Badlands Media - Badlands Book Club: The Creature From Jekyll Island - Chapter 8: Fool's Gold

Episode Date: July 9, 2026

CannCon and Ashe in America crack open Chapter 8 of The Creature from Jekyll Island by G. Edward Griffin, and things get spicy fast. This week's theme: Fool's Gold, the story of how paper money without any real backing became the norm, and how fractional reserve banking let banks issue more gold receipts than gold they actually had. They trace fiat money all the way back to Marco Polo's account of paper currency in Kublai Khan's China, then jump into colonial America's wild ride through inflation, devaluation, and eventual return to sound money. Expect tangents on tallow, brisket, and a healthy dose of disbelief at how casually governments have always printed their way out of trouble. It is history, economics, and a little bit of chaos, delivered with the hosts' usual mix of humor and genuine frustration.

The Badlands, what are the Badlands? Explain those Badlands. That's a hell of a name. Good afternoon. Ladies and gentlemen, welcome to Badlands Book Club, or as Ash lovingly calls it, the anger hour. The Bad Mood Hour, Brian. It's the Bad Mood Hour, and this is the creature from Jekyll Island. I get to use my bookmark.

You don't get to use your bookmark because you're... digital child. Yes. But yeah. Bad mood hour is where we explore this guy, taken over and making us all slaves. Yes, that too. The good thing is that, you know,

the America 250, like, I was running on my love for America for so long. And like then we had to, you know, Gart. we had the 4th of July and it was just like pump up and then you know things happen and um i'm pretty much in a bad mood all the time now so uh this hour might be more optimistic than usual your bruce banner the the the key is i'm angry all the time or the secret i think that's

bruce i really that's the hulk right bruce banner yeah yeah i really liked mark rufflow as the Hulk, but I really can't stand Mark Ruffalo's political opinions because I think he's legitimately retarded. It's a bit of a struggle session for me. I know. I know. All right. So I'm trying to find what I'm looking for. And I found it. There we go.

All right. Let's jump into our sponsors for today's show. Guys, the Skills Freedom Collection is where the ocean, open ocean meets the red, white, and blue seas that we call home. inspired by salt air tight lines and the rhythm of the tide and the waves. This collection channels the spirit of freedom through the lens of a waterman's lifestyle. From long sleeve performance shirts built for the elements to butter soft teas and hats, adorned with bold, ocean-inspired, Americana prints, every piece. It's designed to keep you cool, protected, and connected to the water that sets us free.

From weed lines to tree lines, we love our freedom. Shop now at badlandsmedia.tv slash scales. And enter promo code Badlands at checkout to get 20% off your next purchase. 10 out of 10 recommend scales. As a Florida boy, I live by, you know, that Americana waterman's lifestyle and their shirts are fantastic. I love their long sleeve Gulf of America shirt. I think Cam wore it like six times while he was down here. Yeah, all three of my boys were born in Sarasota, Florida.

And they're all fisher boys, right? Fishermen, I guess now. Two of them at least. Fishermen. But they love the scales gear as well. I got one of those white long sleeve kind of performance sport fishing shirts as a part of our sponsorship for scales. And they stole that immediately from me. And my Gulf of America hat can't ever really find it because it's like the family hat and everybody loves it. But when I do wear the Gulf of America hat out, I get so many compliments on it. People were just like, oh, man, here in communist clenjury, Colorado, right? It's a novelty to love America. And, you know, the secret America lovers come out, like, oh, my gosh, I love your hat. Only kind of item of clothing that I've worn, like, out in Colorado that has gotten a similar level of attention is the bitches love independence shirt that Michelle gave me at Gart. I wore that on Fourth of July when we went down into the Castle Rock party. People were stopping me the whole time.

Like, oh, my gosh, I love your shirt. Where'd you get it? I'm like, it's one of a kind. Sorry. Also, Gart St. Petersburg, we will all have the opportunity to dip our toes into the Gulf of America. I have not yet been in the Gulf of America and I'm only an hour away. You've never been in the Gulf of America? Not since it's been the Gulf of America.

Oh, I see what you're saying. Since the name change, you haven't dipped your toes in. I think I have. Golf. I grew up on Sanibel Island every summer, man. I don't think I have actually either. Yeah. That was 20, 25.

2025, yeah. Yeah, no, you're right. Haven't. All right, Ash, you want to talk to our fine audience about our friends over at Van Man? Are you ready to upgrade your daily routine with truly clean natural products? No exceptions. Start in the kitchen with Van Man's pure cooking tallow, perfect for high heat cooking and adding rich, clean flavor to your meals. For your daily cleanse, try their gentle tallow soaps, the classic honey, pine tar or coconut.

These bars deliver a rich, natural lather that leaves your skin feeling clean, soft, and refreshed. Give your smile, real care with miracle tooth powder and flavors like mint bone, cinnabone, or original. I'll crave about whiter, stronger teeth, and fresher breath with no harsh chemicals. I am one of those customers. I use Van Man's tooth powder. I use their pulling oils.

I use their mouthwash and their dental lineup is better than any other products on the market. Definitely check it out. out and they do a bundle, which is great on the dental products. So you can try them and see if you like them. You won't be disappointed. Van Man also offers great products like hair care, eye cream, and more. All made with clean natural ingredients, no exceptions. Right now, enjoy free US shipping on orders over $40.

Head to badlandsmedia.tv slash van man today. That's badlandsmedia.tv slash fan man. All right. You know what I learned this weekend? What did you learn? how to actually make beef tallow. Well, God makes beef tallow, Brian. Well, no, God makes beef fat.

We create tallow from that beef fat. It's actually a really complicated process. I used to just take, and it worked for me. I would, because I only use it for cooking. Like, I'm not doing, like, cosmetic grade. Mearing it on your skin. Yeah, yeah, yeah. I just use it for cooking as like a lard, you know,

for the pan and stuff like that. But yeah, like I used to just take the fat like that would cut off a brisket, chop it up it a little bit, put it on the smoker for like two or three hours until it kind of starts to render out and then just pour that through like a cheesecloth into a mason jar and boom, I'm good. You're actually supposed to like take that mason jar then and like freeze it and or not freeze it but cool it and then take that out and then add water to it and salt and then do that again and then cut it up and scrape the salt off the bottom and then take all the water out and then

do it melt it down again and do the same thing again and I'm like holy shit but that's for like cosmetic grade so I'm not going for that but yeah cool to know pretty badass it is cool to know and it's better to cook with uh tallow it is to cook with all the synthetic nonsense that they've convinced this is better I actually had so much tallow I did a 24 pound brisket for 4th of July huge huge fairly fit my smoker. I had so much beef fat that I filled three mason jars full of tallow. So, all right. Let's get into the book chapter eight of the creature from Jekyll Island, fools gold. The history of paper money without precious metal backing forced on the public by government decree the emergence of our present day fractional reserve banking system based

on the issuance of a greater amount of receipts for gold than the bank has in gold to back them up. We previously have broken down the concept of money into four categories, commodity, receipt, fiat, and fractional. In the last chapter, we examined commodity and receipt money in some detail. In doing so, we also establish certain monetary principles which apply regardless of their form. We shall now turn to the remaining two categories, both of which are represented by paper, and which are the root of almost all modern man's economic woes. You want me to go? Yes.

Fiat money. The American Heritage Dictionary defines Fiat money is paper money decreed legal tender, not backed by gold or silver. The two characteristics of Fiat money, therefore, are one, it does not represent anything of intrinsic value, and two, it is decreed legal tender. Legal tender simply means that there is a law requiring everyone to accept the currency in commerce.

The two always go together because, since the money really is worthless, it soon would be rejected by the public in favor of a more reliable medium of exchange, such as gold or silver coin. Thus, when governments issue fiat money, they always declare it to be legal tender under pain and fine and imprisonment. The only way a government can exchange its worthless paper money for tangible goods and services is to give its citizens no choice. The first notable use of this practice was recorded by Marco Polo during his travels to China in the 13th century. The famous explorer gives us this account, quote.

The Emperor's Mint, then, is in this same city of Cambalook, and the way it is wrought is such that you might say he hath the secret of alchemy in perfection, and you would be right. What they take is a certain fine white bast or skin, which lies between the wood of the tree and the thick outer bark, and this is what they make into something resembling sheets of paper but black. When these sheets have been prepared, they are cut into pieces of different sizes. The smallest of these sizes is worth a half-tornousal.

There is also a kind worth one besant of gold and others of three besants and so up to ten. All these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver. And on every piece, a variety of officials whose duty it is have to write their names and put their seals. And when all this is prepared duly, the chief officer deputed by the con smears the seal entrusted to him with vermilion and impresses it on the paper. So that the form of the seal remains stamped upon it in red, the money is then authentic. Anyone forging it would be punished with death. and the con causes every year to be made such a vast quantity of this money, which costs him nothing, that it must equal in amount all the treasures in the world.

With these pieces of paper made, as I have described, he causes all payments on his own account to be made, and he makes them to pass current universally over all his kingdoms, and nobody, however important, he may think himself, dares to refuse them on pain of death, and indeed, everybody takes them readily. One is tempted to marvel at the Khan's audacious power and the subservience of his subjects who endured such an outrage, but our smugness rapidly vanishes when we consider the similarity to our own Federal Reserve notes. They are adorned with signatures and sealed. Counterfeiters are severely punished.

The government pays its expenses with them. The population is forced to accept them. They, and the invisible checkbook money into which they can be converted, are made in such vast quantity. that it must equal in amount all the treasures of the world, and yet they cost nothing to make. In truth, our present monetary system is an almost exact replica of that which supported the warlords seven centuries ago. The colonial experience, unfortunately, the present situation is not unique to our history.

In fact, after China, the next place in the world to adopt the use of fiat money was America, specifically the Massachusetts Bay colony. damn you massholes. This event has been described as, quote, not only the origin of paper money in America, but also in the British Empire and almost in the Christian world. In 1690, Massachusetts launched a military,

launched a military raid against the French colony in Quebec. He had done this before, and each time had brought back sufficient plunder to more than pay for the expedition. This time, however, the foray was a dismal failure. And the men returned empty-handed. When the soldiers demanded their pay, Massachusetts found its coffers empty. Disgruntled soldiers have a way of becoming unruly, so the officials scrambled for some way to raise funds.

Additional taxes would have been extremely unpopular, so they decided simply to print paper money. In order to convince the soldiers and the citizenry to accept it, the government made two solemn promises. One, it would redeem the paper for gold or silver coin just as soon as there was sufficient tax revenue to do so. and two, absolutely no additional paper notes would ever be issued. Both pledges were promptly broken. Only a few months later, it was announced that the original issue was insufficient to discharge the government's debt. And a new issue, almost six times greater, was put into circulation. The currency wasn't redeemed for nearly 40 years, long after those who had made the pledge had faded from the scene. A classic pattern. Most of the other colonies were, quick to learn the magic of the printing press and the history that followed as a classic example of cause and effect.

Governments artificially expanded the money supply through the issuance of fiat currency. This was followed by legal tender laws to force its acceptance. Next came the disappearance of gold and silver coins, which went instead into private hordes or to foreign traders who insisted on the real thing for their wares. Many of the colonies repudiated their previous money by issuing new bills valued at multiples of the old. Then came political discontent and civil disobedience, and at the end of each cycle, there was rampant inflation and economic chaos. In 1703, South Carolina declared that its money was, quote, a good payment and tender in law, and then added that should anyone refuse to honor it, as such, they would be fined an equal amount to double the value of the bills so refused. By 1716, the penalty had been increased to treble the value.

the printing press and inflation funny you give them away to print quicker and inflation goes through the roof Benjamin Franklin was an ardent proponent of fiat money during those years and used his great influence to sell the idea to the public man Ben you just went down in my book wow a couple pegs yeah that's that's disheartening we can get some idea of the ferment of the times by noting that in 1736 writing in the pennsylvania gazette Franklin a apologize for its irregular publication and explained that the printer was, quote, with the press, laboring for the public good to make money more plentiful. The printing of money was apparently a major time-consuming operation.

In 1737, Massachusetts devalued its fiat currency by 66%, offering $1 of new currency for three of the old. The promise was made that after five years, the new money would be fully redeemed in silver or gold. the promise was not kept. Shocking. Yep. By the 1750s, Connecticut had priced inflated, had price inflated by 800%. The Carolinas inflated by 900%.

Massachusetts, 1,000% Rhode Island, 2,300%. Naturally, these inflations all had come to an end, had to come to an end. And when they did, they turned into equally massive deflations and depressions. It has been shown that even in colonial times, the classic booms and busts, which modern economists are fond of blaming on unbridled free market, are actually or direct manifestations of the expansion and contraction of fiat money, which no longer was governed by the laws of supply and demand.

By this time, coins had completely disappeared from the scene. Some were in private hordes, but most of them had been exported to other countries leaving the colonies with little choice, but to use fiat money or barter. Merchants from abroad were interested in neither of those, however, an international trade ground, almost to a halt. A blessing in disguise. The experiment with Fiat money was a calamity to the colonists, but it was also a thorn in the side of the Bank of England.

The bank had used its influence with the Crown to forbid the colonies to mint their own coins or to establish local banks. This meant that if the colonists wanted the convenience of paper money, they would be forced to use the notes issued by the Bank of England. No one had anticipated that the colonial governments would be so inventive as to create their own. paper money. So in 1751, Great Britain began to pressure the colonies to redeem all of their currency

and withdraw it from circulation. This they eventually did, and at bargain prices. By then, their Fiat money was heavily discounted in the marketplace, and the governments were able to buy back their own currency for pennies on the dollar. The decree from the British Parliament, although heavily represented by the colonists, turned out to be a blessing in disguise. The paper notes of the Bank of England never did become a primary medium of exchange. Probably because of their recent bad experience with paper money, the colonists merely brought what few gold and silver coins they had out of hiding and returned to a true commodity money system.

At first, the doomsdayers predicted this would spell further ruin for the colonial economy. There isn't enough money, was the all too familiar cry, but there was indeed quite enough for, as we have already seen, any amount is sufficient. I wonder how much of the American Revolution was fought over yacht currencies. So this is 1751. 12 years later is when, you know, Sons of Liberty came into full effect. In 63?

Yeah. 63 or 73? 63. Okay. Isn't it, wasn't the, wasn't the, wasn't the, wasn't the, Lexington and Concord 1763. Look that up. Fact check me. Say it again, Lexington and Concord.

The Boston Massacre was 1763, wasn't it? Okay, you read and I'll look it up. Tobacco becomes money. There was in fact a period in which other commodities became accepted as a secondary medium of exchange. Such items as nails, lumber, rice, and whiskey filled the monetary void, but tobacco was the most common. Here was a commodity which was in great demand both within the colonies and for overseas commerce. 1775.

What was 1763? That was now. Hold on. Now I'm pausing. The conclusion of the seven years war and the subsequent redrawing of colonial boundaries, the Treaty of Paris, Contiacs War with the Native Americans, the Royal Proclamation, this might be it, the Royal Proclamation of 1763. Forbidding colonialists from settling or purchasing land west of the Appalachians?

No, that was... That occurred on October 7. Sons of Liberty was 1765. So maybe I just was off by a couple of years there. All right. So we're close enough. But anyways, you looked up, would you look up, Lexington and Concord? It's what you told me to look up.

Yeah, it was perhaps. Okay, the Boston Massacre was 1770. Okay. all right i i i i was doing though maybe stamp act or something is what it might have been like the stamp act or the molasses act because the molasses act was somewhere around that time as well but anyways i'm going to say stamp act was 63 65 but stand back 65 yeah it had intrinsic value so here was a commodity which was in great demand both within the colonies and for overseas commerce it had intrinsic value it could not be counterfeited it could be divided into almost any denominational quantity and its supply could not be

except by the exertion of labor. In other words, it was regulated by the law of supply and demand, which gave it great stability and value. In many ways, it was an ideal money. It was officially adopted as such by Virginia in 1642, and a few years later by Maryland, but it was used unofficially in all other colonies as well. So close was the identity of tobacco with money

that the previous fiat currency of New Jersey, not a tobacco growing state, displayed a picture of a tobacco leaf on its face. It also carried the inscription to counterfeit is death. Tobacco was used in early America as a secondary medium for exchange for about 200 years until the new constitution declared that money was henceforth the sole prerogative of the federal government. And they've done such a great job with it. We should definitely let them keep that authority.

Yeah. Tobacco was, yeah. So 200 years would be 1640. too. So even even Griffin refers to the reconstruction as the new constitution. Yeah. Yeah. Well, it was. I know, but inverted. Yeah. The primary currency at that juncture, however, was still gold and silver coin or specie, species, as it's called. And the immediate result of returning to a sound monetary unit was a rapid recovery from the economic stagnation previously inflicted by the booms and busts of fiat money. Trade in production rose dramatically, and this, in turn, attracted an inflow of gold and silver coin from around the world, filling the void that had been created by years of worthless paper.

The law of supply and demand was visibly at work. For a while, Massachusetts had returned to Specy, while Rhode Island remained on Fiat money. The result was that Newport, which had been the trade center of the West Indies, lost its trade to Boston and became an empty port. after the colonies had returned to coin. Prices quickly found their natural equilibrium and then stayed at that point, even during the seven years war. Which ended in 1763. And the disruption of trade that occurred immediately prior to the revolution. There's no better example of the fact that economic systems in distress can and do recover rapidly if government does not interfere with the natural healing process.

War brings a return of Fiat. money. The war for independence brought all of this to a sudden halt. Wars are seldom funded out of the existing treasury, nor are they even done so out of increased taxes. If governments were to levy taxes on their citizens fully adequate to finance the conflict, the amount would be so great that many of even its most ardent supporters would lose enthusiasm. By artificially increasing the money supply, however, the real cost is hidden from view. It is still paid, of course, but through enforcement, a process that few people understand. The American Revolution was no exception. In order to pay the bill for independence, both the Confederation and the individual states went heavily into the printing

business. At the beginning of the war in 1775, the total money supply stood at 12 million. In June of that year, the Continental Congress issued another 2 million. Before the notes were even put into circulation, another 1 million was authorized. By the end of the year, another 3 million. In 1776, another 19. million and 13 million in 1777, 64 million in 1778, 125 million in 1779, and still more. The Continental Army issued its own certificates for the purchase of supplies totaling 200 million, a total of 425 million in five years on top of a base of 12 million is an increase of over 3,500 percent. And in addition to this massive expansion of the money supply on the part of the central

government, it must be remembered that the states were doing exactly the same thing. It is estimated that in just five years from 1775 to the end of 1779, the total money supply expanded by 5,000 percent. By contrast, the amount raised in taxes over the five-year period was inconsequential, amounting to only a few million dollars. And in case you missed it, it's one episode. Brian and I did War as a Racket by Smedley Butler It took us one episode to read that book Should go back on the playlist

Find it and watch it Yeah and I'll tell you right now man This before that section right there I was going to say this has been my favorite chapter so far Now you're mad again Now I want to go live in the middle of the woods In the middle of nowhere And just raise my own food and kill my own food

And for needs Yeah Yeah, I'm with you. Because I was thinking we were going to, I was thinking we weren't going to find this much like craziness until, you know, the late 1800s, early 1900s. But nope, we had it right at the American Revolution. Imagine that. Look at that. $2 million before the war.

And then two, what was it, $125 million in 1779. So five years later, we go from we need $2 million to $125 million. 5,000% expansion in the money supply to account for the war. That's freaking crazy. And the crazy thing too is like, aren't we told that the Continental Army that was actually fighting the war was eating their shoe leather and not getting anything from the Continental Congress? So they rapidly and massively expanded the money supply.

What'd they do with it? It was inflation. It was all inflation. That 125 million wasn't worth anything more than 2 million. There was just more of it. No. And so then what do they do? Now when you see like the whiskey rebellion, you realize that the whiskey rebellion wasn't because they were a bunch of raging alcoholics that didn't want to pay a tax on their whiskey. It's because the whiskey was more valuable than the money. Yeah, let's go. Still is, by the way. a that's a fact and a massive inflation the first exhilarating effect of this flood of new money was the flush of apparent prosperity but that was quickly followed by inflation as a self-destruct mechanism began to operate in 1775 paper continentals were traded for one dollar in gold in 1777 they were exchanged for 25 cents by 1779 just four years from their issue they were worth less than a penny the phrase not worth a continental has its origin in this dismal period. Shoes sold for $5,000 a pair. It's more expensive than today,

by a lot. A suit of clothes cost a million dollars. A million Continentals. Yeah. That's true. It was in that year that George Washington wrote, quote, a wagon load of money will scarcely purchase a wagon load of provisions. Even Benjamin Franklin began to see the light in a mood of sarcasm. wrote, quote, this currency as we manage it is a wonderful machine. It performs its office when we issue it. It pays enclosed troops. It provides victuals and ammunition. And when we are obliged to issue a quantity excessive, it pays itself off by depreciation. When speaking of deficit spending is common to hear the complaints that we are saddling future generations with the bill for what we enjoy today. Why not let those in the future help pay for what will benefit

them also. Don't be deceived. That is a misconception encouraged by politicians to calm the public. When money is fiat, as the colonists discovered, every government building public work and canon of war is paid out of current labor and current wealth. These things must be built today and with today's labor. And the man who performs that labor must also be paid today. It is true that interest payments fall partly to future generations, but the initial cost is paid by those in the present. It is paid by loss of value in the monetary unit and loss of purchasing power for one's wages. Yeah, I mean, we're all still living the repercussions of World War II, aren't we? And all the wars since, I think we are. Inflation is a hidden tax. Fiat money is the means by which

governments obtain instant purchasing power without taxation. But where does that purchasing power come from? Since Fiat money has nothing of tangible value to offset it, government's Fiat money purchasing power can be obtained only by subtracting it from somewhere else. It is, in fact, collected from all of us through a decline in our purchasing power. It is therefore exactly the same as a tax, but one that is hidden from view silent in operation and little understood by the taxpayer. In 1786, Thomas Jefferson provided a clear explanation of this process when he wrote, quote, Everyone, through whose hands a bill has passed, lost on that bill, what it lost in value during the time it was in its hands. This was a real tax on him. And in this way, the people of the United

States actually contributed those millions of dollars during the war and by a mode of taxation, the most oppressive of all, because the most unequal of all. I didn't realize the next page was a new section. Um, one thing real quick, if a suits a million Continentals, were there people walking around with like bags full of Continentals? Yeah, maybe like a paper note, right, like a check. Like right at I owe you. I've got a million back. I'll buy this suit.

Come get your wheelbarrow, right? Bring your, bring your pallet and your massive truck and come get all the money to pay for a suit. I know they didn't have a whole lot of time back then, but can you imagine sitting there counting a million continentals to buy a suit? A transaction that happens thousands of times a day in today's society. Yeah, well, it probably didn't happen thousands of times a day back then. You know, you bought a suit that, one, it cost you a million Continentals. Two, you know, people didn't have a suit. You didn't have the volume of the quantity of stuff that you have today, right?

Maybe you owe two suits total. Enter price controls and legal tender laws. As prices skyrocketed, the colonies enacted wage and price controls, which was like, like plugging up the whistle on a tea kettle in hopes of keeping the tea, the steam from escaping. When that failed, there followed a series of harsh legal tender laws. One law invoked the specter of treason. It said, quote, if any person shall hereafter be so lost of all virtue and regard for this country as to refuse to receive said bills and payment, he shall be deemed published and treated as an

enemy of this country and precluded from all trade or intercourse with the inhabitants of these colonies. So you weren't allowed to have sex. I knew you were getting up there. Like you can't buy. They don't see sexual intercourse. They say intercourse in the general sense, which I think means just relations. I mean, it says intercourse with the inhabitants. I can only take that as one way. Male or female. Yeah. Rhode Island not only levied a heavy fine for non-acceptance of its notes, but upon a second offense, an individual was stripped of citizenship. When a court declared the act unconstitutional, the legislature called the judges before it and summarily dismissed the offenders from office. Enter economic chaos and insurrection.

If the ravages of war were a harsh burden for the colonies to bear, the havoc of fiat money was equally so. after the war, inflation was followed by deflation as a reality turned into the marketplace. Prices fell drastically, which was wonderful for those who were buying, but for the merchants who were selling, or the farmers who had borrowed heavily to acquire property at inflated wartime prices, it was a disaster. The new lower prices were not adequate to sustain their fixed inflated mortgages, and many hardworking families were ruined by foreclosure. Furthermore, most people didn't understand the inflation process, and there were many who continued to advocate the paper money cure. That still happens today, man.

Several of the states were receptive to the pressure, and their printing presses continued to roll. Historian Andrew McLaughlin recalls the typical scene in Rhode Island at that time as witnessed by a visiting Frenchman. Quote, a French traveler who passed through Newport about this time gives a dismal picture. picture of the place. Idle men standing with folded arms at the corners of the streets, houses falling to ruins, miserable shops, offering for sale nothing but a few coarse stuffs, grass growing in the streets, windows stuffed with rags everywhere announcing the misery, the triumph of paper money and the influence of bad government. The merchants had closed their stores rather than take payment and paper. Farmers from neighboring states did not care to bring their produce. Idleness and

economic depression also led to outbursts of rebellion and insurrection. In 1786, George Washington wrote to James Warren, quote, the wheels of government are clogged and we are descending into the veil of confusion and darkness. Two years later, in a letter to Henry Knox, he said, quote, if any person had told me that there would have been such formidable rebellion as exists, I would have thought him a badlamite, a fit subject for a madhouse, a bedlamite. That's, we're going to adopt that word. I got it. Can you send that one to Christy?

Bedlamite. Bedlamite. Fortunately, there is a happy ending to that part of the story. As we shall see in a subsequent chapter, when the state delegates assembled to draft the Constitution, the effects of Fiat money were so fresh in their minds, they decided to put an end to it once and for all. Then the New Republic not only rapidly recovered,

but went on to become the economic envy of the world. for a while at least until the lesson had been forgotten by following generations. But that's getting ahead of our story. For now, we're dealing with the topic of Fiat money. And the experience of the American colonies is a classic example of what always happens when men succumb to its siren call. Love that. Natural law number three, not to be confused with love potion number nine.

Let's pause at this point and observe another. of those lessons derived from centuries of experience. That lesson is so clear and so universal and so widely seen throughout history that it may be stated as a natural law of human behavior. Lesson. Fiat money is a paper money without precious metal backing and which people are required by law to accept. It allows politicians to increase spending without raising taxes.

Fiat money is the cause of inflation and the amount which people lose in purchasing power is exactly the amount which is taken from them and transferred to their government by this process. Inflation, therefore, is a hidden tax. This tax is the most unfair of all because it falls most heavily on those who are least able to pay, the small wage owners and those on fixed incomes. It also punishes the thrifty by eroding the value of their savings. This creates resentment among the people leading all ways to political unrest and national disunity. Therefore, law.

A nation that resorts to the use of Fiat money has doomed itself to economic hardship and political disunity. Yeah, America. I hope Trump has read this book. I'm sure he has. Fractional money. Well, you know, his economic team certainly has. And they use the same terms, right, hidden tax of inflation and all that. They've been using the same kind of language, which is encouraging. Let us turn now to the fourth and final possible form of money, a most intriguing concept called fractional money.

And to understand how this functions, we must return to Europe and the practice of early goldsmiths who stored the precious metal coins of their customers for a fee. In addition to the goldsmiths who stored the coins, there was another class of merchants called scriveners who lent coins. The goldsmiths reasoned that they, too, could act as scribveners. but do so with other people's money. They said it was a pity for all that the coin just had to sit idle in their vaults. Why not lend it out and earn a profit, which could then be split between themselves and their depositors? Put it to work instead of merely gathering dust. They had learned from experience that very few of their depositors ever wanted to remove their coins at the same time. In fact, net withdrawals settled exceeded 10 or 15% of their stockpile. It seemed perfectly safe to lend up to

80 or even 85% of their coins. And so the warehousemen began to act as loan brokers on behalf of their depositors and the concept of banking, as we know it today, was born. That's the way many history books describe it. But there is more involved here than merely putting idle money to work. First of all, sharing the interest income with the owners of the deposits was not part of the original concept. That only became general practice many years later after the depositors became outraged and needed to be reassured that these loans were in their interest as well. In the beginning, they didn't even know that their coins were being lent out. They naively thought the goldsmiths were lending their own money.

Depositors are not available for lending. Deposits are not available for lending. In the second place, we need to consider whether the coin in the vault was even available for lending, regardless of whether or not the depositors received a part of the profit. Let us suppose that we are playing a game of poker at the home, of Charlie Smith. Each of us has given $20 to Charlie, who acting as the banker has put our money into a shoebox and given us in return 20 poker chips. Is the understanding that anytime we want to go home, we can get back a dollar for each chip we have at that time. Now, let us suppose Charlie's

brother-in-law Larry shows up not to play poker, but to borrow some money. Since six of us are playing and each is put in $20. There's a total of $120 in the shoebox. And that turns out to be perfect for Larry's needs. You can imagine what would happen if Charlie decided to lend out the idle money. It is not available for lending. Neither Charlie nor any of the players have have the right to loan those dollars because they are being held in escrow, so to speak, pending completion of the contract between Charlie and his guests. Those dollars no longer even exist as money. They have been replaced, in concept at least, by the poker chips. If any of us are so touched by Larry's story that we have decided to loan him the money ourselves, we would have to do it with other dollars.

or cash in our chips for the dollars in the shoebox. In that case, of course, we could no longer stay in the game. We cannot spend loan or give away the deposits and also consider the chips to be worth anything. If you were a member of an organization and have given your proxy to a friend to vote in your absence at the annual meeting, you cannot then show up and cast your own vote in addition to your proxy. Likewise, in the beginning of banking, the certificates which were circulated

as money were in effect proxies for the coins. consequently those coins were not available for lending their monetary value had been assigned to the certificates if the certificate holders had wanted to lend out their coins they should have retired the certificates first they were not entitled to hold a spendable paper money and also authorized their banker to lend that same money as coins one cannot spend loan or give away the coins and also consider certificates to be worth anything all of this is just common sense, but there's another dimension to the problem, which has to do with honesty and business contracts. When the bankers used those coins as the basis for the loans, they were putting themselves in a position of not having enough coin in the vault to make good on their contracts when it came time for depositors to take the money home. In other words, the new contracts were made with the full knowledge that under certain circumstances, they would have to be broken.

But the bankers never bothered to explain that. The general public was led to believe that if they approved of putting these supposedly idle funds to work, they would be helping the economy and earning a little profit besides. It was an appealing proposal and the idea caught on like wildfire. Welcome to the bad mood hour. Fractional reserve banking. Most borrowers wanted paper money, of course, not bulky coins. So when they received their loans, they usually put the coins right back into the vault for safekeeping.

They were then given receipts for these deposits, which, as we have observed, were readily accepted in commerce as money. At this point, things began to get complicated. The original depositors had been given receipts for all of the bank's coins, but the bank now issued loans in the amount of 85% of its deposits, and the borrowers were given receipts for that same amount. These were in addition to the original receipts. That made 85% more receipts than coins. Thus, the banks created 85% more money and placed it into circulation through their borrowers. In other words, by issuing phony receipts, they artificially expanded the money supply.

At this point, the certificates were no longer 100% backed by gold. They now had a backing of only 54%. 100 units of gold divided by 185 certificates equals 0.54. But they were accepted by the unsuspecting public as equal in value to the old receipts. The gold behind all of them, however, now represented only a fraction of their face value. Thus, the receipts became what may be called fractional money. And the process by which they were created is called fractional reserve banking. None of this shortfall, unfortunately, was ever explained.

The bankers decided that it would be better not to discuss reality where the public could hear. These facts became the arcane secrets of the profession. The depositors were never encouraged to question how the banks could lend out their money and still have it on hand to pay back on an instance notice. Instead, bankers put on great airs of respectability, stability, and accountability, dressed and acted serious, if not stern, erected great edifices resembling government buildings and temples, all to bolster the false image of being able to honor their contracts to pay on demand. It was John Maynard Keynes, who observed, quote, a sound banker, alas, is not one who foresees danger,

and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way, along with his fellows, so that no one can readily blame him. It is necessarily part of the business of a banker to maintain appearances and to confess a conventional respectability, which is more than human. Lifelong practices of this kind make them the most romantic and the least realistic of men. And what they're describing, Brian, both Keynes and Griffin, What they're describing reminds me so much of the SEC audit firm profession, this air of public trust. We are the arbiters of public trust. The reason that we wear $10,000 suits, one million, what was it, Continentals, one million continental suits is because we're responsible for maintaining public trust.

but maintaining public trust in a fraudulent system is not a virtue. Right. It's a crime. Creating money out of debt, let us step back for a moment and analyze. In the beginning, banks served as warehouses for the safekeeping of their customers' coins. When they issued paper receipts for those coins, they converted commodity money into receipt money. This was a great convenience, but it did not alter the money supply. People had a choice of either using coin or paper, but they could not use both.

If they used coin, the receipt was never used. issued. If they used the receipt, the coin remained in the vault and did not circulate. When the banks abandon this practice and began to issue receipts to borrowers, they became magicians. Some have said they created money out of nothing, but that is not quite true. What they did was even more amazing. They created money out of debt. Obviously, it is easier for people to go into debt than to mine gold. Consequently, money no longer was limited by the natural forces of supply and demand. From that point, in history forward, it was to be limited only by the degree to which bankers have been able to push down the gold reserve fraction of their deposits.

From this perspective, we can now look back on fractional money and recognize that it is really a transitional form between receipt money and fiat money. It has some of the characteristics of both. As the fraction becomes smaller, the less it resembles receipt money and the more closely it comes to fiat money. When the fraction finally reaches zero, then it has made the complete transition. transition and becomes pure fiat. Furthermore, there is no example in history where men, once they had accepted the concept of fractional money, didn't reduce the fraction lower and lower until eventually it became zero. No bank can stay in business for very long with the zero reserve. The only way to make people accept such a worthless currency is by government force.

That's what legal tender laws are all about. The transition from fractional reserve money to Fiat money, therefore requires the participation of governments through a mechanism which is called a central bank. Most of the balance of this book will be devoted to study of that creature. But for now, suffice it to say that the euphoria of being able to create money without human effort is so great that once a narcotic is taken, there's no politician or banker who can kick the habit. As William Sumner observed, quote, a man might as well jump off a precipice intending to stop halfway down. You can't get rid of your creature.

Kind of always there. So he's just lurking. Natural law number four. And so, once again, we come to one of those natural laws that emerge from centuries of human experience. It can be stated as follows. Lesson. Fractional money is paper money, which is backed by precious metals, up to only a portion of the face amount.

It is a hybrid, being part receipt money and part. Fiat money. Generally, the public is unaware of this fact and believes that fractional money can be redeemed in full at any time. When the truth is discovered, as periodically happens, there are runs on the bank, and only the first few depositors in line can be paid. Since fractional money earns just as much interest for the bankers as does gold or silver, the temptation is great for them to create as much of it as possible. As this happens, the fraction which represents the reserve becomes smaller and smaller until eventually it is reduced to zero. Therefore, law, fractional money will always degenerate into fiat money. It is, but fiat money in transition. So much for the overview and

generalities. In the next chapter, we shall see what history has to say about this process and what history it is. Summary. Fiat money is paper money without precious metal backing, which people are required by law to accept. The first recorded appearance of fiat money was in 13th century China. Thanks, China. But its use on a major scale did not occur until colonial America. Thanks, colonial America. The experience was disastrous leading to massive inflation, unemployment, loss of property, and political unrest. During one period when the Bank of England forced the colonies to abandon their fiat money, general prosperity returned quickly. The revolutionary war brought and fiat money back to the colonies with a vengeance. The economic chaos that resulted led the colonial

governments to impose price controls and harsh legal tender laws, neither of which were effective. Fractional money, excuse me, is defined as money with precious metal backing for part, not all of its stated value. It was introduced in Europe when goldsmiths began to issue receipts for gold, which they did not have. Thus, only a fraction of their receipts was redeemable. fractional money always degenerates into pure Biot money and that is it for the pissed off hour

I like that mood I can get behind that since I don't have the book I can get behind wearing our creatures they take it they take control they're never gone always there who's looking fine.

It has a beard. My beard. Mine's beard is a little screw. You could pull the beard down to where it makes a unibra. Oh, that's nice. You kind of look like you're wearing like a mini shriner hat. A beret. Yeah,

that works too. But the poofy thing should be up and instead it's down. No, the poofy thing is his beard. Yeah, there we go. Yeah, now you've got like the Bert and Ernie eyebrow. Bert and Ernie. Hey, Bert. Hey, Bert.

All right, let's go ahead and get some soft disclosure in here. Ash gets mad at me when I do this, but whatever. No, Chee-G, we can't stop for SAC, and we have to deliver all of these soft disclosure gift cards. It goes by Zach Pave. The emotion detective. Just to be clear, I don't hate it when you play the soft disclosure ads. I love the soft disclosure ads. I hate it when you play them as an outro and don't talk about the products.

I always talk about the products. Nah. I use soft disclosure on my inner brow. I've been doing better. I use soft disclosure on my unibrow. Look how soft. It has been known to help remove creatures from your head. I'm going to go pour a little of the Federal Reserve.

No. By buying soft disclosure, you will help us shut down the Federal Reserve. In Bitcoin. Buy it in Bitcoin. promo code, muffin, hit it. it is that a promo code yes i've been saying bad lands and it's muffin hit it still work badlands will still work i also think um bad rands always works bad rands but from the asian alpha video um but yeah the the lotion the lip bomb beard oil tallow products all amazing good stuff the deodorant

you know you really only have to buy one to two deodorant deodorants a year when you use soft disclosure deodorant. So make sure that you stock up, get your stuff, give it as gifts, give it to your friends, and support all of the American businesses that make up soft disclosure. And we're expanding American businesses that make up soft disclosure. We have some, you'll, folks will start to see that come in more and more. Very exciting stuff, but can't beat our products. You can't really beat our ads either. I think we have the best personal care product advertising game around. I think we have the best advertising game around.

Yeah. Oh, my face. It's so soft. What is this? Hands down my hair. Make a great debt. Yeah, man. I was actually,

I played that song like 20 times over the weekend for the fourth. I love it so much. I make everybody watch that ad. Yeah. I've already seen it. You're going to watch it again. And it's crazy because even if they don't know like all the inside jokes that we have at Badlands, it's still epic. Still awesome.

Yeah. But then when I tell people that that song is AI, they're like, yeah, we're done as society. We're out because that's better than like 99% of music on the radio today. Yeah, but here's the thing. Like think about that, that Sweetland video that came out over heavy pulp. video that Elon shared and went viral. Like, that was a pretty good song as well. And it was all AI that was used in that.

It's not, AI can't do that by itself. It's the vision and the scripting and the prompts. And the person using AI, the artist using AI, the writer, the musician using AI, that's still human in the loop talent. And I think AI, there's a difference between, good quality AI art and AI slop. And I think that we're starting to see that difference come in to focus. Join us next week for Bad Mood Hour,

Chapter 9. All right. Thank you guys all so much for tuning in. And we will see this. We forgot to mention again. This was a pre-record. So we'll save. If there are any.

Yeah, they probably do. I'm wearing the same clothes that I was wearing on daily yesterday because this is right after daily yesterday. So I'm actually in two places at once right now because I'm also. covering the Charlie Kurt Tyler Robinson hearing. So maybe I'll rage you over to that. Cloning.

You're cloning. 57 minutes. We'll see you guys later. God bless. Take care. Bye guys. Thank you so much for joining us. And don't forget to hit the thumbs up on this video.

And a special thank you to all of our advertising partners. Please remember to shift your dollars to support those businesses that support Badlands Media.