum.
The United States economy is in the early phase of its
worst housing-price collapse since the 1930s. No end is
in sight. Fannie Mae and Freddie Mac, as private stock
companies, have gone to excesses in leveraging their risk,
much as many private banks did. The financial market
bought the bonds of Fannie Mae and Freddie Mac be-
cause they bet that the two were “too big to fail,” that is,
in a crisis the government would be forced to step in to
bail them out.
In case you have wondered, “Fannie Mae” comes from
the acronym FNMA, which is Federal National Mortgage
Association, created in 1938. “Freddie Mac” was derived
from Federal Home Loan Mortgage Corporation
(FHLMC, 1970).
The scale of the latest wave to hit, the collapse of con-
fidence in the two government-sponsored entities, Fred-
die Mac and Fannie Mae, is a harbinger of worse to come
in what will be the most devastating financial and eco-
nomic catastrophe in United States history. The impact
will be felt globally.
While he is getting praise in the financial media for
his “innovative” and quick reactions to the unraveling cri-
sis, those in the know say that Fed Chairman Bernanke in
unlimited liquidity to prevent a banking
system collapse, he risks destroying
the U.S. corporate and Treasury bond
market and with it the dollar.
If Bernanke acts to save the bond
market by raising interest rates,
it will only trigger the next devastating
round of shock waves.”
reality is in a panic mode as he is caught in a “Catch-22.”
If Bernanke continues to provide unlimited liquidity
to prevent a banking system collapse, he risks destroying
the U.S. corporate and Treasury bond market and with it
the dollar. If Bernanke acts to save the heart of the U.S.
capital market—its bond market—by raising interest
rates (the Fed’s only anti-inflation weapon), it will only
trigger the next even more devastating round in tsunami
shock waves.
With so many deceivers in print, it is refreshing to read
one of the few who understands and will say it.
Lew Rockwell explains:
Place the blame not only on the banks, but also
on the institutions that are siphoning off their lia-
bilities for irresponsible behavior, and that would
be Freddie and Fannie. And who created these?
“They were created by FDR in 1938 to fund
mortgages insured by the Federal Home Adminis-
tration. They were used by every president as a
means to achieve this peculiar American value that
every last person must own a home, no matter
what. So they were given the legal permission to
purchase private mortgages and make them part of
their portfolios. Still later, under LBJ and Richard
Nixon, they became public companies and sold
stock.
The U.S. government passed the law creating Fannie
Mae during the Great Depression as part of Franklin D
country’s attempt at economic recovery. Freddie Mac was
formed by Congress in 1970, to help revive the home-
loan market. Congress started the companies to promote
home buying and their charters give the Treasury the au-
thority to extend a $2.25 billion credit line.
Freddie Mac owes $5.2 billion more than its assets
today are worth, meaning under current U.S. “fair value”
accounting rules, it is insolvent. Fair value of Fannie Mae
assets has dropped 66 percent to $12 billion and may go
negative next quarter. As home prices continue to fall
across America, and corporate bankruptcies spread, the
size of the negative values of the two will explode.
On July 14, Treasury Secretary Paulson, former chair-
man of the Wall Street investment bank Goldman Sachs,
stood on the steps of the Treasury building in Washing-
ton and announced that the George W. Bush administra-
tion would submit a proposal to Congress to make
government guarantee of Freddie Mac and Fannie Mae
explicit. In effect, in the present crisis it will mean na-
tionalization of the $6 trillion agencies.
The bailout statement by Paulson was accompanied
by an announcement by Bernanke that the Fed stood
ready to pump unlimited liquidity into the two compa-
nies. It will sound the death knell for the stability of the
American economy, already hanging by a thread.
The Federal Reserve is already the world’s largest fi-
nancial garbage dump. Now it agrees to add to its trash
pile another $6 trillion in GSE (Government Sponsred
Enterprise) real estate debt. Is this insanity in action or a
planned collapse ?
Yet the disaster in the two private companies has been
obvious to some for five years or more when grave ac-
counting abuses were made public. In 2003, William
Poole, then president of the St. Louis Federal Reserve,
publicly called for the government to cut its implied guar-
antee of Freddie Mac and Fannie Mae, claiming then that
the two lacked capital to weather a severe financial crisis.
Poole, whose warnings were dismissed by then-Fed
Chairman Alan Greenspan, called repeatedly in 2006 and
again in 2007 for Congress to repeal their charters and
avoid the predictable cost of a huge bailout. ★

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B.8 AMERICAN FREE PRESS • August 2008 THE U.S. FINANCIAL CRISIS: A SPECIAL REPORT FROM AFP

Accountability Needed atAll Levels

By Mike Finch are inadequate, because they both lack several necessary but we all know this not to be the case. Individual de-
ingredients to create peace and prosperity. sires without structure also tend to dehumanize humans.
he majority of Americans live in comfortable Globalism and anarchy are two ends of a spectrum,

T
ignorance to much of what happens in the
world around them in regard to government
and economic realities. Who can blame
them; the government is such an immense
system that even those within it do not fully understand
it, and the economy is vastly complex set of intercon-
nected systems that is volatile and unpredictable? The
world has become so complex that most do not even at-
tempt to understand the forces that work in the systems
they live within. It is almost as if those systems are seen
as forces of nature. We complain about them when they
negatively affect us, but don’t really see anything we can
do about them.
Most of humanity desires peace and prosperity in re-
gard to government and economy, but often have differ-
ing perspectives regarding how the goals of peace and
prosperity can be achieved. When one begins looking at
global realities it seems there is a spectrum of perspec-
tives as to how such realities should be governed. On one
end of the spectrum you have the globalists, who want to
create larger structures of government, and those large
government structures will affect peace and prosperity.
On the other end you have anarchists, who believe that
peace and prosperity can only be found in radical indi-
vidual choice. Unfortunately both ends of the spectrum
Globalism, as seems to be the goal of such clandestine
groups as the Bilderbergers and Masons, is flawed be-
cause its answer is to control from the top down what
happens in the world to effect change. It lacks moral
guidelines, but the primary flaw of globalism is the im-
mense amount of power it gives to the relatively few who
govern. Globalism might work if those who had global
power were guaranteed to be omniscent, kind and benef-
icent, such power would corrupt.
It is also likely that such power would dehumanize
humanity. The larger a body of people becomes, the less
human each individual is. To send one person you know
to go die for you is much more difficult than sending
fifty thousand you don’t know. Any form of government
must create systems to ensure that the humanity of each
individual is respected. Global power structures (even
the ones that currently exist) often do not lend them-
selves to respecting the humanity of the individual,
though they try.
So we should be anarchist? Some believe so, but this
also is not the answer. Anarchy also has no moral struc-
ture built into it. When there is no law, each man be-
comes a law unto himself, and that extremely
individualized system would also allow humans to be de-
humanized. The individual would have all power, and if
all individuals were kind and beneficent this would work,
but strangely both have the same problem: they create
an atmosphere that is conducive to the abuse of human
rights. What is the answer then? I am not sure. There may
be many answers. But the one thing that both globalism
and anarchism lack is accountability. This simple con-
cept is extremely significant. Those with power, whether
it is the individual, or the state, require community. They
require a mitigation of their power, for absolute power
corrupts absolutely. This simple idea, accountability, is
often lost in the polarized realities of current American
culture. On one hand you have the extremely individual-
istic aspect of pop culture, where a near anarchic state
of mind reigns, and on the other hand you have huge
forms of government, business, and banking that seem to
only answer to themselves. Our entire culture is lacking
accountability from top to bottom, which is to say we are
lacking community. We are a lonely people just search-
ing for peace and prosperity. Unfortunately we are
searching in all the wrong places.
What are the answers to our problems? I am not sure,
but I know one thing that will help with everything from
individual to global issues: accountability. ★
Mike Finch is an intern for AFP. He has a Master’s degree in journal-
ism and is working on his Ph.D. in Communication.

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