Three Card Monte is a confidence (con) game devised to swindle hard-earned money from people believing they can win by participating in the game. The game’s operators show how you can follow the card and win. It appears rather elementary, but very few people win because the operators cheat. Likewise, a Ponzi scheme is an investment plan in which the investments of later participants are paid out to earlier participants. Generous returns for early participants lure future participants into the scheme. The scheme eventually collapses as the promise of returns disappears as fewer future participants enter the system.
The Three Card Monte and Ponzi scheme operators are selling an illusion – a promise, a dream — to people taken in by the rhetoric of smooth operators. The allure of an outcome, the realization of a goal or dream is used by the operators against their victims. And, there is no shortage of victims to these confidence games.
We live within the vast expanse of a modern day confidence game perpetrated by smooth operators on the citizens. Today, the political and monetary systems are the confidence game forced upon the citizens. The systems are designed by the operators, for the operators, to deceive and manipulate citizens. Ideally the operators prefer the citizens to enter into these systems voluntarily under the guise of a level playing field. Furthermore, the system is premised upon something called free elections. The idea that citizens can freely elect their representatives provides an illusion of legitimacy and fairness.
The political and monetary systems are self-serving, vicious monstrosities devouring freedom, liberty, and property like swarms of locusts devouring a wheat field. However the government and central planning locusts didn’t start as a swarm. Roughly one hundred years ago the government needed only 3-5% of GDP to function. There was no federal reserve bank. There was no income tax. The currency was backed by gold. States appointed their Senators to Congress.
Prior to 1913 the country was mostly a free-market capitalist society operating independent of government authority, rules, and regulations. However, the great transformation that started in 1913 really took off in the 1930s. A private company called the Federal Reserve Bank controlls the currency. Income taxes were extremely progressive and punitive. The currency – at least domestically – was no longer backed by gold. Instead, the currency was backed by nothing more than a promise from the U.S. government which, in reality, was a promise to others that the people would be liable for all debts incurred by the government.
To ensure those debts would be paid the government must have the ability to confiscate property from its citizens. That assurance to the country’s creditors was the income tax. There is no coincidence that the income tax was passed the same year the Federal Reserve Act was signed into law. Furthermore, government issued currency, backed by nothing more than a promise, required citizens to accept the currency. In 1933, the Federal Reserve Note was no longer backed by gold. Legal tender laws forced citizens to use government created currency.
The stage was set to move forward with the great transformation towards a socialist country. The government had the power to tax and the power to print currency without constraint. This gave birth to what we know as deficit spending. The country saw a massive expansion of government programs, power, and authority throughout the 1930s. Progressive and punitive taxation was instituted and is still enforced today. Government programs were created out of thin air without any legitimate constitutional authority. While some were struck down by the Supreme Court as unconstitutional many were upheld, especially after President Roosevelt’s threat to pack the Supreme Court.
After WWII, the size and power of the government grew unabated. Every President since FDR has expanded the authoritarian state. The expansive authoritarian state included new federal departments or agencies, new statutory laws, new rules and regulations, new entitlement programs, and massive increases to the federal debt.
In 1971, President Nixon broke the Bretton Woods agreement and removed the U.S. from the international gold standard. In other words, the U.S. would no longer settle international claims with gold payments. This launched the modern day monetary and financial systems we live with now. The entire global monetary system is based on fiat currencies based on debt. There are debtor nations and creditor nations. Every country is trying to debase its currencies in a race to the bottom. Those holding currency over time lose wealth and purchasing power.
Consequently, the U.S. trade deficits started after 1971. The rapid growth in the U.S. debt started after 1971. The debasement of the currency accelerated after 1971. Since 1971 the currency has lost 82% of its purchasing power. The oil crisis started in the 1970s because OPEC understood exchanging oil for fiat currency was a losing proposition. Since oil was settled in Federal Reserve Notes and the issuer can print freely the oil producing countries were put in a precarious position. In 1966, Alan Greenspan said this on the issue of gold and fiat currency:
“Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.
They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of society lose value in terms of goods.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1933]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
The changes to the financial system created the fertile ground to fundamentally transform government. What Greenspan stated is true. Deficit spending is simply a scheme for the confiscation of wealth. I hope that sinks in. The political and monetary systems are inextricably linked are now inseparable as they are dependent upon one another to continue their insatiable quest for power and authority. The chickens are coming home to roost and we the people are going to pay the price.
Entitlement programs are government’s Ponzi schemes. Early participants in Social Security and Medicare reaped the benefits of these programs as new participants money was used for the early participant’s benefit. The number of people entering the Ponzi scheme has diminished greatly the level of benefits paid out continues to decline. There is somewhere between $80 trillion and $200 trillion of unfunded liabilities in the Social Security and Medicare system. In other words, there is no way to pay for future benefits promised to people if they simply accept and participate in the system.
The smooth operators used false promises and rhetoric to gain public support to foist these Ponzi schemes on the citizens. It was the ruling class pulling a Three Card Monte on the citizens. Look here they say. We promise the government will provide you with this level of benefits. But you have to vote us into power and keep us in power to ensure you receive these benefits.
Meanwhile social security and medicare taxes are collected by the government and put into “trust funds”. However, those Three Card Monte operators on Capitol Hill and in the White House took the money and spent it. To replenish the funds the government sells bonds to creditors resulting in an increasing in the federal debt. In turn that burden to repay the debt, plus interest accrued, falls on the children, grandchildren, and great-grandchildren of the very people that believe they are entitled to the benefit in the first place.
Lastly, the productive citizens that are able to save or invest are preyed upon the most. Progressive and punitive tax policy is used against the industrious. Government uses legal tender laws to force the citizens to accept their fiat currency. The buyers of U.S. debt know the U.S. government will tax the productive citizens and continue to force citizens to use their fiat currency. That is what backs the promise to repay the debt. Nothing more, nothing less!
Meanwhile because government can deficit spend, can borrow money without limit, and can print money at will, government continues to grow unabated. Undoubtedly, the smooth operators known as the ruling class wants to retain power and continue growing the authoritarian state. The schemes, the lies, the deceptions are being perpetrated on the American citizens as part of the fundamental transformation from a free-market capitalist, constitutionally limited society into an all-powerful authoritarian state.
The ruling class is the Three Card Monte dealer. The ruling class is the Ponzi scheme operator. Except we don’t volunteer to participate in their confidence game. We are forced, by threat of fines or prison, to participate the confidence game knowing the game is rigged. The ruling class uses rhetoric to cajole us. The ruling class lies and deceives us. The ruling class plunders property from some citizens to give to other citizens (or non-citizens) in exchange for votes.
The only winning move is not to play.