On October 8, 1974, before a joint session of the Congress, President Ford call- ed "inflation, our public enemy No. 1." Schiffs thesis is that since it's the Federal government that causes that inflation, it's the Federal government that is, in reality, "public enemy No. 1" — and blistering chapters add to this in- dictment. With irrefutable evidence and driving logic, he accuses the Federal government of converting the American economy to national socialism and turning American workers into Federal peons. With facts and figures he shows how, when, and why the Federal government: • Causes inflation • Steals more from the public in a week than the Mafia does in a year • Declared official bankruptcy three times since 1970 • Created the energy crisis • Legislates unemployment, poverty and crime • Fraudulently conceals the nation's $8 trillion public debt • Unconstitutionally enforces a fraudulently acquired power to tax income, and • Why Social Security is a gigantic fraud from which taxpayers can now legally "drop out" • Why the Federal government is nothing but a profit making* business monopoly, and • Why he has paid no.income taxes since 1973. * For those who run it. IRWIN A. SCHIFF THE BIGGEST CON How The Government Is Fleecing You Foreword by John Chamberlain jfretbom Pooktf Las Vegas, Nevada Illustrations and Graphs by Emanuel Zeid Cover by Danial Brown Copyright 1976, 1977 by Irwin A. Schiff All rights reserved. No portion of this book may be reproduced without written permission from the publisher except by a reviewer who may quote brief passages in connection with a review. Manufactured In the United States of America ISBN 0-930374-01-0 PRINTING HISTORY Arlington House Edition - Published April, 1976 Freedom Books Edition - Published August, 1977 Freedoms Book. Second Printing - December, 1977 Freedom Books, Third Printing - May, 2000 This book contains the complete text of the original, hardcover edition published by Arlington House, plus an addendum specially written for Freedom Books. In addition a new foreword was written by the author for this printing. Library of Congress Cataloging in Publication Data Schiff, Irwin A. The Biggest Con. Includes index 1. United States-Economic policy-1971- I. Title HC106.7.S33 1977 338.973 77-81568 THE BIGGEST CON Dedication To my parents, Jacob and Anna Schiff, who, like millions of others, immigrated to these shores, not seeking or expecting a public subsidy but seeking only those rewards, that free- dom, hardwork, thrift and self-reliance could bestow. May this spirit and these virtues be restored to American life to serve as inspiration for my two children, Peter and Andy, their generation and future generations of Americans. "Inflation, our public enemy No. 1.. will, unless whipped, destroy our country, our homes, our liberty, our property . as surely as any well armed wartime enemy." President Gerald Ford Before a Joint Session of the Congress, October 8, 1974 Since it is our own government that causes that inflation -our own government is that enemy. Contents Foreword 7 Introduction 9 1. The U.S. Money Swindle 13 2. Inflation: The Government's Silent Partner 31 3. The U.S Public Debt and How the Government Conceals It 51 4. Social Security: The World's Biggest Chain Letter 105 5. How and Why the Government Declared Bankruptcy and Concealed It 120 6. Toward a United Socialist America? 128 7. U.S. Taxes—How They Have Converted the American Worker into a Serf 140 8. Taxes: The Arsenic in Our System 148 9. How Labor Laws Destroy Employment Opportunities 164 10. How Unions Victimize the Worker 185 11. The Energy Crisis—How the U.S. Government Planned It 193 12. The Uneconomists and the Science of "SIIGometrics" v...218 13. The Decline of U.S. Economic Power—How the Government and the Federal Reserve Arranged It 253 14. The Solution to America's Economic and Social Problems 290 Appendix A: Investments 314 Appendix B: The Testimony of Irwin A. Schiff as Submitted to the Committee on Banking and Currency 328 Appendix C: Direct Excerpts from Testimony Presented to the Committee on Banking and Currency 336 Addendum 343 Index 361 COMMENTS BY THE AUTHOR ON THE 4™ PRINTING OF THIS BOOK IN THE YEAR 2000 Both the outside and inside covers of this edition of The Biggest Con: How the Gov- ernment is Fleecing You are reproduced as they appeared on the original, 1977 paperback edition. Arlington House published the first edition of The Biggest Con in hard cover in 1976. Though this book was my first book, it received approximately 80 laudatory reviews and was a Conservative Book of the Month Club selection in 1976. The book went on to sell approximately 90,000 copies in soft and hard cover and was itself influential in causing a number of other books being written based on the disclosures in this book. This was the first book to actually illustrate and document the illegal and unconstitutional conversion of U.S. coin and currency to what is essentially counterfeit coin and currency. It was also the first book to actually document how the U S. government was hiding the full extent of the National Debt by not including in its reporting of that debt the government's unfunded and contingent liabilities. I have always wanted to write a chapter by chapter update of this book to illustrate how all of my 1975 fears concerning federal taxation and regulations were undermining America's industrial base (and destroying high paying industrial jobs) were turning out as predicted. However, since 1 have been occupied exposing the illegality with which the government collects (actually extorts) income taxes and devising methods by which Americans can avoid paying this tax, I have not had the time to do that. Suffice to say that America's upcoming $350 billion trade deficit for the year 2000 has more than fulfilled all of my fears as expressed throughout the book. Since my most dire predictions (such as those expressed on pages 145 and 146) never actually materialized, one might conclude that those predictions were far-fetched. How- ever, those predictions were based on the conditions that existed in 1975 and the obvious shriveling up of the necessary capital (due to taxation, inflation and a falling savings rate) needed to sustain and support our economy. There were two factors that saved the situation that I had never considered; 1) the vast increase of women in the work force, and 2) the substantial influx of foreign capital (which was insignificant in 1975) both of which re- placed the supplies of domestic capital I saw vanishing, It should be obvious that if we rolled back the number of women in out workforce to the same percentage they occupied in 1975. and if we did the same with the amount of foreign capital being utilized in our economy (and the amount needed to support domestic consumption) - our economy would have collapsed long ago, as predicted. Because of these two factors - women in the work force and the infusion of foreign capital - the day of reckoning has merely been postponed, but it is still coming. In the first paragraph on page 335 1 made a number of predictions concerning what would happen to the dollar if the Johnson Administration succeeded in removing gold backing from U.S. currency. Everyone of my predictions came to pass. However, the con- trary claims and predictions made by such other government witnesses as; Senator William Proxmire, then head of the Joint Economic Committee, Secretary of the Treasury Henry H. Fowler and Federal Reserve Board Chairman, William McChesney Martin (pages 336- 342) have proven to have been blatant nonsense. Since 1 actually ran out of copies of this book and could no longer fill orders for them. I had to rush this reprinting and forgo my desire to republish this book with a chapter-by- chapter commentary. 1 will have to leave that task for a later date. Foreword The word "blockbuster" is used indiscriminately. But, it is surely the right word for Irwin Schiff's account of how our uneconomists (his word for the Keynesians who believe in the universal solvent of the free lunch) have flooded us with unmoney to the point where recovery has become almost impossible without a truly terrifying bankruptcy. What is new about Mr. Schiff s work is that he shows how scores of mistakes, no one of which is necessarily lethal by itself, can react on each other to bring an end to the efficacy of any temporary palliatives. A law of critical mass becomes involved. Long ago, John T. Flynn and Edna Lonigan proved the fraudulent nature of a Social Security system that builds up no backlog of investments capable of meeting its obligations. We might have survived this theft if the purchasing power of our money hadn't been systematically leached by additions to dead-horse debt that must now be reckoned in the trillions. The government-induced energy crisis complicates everything by a factor we have not yet fathomed. Legal ratchet actions prevent any fall-back to positions that might enable producers to reduce their costs, revive their attraction for investors, and come out of it with an annual profit, Union wages and fringe benefits remain on the escalator. The minimum wage has put a whole generation of young blacks on the relief rolls. The Employment Act of 1946 forces Congress to spend endlessly in the vain hope that work can be made for everybody. Meanwhile, the federal, state and municipal payrolls become padded with thousands of non-producers. Mr. Schiff figures that only sixteen out of every hundred people in the U.S.