Quotes from the Book The Web of Debt

Executive Summary

• The excellent book The Web of Debt was so good, it was necessary to record some quotes.

Introduction

This book explains the problem with private banking and why banking should be public. It provides a tremendously insightful explanation of the history of private banking interests and how previous battles between private and public banking took place.

This is an introduction to Ellen Brown the best-known advocate for public banking. Ellen Brown explains how the math works of what happens when a state creates its own bank. In this video, she uses California as an example. 

The fact that states do not create their own state banks is in part due to private banking interests and to the fact that most of the people working in state government do not understand how banking works.

Ellen Brown uses the history of private banking and public banking to make the case for all states to start their own state banks. However, that is only a minor alteration to the system. The ultimate goal would be the end of private banking. Yet, just getting states to create their own banks would be a monumental task.

Who is Robbing the Bank?

In my experience in fact, the chief source of bank robbery is not masked men, looting tellers, Tash tells but the blatant abuse of the extension of credit by white collar criminals. A common practice is for loan officers to ignore the long term risks of loans and approve those loan transactions with the highest fees and interest paid immediately. income which can be distributed to the principal executives of the bank. The federal income tax was instituted specifically to coerce taxpayers to pay the interest to the banks on the federal debt. If the money supply had been created by the government rather than borrowed from banks that created it, the income tax would have been unnecessary. Contrary to popular belief, creeping inflation is not caused by the government irresponsibility in printing dollars. It is caused by banks expanding the money supply with loans.

On Obscuring Reality With Mainstream Economics

Economics is a drying forbidding subject that has been made intentionally complex by banking interests, intent on concealing what is really going on it is a subject that sorely needs lightening upon with imagery metaphors and characters and applaud so before we get into the ponderous details of the modern system of money based on debt, we’ll take an excursion back into a simpler time, when the money issues were more obvious, and we’re still a burning topic of discussion.

The Economic Depression of the 1890s

The 1890s were plagued by an economic depression that was nearly as severe as the Great Depression of the 1930s. The farmers lived like serfs to the bankers, having mortgaged their farms or equipment and sometimes even the seeds they needed for planting. They were charged so much by a railroad cartel for shipping their products to market that they could have more costs and that’s the profits. In every presidential election between 1872 and 1896, there was a third National Party running on a platform of financial reform, typically organized under the auspices of labor or farmer organizations. These were parties of the people rather than the banks, being included the Populist Party, the Greenback, the Greenback Labor Parties, the Labor Reform Party, the Anti Monopolist Party, the Union Labor Party, they advocated expanding the national currency to meet the needs of trade reform of the banking system and democratic control of the financial system.

Why Reform Tends to Center Around the Gold Standard

Money reform advocates today tend to argue that the solution to the country’s financial woes is to return to the gold standard, which required that paper money be backed by a certain weight of gold bullion. But to the farmers and laborers who were suffering under the yoke of the 1890s.

The Gold Standard was a problem.

They had been there and done it and knew it didn’t work. William Jennings Bryan called the bankers private gold based money a cross of gold, there was simply not enough gold available to finance the needs of the next. banding economy. The bankers made loans and notes pay backed by gold and required repayment in notes backed by gold, but the bankers control the gold and its price was subject to manipulation by speculators.

US Government Issued Money: Greenbacks

The solution of Jacob Kaki and his industrial army of destitute unemployed man was to our argue, augment the money supply with government issued United States now it’s popularly called greenbacks. These federal dollars were first issued by President Lincoln when he was faced with the US various interest rates of the 1860s Lincoln had foiled the bankers by funding the government with us notes, did not accrue interest and did not have to be paid back to the banks. The same sort of debt free paper money had financial long period of colonial abundance in the 18th century until King George forbade the colonies from issuing their own currency. The money supply had been shrunk, precipitating a depression that led to the American Revolution. to remedy the type money problem that resulted when the greenbacks were halted under Lincoln’s assassination. kaksi proposed that Congress should increase the money supply with a further 500 million and greenbacks. This new money would be used to redeem the federal debt and to stimulate the economy by putting the unemployed to work on public projects. The bankers countered that allowing the government to issue money would be dangerously inflationary.

Lincoln’s View on Money

The government should create a issue and circulate, all of the currency and credit needed to satisfy the spending power of the government and the buying powers of the consumers, the privilege of creating and issuing money is not only the supreme prerogative of the government, but it is the government’s greatest creative opportunity by the adoption of these principles along felt once for the uniform medium will be satisfied, the taxpayers will be saved immense sums of interest discounts and exchanges, the financing of all public enterprise and the maintenance of stable government, and ordered progress and the conduct of the Treasury will become matters of practical administration. Money will cease to be the master and become the servant of humanity democracy will rise superior to the money power from the Senate.

How Private Banks Lent Gold Many Times Over

What they failed to reveal was that their own paper banknotes were themselves highly inflationary since the same gold was lent many times over, effectively counterfeiting it and when the bankers lent their paper money to the government, the government wound up heavily in debt for something it could have created itself. But those facts were buried in confusion rhetoric in the bankers gold standard won the day. Like the green bankers, the populist argued that money should be issued by the government rather than by private banks. William Jennings Bryan, the populist loquacious speaker gave such as stirring speech at the Democratic Convention, that he won the Democratic nomination for president in 1896. outgoing president Grover Cleveland was also a Democrat, but he was an agent of JP Morgan in the Wall Street banking interests. Cleveland favored money that was issued by the banks and he backed the bankers gold standard. Bryant was opposed to both.  He argued in his winning nomination speech.

“We say in our platform that we believe the right to coin money and issue money is a function of government. Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank, and that the government outright to go to borrow to get out of the banking business. I stand with Jefferson, and tell them as he did, that the issue of money is a function of the government, and that the bank should go out of the government business governing business. You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a gold of a cross of gold.”

Since the green bankers push for government issued money, it failed. Brian and the silver rights proposed softened liquidity problem and another way, the money supply could be supplemented with coins made of silver or precious metal that was cheaper and more available than gold. Silver w

The crash that initiated the Great Depression wasn’t a one time occurrence. It continued for nearly four years after 1929 stoked by speculators who made huge profits. Not only on the markets meteoric rise, but as it was plummeting, unrestrained financial exploitation has been one of the great causes of our present tragic condition Roosevelt complained in 1933. a four year industry wide bear raid reduce the Dow Jones Industrial Average to only 10% of its foreign value for more value. A bear raid is the practice of targeting stocks would take down either for quick profits are for corporate takeover. short selling is a form of counterfeiting. When a company is founded, a certain number of shares are created, the entire value of that company is represented by that fixed number of shares. When an investor buys some of those shares and leaves them registered in his brokerage street name, his broker makes those same shares available to someone else. To sell short. Once sold short there are two investors owning the same shares of stock. The price of stock shares are set by market forces IE supply and demand. When there is a fixed supply of something the price adjusts until demand is met. But when supply is not fixed, as when something is counterfeited, supply will exceed demand and the price will fall. The price will continue to fall as long as supply continues to extend beyond demand. The lending of shares by a broker who holds them in trust for his customer is comparable to the Goldsmith’s lending of gold held in trust for depositors. The brokers customers may have agreed to lend out their shares in the fine print of their brokerage contracts, but they probably are not aware of it. They could avoid having their shares lent out by taking physical possession of the stock, but if they leave the stock with a broker, it is in street name and can be lent out and sold without the real owners knowledge. Naked short selling is a practice of selling stock short without either owning or borrowing them. Like many regulations put in place during the Roosevelt’s New Deal. The rule against that practice to is also been seriously eroded. It has been argued that a highly liquid stock market is essentially is essential to ensure corporate funding and growth. That might be a good argument if the money actually went to the company but that’s not where it goes. The issuing company gets the money only when the stock is sold at a high initial public offering IPO. The stock exchange is a secondary market investors buying from other stockholders hoping they can sell the stock for more than what they paid for it. Basically, it’s gambling. Corporations have an easier time raising money through new IPOs. If the buyer know they can turn around and sell their stock quickly. But in today’s computer globalized markets, real buyers should show up quickly enough without letting broker sell stock they don’t actually have to sell. Like fractional reserve lending. short selling is made possible because the brokers are not dealing with physical things, but they’re simply moving numbers around on computer monitors. Any alleged advantages to a company from the liquidity afforded by short selling are offset by the serious harm the sleight of hand can do to companies targeted for the takedown in bear rates over the six year period before 2004 he said the practice resulted in over 7000 public companies being shorted out of existence. Burrell maintain that as much as a trillion dollars to 3 trillion may have been lost and naked short selling, and that more than 1200 hedge funds and offshore accounts have been involved in the scandal. hedge funds are private funds that pool the assets of wealthy investors with the aim of making absolute returns making a profit whether the market goes up or down maximize their profit. They typically use credit borrowed against the fund’s assets to leverage their instant investments. Leverage is the use of borrowed funds to increase purchasing power, the greater the leverage, the greater the possible gain or loss. In trading futures this leverage is called the margin. Leveraging on margin or borrowing the money allows an investor to place many more bets Then if They had paid the full price. In the 1920s. wealthy investors engaged in pooling, combining their assets to influence the markets for their collective benefit. Like trust a monopolies pooling was considered to be a form of collusive interference with the noise market forces of supply and demand. Hedge Funds are the modern day variants of this scheme. They are usually run in offshore banking centers, such as the Cayman Islands to avoid regulation. Hedge funds were originally set up to hedge the bats have investors insuring against currency or interest rate fluctuations but they quickly became instruments for manipulation and control hedge funds are now offered responsible for over half the daily trading In the equity markets due to their huge And the huge amount capital funding them In the fall of 2000 In six Hey 1200 82 of the night 800 hedge funds Operating worldwide. registered in the kingdom. Language British Overseas Territory with us population of 50 7000 people came in Island monetary authority gives each hedge fund a right at registration 100 year exemption from any taxes sheltering the funds activity. behind the wall of official secrecy How are these astronomical derivative sums even possible? The answer again is a derivatives are just bets and gamblers can bet any amount of money they want. Gary Novak is a scientist with a website devoted to simplifying complex issues. He writes, it’s like two persons flipping a coin for a trillion dollars and afterwards someone owes a trillion dollars which never existed. One problem with the current system is that the government itself has been seduced into borrowing money created out of nothing and paying interest on it when the government could have created the funds itself, debt and interest free. In the case of government loans, banks take virtually no risks. And so government is always good for interest, and the taxpayers get saddled with a crippling debt that could have been avoided. Another problem with the fractional reserve system is simply in math. Since all money except coin comes into existence as debt to private banks and the banks create only the principal when they make loans. There is never enough money in the economy to repay principal plus interest on the nation’s collective debt. When the money supply was tethered to gold, the problem was resolved through periodic waves of depression and default, that wipe the slate clean and started the cycle all over again. It was a brutal system for the farmers and laborers who got wiped out and it allowed to finance your class to get progressively richer, while the actual producers got progressively poor. But it did serve to maintain a certain stability in the money. So Why? Today however, the Fed has taken on the task of preventing depression something it does by pumping more and more credit money into the economy by funding a massive federal debt that no one ever expects to every two have to repay and all this credit money is extended interest at some point The interest bill alone must exceed the tax. payers ability to pay And a According to the US Comptroller General, David Walker that day of reckoning is only a few years away. A third problem with the current system is that giant International Bank are now a major players in global markets not just as lenders but as investors. Banks have a grossly unfair advantage in this game because they have access to so much money and they can influence the outcome of their bets. If you have the individual investors sell a stock short. Your modest investment won’t do much to influence the stock price but a mega bank It’s affiliates can short so much stock that the value plunges if the bank Hank is one of those lucky Institutions consider too big to fail. It can rest easy even even if it’s bad. That does go wrong since the FDIC and taxpayers will bail it out from its folly Lincoln’s economist Henry Carey said that The twin weapons used by the British Empire to colonize a world where the gold standard and free trade. The Gold Standard has now become the petrodollar standard.

And as we’ll see in the next chapter, the same crack open foreign markets in the name of free trade take down the local currency And put the nation’s assets on the block of firesale prices. The first step in this process is to induce the country to accept foreign loans and investment. The loan money gets dissipated, but the loans must be repaid in the appointment word Brazilian politician Louis Ignacio Silva The third world war has already started the war is tearing down Brazil, Latin America and practically all the Third World instead Soldiers die. There were children. It’s a war over the third World debt one Which has its main weapon interest a weapon more deadly than the atom bomb. More shattering than the laser beam The gold cap suggests that the gold that was used by international finances to colonize indigenous populations in the 19th century. The Gold Standard was a necessary step in giving the bankers fractional reserve lending scheme legitimacy, but the rules could not be sustained indefinitely. l is our Lord put his finger on the problem in the 1860s. When gold left the country to pay for foreign debts, the multiples of banknotes ostensibly backed by it had to be withdrawn in circulation as well. The result was money, contraction and depression. The currency for the time is annihilated, said Lord. Prices for businesses suspended detriment on paid panic and distress and Sue men and active business fail bankruptcy ruin in disgrace reign. Roosevelt was faced with this sort of implosion of the money supply in the Great Depression, forcing him to take the dollar off the gold standard to keep the economy from collapsing. In 1971, Nixon had to do the same thing internationally. When for creditors threatened to exhaust us gold reserves by cashing in their paper dollars for gold. between those two paradigm changing events came john F. Kennedy who evidently He had his own ideas about free trade, the third world and the world Wall Street dead game battling Wall Street. The presidency. Donald Epson contends Kennedy was last president Take a route to take Real stand again. She entrenched Wall Street business interests Kennedy was a hit. hambletonian who will pose the forces of free Trade And felt that industry should be harnessed to serve the Commonwealth. He felt strongly that the country should maintain its independence by developing cheap energy sources. The stand pitted against him pitted him against oil. banking cartels, which was bent on raising oil prices to prohibitive levels to entangle the world in debt. Kennedy has been accused of reckless militarism and obsessive anti communism. But Gibson said his plan for neutralizing the appeal of communism was more benign. He would have replaced colonialist and imperialist economic policies with a development program that included low interest loans, foreign aid and nation and nation cooperation and some measure of government. When planning the Wall Street bankers had other ideas give in quotes George Moore the president of First National City Bank, who said with $1, leading international currency And the United States or worlds largest exporter importer of goods services and capital was only natural The you Banks should guard themselves. To play the same relative role in international finance, that the Great British financial institutions played in the 19th century. The Great British financial engine Institutions play the role of subjugating the end of developed countries to the position A backward exporters of raw material You was the short With exploitation Kennedy foreign policy aimed to eliminate he crossed the banking community and International Monetary Fund when he could To give foreign aid to Latin American countries it has failed to adapt The bankers policies you rights, Kennedy’s support for economic development and third world nationalism and his tolerance for government economic planning, even when it involves expropriation of property owned by interests in the US all lead to conflicts between Canada and the US. leads within the US and Our nation’s There is also evidence that Kennedy crossed the bankers by seeking to revive a silver backed currency that will Wouldn’t be independent of the banks and their privately owned Federal Reserve The man remains and out since his presidency came to an untimely end before he could play his hand, but he did authorize the Secretary of the Treasury to issue US Treasury silver certificates and he was the last President issue freely circulating United States banknotes greenbacks when President Lyndon Johnson stepped into the presidential shoes. His first official acts included replacing government issued United States notes with Federal Reserve now In declaring the Federal Reserve Notes could no longer be redeemed and silver. The new federal reserve notes were released that omitted the following promise to pay in lawful money in 1906 Da Johnson issued a proclamation And then even Federal Reserve silver certificates could not be redeemed in silver, the $1 bill which until then had been a silver certificate was made of Federal Reserve. No Not redeemable in any form of hard currency. United States notes and $100 denominations were printed in 1966 to satisfy the 1878 green backlog requiring their issuance but most were kept Separate or separate room It’s a treasury and we’re not circulated In the 1990s greenback law was revoked all together. Eliminating Even that token issuance Although the puppeteers behind Kennedy’s assassination had never been officially exposed, some investigations have concluded that he was another victim of the Invisible Hand of the International corporate banking military cartel. President Eisenhower warned in his 1961 farewell address of the encroaching powers of the military industrial complex. in that mix, Gibson would add the oil cartel and Morgan Rockefeller banking sector which were closely aligned, Kennedy took a bold stand against them all. He how he stood up to the CIA in the military was revealed by James Bamford. In the book body of secrets, which featured the ABC News is featured by ABC News in November 2001. Two months after the World Trade Center disaster, the book discussed Kennedy’s threats to abolish the CIA’s right to conduct covert operations after he was presented with secret military plans codenamed Operation Northwoods in 1962. drafted by America’s top military leaders these bizarre plans included proposes to kill innocent people have committed acts of terrorism and US cities in order to create public support for war against Cuba. Actions contemplated included hijacking planes, assassinating Cuban emigres, sinking boats of Cuban refugees on the high seas, blowing up a US ship orchestrating violent terrorism in US cities and causing us military casualties, all for the purpose of tricking the American public and the international community into supporting a war to aus Cuba’s then new communist leader Fidel Castro. Their proposal stated we could blow up a US ship in Guantanamo Bay and blame Cuba, and that casualty lists in US newspapers could cause a helpful wave of national indignation. Needless to say Kennedy was shocked and flatly vetoed the plans. The head of the Joint Chiefs of Staff was promptly transferred to another job. The country’s youngest president was assassinated a follow assassinated the following year. Whether or not Operation Northwoods played a role. It was further evidence of an invisible government acting behind the scenes is disturbing murder was a wake up call for a whole generation of activists. Things in the Emerald City were not as green as they seemed Lyndon Johnson was followed in the White House by Richard Nixon, the candidate Kennedy defeated 1960. In 1971, President Nixon took the dollar off the gold standard internationally leaving currencies to float in the market so that they had to compete with each other as if they were commodities. currency markets were turned into giant casinos, it could be manipulated by powerful hedge funds, multinational banks and currency speculators. William angol, author of a century of war writes, in this new phase control over monetary policy, in effect was privatized with large international banks such as Citibank, Chase Manhattan or Barclays, assuming the role that central banks had in the gold system, but entirely without gold. market forces would now determine the dollar and they did with a vengeance. It was not the first time floating exchange rates have been tried an earlier experiment had ended in disaster when the British pound and the US dollar had both been taken off of the gold standard in the 1930s. The result was a series of competitive devaluations that only serve to make the global depression worse. The Bretton Woods accords were entered into at the end of World War Two. To correct this problem, the foreign exchange markets were stabilized with an international gold standard in which each country fixed its currency. currencies global price against the price of gold currencies are allowed to fluctuate from this pegged only within a very narrow range, plus or minus 1%. The United The International Monetary Fund was set up to establish exchange rates and the International Bank for Reconstruction and Development The World Bank was founded to provide credit to war ravaged and third world countries. The principal architects of the Bretton Woods accords were British economist john Maynard Keynes and assistant US Treasury Secretary Harry Dexter white. Keynes envisioned an international Central Bank and the had the power to create its own reserves by issuing its own currency which he called the banker, but the United States had just become the world’s only financial superpower and was not ready for that step in 1944. The IMF was formulated mainly by white and it reflected the power The American dollar the gold standard had failed earlier because Great Britain and the United States, their global bankers had run out of gold. Under the white plan, gold would be backed by US dollars, which were considered good as gold because the United States had to agree to maintain their convertibility into gold at $35 per ounce. As long as people had faith in the dollar there was no fear of running out of gold homestead no That the Bretton Woods accords were convened By the master spider, David Rockefeller, they played right into the hands of the global bankers who needed the most sensible backing of gold to justify a man expansion of the US dollar Debt around the world. The Bretton Woods gold standard worked for a while but it was mainly because few countries actually converted their dollars in the gold. Trade balances were usually cleared in US dollars due to their unique strength with After World War Two things fell apart However, after foreign in Should you begin to doubt the solvency of the US by 19 65 Vietnam War driven the I’m pretty heavily into debt the French President Charles de Gaulle, seeing that the United States was spending far more Hadn’t gold reserves to manage to convert 300 million of France’s US dollar holdings into gold. That request was honor but it was followed by one that would have broken the Bank Great Britain having a car The largest monthly trade deficit in its history have been turned down by the IMF for a $300 billion loan and tried to cash in its gold back. dollars for the gold they supposedly representative represented some amount of To a folly 1/3 The gold reserves in In the United States The problem might have been alleviated. In the short term bye raising the price of gold but that was not Agenda prevail. The gold price was capped at $35 per ounce, forcing President Nixon to renege on the gold deal and closed the gold window permanently. To his credit Nixon did Not take this step until he was forced into it. Although he it had urged by a cop optimist Milton Friedman Result of taking the dollar off the gold standard was to finally take the brakes off the printing presses. Fiat dollars could now be generated and circulated to whatever extended the world extent the world would take them. The Witches of Wall Street proceeded to build a worldwide financial Empire based on fractional reserve banking. That used bank rated paper dollars in place of time on our gold dollars became the reserve currency for a global net of debt to an international banking cartel. It worked out so well for the bankers that skeptical commentators suspected it must have been planned that way. Professor antheil fake a fake at a wrote in an article in the May 2005 Asian times that the removal of the dollar from a gold standard was the biggest act of bad faith in history he charged it is disingenuous to say that in 1971, the dollar the US made the dollar freely floating what the US did was nothing less than throw away the yardstick of measuring value. It is truly unbelievable that in our scientific day and age when the material and therapeutic while being a billions of people depends on increasing accuracy of measurement in physics and chemistry. dismal monetary science has been allowed to push the world into the dark ages. By abolishing the possibility of accurate measurement of value. We no longer have a reliable yardstick to measure value. There was no open debate about the wisdom or the lack of it determined to run the economy without such a yardstick. Whether unpacking the dollar from gold was a deliberate act of bad faith might be debated, but the fact remains that gold was inadequate as a global yardstick for measuring value. The price of gold gold fluctuated widely, and it was subject to manipulation by speculators. Gold was also failed as a global reserve currency because there was not enough gold available to do the job. If one country had an outstanding balance of payments because it had not export enough goods to match its imports. That imbalance was corrected by transferring resource goals between countries. And to come up with the goal the debtor country would cash and it’s US dollars for the metal draining us gold reserves. It was inevitable that the US government the global banker, would eventually run out of gold. Some proposed proposals for pegging currency exchange rates that would retain the benefit of the gold standard without its shortcomings are explored in chapter 46. If the gold standard was flawed, the system of floating exchange rates that replaced it was much worse, particularly for the third world countries. currencies were now valued nearly by their relative exchange rates in the free market. The foreign exchange markets became giant casinos in which the investors were just betting on the relative positions of different currencies. smaller countries were left at the mercy of the major players, whether other countries, multinational corporations, or multinational banks, which could radically devalue national currencies just by selling them short on the international markets. in large quantities. These currency manipulator manipulations could be so devastating they could be used to strong on concessions from Target economies. What happened, for example, during the Asian crisis in 1997, and 98, when they were used to encourage Thailand, Malaysia, Korea and Japan to come into conformance with World Trade Organization rules and regulations. The foreign exchange market became so unstable that that crisis ease could result just from rumors of economic news and changes in perception. Commercial risks from sudden changes in the value of currency are now considered greater than political or market risks from conducting foreign trade. A huge derivative market developed to provide hedges to counter these risks. The hedgers typically place that bets both ways in order to be covered, whichever way the market goes. The US dollar had formerly been backed by gold that was now backed by oil. Every country had to acquire Federal Reserve Notes to purchase this essential commodity. Oil importing countries around the world suddenly had to export goods to get the dollars to pay their expensive new oil import bills diverting their productive capacity away from feeding and clothing their own people, countries that had a negative trade balance. Because they failed to export more goods in the imported were advised by the World Bank and the IMF to up peg their currencies from the dollar, unpack their currencies from the dollar and let them float and the currency market. The theory was that an overvalued currency would then become devalued naturally until until it found its true revalue devaluation would make exports cheaper and imports more expensive along the country to build up a positive trade balance. By selling more goods and I bought that was a theory but as Michael Rob Hoffman observed It has not worked well on Practice. There is the obvious but frequently ignored point that whilst lowering the value of a currency may promote exports, it will also raise The cost of imports. This of course is intended to auditor imports by If the demand of imports is inelastic reflecting essential goods and services, contracts and preferences then the net cost of imports may not Fall in may actually rise. Also whilst the volume of exports may rise, appearing to promise greater earnings, the financial return per unit of export will fall, time and time again nations devaluing their currency MCs have seen volumes of exports and imports alter slightly but with little overall impact on the financial balance of trade Right If the benefits of letting the currency float or minor, the downsides are major. The currency was now subject to rampant manipulation by speculators As a result was a disaster. rollercoaster ride particularly Third World economies. Today most currency trades are done purely for speculative profit. currencies rise or fall depending on quantities traded each day. Professor Henry ck Lu, the Chinese American economist quoted earlier says that China escaped the 1998 Asian crisis in this way he writes, China was saved from such a dilemma because the one was not freely convertible in a fundamental way. The Chinese miracle of the past half century, half decade has been made possible by its fixing exchange rate, fixed exchange rate and currency control. But China too has been under pressure to let its currency float Lew warns that the country of his ancestors, quote, the record of the past three decades has shown that neoliberal ideology brought devastation to every economy and invaded. China will not be exempt from such a fate when it makes a wonderful a convertible and floating rates and quote, there is no real solution to this problem short of global monetary reform. China’s money system is explored in detail in chapter 27. When the price of oil quadrupled in the 1970s, OPEC countries were suddenly flooded with us currencies, and currency. And these Petro dollars were usually deposited in London and New York banks. They were an enormous windfall for the banks, which recycled them as low interest loans to third world countries. They were desperate to borrow dollars to financial oil imports. Like other loans made by commercial banks, these loans are not actually because it’s the money deposited by their clients. The deposits merely served as reserves for loans created by the multiplier effect out of thin air. through the magic of fractional reserve lending dollars belonging to Arab sheiks are multiplied many times over. As accounting entry loans. The emerging nations were discovered as emerging markets for those new international financial capital hundreds of billions of dollars in loan money were generated in this way. Before 19 73/3 world debt was manageable and contained. It was financed mainly through public agencies, including the World Bank, which invested in projects promising solid economic success, but things changed on private commercial bank and gotten into the game. The banks were not in the business of development. They were in the business of loan brokering, some call it loan sharking. The banks preferred stable governments for clients. Generally, that meant governments controlled by dictators. How these dictators come to power and what they did with their money were not of immediate concern to the banks, the Philippines, Chile, Brazil, Argentina, and Uruguay were all are all prime loan targets. In many cases, the dictators use the money for their own ends, without significantly better conditions the people, but the people were saddled with the bill. The screws are tightened in 79 when the US Federal Reserve under paul volcker, unilaterally hiked rates to crippling levels. And Goodall notes that this was done after foreign dollar holders began dumping their dollars in protest over the foreign policies of the Carter administration. Within weeks, Volcker allowed the US interest rate to triple they rose to over 20%, forcing global interest rates through the roof triggering a global recession and mass unemployment. And by 1982, the dollar status as gold global reserve currency had been saved. But the entire third world was on the brink of bankruptcy, choking from as user as interest charges on their Petro dollar loans. That was when the IMF got into the game. Bought brought in by the London and New York banks to enforce debt repayment, and act as debt policemen. public spending for Health Education and Welfare entire countries was slashed following IMF orders to ensure that the bank’s got timely debt service for the Petro dollars. The banks also brought pressure on the US government to bail them out from the consequences of their imprudent loans using taxpayer money and us assets to do it. The results were austerity measures for the third world countries and taxation for American workers to provide welfare for the banks. The banks were emboldened to keep aggressively lending confident they would again be bailed out if the debtors loans went into default. worse for American citizens the United States itself ended up as a major debtor nation because oil is an essential commodity. For every country. The Petro dollar system requires other countries to build up huge trade surpluses in order to accumulate the dollar surpluses. They need to buy oil. These countries have to sell more goods and dollars and they buy to give them a positive dollar balance. That is true for every country except the United States, which controls $1 and issues that it will more accurately the Federal Reserve and the private commercial banking interests it represents control the dollar and the issue issue with it well, since you are a US economic dominance depends on the dollar. recycling process, the United States has acquiesced in becoming importer of last resort. The result has been the satelitte with growing negative trade balances or currency account deficit. By 2000. US trade deficits and net liabilities to foreign accounts were well over 22% of gross domestic product. The people of the United States like those in the third world had become hopelessly mired in debt to support the banking system of a private international cartel. Wow. countries around the world have been caught in the same trap that captured Mexico. Henry ck Lu calls it the tequila trap. He also calls it a suicidal policy masked by the giddy expansion of typically typical of the early phase of a Ponzi scheme. The lower on the trap is the promise of massive dollar investment at first returns are spectacular. But as with every Ponzi scheme, the returns eventually collapse, leaving the people massively in debt to a foreign banking cartel that will become their new economic masters. The former Soviet states, the tiger economies of Southeast Asia, and the Latin American banana republics all succumb to these rapacious tactics, local ineptitude and corrupt politicians are blamed when the real culprits are international banking speculators on with tsunami size walls of credit created on computer screens. Targeted countries are advised to attract foreign investment. They must make their currencies freely convertible into dollars in prevailing or floating exchange rates, and they must keep adequate dollars in reserve for anyone who wants to exchange from one currency to the other. After the trap is set, the speculators move in. Speculation has been known to bring down currencies and national economics in a single day. Michel chossudovsky See, professor of economics at the University of Ottawa writes, the media tends to identify these currency crisis as being the product of some internal mechanism, internal political weakness or corruption. The linkages to international finance are downplayed. The fact of the matter is that currency speculation using speculative instruments was ultimately the means whereby the central bank reserves were literally confiscated by the private speculators the very notion that a country has to defend its currency shows that there’s something wrong with the system law The tequila trap is the contemporary version of what Henry Carey and the American nationalist warned against the 19th century when they spoke of the dangers of opening a country’s borders to free trade. Carey said sovereign nation should pay their debts and their own currencies issued greenback style by their own governments. Professor Lew also advocates his approach which he calls sovereign credit, carry calls it National Credit, something that he defined as a national system not liable to interference from abroad. Carey also called it the American system to distinguish it from the British system of free trade. Abraham Lincoln was forging ahead with that revolutionary model when he was assassinated, carrying his faction realizing that the country was facing the very real threat the banking interests that had captured England would also capture America then move from to form a ball awkward against us encroaching menace by planting the seeds of the American system abroad. In the 20th century, the British system did prevail in America but the American system was quietly taking roots overseas

Transcribed by https://otter.ai

as considered to be the money of the Constitution. The Constitution only referred to the dollar but the dollar was understood to be a reference to the Spanish milled silver dollar coin then a common use.

Silver Versus Gold

The slogan of the silver rights was 16 to 1. Or 16 ounces of silver would be the monetary equivalent of one ounce of gold. After World War Two, the money question faded into obscurity.

How Government Creating Its Own Money Has Been Converted into a Conspiracy Theory

Today, according to British economist Michael Robotham, the surest way to ruin a promising career in economics, whether from professional or academic is to venture into the cranks and crackpot world of suggesting suggestions for reform of the financial system. Yet the claims of these cranks and crackpots have been consistently proven to be correct. The US debt burden has mushroomed out of control until just the interest on the federal debt now threatens to be a greater tax burden than the taxpayers can afford. Today’s monetary allegory goes something like this. The dollar is a national resource that belongs to the people it was an original invention of the early American colonists, a new form of paper currency backed by the full faith and credit of the people. But a private banking cartel has taken over its issuance turning debt into money and demanding that it be paid back with interest. Taxes into crushing federal debt had been imposed by financial ruin class it keeps the people in trance and enslaved. illusion surrounding the Federal Reserve begins with its name the Federal Reserve is not actually federal and it keeps no reserves at least not in the sense most people think no gold or silver backs its federal reserve notes are dollar bills. A booklet published by the Federal Reserve Bank of New York State’s currency cannot be redeemed or exchanged for Treasury gold or any other asset used as backing the question of just what assets backup Federal Reserve Notes has little to do as little bit bookkeeping significance. The Fed is owned by a consortium of private banks, the biggest of which are Citibank and JP Morgan Chase company. These two mega banks or financial cornerstones are the Empires built by JP Morgan and JD Rockefeller.

The mechanics of money creation were explained in a revealing booklet published by the foot the Chicago Federal Reserve in the 1960s called Modern Money Mechanics, a workbook on bank reserves and bank deposit expansion. The booklet is a goal is a goldmine of insider information that will be explored at length later, but here are some highlights. It begins with

“The purpose of this booklet is to describe the basic process of money creation in a fractional reserve banking system. The actual process of money creation takes place primarily in banks. Banks do not really pay out loans from the money they receive as deposits. If they did, there’s no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrower’s transaction accounts. Contrary to popular belief, then loans become deposits rather than the reverse.”

Chicago fed stated banks can build up deposits by increasing loans and investments, so long as they keep enough currency on hand to redeem whatever amounts to the holders of deposits want to convert into currency. This unique attribute of the banking process was discovered many centuries ago.

“It started with Goldsmith’s this unique attribute the Goldsmith’s discovered was what was that they could issue paper receipts for the same gold many times over so long as they kept enough gold in reserve for any depositors who might come for their money. This sleight of hand was came to be known as fractional reserve banking. If the Goldsmith’s were careful not to overextend this credit, the Goldsmith’s could thus become quite wealthy without producing anything of value themselves.”

How the Goldsmiths Preyed on the Local Economy

Since more money was owed back then the townspeople as a whole possessed the wealth of the time and eventually the country was siphoned into the vaults of these Goldsmith’s turned bankers, while the people fell progressively into their debt. If a landlord had rented the same house to five people at one time and pocketed the money, he will quickly have been jail for fraud, but the Goldsmith’s had devised a system in which they traded, not things of value, but paper receipts for them. The system was called fractional reserve banking because the gold held in reserves was a mere fraction of the banknotes it supported.

Whipple explains the interest problem like this from the problem with usury. When a bank provides you with $100,000 mortgage creates only the principal would you spend, and which then circulates in the economy, the bank expects you to pay back $200,000 over the next 20 years, but it doesn’t create the second $100,000 the interest. Instead, the bank sends you out into the tough world, to battle against everyone else to bring back the second $100,000. He concludes greed competition are not a result of the immutable human temperament. greed and fear of scarcity are in fact being continuously created and amplified as a direct result of the kind of money we are using. We can produce more than enough food to feed everybody. And there’s definitely enough work for everybody in the world. Well, there’s clearly not enough money to pay for it all. scarcity is in our national currencies. In fact, the job of central banks is to create and maintain the currency scarcity. The direct consequence is that we have to fight with each other in order to survive. Inherent hearings before the House Committee on Banking and currency in 1941, right patman asked Marriner AClass, then Governor of the Federal Reserve Board, how the Federal Reserve got money to buy government bonds. Quote, we created it unquote. Echols replied. Right patman asked out of what Echols replied out of the right to issue credit money and then patman and there’s nothing behind it is there except our government’s credit. That’s what our money system is Eccles replied. If there were no deaths in our money system, there wouldn’t be any money. in numerous years, following the Civil War, the federal government ran a heavy surplus, but it could not pay off its debt retire with securities because to do so meant there would be no bonds to back and national bank notes. To pay off the debt was to destroy the money supply. The federal debt has been the basis of the US money supply ever since the Civil War when the national Banking Act authorized private banks to issue their own banknotes backed by government bonds deposited with the US Treasury.

The Experiment in Public Central Banking by the American Colonies

The American colonies were an experiment in utopia in an uncharted territory, you could design new systems and make new rules. Paper money was already in use in England but it had fallen into the hands of private bankers, who were using it for private profit at the expense of the people. In the American vision of this new medium of exchange paper money was issued in lent by provincial governments, and the proceeds were used for the benefits of the people. The colonists new paper money finance, a period of prosperity that was considered remarkable for isolated colonies lacking their own silver and gold. By 1750. Benjamin Franklin was able to write of New England, there was abundance in the colonies in peace was raining on every border. It was difficult and even impossible to find a happier more prosperous nation on all the surface of the globe. Comfort was prevailing in every home. The people in general kept the highest moral standards and the education was widely spread. The distinction of being the first local government to issue which on paper money went to the province of Massachusetts The year was 1691.

Massachusetts

Three years before the Charter of the Bank of England, Jason Goodwin, who tells a story in his 2003 book greenback rights at Massachusetts Buccaneer governor had led a daring assault on Quebec, in an attempt to drive the French out of Canada. But the assault had failed. Militia men and widows needed to be paid. The local merchants were approached but declined, saying they had other demands on their money. The idea of a paper currency had been suggested in 1650, in an anonymous British pamphlet titled The key to wealth or a new way of improving the trade, lawful, ease and safe and effectual. The paper currency proposed by the pamphlet here, however, was modeled on the receipts issued by London goldsmiths and silversmiths for the precious metals left in their vaults for safekeeping. The problem for the colonies was that they were short of silver and gold. They had to use foreign coins to conduct trade, and since they imported more than the export of the coins were continually being drained off to England and other countries leaving the colonialists without enough money for their own internal needs. The Massachusetts assembly, therefore propose a new kind of paper money, a bill of credit representing the government’s bond or IOU. Its promise to pay tomorrow on the debt incurred today. The paper money of Massachusetts was backed only by the full faith and credit other government. Other colonies then followed suit with their own issues of paper and money. Some were considered government IOU is redeemable later in hard currency, silver or gold. Other issues were legal tender and themselves legal tender, is money that must legally be accepted for the payment of debts. Franklin wrote his pamphlet after observing the remarkable effects that paper currency had had in stimulating the economy. In his home in the province of Pennsylvania. He said experience more prevalent than logic and all the world is fully convinced us that paper money has been and is now of the great, greatest advantages to the country.

1. The government did not need gold to issue this currency and it did not need to go into debt to the banks in America the land of opportunity, this ready money would allow even the poor to get ahead.
2. Franklin wrote that money that understand business very well, but have not had a stock sufficient of their own will be encouraged to borrow money to trade with when they have it at a modest interest. When gold was a medium of exchange, money determined production rather than the production determining the money supply. When gold was plentiful, things got produced when it was scarce, men were out of work and people knew want. The virtue of the government issued paper script was that it could grow along with productivity, allowing potential To become real wealth. The new paper money did more than make the colonies independent of the British bankers and their goal that actually allow the colonists to finance their local governments without taxing the people. And the government is traced in 2002 article called representation without taxation by 1000 Rand Booshka, a senior fellow at the Hoover Institute at Stanford University, he writes it There are two main ways economies issued paper money.

Most colonies use both in varying proportions. One was a direct issuance of notes, usually called bills of credit or Treasury notes. These are IO use of the government backed by specific future taxes. However, the payback was deferred well into the future and sometimes the funds never got returned to the Treasury at all. Like a bathtub without a drain, the money supply kept increasing, without a means of recycling it back to the source, but at least the funds were not owed back to private foreign lenders and no interest was due on them.

The Most Successful Loan Officer in the Middle Colonies

The most successful loan officers were in the middle colonies Pennsylvania, Delaware, New York and New Jersey the model that earned it my admiration of all was a loan officer established in Pennsylvania in 1723. The Pennsylvania plan show that it was quite possible for the government to issue new money in place of taxes without inflating prices.

From 1723. Until the French and Indian War of the 1750s. The provincial government collected no taxes at all. The loan office was the provinces chief source of revenue, supplemented by imported import duties on liquor papercraft currencies of the New England colonies, Massachusetts, Rhode Island, Connecticut and New Hampshire were less successful than those of the middle colonies, mainly because they failed to limit their issues to these proper proportions or to recycle the money back to the government.

The paper money of the New England colonies helped to finance development and growth that would not otherwise have occurred, but the currencies did not maintain their value because bills and credit were issued in far greater quantity than the government that provincial government ever hoped to redeem. Rapid depreciation of the New England bills eventually threatened the investments of British merchants and finance ears who were doing business with the colonies, who learned on part parliament to prohibit the practice, who leaned on parliament to prohibit the practice. In 1751. King George a second and accurate a ban on the issue of all new paper money in the New England colonies, forcing the colonists to borrow instead from the British bankers. The ban was continued until George King George the Third, who succeeded his father in 1752. In 1764, Franklin went to London to petition parliament to lift the band. When he arrived, he was surprised to find rampant unemployment and poverty. Among the British working classes. The streets were covered with beggars and tramps. He observed and when he asked why, he was told that the country had too many workers there’s English listeners had trouble believing what Franklin said.

Franklin said that.

“We have no poor houses in the colonies and if we had some there would be nobody to put them in. Since there is in the colonies, not a single unemployed person, neither beggar nor tramp.”

The English had listeners had trouble believing this and started poor houses and jails were had become to clutter. The English had actually shipped their poor to the colonies, when the directors of the Bank of England asked who was responsible for the booming economy the young colonies had, Franklin reportedly replied.

“That is simple. In the colonies we issue our own money. It is called the colonial script we issue with the pay the government’s approved expenses and charities we make sure it is issued in proper proportions to make the goods pass easily from the producer to the consumer. In this manner, grading for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to know what you see a legitimate government can both spend and lend money into the circulation. While banks can only lend significant amounts of their promissory notes. For they can neither give away nor spam but a tiny fraction of the money that people need. Thus, when your bankers here in England place money in circulation, there is always a debt principle to be returned and usually to be paid. The result is that you always have too little credit in circulation to give workers full employment. You do not have too many workers you have too little money in circulation, and that which circulates all bears the endless burden of unpayable debt and usury. After extolling the benefits of colonial script to the citizens of Pennsylvania, Franklin reportedly told his listeners, New York and New Jersey have also increased greatly during the same period with the use of paper money, so that it does not appear to be of the ruinous nature ascribed to it.”

Jason Goodwin observes that it was a tricky argument to make, the colonialist had been stressed stressing to the mother country how poor they were so poor, they were forced to print paper money for lack of precious metals. Franklin’s report demonstrated the Parliament and the British bankers at the pretext for allowing paper money had been removed.

The point of having colonies was not after all to bolster the colonies economies, it was to provide more raw material at a decent rate to the mother country.

How the Bank of England Used its Influence to Pass the Currency Act Against the Colonies

In 1764, the Bank of England England used its influence on parliament to get a Currency Act passed. That made it illegal for any of the colonies to print their own money. The colonists were forced to pay all future taxes in Britain to Britain in silver or gold. Anyone lacking those precious metals had to borrow them and interest from the banks. Only a year later, Franklin said the streets of the colonies were filled with unemployed beggars, just as they were in England, the money supply had suddenly been reduced by half leaving insufficient funds to pay for the goods and services these workers would have or could have provided. He maintained it was the poverty caused by the bad influence of British bankers on the parliament, which had caused the colonies hatred of the English and the Revolutionary War. This he said was a real reason for the revolution. The colonies will gladly have one little tax on tea and other matters had it not been that the English took away from the colonies the money which created unemployment and dissatisfaction. JOHN twelves and English historian confirmed the view of the revolution writing in a bad hour the British Parliament Chuck away from America, it’s representative money, forbade any further issue of bills of credit. These bills cease to be legal tender, and ordered that all taxes should be paid in coin considering how the consequences considering now the consequences this restriction of the medium of exchange paralysed all the industrial energies of the people. Ruling took place in these once flourishing colonies. most vigorous distress visited every family and every business is discontent became desperation, and reached a point to use the words of Dr. Johnson where human nature rises up and asserts its rights. When the colonists could not issue their own currency, the money supply had suddenly shrunk, leaving widespread unemployment, hunger and poverty and its wake unlike the Great Depression of the 1930s people in the 1770s were keenly aware of who was responsible for their distress. One day they were trading freely with their own paper money the next day, it was gone banned by the order of a king an ocean away who demanded tribute in coin of the British bankers. In the coin of the British bankers, the outrage populace ignored the bandwidth act issuing its own paper money in the law, science of money. Stephen Zarlenga quotes historian Alexander Del Mar, who wrote in 1895. The creation and circulation of bills of credit by revolutionary assemblies.

The Continental Script

Like Massachusetts nearly a century earlier the colonies suddenly found themselves at war without the means to pay for it. The first act of the new Continental Congress was to issue its own paper script proper properly called the Continental most of the Continentals were used as IOUs or debts of the revolutionary government to be redeemed in coinage later, eventually, $200 million and continental scripts were issued.

By the end of the war, the script had been so devalued, that it was basically worthless, but it still evokes the wonder and admiration of foreign observers because it allowed the colonialists to do something that had never been done before. They succeeded in financing a war against a major power with virtually no hard currency of their own, without taxing the people.

Franklin wrote from England during the war, the whole is a mystery, even to the politicians how we could pay with paper what had no previously fixed fund, appropriately specified to redeem it. Thomas Paine called it a cornerstone of the revolution. The English government, which seems to have a mania for counterfeiting, the paper money of its enemies entered into a competition with private criminals. The Continental had to compete with other currencies, rendering it vulnerable to speculative attack in the same way that foreign currencies left to float the international markets are today, the Continental had to compete with the state’s paper notes. The British bankers, gold and silver coins, gold and silver were regarded as far more valuable than paper promises of a revolutionary government that may not prevail, and the state’s paper notes had the taxation power to back them. The problem might have been avoided by making the Continental the sole official currency but the Continental Congress did not yet have the power to enforce that sort of order. It had no course no police, no authority to collect taxes to redeem the notes or contract the money supply. The colonies had just rebelled against taxation by the British and we’re not ready to commit to that burden from the new Congress. speculators took advantage of these weaknesses by trading the Continentals at a deeper and deeper discount until they became virtually worthless, giving rise to the expression not worth a continental. president john adams was quoted as saying there are two ways to conquer and enslave a nation. One is by the sword and the other is by debt. Sheldon Amery expanded on this concept two centuries later, observing that conquest by the sword has a disadvantage that the conquered are likely to rebel. Continual forces were required to keep them at bay from conquest by debt can occurs so silently and insidiously that the Conqueror don’t even realize they have new masters. Colonies in the 17th and 18th centuries all had the same purpose to enhance the economy of the mother country. That was how the mother country saw it, but the American colonists had long oppose any plan that would systemically drain the money supply off to England. The founding fathers were so additional disillusion with paper money, that they simply omitted it from the Constitution. The Congress was given the power only to coin money and regulate the value thereof and to borrow money on the credit of the United States. An enormous loophole was thus left left in the law. Creating an issuing money had long been considered the prerogative of the government, but the constitution failed to define exactly what money was, was to coin money and 18th century wave sailing saying to create money, or did this include creating paper money, if not, who did have the power to create paper money, Congress was authorized to borrow money but did that include borrowing paper money or just gold? The National War debt had reached $42 million, with no silver or gold coins available to pay it off. The debt might have been avoided if the government had funded the war with continental script that was stamped legal tender making it money in itself with the revolutionary government and the states had issued a major portion of their paper money is promissory notes payable after the war. The solution of treasury secretary Hamilton was demonetised national debt by turning it into a source of money for the country. He proposed that a national bank be authorized to print up bank notes and swap them for the government’s bond. The government would pay regular interest on the debt using imported duties and money from the sale of public land. Proponents of the American system rejected the laissez faire approach in favor of guiding and protecting the young country with a system of rules and regulations. They felt if the economy were left to the free market, big monopolies would gobble up small entrepreneurs, foreign banks and industrialists could explore the country’s labor and material and competition would force prices down ensuring subjugation to British imperial interests. The British model assume that one man’s gain could only occur through another’s loss. The goal was to reach the top of the heap by climbing on competitors and driving them down. In the American vision of the Commonwealth, all men would rise together by the leaving the whole heap at once. Hamilton argued that to promote general welfare the country needed a monetary system that was independent of foreign masters and for that it needed its own federal central bank. The bank would handle the government’s enormous war debt and create a standard form of currency. Jefferson maintains suspicious maintains suspicious of Hamilton and his schemes. But Jefferson also felt strongly that the new country’s capital city should be in South in his home state of Virginia. Hamilton who did not care where the capital was agreed on the location of the national capital in exchange for Jefferson’s agreement on the bank. Within five years the government had borrowed 8.2 million from the bank, the additional money was obviously created out of thin air, just as it would have been if the government had printed the money itself but the government now owed principal and interest back to the bank. To reduce its debt to the bank, the government was eventually forced to sell its shares largely to British finance ears. To his credit Hamilton is reported to have opposed the sale but the sale went through in the First Bank of the United States wound up largely under foreign ownership and control. Hamilton was widely acclaimed as a brilliant writer, orator and thinker, but Jefferson he remained a diabolical schemer, a British stooge pursued a political agenda for his own ends.

The First Bank of the United States was modeled on the Bank of England, and the same private bank against which the colonialist had rebelled. Years later, Jefferson would say that Hamilton had tricked him into approving the bank’s charter. Jefferson had always suspected Hamilton of monarchical sympathies, and his schemes all seem tainted with the corruption. Jefferson would go so far as to tell Washington he thought Hamilton was a dangerous traitor. He complained to Madison about Hamilton’s bookkeeping.

I do not at all wonder at the condition in which the finances of the United States are found. Hamilton’s object from the beginning was to throw them into forms, which should be utterly indecipherable.

Lurking behind the curtain of Hamilton’s new National Bank, a privileged privileged class of financial middlemen, we’re now legally entitled to siphon off of the perpetual tribute in the form of interest. And because they control the money spigots, they could fund their own affiliate businesses with easy credit, squeezing our competitors and perpetuating the same class divisions in the American system was supposed to have circumvented usury is now defined as charging excess interest, but originally, it meant merely charging a fee or interest for the use of money usually was forbidden in the Christian Bible and anti usury laws were strictly enforced by the Catholic Church until the end of the Middle Ages, but in Jewish scriptures, which were later joined to the Christian books, as the Old Testament, usury was forbidden only between brothers, charging interest to foreigners was allowed and even encouraged. The money changers thus became associated with Jews, but they were not actually the Jewish people. In fact, the Jewish people may have suffered more than any other people for money changers schemes, which were responsible for much anti semitism.

Why Did Jesus Throw the Money Changers Out of the Temple?

In the infimum, informative documentary video, the money masters Bill Still and Patrick Carmax point out that when Jesus threw the money changers out of the temple, it was actually to protect the Jewish people Like the modern banking cartel.

The money dangers and monopoly As a medium of exchange and we’re exacting a charge for its use Money was a mere fiat of the law.

The Tally Stick

Fiat means let it be done in Latin. Fiat money is money that is legal tender by government decree. It is simply a tally something representing a unit of value that is to be traded in the marketplace. The English tally system originated with King Henry the first son of William the Conqueror who took the throne in 1100 AD the printing press had not yet been invented and taxes were paid directly with goods produced by the land. under King Henry’s innovative system, payment was recorded with a piece of wood that had been notched and split in half, one half was kept by the government and the other by the recipient. To confirm payment, the two halves were matched to make sure they tallied sense, no stick splits and an even manner on since the notches tally the songs were cut right through both of the pieces of wood. The method was virtually foolproof against forgery. Only a few 100 tallies survived but millions were made. Tallies were used by the government not only as receipts for payment of taxes but to pay soldiers for their service farmers for their wheat and labor’s for their labor. at tax time the treasurer accepted the tallies and payment of taxes. In the field 1500s King Henry the Eighth gave them the force of national currency.

The tally system was to be used for more than five centuries before the usury bankers gold Based paper money scheme took root, helping to fund a long era of leisure and abundance it flowered into the Renaissance. Modern school books generally portrayed the Middle Ages as a time of poverty, backwardness and an economic slavery, from which the people were freed only by the Industrial Revolution but reliable, early historians paint quite a different picture. Thorold Rogers, a ninth century Oxford historian wrote that in the Middle Ages, a laborer could provide all the necessities for his family for a year by working 14 weeks. For the rest of the time, some men work for themselves some studied some fished. Some help to build the cathedrals that appear all over Germany, France and England during the period. The Renaissance is usually thought of as the flowering of the age, but the university system, representative government and a parliament, the English common law system and the foundations of a great literary and spiritual movement were all in place by the 13th century, and education was advanced and widespread.

In the documentary, the Money Masters narrator Bill Still uses the puppet metaphor to describe the transfer of power. From the royal line of English stewards to the German Royal House of Hanover in the 18th century, quote, England was to trade masters and unpopular King James a second for a hidden cabal of money changers pulling the strings of their usurper thing away in the third from behind the scenes, the symbolic or symbiotic relationship between the money changers and the higher British aristocrat Arista, aristocracy continues to this day. The monarch has no real power but serves as a useful shield for the money changers who rule the city. Where did these international financial years come from, and how did they achieve their enormous power? The money lenders had been evicted not only from England, but from other European countries they had regrouped in Holland where they applauded their return. But the kings and queens staunchly resisted their advances in England. The King did not need to borrow money when he had the sovereign right to issue it himself. For a brief period in the 1500s King Henry the Eighth relaxed the laws concerning usury when he broke away from the Catholic Church, but when Queen Mary took the throne, she tightened the laws again. The result was to seriously contract the monetary supply, but Queen Elizabeth was determined to avoid the usury trap. She solved the problem by supplementing the money supply with metal coins issued by the public Treasury. The coins are made of metal but their value came from the stamp of the sovereign on them. After the Bank of England began issuing paper banknotes in the 1690s, the government followed suit by issuing paper tallies against future tax revenues. paper was easily negotiable, making the paper tallies competitive with private bank note money. For the next century bank notes and tallies circulated interchangeable, but they were not mutually compatible means of exchanges.

The bankers paper money expanded when credit expanded and contracted when loans were cancelled are called producing cycles of tight money and depression alternating with easy money and inflation. Yet these notes appeared to be more sound than the government’s tallies because of their gold banking. They appear to be sound until a bank’s customers got suspicious and all demanded their gold at the same time when there would be a run on the bank and it would have to close its doors because it did not have enough gold to go around. Meanwhile, the government tallies were permanent money that remained stable and fixed. They made the bankers paper money They look bad and they had to go. The child has had to go for another reason. King William’s right to the throne was disputed, and the Dutch moneylenders who backed him could be evicted Did it the Catholics got back in and forbade the money lending again, to make sure that did not happen the money lenders used undue influence to discount the tallies as money and get the banknotes legalizes the money of the realm that salaries were called unfunded debt while the bank of England’s paper notes were euphemistically labeled funded debt. They were to be funded through taxes since they were not death’s door receipts for goods and services which could be used by the bearers in the payment of taxes. It was because Italians were accepted and sometimes even required in the payment to access that they’ve retained the stable value of money. Harvard Law presented a chart showing that in 1693 100 percent of the government’s debt was unfunded or paid and government tallies. By the 1720s. They wrote over 90% of all government borrowing was long term unfunded.

This in a nutshell was the financial revolution in a nutshell

The financial revolution transfer the right to money from the government to private bank.

The End of the Tally Sticks

In the end, the tallies met the same fate as a witches death by fire. The medieval witches were mainly village healers whose natural herbs and potions competed with a male dominated medical profession and the papal church. According to some modern estimates, 9 million people were executed as witches for practicing natural herbal medicine and occult religion. Battalions were some early the money of the people which competed with the money of the usury bankers. In 1834 after the passage of certain monetary reform acts, the tally sticks went up in flames and a huge bonfire started in the stove. In the House of Lords in an ironic twist, the fire quickly got out of control and wound up burning down both the Palace of Westminster and the Houses of Parliament. It was a symbolic end of an equitable era of trade, with the transfer of power from the government to the bank. A private central bank is charted as the nation’s primary bank and lends exclusively to the national government. It lends the central bank’s own notes printed paper money, which the government swaps for bonds its promises to pay in circulation as a national currency. The government’s debt has never paid off, but it has just rolled over from year to year, becoming the basis of the national money supply.

Goldsmith’s Printing Their Own Supply of Notes Against Bank Reserves

Until the 20th century, banks follow the model of Goldsmith’s and literally printed their own supply of notes against her own gold reserves. These were then multiplied many times over on the fractional reserve system the bank saw own name was printed on the notes which were lent to the public and the government. Battalions were wiped off the books and fell down the memory hole but they still left a mark on the modern financial system. The word stock meaning if an answer certificate comes from the Middle English for the tally stick, much of the stock in the Bank of England was originally purchased with Pat with tally sticks. The holder of the stock was said to be the stock holder who owned bank stock

The Foreign Money Lenders Conquer Britain and Set Their Eyes on the US

The foreign money lenders who’ve conquered Britain set the same traps in America and they did it the same way. They provoked a series of wars. British money funded the opposition to the American war for independence, the war of 1812 and both sides of the American Civil War in each case war led to inflation, heavy government debt, and the chartering of a private bank of the United States to fund the debt, delivering the power to create money to private interests.

Americans That Opposed the Creation of a Private Bank in the US

In each case, the opposition to the bank was opposed by a few alert leaders opposition to the first US Bank was led by Thomas Jefferson, the country’s second president, while opposition to the second US Bank was led by Andrew Jackson, the country’s seventh president, the two leaders did not have much else in common. Jefferson was the landed gentry while Jackson was called the rough shot president but they shared a deep suspicion of any private arrangement for issuing the national currency. Both are particularly concerned about the national banking system and had Jefferson is quoted as saying if the American people ever allow the banks to control the issuance of their currency, first by inflation then by deflation the banks and the corporations will grow up around them and will deprive their people of all property until their children will wake up homeless on the continent their fathers occupied Jefferson was instrumental in Congress’s refusal to renew the Charter of the first US Bank in 1811. When the bank was liquidated Jefferson’s suspicious were confirmed 18,000 of the bank’s 25,000 shares were owned by foreigners, mostly English and Dutch. Foreign domination in the revolution, had been fought to eliminate. That is had fought to eliminate had crept back Through the country’s private banking system. Congressman Teesha of Kentucky, speaking in the House of Representatives declared that this accumulation foreign capital was one of the enemies, one of the engines for overturning civil. Everybody and he had no doubt King Georgia III was a principal said.

Congress later renewed the bank’s charter and Andrew Jackson vetoed it. He expressed concern about a major portion of the bill, the bank shareholders is that they were foreigners like the German Rothschilds banking Empire was British only in the sensse it had been in England a long time. Its roots are actually in Germany the House of Rothschild was founded in Frankfurt in the middle 18th century when a money lender name mayor and name Bauer changed his name to an Rothschild and fathered 10 children. His five sons were sent to the major capitals of Europe to open branches of the family banking business. Nathan, the most astute of these sons was sent to London where he opened a family branch called the nm Rothschilds and sons.

And the United States did find itself in another war with England the war of 1812 war again led to inflation and heavy government debt and this and an inability to collect taxes were the reasons given for chartering the second Bank of the United States as a private National Bank. The 20 year charter was signed by President James Madison in 1816, to authorize the bank and its branches to issue the nation’s money in the form of banknotes again shifting the power to create the national money supply into private hands. Jefferson was out of town when the constitution was drafted, serving as America’s minister of France during the dramatic period leading up to the French Revolution. But even if he had been there, he would probably have gone along with the majority and voted to omit paper money from the Constitution. After watching the national debt mushroom, he wrote to John Tyler in 1878.

“I wish it were possible to obtain a single amendment to our constitution taking from the federal government the power to borrow money, I now deny their power of making paper money or anything else is legal, legal tender.”

It would be several decades before Jefferson realized that the villain was not paper money itself, it was private debt masquerading as private money as private debt owed to bankers who were merely pretending to have money. Jefferson wrote to Treasury Secretary Galton in 1815. Writing to Galton in 1803, Jefferson said of the private National Bank, this institution is one of the most deadly hostile against the principles of our Constitution. He asked,

“Could we start towards independently using our own money to form our own bank?”

The Constitution only gave Congress the power to coin money, but Jefferson argued that constitution could be ammended. He wrote to Samuel Carey Chava all in 1816.

“Some men took a look at constitutions with sanctimonious reverence and deem them like the Ark of the Covenant to sacred to be touched. They ascribe to the man of the preceding age of wisdom, more than human and suppose that they did. To be beyond amendment laws and institutions must go hand in hand with the progress of human mind. As that becomes more developed, more enlightened as more discoveries are made institutions must advanced also, to keep pace with the times.”

Andrew Jackson was a hero of the War of 1812 and a leader with enormous popular appeal. He was the first of the unlettered scarecrows to reach the White House to be followed by the even mightier Abraham Lincoln. Jackson received an honorary degree from Harvard College in 1833. But it was over the objection of Harvard alumnus john quincy adams who call them a barbarian who could not write a sentence of grammar and hardly could spell his own name. In January of 1835, and what may have been his finest hour, Jackson paid off the final installment on the national debt he had succeeded in doing something that had never been done before, which has not been done since he reduced the national debt to zero and accumulated a surplus.

The following year, the charter for the second Bank of the United States expired, and Biddle was later arrested and charged with fraud. He was tried and acquitted, but he died about tied up in civil suits. Jackson had beaten the bank his personal secretary Nicholas tryst called the crowning glory of Andrew Jackson’s life and the most important service he ever rented to his country. Abraham Lincoln went from hasty to the top of his class by sheer native wit and determination epitomized the American Dream following in the footsteps of Andrew Jackson, he rose from the backwoods to the presidency without ever going to college. Lincoln’s mother could barely read like a law Jackson Lincoln risk life and limb battling the money power. But the two presidents are quite different ideas about how it should be done.

Andrew Jackson and Ending the Private Central Bank

Jackson had captured the popular imagination by playing on the distrust of big banks and foreign bankers. By throwing out the National Bank and its foreign controllers. He had thrown out Hamilton’s baby with the bathwater, leaving the bank, the banks and unregulated a chaos. There was now no national currency, banks printed their own notes and simply had to be trusted to be redeemed for gold bullion.

Bank fed speculation had collapsed much of the factory system and federal support for roads, canals and railway construction was halted, halting the Pioneer settlement of the west along with it. Lincoln it was only 24 years old when he joined the fight as an Illinois state legislator to continue the pioneering internal improvements begun by Henry Clay in the national Republicans. Both Jackson and Lincoln were targets of assassination attempts, but for Lincoln they started before he was even inaugurated, he began to deal with a treason insurrection and national bankruptcy within the first days of taking office considering the powerful forces arrayed against him. His achievements in the next four years were nothing short of phenomenal. His government built and equip the largest army in the world smash the British financial insurrection, abolish slavery and freed 4 million slaves along the way the country managed to become the greatest industrial giant the world had ever seen. I was all of this accomplished with a treasury that was completely broken a congress that hadn’t been hadn’t paid, been paid themselves. As Benjamin Franklin might have said, that is simple. Lincoln tapped into the same cornerstone that had gotten the prop pauvres colonists through the American Revolution, and a long period of internal development. Before that, the government issued its own paper, fiat money. National control was reestablished over banking and the economy was just started with a 600% increase in government spending and cheap credit directed at production.

A century later, Franklin Roosevelt would use the same techniques to pull the country through the Great Depression. But Roosevelt’s New Deal would be financed with borrowed money. Lincoln’s government used a system of payment that was closer to the medieval tally. Originally called the United States notes, these 19th century tallies were popularly called greenbacks, because they were printed on the back with green. They were basically just receipts acknowledging work done, or goods delivered, which could be traded in the community for an equivalent value of goods or services.

Who Came Up with the Idea for Greenback?

The greenback system was not actually Lincoln’s idea, but when pressure grew in Congress for the plan, he was quick to endorse it. The South succeeded from the union soon after his election in 1860. to fund the war between the states to Eastern banks and offered a loan package that was a little short of extortion. 150 million advanced and interest rates of 24 to 36%. Like a new loan would be impossible to pay off he took the revolutionary approach, because he had no other real choice, the government could either print its own money or succumb to debt slavery to the bankers.

Henry Carey

Lincoln’s economic adviser was Henry Carey. The son of Matthew Carey, the printer and publisher mentioned earlier who was tutored by Benjamin Franklin and had tutored Henry Clay. Clay was the leader of the Philadelphia based political faction proposing the American system of economics and the aid in the 1920’s historian Vernon Parrington called Henry Carey, our finest professional economist. Carey was known around the world during the Civil War and its aftermath and his writings are translated into many European and Asian languages. Carey came to consider free trade and the gold standard to be twinned financial weapons forged by England for its own economic conquest. His solution to the gold drain was for the government to create an independent national currency that was non exportable one that would remain at home to do the country’s own work. He advocated a currency founded on a national credit, something he defined as a national system based entirely on the credit of the government, with the people not liable to interference from abroad. Like the wooden tally his paper money would simply be a unit of account that tallied work performed in goods delivered as Thomas Edison reasonably observed in an interview reported in the New York Times in 1921. If a nation can issue $1 bond, you can issue $1 bill, the element that makes the bond good makes the bill good also, the difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sword provided by the Constitution pays nobody but those who contributed in some useful way. It is observed to say that our country can issue bonds and cannot issue currency both our promises to pay one the fattens the user, and the other one helps the people. mean Meanwhile, the Confederates paper money had become devalued so much that they were worthless. the Confederacy had made the mistake of issuing fiat money that was not legal tender, but was only a bond or promise to pay.

After the war as the defeat of the Confederacy became more and more certain its currency value plummeted. In 1971, the United States Treasury Department was asked to compute the amount of interest that would have been paid if the 400 million and greenbacks have moved borrow from the banks instead. According to the Treasury Department’s calculations in this short tenure, Lincoln save the government a total of $4 billion in interest just by avoiding this $400 million loan. the Confederacy was not the only power that was bent on destroying Lincoln’s Union Government lurking behind the curtain pulling the strings of war were powerful foreign financier’s Otto von Bismarck, Chancellor of Germany in the second half of the 19th century called these puppeteers the masters of European finance. And he wrote, I know of absolute certainty that the division of the United States and the Federation’s of equal forests was decided long before the Civil War.

Why the European Private Banking Interests Feared the US

The high financial powers of Europe, these bankers were afraid of the United States if they remained in one block, and as one nation would attain economic and financial independence, which would upset their financial domination over Europe and the world. Of course, in the inner circle of finance, the voice of the Rothschilds prevailed. They saw an opportunity for prodigious booty if they could substitute two feeble democracies burdened with debt to the finance ears in place of a vigorous Republic on to herself. Therefore, they sent their emissaries into the field to exploit the question of slavery and to drive a wedge between the two parts of the Union.

The rupture between the North and the South became inevitable the masters of European finance employed all their forces to bring it about and turn it to their advantage. The European bankers wanted a war that could return the United States to its colonial status, but they were not necessarily interested in preserving slavery.

The European Banking Interests Views on Slavery

Slavery just meant that the owners had to feed and care for their workers. The bankers preferred the European plan, capital would exploit labor by controlling the money supply while letting the laborers be themselves in July of 1862. This ploy was revealed in the tour in an editorial document called the hazard circular which was circulated by British banking interests. Among their American banking counterparts. It said..

“Slavery is likely to be abolished by the war power and chattel slavery destroyed. This I and my European friends are glad for slavery is about the owning of labor and carries with it the care of the laborers. While the European plan led by England is a capital shall control labor or labor by controlling wages. This can be done by controlling the money the great debt the capitalists will see to it is made up. The war must be used as a means to control the volume of money. To accomplish this, the bonds must be used as a banking basis, it will not do to allow the greenback as it is called to circulate as money any length of time as we cannot control that.”

The system the bankers wanted to preserve was what Henry Clay and Henry Carey had called the British system with its twin weapons of free trade and the gold standard keeping the less industrialized countries in a colonial state, supplying raw materials to Britain, Britain’s factories, the American South had already been subjugated. In this way, the bankers had now set the sights on the North to be reeled in with usurious world loans, but Lincoln had refused to take the bait. The threat the new breed greenback system pose to the bankers game was reflected in an article attributed to an unidentified editorialist writing in the London Times it warned.

“If that mischievious financial policy which had its origins in the North American Republic, could become in endurated, down to a fixture, then that government will furnish its own money without cost. It will pay off debts and will be without a debt, it will have all the money necessary to carry on commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America, the government must be destroyed or it will destroy every monarchy on the globe.”

Notice that the banking interests considered a country creating its own money, without private banking interests as “mischievous.”

Otto Von Bismark

Otto Von Bismarck wrote in 1876, the government and the nation escaped the plots of the foreign finance ears. They understood it once that the United States would escape their grip. The depth of Lincoln was resolved upon Lincoln was assassinated in 1865. The European finance ears had failed the trap Lincoln’s government would use areas were loans, but they achieve their ends by other means. While one faction in Congress was busy getting the greenback issued to fund the war, another faction was preparing a national Banking Act that would deliver a monopoly over the power to create the nation’s money supply to the Wall Street bankers and their European affiliates.

The National Banking Act

The National Banking Act was promoted as establishing safeguards for the new national banking system. But while it wasn’t an important first step towards a truly national bank, it was only a compromise with bankers and burried. In the fine print, it gave them exactly what they wanted a private communication from a Rothschild investment house in London to an associate banking firm in New York, dated June 25 1863.

The few who understand the system will either be so interested in its profits are so dependent upon its favours, that there will be no opposition from the class from that class. While on the other hand, the great body of people mentally incapable of comprehending will bear its burdens without complaint. The National Banking Act was recommended to Congress by Treasury secretary Chase ironically the same official who had sponsored the greenback program.

In a popular 1887 book called The Seven Financial Conspiracies that have Enslaved the American People, Sarah Emery wrote that Chase had acquiesced only after several days of meetings and threats of phony financial coercion by bank delegates. He is quoted as saying

“My agency in procuring the passes of the National Bank act was the greatest financial mistake of my life. It has built up a monopoly that affects every interest in the country, it should be repealed, but before this can be accomplished, the people will be arrayed on one side and the banks on the other in a context such as we have never seen in this country.”

The Renewed Interest in Greenbacks

Although Lincoln was assassinated in 1865, that would be another 50 years before the promise of his debt free greenbacks were raised from the minds of people long suspicious of the usury bankers and their gilded paper money.

In 1874, the politically powerful farmers responded by forming the Greenback Party. Their proposed solution to the crisis was for the government to finance the building of roads and public projects with additional debt free greenbacks, augmenting the money supply and putting the unemployed to work returning the country to the sort of full employment productivity. As you have you seen in Benjamin Franklin’s time, the greenbacks could also be used to redeem the federal debt under the Ohio idea or government bonds not specifying payment in gold or silver could be repaid in greenbacks. The plan was not adopted, but the scarecrow had shown he had a brain the timid lion had demonstrated the courage and the collective will to organize and make a difference. They failed to get a new issue of greenbacks, but they had enough political clout to stop further withdrawal of existing greenbacks. from circulation the greenbacks then outstanding $346 million worth were made a permanent part of the nation’s currency.

In 1881, James Garfield became president he boldly took a stand against the bankers charging.

“Whoever controls the volume of money in any country is an absolute master of all Industry and Commerce. And when you realize that the entire system is very easily controlled, one way or another by a few powerful men at the top, you will not have to be told how long periods of inflation and depression originate.”

President Garfield was murdered not long after releasing this statement, when he was less than four months into his presidency. Depression deepened, leaving masses of unemployed to face poverty and starvation at a time when there was no social security or unemployment insurance to ask to act as a safety net. The Gold Standard and the inflation argument that was used to justify it were based on the classical quantity theory of money, the foundation of classical monetary theory, it held that inflation was caused by too much money chasing too few goods. If the government were allowed to simply issue all the greenback dollars that needed the money supply would increase faster than goods and services. And price inflation would result if paper money were tied to gold, the commodity unlimited and fixed supply, the money supply would remain stable and the price inflation would be avoided, avoided. A corollary to that theory is was the classical maxim that the government should balance its budgets at all costs. If it ran short of money, it was supposed to borrow from the bankers, rather than print the money it needed in order to keep from inflating the money supply.

One has to really wonder in amazement at this assertion.

Why would a government need to borrow something from private bankers that the government itself creates and that a private bank cannot? A private bank cannot make any currency the legal tender of the land.

The Straw Man Argument of the Private Bankers

The argument was a straw man argument when easily knocked down because it contained a logical fallacy. But the fallacy was not immediately obvious because the bankers were concealing their hand.

The fallacy lay in the assumption that the money that government borrowed from the banks was already already existed and was merely being recycled. If the bankers themselves are creating the money they lend. The argument collapsed in a heap of straw. The money supply would obviously increase just as much from bank created money as from government created money. In either case, it was money pulled out of an empty hat. The money created by the government had the advantage that it would not plunge the taxpayers into debt, and it provided a permanent money supply one not dependent on high, higher and higher levels of borrowing to stay afloat. The quantity theory of money contained another logical fallacy, which was pointed out later by British economist john Maynard Keynes.

Adding money demand to the economy would drive up prices only if the supply side of the equation remain fixed. If new greenbacks were used to create new goods and services supply would increase along with demand and prices would remain stable.

The Shoe Example

When a shoe salesman with many unsold shoes on the shelves suddenly got more customers he did not raise prices he sold more shoes. If he ran out of shoes, he ordered more from the factory, which produced more if he were to raises prices as customers would go to the shop down the street where shoes are still being sold at the lower prices.

Adding more money to the economy would inflate prices only when the producers ran out of labor and materials needed to make more goods. Before that supply and demand would increase together leaving prices as they were before. That theoretical revision helps explain such paradoxical data as the economic mystery of China. The Chinese have managed to keep the prices of their products low for 1000s of years. Although their money supply has continually been flooded with the world’s gold and silver and now the world’s dollars as those currencies have poured into pay for China’s cheap products. The Keynesian explanation is that prices have remained stable because the money has gone into producing more goods increasing supply along with demand.

The Example of Guernsey

One example is found in the islands of Guernsey. Guernsey has an income tax but the tax is relatively low a flat 20%. And it is simple and loophole free. It has no inheritance tax, no capital gains tax, and no federal tax, commercial bank service private lenders, but the government itself never goes into debt. When it wants to create some public worker service. It just issues the money it needs to pay for the work, the Guernsey government has been issuing its own money for nearly two decades. During that time, the money supply has mushroomed to about 25 times its original size yet the economy has not been troubled by plight by price inflation, and it has remained prosperous and stable. In 1816, its sea walls were crumbling, its roads were muddy, and only four and a half feet wide. guernseys debt was 19,000 pounds. The island’s annual income was 3000 pounds of which 2400 had to be used to pay interest on the debt. Not surprisingly, people were leaving Guernsey and there was a low employment. Then the government created and low new interest free state notes worth 6000 pounds. Some 4000 pounds were used a state to start the repairs of the sea walls. In 1820. Another 440 500 pounds was issued again interest free in 1821, another 10,000 in 1824 or 5000 in 1826 20,000. By 1837 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads and marketplaces, churches and colleges. This sum was more than double the island’s money supply during the 13 year period, but there was no inflation. In the year 1914 is a British restricted the expansion of their money supply due to World War One the people of Guernsey commenced to issue another 140,000 pounds over the next four years and never looked back. By 1958. Over 54 over 542,000 pounds had been issued all without inflation.

How Did Guernsey Escape the British Private Banking Interests?

Many other countries have also successfully issued their own money but Guernsey is one of the few who have stayed on under the radar long enough to escape the corporate attacks of the international banking cartel bent on monopolizing the money making market as we’ll see later, governments that have dared to create their own money have generally wound up dealing with a presidential assassination a coup a boycott, a war or a concealed assault on the national currency by international speculators.

The American colonists operated successfully on their own sovereign money until the British money lenders leaned on parliament to halt the practice, prompting the American Revolution, England had a thriving economy that operated on the sovereign money of the king until Oliver Cromwell’s Glorious Revolution, which led the money lenders inside the gates after 1700 the right to create money was transferred to the Private Bank of England, based on a fraudulent gold standard that allowed it to duplicate the golden its vaults many times over in the form of bank notes, paper bank notes. Today, governments are in the position of the disenfranchised king having to borrow money created by banks, rather than issuing themselves. The requirement that paper banknotes be backed by a certain weight of gold bullion Lord said was affection. Banks did not have nearly enough gold to redeem all the paper money that was supposed It was supposed to be based on and there was no real reason the nation’s paper money had to be linked to gold at all.

What the Gold Standard Did

The Gold Standard just put America at the mercy of the foreign finance ears who control the gold. When national imports exceeded exports gold bullion left the country to pay the bill and when gold stores shrank the supply of paper money based on it shrank as well.

As Vernon Parrington pointed out, the real issue was not what money consisted of, but who created it. Whether the medium of exchange was gold or paper or numbers in the ledger, when it was lent into existence by private lenders and was owed back to them with interest more money would always be owed back than was created in the first place spiraling the economy into perpetual debt $1 borrowed at 6% interest compounded annually grows in 100 years to a debt of $13,781.

This is true whether the money takes the form of gold paper or accounting entries. As noted earlier, the banks lend the dollar into existence but not the additional $13,780 needed to pay the loan off forcing the public to go further and further into debt. In search of the ethereal lost interest, ethereal interest due on their money built on That mergers continually have to raise their prices to try to cover this interest tab, producing perpetual price inflation. Like the The Tin Woodsman, whose axe was enchanted by the witch to chop off parts of his own body. The more people work, the less they seem to have left for themselves. They cannot keep up because our money keeps shrinking as sellers keep raising the price in a futile attempt to pay off loans that are collectively impossible to repay.

What Are Corporations?

Corporations are feudalistic organizations designed on the structure of a pyramid with an elite group at the top manipulating the masses of workers below. Workers are kept marching in lockstep passing receiving orders down from above, out of fear of losing their jobs or homes and their benefits that they get out of line. At the top of the pyramid is a small group of controllers who alone know what is really going on. Critics have noted that the pyramid with an overseeing eye at the top is also the symbol of the Federal Reserve Note, the privately issued currency that became the national monetary unit in 1913.

The popular grassroots movements that produces the greenback produce the greenback and populist parties in the 1890s represented the interests of a common man over these corporations and financial oppressors. Although populism today tends to be associated with the political left, the word comes from the Latin word simply for the people. In the 19th century, it stood for the government of the people by the people for the people and proclaimed by Abraham Lincoln. According to Wikipedia, populism on the whole does not have a strong political identity as either a left wing or right wing movement. populism has been taken left wing, right wing and even centrist forms. Abraham Lincoln is quoted as saying.

“I see in the near future or crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few and the Republic is destroyed.”

The Federal Reserve Act of 1913

Opposition to the plan was led by William Jennings Bryan and Charles Lindbergh senior who were strongly against any bill, suggesting a central bank or control of walls. by wall street money. Only a major bank panic had led Congress to even consider such a bill.

The Panic of 1907 was triggered by rumors that the Knickerbocker bank in the Trust Company of America were about to become insolvent. Later evidence pointed to the house of Morgan as a source of the rumors. The public believing the rumors proceeded to make them come true by staging a run on the banks. Morgan then nobley helped to avert the panic by importing 100 million worth of gold from Europe to stop the bank run. The mesmerized public came to believe that the country needed a central banking system to stop future panics. Robert Owens, co author of the Federal Reserve Act later testified before Congress that the banking industry had conspired to create such financial panics in order to rouse the people to demand reforms that serve the interest of the finance ears. Congressman Lindbergh charged the money trust caused the 1907 panic. Those not favorable to the money trust could be squeezed out by the business and the people frightened into demanding changes in the banking and currency laws, which the money trust would frame. The 1907 panic prompted the congressional inquiry headed by Senator Aldrich and the Jekyll Island meeting followed. The result was a bill called the Aldrich plan, but the alert opposition saw through it and soundly defeated it. Bryant said he would not support any bill that resulted in private money being issued by private banks. Federal Reserve Notes must be Treasury currency issued and guaranteed by the government and the governing body must not be appointed must be appointed by the president and approved by the Senate.

Morgan Bank Uses Teddy Roosevelt to Run against Taft

Morgan had another problem besides the opposition in Congress, he needed a president willing to sign his bill William Howard Taft, the President in 1910 was not a Morgan man.

McKinley had been succeeded by his Vice President Teddy Roosevelt who was in the Morgan camp, and had been responsible for breaking up Rockefeller Standard Oil. Taft who followed Roosevelt was a republican from Rockefellers state of Ohio. He took vengeance on Morgan by filing antitrust suits to break up the two leading Morgan trusts, International Harvester and United States steel. Taft was a shoe in for the re-election in 1912. To break his hold on the presidency, Morgan deliberately created a new party the progressive or bull moose party, and brought Teddy Roosevelt out of retirement to run as its candidate. Roosevelt took enough votes away from Taft to allow Morgan to get his real candidate Woodrow Wilson elected on the Democratic ticket. In 1912. Roosevelt walked away realizing he’d been duped and the Progressive Party was liquidated soon after, Wilson was surrounded by Morgan men, including Colonel Edward Mandal house, who had his own rooms in the White House. To get their bill passed, the Morgan faction changed its name from the Aldrich bill to the Federal Reserve Act. They brought it brought in three days before Christmas. Then Congress was preoccupied with departure for the holidays. The bill was so obscurely worded that no one really understood its provisions.

The Private Banking Interests Lie to Byrant About the Federal Reserve Act

The Aldrich team knew it would not pass without Bryan’s support. So in a spirit of apparent compromise, they made a show of acquiescence to his demands. He said happily, the right of the government to issue money is not surrendered to the banks. The control over the money so issued is not relinquished by the government.

So he thought, but why the national money supply could would be printed by the US Bureau of Engraving and Printing would be issued as an obligation or debt of the government owed back to the private Federal Reserve with interest. And while Congress and the President would have some input in appointing the Federal Reserve board, the board would work behind closed doors with the regional bankers without congressional oversight or control.

The bill passed in December 22 and 1913 and President Wilson signed into law the next day later he regretted what he had done. He reported to have said before he died, I have on the way worryingly ruined my country.

International Bankers Get What They Want From Federal Reserve Act

The Federal Federal Reserve Act of 1913 was a major coup. For the international bankers they had battled for more than a century to establish a private central bank with the exclusive right to monetize the government’s debt that is to print their own money in exchange for government securities or I’ll use the preamble said that its purposes were to provide for the establishment of Federal Reserve Bank to furnish an elastic currency to afford a means of re-discounting commercial paper to establish a more effective supervision of banking in the United States and for other purposes. It was the beginning of Fedspeak.

Fedspeak

Fedspeak is abstract economic language touted the issues in obscurity. Elastic currency is credit that can be expanded at will by the banks read discounting is a technique by which banks would be allowed to magically multiply funds by re lending them without waiting for outstanding loans to mature.

In plain English. The Federal Reserve Act authorized a private central bank to create money out of nothing, lend it to the government and interest and control the national money supply expanding or contracting it at well.

Louis McFadden

In 1934, in the throes of the Great Depression, Representative Louis McFadden would go further stating on the Congressional Record,

“Some people think that the Federal Reserve Banks are United States Government institutions, that they are private monopolies, which prey upon the people of the United States for benefit of themselves and their foreign customers, foreign and domestic speculators and swindlers and rich and predatory money lenders, in that dark crew, financial pirates, there are those who would cut a man’s throat to get $1 out of his pocket. There are those who send money into states to buy votes to control our legislatures. There are those who maintain international propaganda for the purpose of deceiving us into granting new concessions, which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime. These 12 private credit monopolies were deceitfully and disloyalty, foisted upon the country by the bankers who came here from Europe and repaid our hospitality by undermining our American institutions.”

Before World War Two the reins of international finance were held by the powerful European banking dynasty, the health of Rothschilds, but during the war, the control cross the Atlantic to their Wall Street affiliates. Stitz says that the role of master spider fell to David Rockefeller senior, a grandson of the father’s side of John D Rockefeller senior, and on his mother’s side, Nelson Aldrich, the Senator from whom the prosecute or the precursors of the Federal Reserve Act was named.

David Rockefeller was a director of the Council on Foreign Relations from 1949 to 1985, and its chairman from 1970 to 1985, and he founded the Tri Lateral Commission in 1976. He was instrumental in founding the elite International Club called the bilderbergers to Tri Lateral Commission has been described as an elite group of international bankers, media leaders, scholars and government officials bent on shaping and administering a new world order with the central World Government held together by economic interdependence. Secrecy has been maintained because the robber barons have been able to use their monopoly over money to buy up the major media, educational institutions and other outlets of public information.

While Rockefeller was buying up universities medical schools in the Encyclopedia Britannica, Morgan bought up newspapers. By 1983, according to Dean Ben bag did cat Dickeyon in the media monopoly 50 corporations owned half or more of the media business by 2000. That number was down to six corporations. With directorates interlocking with each other and with major commercial banks. Howard Zinn observes, whether you have a Republican or a Democrat in power, the robber barons are still there. Under the Clinton administration, more mergers of huge corporations took place than had ever taken place before under any administration.

The History of Income Tax Before 1913 Versus After 1913

The absence of income tax that allowed the economy to grow and its citizens to prosper for over a century, from 1776 to 1913, except for brief periods when the country was at war, the Federal Government had been successfully funded mainly from customs and excise taxes in 1812 to fund the war of 1812. First sales tax was imposed on gold silverware, jewelry and watches The first income tax was also proposed that year but in order to comply with the constitutional requirements, it was apportioned among the states, which collected the tax from property owner. In 1817, when the war was over the taxes were terminated. The first national income tax as we know it was imposed in 1862. Again, it was to support a war effort the war between the states. The tax was set at a mere one to 3% of income, and it applied only to those having annual incomes over $800, a category that then included less than 1% of the population. Congress avoided constitutional apportionment requirements by classifying the new tax as an indirect tax. In 1872, this tax too was repealed. Another income tax was passed in 1894. But no war was in progress to win sympathy for it and it was immediately struck down by the US Supreme Court. In 1895, in Pollock vs. Farmers loan and Trust Company, the court held the general income taxes violate the constitutional guidelines that taxes levied directly on the people are to be leveled, levied in proportion to the population of each state. That ruling has never been overturned. Instead, the Wall Street faction decided to make an end run around the Constitution in 1913. The 16th amendment was introduced to Congress as a package deal with the Federal Reserve Act. Both were supported by the Wall Street Senator Nelson Aldrich. The amendment provided the cost, the Congress shall have power to lay and collect taxes on incomes, from whatever sources derived without apportionment among the several States without regard to any census or enumeration.

The tax code is now 17,000 pages long, a sea of obscure legal ease providing enormous loop halls for those who can afford the lobbyists to negotiate them. Corporations with enough clouds such as Enron have had whole pages devoted to their private interests. Enron paid no taxes for four of the five years from 1996 through 2000. Although it was profitable during those years, the tax system has become so complex that 10s of millions of taxpayers have to seek professional help to comply with its mandates. estimates are that one of the hidden taxes paid by workers all the way up the chain of production are factored in. Over 40% of the average citizens income may be going to taxes

How The FDIC Favors Bigger Banks

The FDIC was prepared to rescue some banks but not all. It was designed to favor rich and powerful banks. Ed Griffin writes in the creature from Jekyll Island, the FDIC has three options when bailing out an insolvent bank. The first is called a payoff involves simply paying off it insured depositors and then letting the bank fall to the mercy of the liquidators. This is the option usually chosen for small banks with no political clout. The second possibility is called a sell off and it involves making arrangements for a larger bank to assume all the real assets and liabilities of a failing bank. banking services are uninterrupted and aside from a change in name most customers are unaware of the transaction. This option is generally selected for small and medium banks. In both a pay off and a sell off the FDIC takes over the bad loans of the failed bank and that supplies the money to pay back the insured depositors. The third option is called bailout. Irving sprag, a former director of the FDIC explains, in a bailout the bank does not close and everyone insured or not is fully protected. Such privilege treatment is accorded by the FDIC only rarely to a select to a an elect few. The select few are the wealthy and powerful banks that are considered too big to fail without doing irreparable harm to the community. Later, the International Monetary Fund was devised to serve the same backup function when whole countries defaulted. Austerity measures and belt tightening imposed on the poor while welfare was provided for the rich, saving the moneyed class from the consequences of their own risky investments.

Who was to blame for this decade long cyclone of debt and devastation? Milton Friedman, professor of economics at the University of Chicago and winner of the Nobel Prize in Economics stated categorically.

“The Federal Reserve definitely caused the Great Depression by contracting the amount of currency in circulation by 1/3. From 1929 to 1933.”

The Honorable Louis T. McFadden, Chairman of the House Banking and Currency committee went further he charged quote, the Depression was not accidental, it was a carefully contrived occurrence.

“The international bankers thought sought to bring about a condition of despair here so that they might emerge as rulers of us all. He went on to say, recently in one of our states, 60,000 dwelling houses and farms were bought under the hammer in a single day. 71,000 houses and farms in Oakland County, Michigan were sold in their erstwhile owners dispossessed the people who have thus been driven out, or the wastage of the Fed, they are the victims of the Fed. Their children are the new slaves of the auction blocks in the revival of the institution of human slavery.”

A document called the Bankers Manifesto of 1934 added weight to these charges. An update from the Bankers Manifesto of 1892. It was reportedly published in the Civil Servants yearbook in January 1934. And in the New American in February 1934, and was circulated privately among lending leading bankers it read in part:

“Capital must protect itself in every way through combination monopoly and through legislation. Debts must be collected and loans and mortgages are closed as soon as possible. When through a process of law, the common people have lost their homes they will be more tractable, and more easily governed by the strong arm of the law applied by the central power of wealth. Under control of leading finance ears, people without homes will not quarrel with their leaders. This is well known among our principal men, now engaged in farming and imperialism have capital to govern the world.”

William Harvey Runs for President as Part of the Liberty Party

Another blast from the past on the presidential campaign trail was William Harvey author of coins financial school and economic adviser to William Jennings Bryan in the 1890s. Harvey ran for president in 1932 on the Liberty Party ticket, like Coxey, he was an obscure candidate who was later lost to history, but his insights would prove to be prophetic.

What Are People Actually Borrowing

Harvey stressed that people who took out loans at banks were not actually borrowing money, they were borrowing debt and the commercial oligarchy, to whom it was owed would eventually end up running the country. The workers would live on credit and buy at the company store becoming wage slaves who own nothing of their own. Harvey considered money to be a direct representation of a man’s labor and usually in debt to be a scheme to put middlemen bankers between a man’s labor and his property. Even efficient farmers operating on the debt money model would eventually have some bad years and they would default on their loans. Every year there would be a certain number of foreclosures and the banks would get the land which would be sold to the larger farm owners, the country’s property would gradually become concentrated in fewer and fewer hands. The farms factories and the businesses would wind up owned by a few individuals and corporations that were controlled by the bankers who control the money supply. At the heart of the problem said Harvey was the Federal Reserve System, which allowed banks to issue debt and pretend it was money. This sleight of hand was what ahead allowed the bankers to slowly foreclose on the country moving ownership to the Wall Street banks, brokerage houses and insurance companies.

What Harvey Saw as the Main Culprit: The English Banking System – i.e. the British Banking System (Private Banking Interests)

The ultimate culprit was the English banking system which had infected and corrupted America’s banking system. It was the English who had first he monetized silver and 1816 and who had decreased the value of everything else by hoarding gold. That’s to English bankers had to be paid in gold, and countries that did not produce gold had to buy it to pay their debts to England. The result was drive down the value of the gold whose countries did produce in venturing them to the English bankers. The populace of the 1890s had campaigned to expand the money supply by adding silver to the gold that backed paper money, but Harvey now felt that both gold and silver should be demonetised. The national currency did not need precious metal backing. It could be what Franklin and Lincoln said it was simply a receipt for labor.

Paper money could be backed by government services. Although that is a novel idea today it has a familiar precedent. The postage stamp is a kind of money redeemable in government services. One postage stamp represents the amount of government labor required to transport one letter from one place to another.

The Arrival or Roosevelt

Although Harvey and Coxey both failed and their political aspirations both saw elements of their platforms adopted in the New Deal, Roosevelt took the dollar off the gold standard as Harvey advocated, and he jumped started the economy by putting the unemployed workers to work as Kaksi had advocated.

Roosevelt came from banker money and had the support of big business but he also had a strong streak of candu populist spirit.

Where Roosevelt’s plan diverged from proxies was in the source of the funds. Rather than issuing the money outright, he borrowed it from the banks. Even that step was considered radical at the time, the dogma of the day was that the government’s budget had to be balanced at all costs.

The Novel Idea of John Maynard Keynes and Keynes Comes Around to Greenbacks

The novel idea that the government could operate on borrowed money was urged by John Maynard Keynes, a respected British economist, who said it was more sensible course than austerely trying to balance a budget when funds were not to be had.

Keynes started thinking more like the greenbackers at the end of the World War II, when he proposed a debt free greenback style currency called the bank or to serve as the reserves of the International Monetary Fund. The fund established to stabilize currencies but by then, England’s economic power had been exhausted by two world wars and America called the shots the bank or lost out to the US dollar which would become the world’s reserve currency, along with gold. In the Great Depression, it clearly wasn’t working.

Why Did the Great Depression Lead to Such Decline When the Material Situation of the Country Was Unchanged?

The country was suffering from crippling unemployment although people wanted to work, there was work to be done and there were consumers wanting to purchase the fruits of their productive labor’s the farmer’s hands were laying but the eggs never made it to market. The cows were producing milk but the milk was being dumped on the ground. The apple trees were pretty Using bumper crops but the growers were leaving them to rot in the orchards. People everywhere were out of work and starving yet the land was still fertile, the factories were still ready to roll, and the raw materials were available to run them.

Keynes said that what what was needed was the very thing classical economists would have no effect, an infusion of new money to get the wheels of production turning again. The following is a quote from Murray Rothbard economists of the classical Austrian school who stated that, quote.

“We come to the startling truth that it doesn’t matter what the supply of money is, any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing power or effectiveness of its monetary unit. There is no need whatever for any planned increase in the money supply for the supply to rise to offset any condition or to follow any artificial criteria. More Money does not supply more capital is not more productive does not permit economic growth.”

Keynes Countercyclical Spending Was Considered “Radical”

Roosevelt was slow to go along with Keynes’s radical notions, but as depression got worse, he decided to give them a try. He told the country in a fireside chat, quote, we suffer from a failure of consumer demand because of our lack of buying power. And quote, when the United States entered World War 2, Roosevelt had no choice but to test the limits of his national credit card. And in a dramatic empirical display, the pump priming theory was proven to work, unemployment dropped from more than 17% to just over 1%. The economy grew along with the money supply to double its original size, the fastest growth in US history.

The country was pulled out of the depression. By priming the pump with liquidity funding new production that put new wages in the consumers pockets. Keynes had turned classical theory on its head. The classical assumption was that the output supply was fixed and the prices were flexible. Increasing demand money would therefore increase prices. Keynes said that the prices tended to be fixed and the output to be flexible.

Where the economy was operating at less than full employment. Adding money would not increase prices, it would increase productivity. As long as there were idle resources to draw from watering the liquidity startup economy with new money would not produce inflation, we would produce abundance. And that was how it worked for a while but adding liquidity by borrowing money into existence did not actually create money. He created debt and to service the debt the taxpayers had to pay interest compounded annually. Roosevelt’s plan put people to work putting more money in their pockets, but much of this money was taken out again in the form of taxes, which went largely to pay the burgeoning interest tab from 1933 to 1940. Federal taxes tripled.

In the New Deal years, the average annual federal budget deficit was about 3 billion out of the entire federal budget of 6 billion to 9 billion, a greater percentage than even today, when data is expanding had reached record levels. Wholesale endorsement of Keynesian deficit spending caused the federal debt to balloon from 22 billion in 1933 to 8 trillion in 2005. A 364 fold increase in just 72 years, the money supply increased along with a debt. In 1959. The Fed first began reporting and three and it was only 288 billion. By February 2004, it had reached 9 trillion. prices have gone up in tandem. Many people still remember when ice cream cones and comic books were 25 cents each. Today they’re 250 or more what was once a 10 cent cup of coffee is now $1.50 or $2. A house that was 30,000 1970 is now more than 300,000.

For most families today, both parents have to work outside of the home to make the mortgage payments. These parabolic price increases reflect a parabolic increase in money supply. Where did all of this new money come from? No gold was at added to the asset base in the country, which went off of the gold standard in the 1930s. All this increase came into existence as accounting entry bank loans. More specifically it came from the government loans which never get paid back but get rolled over from year to year. Under the plan of coxy and the green backers rather than borrowing from banks to pull the money out of an empty hat, Uncle Sam could have pulled the money out of its own tall hat and avoided a mushrooming debt. In 1933, Roosevelt took another controversial step when he took the dollar off the gold standard England’s pound sterling had gone off the gold standard in 1931, prompting foreigners to turn to the United States for gold at a time when Federal Reserve Notes had to be backed by 40% gold reserves. The result was a run on the nation’s gold stores that was dangerously shrinking the money supply by shrinking the dollar is gold backing. If everyone holding dollars had been allowed to trade them in for gold, no reserves would have been left to back the dollar and the money supply would have collapsed completely. to halt the alarming trend in 1933, Roosevelt pronounced the country officially bankrupt and declared a national emergency then with a wave of national presidential fiat. He changed the Federal Reserve Note from a promise to paying gold into legal tender itself backed only by the full faith and credit of the United States.

McFadden Responds to FDR

Congressman McFadden was outraged.

He argued that the private gold stores were not needed to rebuild the national money supply. Since the gold backing had just been removed from the dollar. The Fed was still obligated to redeem foreign holdings of Federal Reserve Notes in gold and raising the price of gold reduce those obligations. But that was the Feds problem, not the public’s. He accused the Federal Reserve Board and its foreign manipulators of deliberately draining the gold from the US Treasury. Roosevelt did what the international bankers ordered him to do.

McFadden charged in a 1934 address to Congress, he is preparing to cancel the war debts by fraud. He told Congress, there was no national emergency when FDR took office exam in the bankruptcy of the fed a bankruptcy which has been going on under cover for several years and which has been concealed from the people so that the people would continue to permit their bank deposits and their bank reserves and their gold and the funds of the United States Treasury to be impounded in the bankrupt institution. Undercover the predatory international bankers have been stealthily transferring the burden of the Fed debts to the people’s Treasury. And to the people themselves, they took the farms in the homes of the United States to pay for their thievery. That is the only national emergency that there has ever been here since the Depression began.

“Roosevelt divorced the currency of the United States from gold and the United States currency is no longer productive by gold. It is therefore sheer dishonesty to say that the people’s gold is needed to protect the currency. Mr. Chairman, I am in favor of compelling the Fed to pay their own debts, I see no reason why the general public should be forced to pay the gambling debts of the international bankers.”

FDR imposed strict regulations on Wall Street The Glass Steagall Act was passed limiting speculation and preventing banks from gambling with money entrusted to them. Regular commercial banks were separated from investment banks dealing with stocks and bonds in order to prevent bankers from creating stock offerings and then underwriting or selling offerings to a by hyping the stock. banks had to choose to either be commercial banks or investment banks. Commercial banks were prohibited from underwriting most securities, with the exception of government issued bonds. Speculative abuses were regulated through the Securities Exchange Act of 1933. And the Securities and Exchange Act of 1934. The SEC was formed information requirements to potential investors were established regulations were promulgated for buying securities on margin and for bank lending for the purchase of stocks and bonds. And restrictions were placed on the suspected practice known as the short sale.

“Major Generally General Smedley Butler testified before Congress that he had been solicited by Morgan banking interests to lead the plot. Against Roosevelt. He said he was told by a Morgan bank agent that wall street was about to cut off credit to the New Deal. And then the Roosevelt has either got to get more money out of us, or he asked to change the method of financing the government and we’re going to see that he does not change that method.”

Change the method of financing the government to what?

Hemphill had urged the government to issue its own greenback style, currency and patman had proposed nationalizing the banks greenback style funding was actually authorized by the Thomas Amendment, which provided that the President could issue 3 billion in new greenbacks. If the Federal Reserve banks failed to fund 3 billion in government bonds. That authority has never was never exercised, but the threat was there. The plot to assassinate Roosevelt failed, but according to Smedley, it was only because he had refused the leader. As for congressman McFadden’s impeachment actions against the Fed, he never got a chance to prove his case. His congressional investigation was terminated by a sudden death in 1936 under suspicious circumstances. The month he died, the journal Pelase Weekly reported now that the sterling American patriot has made the passing it could be revealed that not long after his public utterances against the encroaching powers of the international bankers.

“It became known among his intimates that he had suffered two attacks against his life. The first attack came in the form of two revolver shots fired at him from ambushes, he was lighting from a cab in front of one of the Capitol hotels. Fortunately, both shots missed, but the bullets buried themselves in the structure of the cab. He became violently ill after partaking the food at a political banquet in Washington. His life was only saved from what was subsequently announced as poisoning by the presence of a physician in front of the banquet, who at once procure to stomach pump subjugated and subjected the congressman to emergency treatment.”

In his role as Chairman of the House banking and currency committee Patman penetrated the official Fedspeak to expose what was really going on after a probing investigation of the Federal Reserve. He charged the Open Market Committee of the Federal Reserve System

“The Federal Reserve System has the power to obtain and does obtain the printed money of the United States Federal Reserve Notes from the Bureau of Engraving and Printing and exchanges these printed notes which of course, are not interest bearing for United States government obligations that are interest bearing. After making the exchange interest bearing obligations are retained by the 12 Federal Reserve Banks and the interest collected annually on these government obligation goes into the fund of the 12 Federal Reserve Banks. These funds are expended by the system without an adequate accounting to the Congress.”

The Open Market Committee of the Fed

The Open Market Committee was the group formed in 1934. To take charge of open market operations. The feds buying and selling of government securities, then is now the Open Market Committee acquired Federal Reserve Notes from the Federal Bureau of Engraving and Printing essentially for the cost of printing them. The average cost today is about four cents per bill. Then in deft card shark fashion, these dollar bills are swapped for an equivalent stack of notes labeled Treasury securities.

Monetizing the Debt

Turning Treasury securities or debt into money Federal Reserve Notes is called monetizing the debt. The government owes this money back to the Fed.

Although the Fed has advanced nothing but printed paper to earn it in a revealing treaty, called a primer on money, patent and concluded, quote the Federal Reserve’s a total money making machine it can issue money or checks and it never has a problem of making its checks good because it can obtain $5 and $10 bills necessary to cover its checks simply by asking the Treasury Department’s Bureau of Engraving to print them This statement was confirmed by Marriner Eccles then chairman of the Federal Reserve Board in testimony before the house banking and currency committee in 1935.

Eccles acknowledged in purchasing offerings of government bonds the banking system as a whole creates new money or bank deposits. When the bank’s buy a billion dollars of government bonds as they are offered the bank credit and the deposit accounts of the Treasury with a billion dollars they debit their government bond account a billion dollars or are they actually created by a bookkeeping entry a billion dollars.

The Mind is “Repelled” By How the Fed Creates Money

Economist John Kenneth Galbraith would later comment.

The process by which banks create money is so simple that the mind is repelled. The mind is repelled because the process is sleight of hand. It is also completely foreign to what we’ve been taught in a phenomena called cognitive dissonance. We can read the words and still doubt whether we’ve read them right to make sure that we have then here is another credible source.

In 1993, National Geographic magazine published an article by assistant editor Peter white titled eventually create money out of thin air. White began by absorbing that 92% of the money supply consists not of bills or coins, but of checkbooks and other non tangible money. To find out whether this money where this money comes from he asked a Federal Reserve official who said that every day the federal reserve of New York buys us government securities from major banks and brokerage houses. That’s if the Fed wants to expand the money supply, if it wants to contract the money supply itself government securities, white rope, say today the Fed buys $100 million in treasury bills from those big security dealers who keep a stock of them to trade with the public. When the Fed pays the dealers $100 million will thereby be added to the country’s money supply, because the dealers will be credited that amount by their banks, which now have much more on deposit. But where did the Fed get the 100 million dollars to? We created it.

A Fed official tells me he means at any time a central bank checks so to speak, it creates money. It’s money that didn’t exist before. He says is there any limit on that? No Limit? Only the good judgment and the conscious of the Responsible Federal Reserve people. And where did they get this fast authority, it was delegated to them in the Federal Reserve Act of 1913.

Who Has the Right to Create Money Under the Constitution?

Based on the Constitution, article one section eight, Congress shall have the power to coin money regulate the value there of the 10th amendment provides that powers not delegated to the United States are forbidden to the states are reserved to the states or the people. In 1935, the US Supreme Court held their Congress may not advocate or transfer to others its legitimate functions. After we’re letting this agitation by patents committee, the Fed finally agreed to rebate most of the interest received on government bonds to the US Treasury. Congressman Jerry Vora has another early Fed watchdog said that the agreement was a tax admission that the Fed wasn’t entitled to interest. It wasn’t entitled to interest because its own money wasn’t being lent.

Fed apologists today argue that since the interest or most of it is not rebated to the government, no net advantage is accrued to the Fed. But that argument overlooks a far greater windfall to the banks that are the feds owner and the real constituents of bonds that have been acquired essentially for free become the basis of the feds reserves. That phantom money is advanced many times over by commercial banks in the form of loans. We’ve seen that virtually all money in circulation today has come from government debt has been monetized by the Federal Reserve and banking system.

The Fed reports that 90% of its profits are now returned to the US Treasury.

But a review of its balance sheet, which is available on the internet shows that it reports as profits only the interest received from the federal securities and hoses reserves.

How The Fed Hides How Much it Makes from its Ability to Create Money

No mention is made of the much greater windfall afforded to the banks over the Fed’s corporate owners, which use the securities as the reserves that get multiplied many times over in the form of loans. The Federal Reserve maintains that is now audited every year, it is now audited every year by Price Waterhouse in the GAO an arm of Congress, but some functions remain off limits to the GAO, including its transactions and foreign central banks, with foreign central banks and its open market operations. The operations by which it creates money with accounting entries, thus the feds most important and most highly suspect functions remain behind public scrutiny.

A Meaningless Reserve Requirement?

The reserve requirement itself is becoming obsolete. According to the press release issued by the Federal Reserve Board on October 4 2005, no reserves would be required in 2006. For the first 7.8 million of net transaction accounts. At a 0% reserve, there is no limit to the number of times deposits can be relent, there was really no limit in any case, as the New York Fed acknowledges on its own website after explaining the exercise in which $100 deposit becomes $1,000 in loan money, it obliquely conceded in practice the connection between reserve requirements and money creation is not nearly as strong as the exercise above would suggest.

How Banks Can Acquire Reserves Any Time They Like…From the Fed

The Federal Reserve operates in a way that permits banks to acquire the reserves. They need to meet their requirements from the bank the money markets along as they’re willing to pay the prevailing price. The federal funds rate for borrowed reserves. Consequentially, reserve requirements currently play a relatively limited role in money creation in the United States. As the Fed will provide the necessary reserves by making them available at the federal funds rate. The banks borrow from the Fed at a low interest rate and extend credit to their customers at a higher rate. Where the sleight of hand comes in is that the Fed itself creates the reserves out of thin air.

So let’s review the bank lends money it doesn’t have and then this loan of new money becomes a deposit balancing its books when the borrower spends the money. The bank brings its reserves back up by 10% by borrowing from the Fed or other sources as for the Fed itself, it can’t run out of reserves either because that’s what open market operations are all about. like Santa Claus, the Fed can’t run out of reserves because it makes reserves. In order to pull all this off, the Fed has to alter the meaning of certain words.

Reserves Are Now Accounting Entries at the Fed

Reserves are not what the word implies money kept in a safe or to pay climates. Reserves are accounting entries at the Federal Reserve banks that allow commercial banks to make many times those sums in loans. In an article titled Money and Myths Carmen Pierre Ricrdo writes that a reserve account is basically a second set of books kept at the federal Reserve Bank’s thus in the Chicago Feds example, the dealer acquired federal securities from the government and tendered them to the Federal Reserve, which paid by crediting the dealers account causing new money to magically appear as numbers at the dealers bank. This new deposit was then added to the bank’s reserve balance at its local branch of the Federal Reserve.

These reserves are not real money kept In the commercial bank for paying depositors, they exist only as liabilities on the Federal Reserve Bank’s books. Pierre maintains that the rules accounts kept at the Federal Reserve Bank are just a system for keeping track of how much money commercial banks create. Pierre goes on to say, number banks do not physically transfer a percentage of their demand deposit account balances to their reserve accounts at their Federal Reserve branch.

“I believe these accounts were designed to further the parents by a gigantic system of reserves mandated by the Federal Reserve System to force prudent banking.”

That is put less charitably reserve accounts are a smoke and mirror accounting trick and sealing the fact that banks create the money they lent the land out of thin air, barring any reserves they need from the Fed, which also creates money out of thin air disturbing enough but there was more.

The Chicago fed continues with this example involving your bank. Recall that the deposits in the bank do not exist until the Fed conjures them up something it did by creating a liability on itself in the form of bank reserve balances. At a 10% reserve requirement 10% of those newly created deposits are kept in reserve. The other 90% are excess reserve, which may be used to increase earnings including not only loans but investments that pay a return to the bank. Although investment banks are not allowed to take in deposits to make or make loans of imaginary money based on fractional reserves, commercial banks are now that the lines between these two forms of banking have become blurred. It is not hard to envision bank traders having ready access to some very favorable loans. Thornton continues, 90 of the investment banks now do more trading than all but the biggest hedge funds. Those lightly regulated investment pools that almost brought down the financial system in 1998. When one of them long term capital management blew up.

Jumping Into Private Equity

What’s more, banks are jumping into the realm of private equity, spending billions to buy struggling built businesses as far afield as China that they hope to turn around and sell at a profit. equity is ownership interest in a corporation and the equity market is the stock market. These banks are not just investing in short term treasury bills on which they collect the modest interest as commercial banks have traditionally done. They’re buying whole businesses with borrowed money and they are doing it not to develop the productive potential of the business but just to reap a quick profit on resale. Leading the attack in this lucrative new fields as Jordan is the very successful investment bank, Goldman Sachs headed until recently by Henry Paulson. Paulson left the firm to become the US Treasury Secretary in 2006. But neither Goldman nor its cronies are showing signs of easing up. The practice of buying whole corporations in order to bleed them of their profits has been given the less charitable name of vulture capitalism. Why the term fits was underscored in a January 2006 article by Shaun Corrigan called speculation in the late Empire.

“When the buyout merchants and private equity partnerships can borrow What are effectively limitless sums of cheap tax advantaged debt, with which to buy out corporate shareholders, when they can then proceed to ruin the target business’s balance sheet in a flash by ordering payment of special dividends by weighing it down with junk debt in order to return their funds. at the earliest juncture when they’re pecuniary motives are mollified by so little pretense of undertaking any genuine entrepreneurial restructuring with which to enhance economic efficiency when they can rake in an ever greater haul of loot by selling the firm smartly back to the next decimal and sucker in line. When they can scatter fees and commissions and awful often political contributions liberally along the way, then we’re clearly well past the point of reason or endorsement.”

All major markets are now thought to be subject to the behind the scenes maneuverings of big financial players and these manipulations are being done largely what Corrigan calls Phantom money. A June 2006 article in Barron’s noted that the bond market today is dominated by banks and government entities and that they are not buying bonds for their interest income rather the reality is that they are only interested in currency manipulation and market control.

The Constant Bear Raids After the Crash of 1929

The crash that initiated the Great Depression wasn’t a one time occurrence. It continued for nearly four years after 1929 stoked by speculators who made huge profits. Not only on the markets meteoric rise, but as it was plummeting, unrestrained financial exploitation has been one of the great causes of our present tragic condition Roosevelt complained in 1933. a four year industry wide bear raid reduce the Dow Jones Industrial Average to only 10% of its foreign value for more value.

A bear raid is the practice of targeting stocks would take down either for quick profits are for corporate takeover. short selling is a form of counterfeiting. When a company is founded, a certain number of shares are created, the entire value of that company is represented by that fixed number of shares. When an investor buys some of those shares and leaves them registered in his brokerage street name, his broker makes those same shares available to someone else. To sell short. Once sold short there are two investors owning the same shares of stock. The price of stock shares are set by market forces IE supply and demand. When there is a fixed supply of something the price adjusts until demand is met. But when supply is not fixed, as when something is counterfeited, supply will exceed demand and the price will fall. The price will continue to fall as long as supply continues to extend beyond demand. The lending of shares by a broker who holds them in trust for his customer is comparable to the Goldsmith’s lending of gold held in trust for depositors. The brokers customers may have agreed to lend out their shares in the fine print of their brokerage contracts, but they probably are not aware of it. They could avoid having their shares lent out by taking physical possession of the stock, but if they leave the stock with a broker, it is in street name and can be lent out and sold without the real owners knowledge. Naked short selling is a practice of selling stock short without either owning or borrowing them. Like many regulations put in place during the Roosevelt’s New Deal. The rule against that practice to is also been seriously eroded. It has been argued that a highly liquid stock market is essentially is essential to ensure corporate funding and growth. That might be a good argument if the money actually went to the company but that’s not where it goes. The issuing company gets the money only when the stock is sold at a high initial public offering IPO. The stock exchange is a secondary market investors buying from other stockholders hoping they can sell the stock for more than what they paid for it.

Basically, it’s gambling.

Corporations have an easier time raising money through new IPOs. If the buyer know they can turn around and sell their stock quickly. But in today’s computer globalized markets, real buyers should show up quickly enough without letting broker sell stock they don’t actually have to sell. Like fractional reserve lending. short selling is made possible because the brokers are not dealing with physical things, but they’re simply moving numbers around on computer monitors. Any alleged advantages to a company from the liquidity afforded by short selling are offset by the serious harm the sleight of hand can do to companies targeted for the takedown in bear rates over the six year period before 2004 he said the practice resulted in over 7000 public companies being shorted out of existence. Burrell maintain that as much as a trillion dollars to 3 trillion may have been lost and naked short selling, and that more than 1200 hedge funds and offshore accounts have been involved in the scandal. Hedge funds are private funds that pool the assets of wealthy investors with the aim of making absolute returns making a profit whether the market goes up or down maximize their profit. They typically use credit borrowed against the fund’s assets to leverage their instant investments. Leverage is the use of borrowed funds to increase purchasing power, the greater the leverage, the greater the possible gain or loss. In trading futures this leverage is called the margin. Leveraging on margin or borrowing the money allows an investor to place many more bets Then if they had paid the full price.

In the 1920s. wealthy investors engaged in pooling, combining their assets to influence the markets for their collective benefit. Like trust a monopolies pooling was considered to be a form of collusive interference with the noise market forces of supply and demand. Hedge Funds are the modern day variants of this scheme. They are usually run in offshore banking centers, such as the Cayman Islands to avoid regulation. Hedge funds were originally set up to hedge the bets have investors insuring against currency or interest rate fluctuations but they quickly became instruments for manipulation and control. One problem with the current system is that the government itself has been seduced into borrowing money created out of nothing and paying interest on it when the government could have created the funds itself, debt and interest free. In the case of government loans, banks take virtually no risks. And so government is always good for interest, and the taxpayers get saddled with a crippling debt that could have been avoided. Another problem with the fractional reserve system is simply in math. Since all money except coin comes into existence as debt to private banks and the banks create only the principal when they make loans. There is never enough money in the economy to repay principal plus interest on the nation’s collective debt. When the money supply was tethered to gold, the problem was resolved through periodic waves of depression and default, that wipe the slate clean and started the cycle all over again. It was a brutal system for the farmers and laborers who got wiped out and it allowed to finance your class to get progressively richer, while the actual producers got progressively poor. But it did serve to maintain a certain stability in the money.

So Why?

Today however, the Fed has taken on the task of preventing depression something it does by pumping more and more credit money into the economy by funding a massive federal debt that no one ever expects to every two have to repay and all this credit money is extended interest at some point The interest bill alone must exceed the tax. payers ability to pay And a according to the US Comptroller General, David Walker that day of reckoning is only a few years away.

A third problem with the current system is that giant international banks are now a major players in global markets not just as lenders but as investors. Banks have a grossly unfair advantage in this game because they have access to so much money and they can influence the outcome of their bets. If you have the individual investors sell a stock short. Your modest investment won’t do much to influence the stock price but a mega bank It’s affiliates can short so much stock that the value plunges if the bank is one of those lucky institutions consider too big to fail. It can rest easy even even if it’s bad. That does go wrong since the FDIC and taxpayers will bail it out from its folly Lincoln’s economist Henry Carey said that The twin weapons used by the British Empire to colonize a world where the gold standard and free trade. The Gold Standard has now become the petrodollar standard. And as we’ll see in the next chapter, but the game is better with the same crack open foreign markets in the name of free trade take down the local currency and put the nation’s assets on the block prices. The first step in this process is to induce the country to accept foreign loans and investment. The loan money gets dissipated, but the loans must be repaid in the appointment word Brazilian politician Louis Ignacio Silva, the third world war has already started the war is tearing down Brazil, Latin America and practically all the Third World instead of soldiers dying, there were children. It’s a war over the third World debt one which has its main weapon interest a weapon more deadly than the atom bomb. More shattering than the laser beam the gold cap suggests that the gold that was used by international finances to colonize indigenous populations in the 19th century. The Gold Standard was a necessary step in giving the bankers fractional reserve lending scheme legitimacy, but the rules could not be sustained indefinitely. When gold left the country to pay for foreign debts, the multiples of banknotes ostensibly backed by it had to be withdrawn in circulation as well. The result was money, contraction and depression. The currency for the time is annihilated, said Lord. Roosevelt was faced with this sort of implosion of the money supply in the Great Depression, forcing him to take the dollar off the gold standard to keep the economy from collapsing. In 1971, Nixon had to do the same thing internationally. When for creditors threatened to exhaust us gold reserves by cashing in their paper dollars for gold. between those two paradigm changing events came John F. Kennedy who evidently had his own ideas about free trade, the third world. Donald Epson contends Kennedy was last president take a route to take real stand against the entrenched Wall Street business interests. He felt strongly that the country should maintain its independence by developing cheap energy sources. The stand pitted against him pitted him against oil. banking cartels, which was bent on raising oil prices to prohibitive levels to entangle the world in debt.

Kennedy has been accused of reckless militarism and obsessive anti communism. But Gibson said his plan for neutralizing the appeal of communism was more benign. He would have replaced colonialist and imperialist economic policies with a development program that included low interest loans, foreign aid and nation and nation cooperation and some measure of government. When planning the Wall Street bankers had other ideas give in quotes George Moore the president of First National City Bank, who said with $1, leading international currency and the United States or worlds largest exporter importer of goods services and capital was only natural. The banks should play the same relative role in international finance, that the Great British financial institutions played in the 19th century. The Great British financial institutions played the role of subjugating the end of developed countries to the position as backward exporters of raw material. Kennedy crossed the bankers by seeking to revive a silver backed currency that would have been independent of the banks and their privately owned Federal Reserve. His presidency came to an untimely end before he could play his hand, but he did authorize the Secretary of the Treasury to issue US Treasury silver certificates and he was the last President issue freely circulating United States banknotes greenbacks. When President Lyndon Johnson stepped into the presidential shoes his first official acts included replacing government issued United States notes with Federal Reserve now. In declaring the Federal Reserve Notes could no longer be redeemed and silver, the new federal reserve notes were released that omitted the following promise to pay in lawful money.

Although the puppeteers behind Kennedy’s assassination had never been officially exposed, some investigations have concluded that he was another victim of the Invisible Hand of the international corporate banking military cartel. President Eisenhower warned in his 1961 farewell address of the encroaching powers of the military industrial complex. In that mix, Gibson would add the oil cartel and Morgan Rockefeller banking sector which were closely aligned, Kennedy took a bold stand against them all. He how he stood up to the CIA in the military was revealed by James Bamford. In the book Body of Secrets, which featured the ABC News is featured by ABC News in November 2001.

CIA’s Operation Northwoods

Two months after the World Trade Center disaster, the book discussed Kennedy’s threats to abolish the CIA’s right to conduct covert operations after he was presented with secret military plans codenamed Operation Northwoods in 1962. Drafted by America’s top military leaders these bizarre plans included proposes to kill innocent people have committed acts of terrorism and US cities in order to create public support for war against Cuba.

Actions contemplated included hijacking planes, assassinating Cuban emigres, sinking boats of Cuban refugees on the high seas, blowing up a US ship orchestrating violent terrorism in US cities and causing us military casualties, all for the purpose of tricking the American public and the international community into supporting a war against Cuba’s then new communist leader Fidel Castro. Their proposal stated we could blow up a US ship in Guantanamo Bay and blame Cuba, and that casualty lists in US newspapers could cause a helpful wave of national indignation.

Needless to say Kennedy was shocked and flatly vetoed the plans. The head of the Joint Chiefs of Staff was promptly transferred to another job. The country’s youngest president was assassinated a follow assassinated the following year. Whether or not Operation Northwoods played a role it was further evidence of an invisible government acting behind the scenes is disturbing murder was a wake up call for a whole generation of activists. Things in the Emerald City were not as green as they seemed Lyndon Johnson was followed in the White House by Richard Nixon, the candidate Kennedy defeated 1960. In 1971, President Nixon took the dollar off the gold standard internationally leaving currencies to float in the market so that they had to compete with each other as if they were commodities. Currency markets were turned into giant casinos, it could be manipulated by powerful hedge funds, multinational banks and currency speculators. William Engdahl, author of a Century of War writes, in this new phase control over monetary policy, in effect was privatized with large international banks such as Citibank, Chase Manhattan or Barclays, assuming the role that central banks had in the gold system, but entirely without gold. Market forces would now determine the dollar and they did with a vengeance. It was not the first time floating exchange rates have been tried an earlier experiment had ended in disaster when the British pound and the US dollar had both been taken off of the gold standard in the 1930s. The result was a series of competitive devaluations that only serve to make the global depression worse.

Bretton Woods

The Bretton Woods accords were entered into at the end of World War Two. To correct this problem, the foreign exchange markets were stabilized with an international gold standard in which each country fixed its currency. currencies global price against the price of gold currencies are allowed to fluctuate from this pegged only within a very narrow range, plus or minus 1%. The The International Monetary Fund was set up to establish exchange rates and the International Bank for Reconstruction and Development The World Bank was founded to provide credit to war ravaged and third world countries.

The principal architects of the Bretton Woods accords were British economist John Maynard Keynes and assistant US Treasury Secretary Harry Dexter white. Keynes envisioned an international Central Bank and the had the power to create its own reserves by issuing its own currency which he called the banker, but the United States had just become the world’s only financial superpower and was not ready for that step in 1944. The IMF was formulated mainly by white and it reflected the power of the American dollar the gold standard had failed earlier because Great Britain and the United States, their global bankers had run out of gold. Under the White plan, gold would be backed by US dollars, which were considered good as gold because the United States had to agree to maintain their convertibility into gold at $35 per ounce. As long as people had faith in the dollar there was no fear of running out of gold. That the Bretton Woods accords were convened By the master spider, David Rockefeller, they played right into the hands of the global bankers who needed the most sensible backing of gold to justify a man expansion of the US dollar Debt around the world.

Why Bretton Woods Eventually Failed

The Bretton Woods gold standard worked for a while but it was mainly because few countries actually converted their dollars in the gold. Trade balances were usually cleared in US dollars due to their unique strength with After World War 2 things fell apart. French President Charles de Gaulle, seeing that the United States was spending far more on the Vietnam War, the US hadn’t the gold reserves to manage to convert 300 million of France’s US dollar holdings into gold. That request was honored but it was followed by one that would have broken the Bank. Great Britain having the largest monthly trade deficit in its history have been turned down by the IMF for a $300 billion loan and tried to cash in its gold backed dollars for the gold they supposedly representative represented some amount of to 1/3 of the gold reserves in the United States. The gold price was capped at $35 per ounce, forcing President Nixon to renege on the gold deal and closed the gold window permanently. To his credit Nixon did not take this step until he was forced into it. The result of taking the dollar off the gold standard was to finally take the brakes off the printing presses. Fiat dollars could now be generated and circulated to whatever extended the world extent the world would take them. The Witches of Wall Street proceeded to build a worldwide financial Empire based on fractional reserve banking. That used bank rated paper dollars in place of time on our gold dollars became the reserve currency for a global net of debt to an international banking cartel. It worked out so well for the bankers that skeptical commentators suspected it must have been planned that way.

Whether unpacking the dollar from gold was a deliberate act of bad faith might be debated, but the fact remains that gold was inadequate as a global yardstick for measuring value. The price of gold gold fluctuated widely, and it was subject to manipulation by speculators. Gold was also failed as a global reserve currency because there was not enough gold available to do the job. If one country had an outstanding balance of payments because it had not export enough goods to match its imports. That imbalance was corrected by transferring resource goals between countries. And to come up with the goal the debtor country would cash and it’s US dollars for the metal draining us gold reserves. It was inevitable that the US government the global banker, would eventually run out of gold. Some proposed proposals for pegging currency exchange rates that would retain the benefit of the gold standard without its shortcomings.

How the World Moved to Something Worse Than a Gold Standard

If the gold standard was flawed, the system of floating exchange rates that replaced it was much worse, particularly for the third world countries. currencies were now valued nearly by their relative exchange rates in the free market. The foreign exchange markets became giant casinos in which the investors were just betting on the relative positions of different currencies. Smaller countries were left at the mercy of the major players, whether other countries, multinational corporations, or multinational banks, which could radically devalue national currencies just by selling them short on the international markets. in large quantities.

These currency manipulator manipulations could be so devastating they could be used to strong on concessions from Target economies. What happened, for example, during the Asian crisis in 1997, and 1998, when they were used to encourage Thailand, Malaysia, Korea and Japan to come into conformance with World Trade Organization rules and regulations. The foreign exchange market became so unstable that that crisis ease could result just from rumors of economic news and changes in perception. Commercial risks from sudden changes in the value of currency are now considered greater than political or market risks from conducting foreign trade. A huge derivative market developed to provide hedges to counter these risks. The hedgers typically place that bets both ways in order to be covered, whichever way the market goes.

How the Gold Standard Become the Oil Standard

The US dollar had formerly been backed by gold that was now backed by oil. Every country had to acquire Federal Reserve Notes to purchase this essential commodity. Oil importing countries around the world suddenly had to export goods to get the dollars to pay their expensive new oil import bills diverting their productive capacity away from feeding and clothing their own people, countries that had a negative trade balance. Because they failed to export more goods in the imported were advised by the World Bank and the IMF to up peg their currencies from the dollar, unpack their currencies from the dollar and let them float and the currency market.

The theory was that an overvalued currency would then become devalued naturally until until it found its true revalue devaluation would make exports cheaper and imports more expensive along the country to build up a positive trade balance. By selling more goods and I bought that was a theory but as Michael Rob Hoffman observed it has not worked well on practice. There is the obvious but frequently ignored point that whilst lowering the value of a currency may promote exports, it will also raise The cost of imports. This of course is intended to auditor imports by If the demand of imports is inelastic reflecting essential goods and services, contracts and preferences then the net cost of imports may not Fall in may actually rise. Also whilst the volume of exports may rise, appearing to promise greater earnings, the financial return per unit of export will fall, time and time again nations devaluing their currencies have seen volumes of exports and imports alter slightly but with little overall impact on the financial balance of trade right.

Currency Speculators Abound

If the benefits of letting the currency float or minor, the downsides are major. The currency was now subject to rampant manipulation by speculators As a result was a disaster. rollercoaster ride particularly Third World economies. Today most currency trades are done purely for speculative profit. currencies rise or fall depending on quantities traded each day. Professor Henry Liu, the Chinese American economist quoted earlier says that China escaped the 1998 Asian crisis in this way he writes,

“China was saved from such a dilemma because the one was not freely convertible in a fundamental way. The Chinese miracle of the past half century, half decade has been made possible by its fixing exchange rate, fixed exchange rate and currency control. But China too has been under pressure to let its currency float Liu warns that the country of his ancestors, quote, the record of the past three decades has shown that neoliberal ideology brought devastation to every economy and invaded.”

China will not be exempt from such a fate when it makes a wonderful a convertible and floating rates and quote, there is no real solution to this problem short of global monetary reform. When the price of oil quadrupled in the 1970s, OPEC countries were suddenly flooded with us currencies, and currency. And these Petro dollars were usually deposited in London and New York banks. They were an enormous windfall for the banks, which recycled them as low interest loans to third world countries. They were desperate to borrow dollars to financial oil imports. Like other loans made by commercial banks, these loans are not actually because it’s the money deposited by their clients. The deposits merely served as reserves for loans created by the multiplier effect out of thin air. through the magic of fractional reserve lending dollars belonging to Arab sheiks are multiplied many times over. As accounting entry loans. The emerging nations were discovered as emerging markets for those new international financial capital hundreds of billions of dollars in loan money were generated in this way. Before 1973 world debt was manageable and contained. It was financed mainly through public agencies, including the World Bank, which invested in projects promising solid economic success, but things changed on private commercial bank and gotten into the game.

Investment Banks Rape the 3rd World

The banks were not in the business of development. They were in the business of loan brokering, some call it loan sharking. The banks preferred stable governments for clients. Generally, that meant governments controlled by dictators. How these dictators come to power and what they did with their money were not of immediate concern to the banks, the Philippines, Chile, Brazil, Argentina, and Uruguay were all are all prime loan targets. In many cases, the dictators use the money for their own ends, without significantly better conditions the people, but the people were saddled with the bill. The screws are tightened in 1979 when the US Federal Reserve under Paul Volcker, unilaterally hiked rates to crippling levels. And Goodall notes that this was done after foreign dollar holders began dumping their dollars in protest over the foreign policies of the Carter administration.

Within weeks, Volcker allowed the US interest rate to triple they rose to over 20%, forcing global interest rates through the roof triggering a global recession and mass unemployment. And by 1982, the dollar status as gold global reserve currency had been saved. But the entire third world was on the brink of bankruptcy, choking from as user as interest charges on their Petro dollar loans. That was when the IMF got into the game. Bought brought in by the London and New York banks to enforce debt repayment, and act as debt policemen. public spending for Health Education and Welfare entire countries was slashed following IMF orders to ensure that the bank’s got timely debt service for the Petro dollars. The banks also brought pressure on the US government to bail them out from the consequences of their imprudent loans using taxpayer money and us assets to do it. The results were austerity measures for the third world countries and taxation for American workers to provide welfare for the banks. The banks were emboldened to keep aggressively lending confident they would again be bailed out if the debtors loans went into default. Worse for American citizens the United States itself ended up as a major debtor nation because oil is an essential commodity. For every country. The Petro dollar system requires other countries to build up huge trade surpluses in order to accumulate the dollar surpluses. They need to buy oil. These countries have to sell more goods and dollars and they buy to give them a positive dollar balance. That is true for every country except the United States, which controls $1 and issues that it will more accurately the Federal Reserve and the private commercial banking interests it represents control the dollar and the issue issue with it well, since you are a US economic dominance depends on the dollar. recycling process, the United States has acquiesced in becoming importer of last resort. The result has been the satelitte with growing negative trade balances or currency account deficit. By 2000. US trade deficits and net liabilities to foreign accounts were well over 22% of gross domestic product. The people of the United States like those in the third world had become hopelessly mired in debt to support the banking system of a private international cartel. Wow. countries around the world have been caught in the same trap that captured Mexico. Henry Liu calls it the TequilaTrap. He also calls it a suicidal policy masked by the giddy expansion of typically typical of the early phase of a Ponzi scheme. The lower on the trap is the promise of massive dollar investment at first returns are spectacular. But as with every Ponzi scheme, the returns eventually collapse, leaving the people massively in debt to a foreign banking cartel that will become their new economic masters.

The former Soviet states, the tiger economies of Southeast Asia, and the Latin American banana republics all succumb to these rapacious tactics, local ineptitude and corrupt politicians are blamed when the real culprits are international banking speculators on with tsunami size walls of credit created on computer screens. Targeted countries are advised to attract foreign investment. They must make their currencies freely convertible into dollars in prevailing or floating exchange rates, and they must keep adequate dollars in reserve for anyone who wants to exchange from one currency to the other. After the trap is set, the speculators move in. Speculation has been known to bring down currencies and national economics in a single day. Michel Chossudovsky, professor of economics at the University of Ottawa writes,

“The media tends to identify these currency crisis as being the product of some internal mechanism, internal political weakness or corruption. The linkages to international finance are downplayed. The fact of the matter is that currency speculation using speculative instruments was ultimately the means whereby the central bank reserves were literally confiscated by the private speculators the very notion that a country has to defend its currency shows that there’s something wrong with the system law.”

The Tequila Trap is the contemporary version of what Henry Carey and the American nationalist warned against the 19th century when they spoke of the dangers of opening a country’s borders to free trade. Carey said sovereign nation should pay their debts and their own currencies issued greenback style by their own governments. Professor Liu also advocates his approach which he calls sovereign credit, carry calls it National Credit, something that he defined as a national system not liable to interference from abroad. Carey also called it the American system to distinguish it from the British system of free trade. Abraham Lincoln was forging ahead with that revolutionary model when he was assassinated, carrying his faction realizing that the country was facing the very real threat the banking interests that had captured England would also capture America then move from to form a ball awkward against us encroaching menace by planting the seeds of the American system abroad. In the 20th century, the British system did prevail in America but the American system was quietly taking roots overseas.

The British Model Versus The American Model

According to later commentators Frank Baum’s yellow Winky is represented the world’s exploited and oppressed in the late 19th century, the United States was engaged in an imperial war with the Philippines, which was vigorously opposed by William Jennings Bryan, the populist lion (represented by the cowardly lion), the Chinese had been exploited in the Opium Wars and the Chinese immigrants worked like slaves on the railroad, of the American West, to Henry Carey, they were all victims of the British system a form of political economy based on free trade and the gold standard. He wrote in harmony of interests in 1851, two systems are before the world one looks to underworked working under paying or exploiting the Hindu and sinking the rest of the world to his level, the other to raising the standard of man through the world to our level one looks to populism ignorance and depopulation and barbarism. And the other two increasing wealth comfort intelligence combination of action and civilization. One looks towards universal war, the other towards universal peace.

One is the English system. The other, we may be proud to call the American system forward as the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world. In the slave trade domestic foreign domestic and foreign published in 1853 Carey wrote by adopting the free trade or British system we place ourselves side by side with a men who have ruined Ireland and India, and are now poisoning and enslaving Chinese people.

By adopting the other we place ourselves by the side of those whose measures tend not only to the improvement of their own subjects but to the emancipation of the slaves everywhere, whether in the British Isles, India, Italy or America, America had narrowly escaped narrowly escaped the fate of the Irish Indians and Chinese. Only because President Lincoln, stood up to the bankers rejecting their users loans in favor of government issued greenbacks. He had sponsored a government program in which the country would convert its raw materials into manufactured goods funding its own internal development by generating its own money, avoiding interest payments and subservience to middlemen foreign or domestic when Lincoln was assassinated with the and the British system got the upper hand. Carey and the American nationalists saw the need to develop a network of allies against this eminent threat. They encourage political factions in Russia, Japan, Germany and France to bring their governments in accord with Lincoln’s policies, forming and potential alliance that could destroy the British Empire’s financial hedge of money that alliance would later be disrupted by two World Wars, but the foundation had been laid the 100th anniversary of the American Revolution was commemorated in 1876 with a centennial in Philadelphia organized by Henry Carey and his circle, it was a it was a World Fair that celebrated human freedom and potential through collective efforts to develop science, technology, transportation and communications, the carry is funded Thomas Edison’s invention factory which displayed its first telegraphic inventions at the Centennial Exposition later Edison was challenged by Carey’s Philadelphia group to develop electricity and Edison’s partner introduced electric sheet streetcars and subway trains. Many other countries had their own displays the Philadelphia Centennial as well including the French, who donated the Statue of Liberty and millions of people attended from all over the world. The foreign delegates, met with the Philadelphia group to discuss industrialization and the development of an economic system in their own countries along the lines envisioned by Franklin and Lincoln.

Debt Free Government Issued Money As the Cornerstone of the American Revolution

Tom Paine had called debt free government issued money the cornerstone of the American Revolution. The cornerstone had been rejected in America but it was being studied by innovative leaders abroad, and some of them wound up rejecting the privately created money of foreign finance years in favor of this homegrown variety as Wall Street came to dominate American politics and the American media. These nationalized banking systems would be branded on American, but they were actually made in America, patterned after the prototypes of Franklin, Lincoln, Carey and the American green backers, Russia and China developed national banking systems on the American model in the 19th century, well before the communist revolutions that overthrew their monarchies, ironically the Marxist political system they later adopted was devised in Great Britain, and retain the class structure of the British system with a small financial elite ruling over masses of laborers.

The American system of Franklin, Hamilton and Lincoln was something quite different. It celebrated private enterprise and the entrepreneurial spirit, while providing a collective infrastructure under which competitive capitalism could flourish, this protective government umbrella furnish checks and balances that prevented exploitation by monopolies and marauding foreign interests allowed science and technology to bloom and provided funding for projects that promoted the general welfare, welfare, improving the collective human condition by drawing on the credit of the nation.

Henry Carey Argues in Favor of America Backing Russia Against England in the Crimea War

America’s alliance with Russia dated back to the 1850s when Henry Carey helped turn American opinion in Russia’s favor with a noose his newspaper writings, Carey argued that America should back Russia against England in the Crimea War, Russia in turn sent ships to back Lincoln against the British back Confederacy, the American system of economics was introduced to St Petersburg by the US ambassador in 1861 Sorry Alexander the second abolished serfdom, and launch an economic plan for developing agricultural science communications railroads and other infrastructure in America provided scientific and technological know how to help Russia industrialize, in 1862 Russia established a uniform national currency a national tax levee system and a state owned central bank. By the beginning of World War One, the Russian state bank had become one of the most influential lending institutions in Europe, it had vast gold reserves actively granted credit to aid in industry and trade and was the chief source of funds for Russia’s war effort.

A group of Russian entrepreneurs, fought to copy the American system advanced by carrying his faction, but they faced stiff opposition from the landed nobility, who were backed by international banking interests. Although the Tsar had liberated the peasants the nobility for such onerous conditions on their freedom that they remain exploited and oppressed the peasants had to pay huge redemption fees to their former masters and they were given insufficient land to support themselves.

World War I imposed further burdens most of the working men were taken to fight the war, and those who remain had to work grueling hours and suffer bad conditions. The people were forced off the land into overcrowded cities were famine broke out, and the peasants did not actually initiate the Russian Revolution, but when the match was led they provided the tender that set it ablaze.

Two Russian Revolutions, the One We Know of Today Financed by Wall Street

There were actually two Russian Revolutions, the first call of the February Revolution which was a largely bloodless transfer, transfer of power from the Tsar to a regime of liberals and socialists led by Alexander Kerensky who intended to instigate political reform along democratic lines. The far bloodier October Revolution was essentially a coup in which Kerensky was overthrown by Vladimir Lenin, with the support of Leon Trotsky and some 300 supporters who came with him from New York. Born love Bronstein, Trotsky was a Bolshevik revolutionary who had gone to New York after being expelled from France, in 1916, he and his band of supporters returned to Russia in 1917 with substantial funding from a mystery Wall Street donor widely thought to be Jacob Schiff of Kuhn Loeb. Trotsky’s New York recruits later adopted Russian names and made up the bulk of the communist party’s leadership.

Why was the second Russian Revolution necessary in the creature from the Creature from Jekyll Island, Ed Griffin observes that Trotsky and the Bolsheviks received strong support from the highest financial and political power centers in the United States, men who were supposedly capitalists and should strongly oppose socialism and communism. Griffin argues that Lenin, Trotsky and their supporters were not sent to Russia to overthrown the Tsar, rather he says their assignment from Wall Street was to overthrow the revolution. He quotes Eugene Lyons a correspondent with the United Press, who was in Russia during the Revolution, when Lyons wrote Lenin, Trotsky and their cohorts did not overthrow the monarchy. They they overthrew the first democratic society in Russian history, set up through a truly popular revolution in March of 1917. They represented the smallest of the Russian radical movements but theirs was a movement that scoffed at numbers and frankly mistrusted multitudes, Lenin always sneered at the obsession of competing socialist groups with their mass base. Give us an organization of professional revolutionaries he used to say, and we will turn Russia upside down. Within a few months after they attained power most of the Czar’s practices of the Leninists had condemned or revived, usually in more ominous forms, political prisoners convictions without trial and without the formality of charges savage persecution, the dissenting views death penalties for more varied crimes, varieties of crimes and any other modern nation, the February Revolution sought to establish a democratic Russian republic, one with a self contained monetary system under the line suggested by Abraham Lincoln. According to Griffin the October Revolution was commissioned by Wall Street, to make sure this did not happen. Lenin, Trotsky and their supporters kept Russia in the hands of a small group of elite called the Communist Party, who were largely foreign imports the party kept Russian commerce open to free trade, and it kept the banking system open to private manipulation. The country’s banking system was nationalized in 1917 as the People’s Bank of the Russian Republic but this system was dissolved in 1920 as contradicting the communist idea of a moneyless economy, Griffin writes in 1922, the Soviets form their first international bank. It was not owned and run by the state, as would be dictated by communist theory, but was put together by a syndicate of private bankers. These included not only former czarist bankers but representatives of Germany, sweet, sweet, Swedish and American banks. Most of the foreign capital came from England, including British government itself. The man appointed as director of the foreign division of the new Banks was Max made vice president of mortgage Guaranty Trust Company in New York. In the years immediately following the October Revolution, there was a steady stream of large and lucrative meat read non competitive contracts, issued by the Soviets to British and American businesses, US British and German wolves soon found a bonanza of profit selling in the new Soviet regime. And these are, if these arrangements were so lucrative for Anglo American business interests.

Stalin Takes Over After Lenin and Thwarts Wall Street’s Plans

Why did the United States target Soviet Russia as the enemy in the Cold War following World War Two, the plans of the international bankers evidently went awry after Lenin died in 1924 Trotsky who was in line to become the new Soviet leader got sick at the wrong time and Stalin grabbed the reins of power for their Trotskyites and their Wall Street bankers Stalinist communism, then became the enemy.

Trotsky was expelled from the Soviet Union in 1928 in return for a time to New York meaning his death in Mexico, in 1940 at the hands of a Soviet agent.

Although most throughout most of the rest of the 20th century the banking cartel fought to regain its turf in Russia. The Neo cons or neoconservatives, the group’s most associated with the Cold War, have been traced to the Trotskyites of the 1930s Srdja Trifkovic is a journalist who calls himself a paleo conservative. He writes that the neo cons moved from the paranoid left to the paranoid right after emerging from the anti Stalinist far left in the late 1930s and early 1940s they had discovered that capitalism suited their aims better than socialism, but they remained consistent in those aims, which was to prevail over the Russian reasoning regime and dominate the world economically and militarily, they succeeded on the Russian front when the Soviet economy, finally collapsed in 1989, the central bank of the Russian Federation was added to the legal central banks operating independently of the federal and local governments in 1991, the economic destruction of Russia and its satellites followed, Jude.

Time for Shock Therapy for Russia

Once the Reagan era insider quoted earlier says that shock therapy was imposed on the Soviet countries after 1989 and an international continuation of the Cold War by other means. In a February 2005 interview shortly before he died. Srdja Trifkovic acknowledged that he was at one time a neocon himself but he said that he had to break the with neocon policies after the Iron Curtain came down he revealed.

“We were all called warriors united in a very hard line against communism in Moscow and in Beijing. But when the Cold War ended, the Russians invited me to Moscow to try to help them turn their communist regime into a market economy and I was glad to do that for free, but I had to break with my old friend because they said we didn’t beat these guys and now if we have to smash them into the ground. We want to feed them with bad economic advice shock therapy, so they will fall apart.”

The IMG and World Bank as Shock Therapy Specialists

Shock Therapy consisted of austerity measures imposed in return for financial assistance from the International Monetary Fund and its sister agency, the World Bank, also called structural readjustment.

These belt tightening measures included eliminating food program subsidies reducing wages increasing corporate profits and privatizing public industry. According to Canadian writer Wayne Elwood structural adjustment is a code word for economic globalization and privatization, a formula which aims both to shrink the role of the state and soften the market for private investors.

Mark Weisbrot co director of the Center for Policy Economic and Policy Research testified before Congress in 1998 that Russia steep decline after 1989 was a direct result of the harsh policies of the IMF, which were used as tools for subordinating the domestic economies of emerging market countries to the whims of the international financial markets, he told Congress.

“The IMF has presided over one of the worst economic declines in modern history, Russian output has declined by more than 40% Since 1992 A catastrophe worse in our own Great Depression. Millions of workers are denied wages owed to them a total of more than 12 billion. These are the results of the shock therapy a program introduced by the IMF in 1992. First there was an immediate decontrol of prices inflation soared 520% In the first three months, millions of people saw their savings and pensions reduced to crumbs.”

The IMF blamed the Russian hyperinflation on deficit spending by the government. But Weisbrot says it wasn’t true. Rather, the real culprit was the IMF insistence on tight money for the first four years of shock therapy the government mostly stayed with the funds target range, but as the economy. economic collapse continued tax collection became increasingly difficult.

Hilter Supports a Debt Free Government Fiat Money – The “German Greenback”

The German government follow the lead of the American greenbackers and issued its own fiat money, how Hjalmar Schacht head of the German Central Bank should then head of the German central bank was quoted in a bit of.

According to Stephen Zarlenga, in the Lost Science of Money, Hitler was exposed to the fiat money solution when he was assigned by the German army intelligence to watch German, the German Workers Party. After World War One, he attended a meeting that made a deep impression on him in which the views of Godfrey Feder were propounded.

“The basis of Feder’s ideas, was that the state should create and control its money supply through a nationalized central bank rather than have it created by privately owned banks, to whom interest would have to be paid. From this view deriving the conclusion that finance had enslaved the population by usurping the nation’s control of money.”

Stephen Zarlenga traces the idea that the state should create its own money to German theorists who had apparently studied the early American greenback. The 19th century greenbackers saw more clearly that what the true enemy was not an ethnic group but a financial scheme.

The State of the Germany Economy Before Hitler: Proving Lincoln and the American School of Economics Right

The German people were in such desperate straits that they relinquish control of the country to a dictator. And in this they obviously deviated from the American system which presupposed a democratically governed Commonwealth. But autocratic authority did give Adolf Hitler something the American greenbackers could only dream about total control of the economy. He was able to test their theories and he proved that they worked like for Lincoln.

Hitler’s choices were either to submit the total debt slavery or create his own fiat money and like Lincoln, he chose the fiat solution. He implemented a plan of Public Works along the lines proposed by Jacob Coxey and the greenbackers in the 1890s. Projects here marked for funding included flood control, repair of public buildings and private residences, and construction of new buildings, roads, bridges, canals and port facilities.

Within two years, the unemployment problem had been solved and the country was back on its feet. It had a solid stable currency, no debt, no inflation at a time when millions of people in the United States and other Western countries were still out of work and living on welfare. Germany even managed to restore foreign trade, although it was denied foreign credit and was faced with an economic boycott abroad.

Not Using Currency for Foreign Trade

It did this by using a barter system, equipment and commodities were exchanged directly with other countries, circumventing the international banks. This system of direct exchange occurred without debt and without trade deficits. Germany’s economic experiment, like Lincoln’s was short lived, but it left some lasting monuments to its success, including the famous Autobahn. According to Stephen Zarlenga in the Lost Science of Money, Hitler was exposed to the fiat money solution when he was assigned by the German Army Intelligence to watch German Workers Party after World War One. He attended a meeting that made a deep impression on him in which the views of Godffried Feder we’re propounded.

Where Feder and Hilter Diverged from Greenbackers

Where Feder and Hitler diverged from the American greenbackers was in equating the financiers who had enslaved the population with the ethnic race of the prominent bankers of the day. The result was to encourage a wave of antisemitism in Germany and blacken its leaders name. The 19th century greenbackers saw more clearly what the true enemy was not an ethnic group but a financial scheme, one that transferred the power to create money from the collective body of the people to a private banking elite. While Hitler clearly deserved the opprobrium heaped on him for his later military and racial aggressions. He was immediately immensely popular with the German people, at least for a time, as our language suggested that this was because he temporarily rescue Germany from English economic theory, the theory that money must be borrowed against gold reserves of a private banking cartel, rather than issued outright by the government. Stephen Zarlenga also suggests that retaliation by the international bankers may have been a key factor prompting World War Two in billions for the bankers debts for the people. Sheldon Emery also commented on this development writing..

“Germany issued debt free and interest rate free money from 1935 and on and on, accounting for rich startling rise from the depression to a world power in five years. Germany finances entire government and war operation from 1935 to 1945. Without gold and without debt, and it took the whole capitalist and communist world to destroy the German power over Europe and bring Europe back under the heels of the bankers. Such history of money does not even appear in the textbooks of public government schools today.”

Stephen Zarlenga writes that Hjalmar Schach, the former head othe German central bank in his 1967 book The Magic of Money to let the cat out of the bag writing in German, with some truly remarkable admissions that shattered the accepted wisdom of the financial community and that the problems were promulgated on the German hyperinflation. He revealed that it was the privately owned Reichsbank, not the German government that was pumping new currency into the economy. What drove the wartime inflation into hyperinflation was speculation by foreign investors, who would sell the mark short betting on is decreasing value. When the Reichsbank could not keep up with the voracious demand for marks, other private banks were allowed to create them out of nothing and lend Amid interest as well. The Deadly poppy fields that captured Dorothy in the lion were an allusion to the 19th century Opium Wars which allow the British to impose economic imperialism on China. The Chinese government, alarmed at the growing number of addicts in the country made opium illegal and tried to keep the British East India Company from selling it in the country. Britain then forced the issue of militarily acquiring Hong Kong in the process.

The Japanese Opt-Out of International Interactions After Seeing What the British Did to the Japanese

To the Japanese. It was an early lesson in the hazards of free trade to avoid suffering the same fate themselves. They tightly sealed their own borders when they open their borders. Later, it was to the United States rather than to Britain. The Japanese Meiji revolution of 1868 was guided by Japanese students of Henry Kerry and the American nationalists.

Great Britain Often Owned the Central Banks of Nations it Occupied

Great Britain had a policy of owning the central banks of the nations it occupied, such as the Hong Kong and Shanghai Bank of China. In to avoid that trap, Japan became the first nation in Asia to found its own independent states bank, the bank issued new fiat money, which was used to pay the samurai nobles. The nobles are then encouraged to deposit the money in the state bank and to put it to work creating new industries. The Japanese state guided market system was so effective and efficient that by the end of the 1980s, Japan was regarded as a leading economic and banking power in the world. Its Ministry of International Trade and Industry miti played a heavy role in guiding national economic development. The model also proved highly successful in Tiger economies, South Korea, Malaysia and other East Asian countries. East Asia was built up in the 1970s and 80s by Japanese state development aid, along with largely private investments in mity. Support.

The Tiger Economis Embarrass the IMF

And Engdahl writes the Tiger economies were a major embarrassment to the IMF free market model. The very success in blending private expertise with strong state economic roles was a threat to the IMF free market agenda. So long as the Tigers appeared to succeed with a model based on a strong state role, the former communist states and others could argue against taking the extreme IMF course. High economic growth rising social security and a universal education in a market economy is was the sort of Commonwealth America’s founding fathers had endorsed. But the model represented a major threat to the international bankers system of debt based money and IMF loans. to defuse the threat the Bank of Japan was pressured by Washington to take measures that would increase the yen’s value against the dollar. The stated rationale was that this revaluation was necessary to reduce Japan’s huge capital surplus the excess of exports over imports. The Japanese Ministry of Finance countered that the surplus far from being a problem, which urgently required by World needing hundreds of billions of dollars in railroad and other economic infrastructure after the Cold War. But the Washington contingent prevailed and Japan went along with the program. notion sooner to Tokyo act to cool down the speculative fever than the major Wall Street investment banks led by Morgan Stanley and Salomon Brothers began using exotic new derivatives and financial instruments. Their intervention turned the orderly decline of the Tokyo market into a near panic sell off. As the Wall Street bankers made a killing on shorting Tokyo stocks in the process. Until then, the East Asian countries had remained largely debt free avoiding reliance on IMF loans or capital, foreign capital except for direct investment in manufacturing plants. But that was before Washington began demanding that the tiger economies open their controlled financial markets to free capital flows. Supposedly in the interest of level playing fields. They first targeted Thailand gambling that it would be forced to devalue its currency and break from its peg to the dollar. Thailand capitulated its currency was floated and it was forced to turn to the IMF for help. Other geese then followed one by one.

Chalmers Johnson wrote in the Los Angeles Times in June of In 1899,

“The funds easily raped Thailand, Indonesia and South Korea and then turn the shivering survivors over to the IMF. Mark Weisbrot testified before Congress in this case the IMF not only precipitated the financial crisis, it also prescribed policies that sent the regional economy into a tailspin. Meanwhile, the IMF failed to provide the necessary reserves while insisting on very high interest rates and fiscal austerity. The result was a liquidity crisis and became a major regional depression. The result was mass poverty in countries that had previously been experiencing real economic and social progress. Indonesia was ordered by the IMF to unpackage currency from the dollar barely three months before the dramatic plunge of the rupiah its national currency.

Most of the Asian geese succumb to these tactics but Malaysia stood its ground. Malaysian Prime Minister Mohammed said the IMF was using the financial crisis to enable giant International Corporation to take over third world economies. The Chinese Republic was proclaimed just before World War One. After son’s death, the nationalists lost control of mainland China to the Chinese communists, who founded the People’s Republic of China in 1949. But the communists retained much of the American system in creating their monetary scheme, which was a Chinese variant of Lincoln’s greenback program. Before that, bank notes had been issued by a variety of private notes. After 1949 these bank notes were recalled in the Renminbi, or people’s currency became the sole legal currency issued by the People’s Bank of China, a wholly government owned bank. The United States and other Western countries impose an embargo against China in the 1950s, blocking trade between it and most of the rest of the world except the Soviet bloc. China then adopted a Soviet style central planning economy, but in 1978, they pursued an open door policy and was transformed From a centrally planned economy back to a market economy By 2004, China was leading the world in economic productivity growing at 9% annually in the first quarter of 2007. Its economic growth was up to a remarkable 11%.

The Secret to China’s Recent Economic Success

The commonly held explanation for this impressive growth is that the Chinese are willing to work for one of master slave wages. But the starving poor of Africa, Indonesia and Latin America are equally willing. Yet their economies are languishing. Something else distinguishes China. And one key difference is that it is its banking system. China has a government issued currency and a system of national banks that are actually owned by the Nation. Besides its populist banking system, China is distinguished by keeping itself free of the debt web of the IMF and the international banking cartel and by refusing to let its currency float a policy that is fended off the currency manipulators of the international speculators. The Chinese government which can print its own money and doesn’t need to go into debt can afford to let some struggling businesses carry perpetual debt on their books.

India

The differing assessments of how India is faring may be explained by the fact that it is a very large country divided into many states with economic policies that differ. In a June 2005 article in the London observer, Greg Palast noted that those Indian states were globalist free trade policies had been imposed workers have been reduced to sweatshop conditions due to murderous competition between workers without union protections. But this is not the states where Microsoft and Oracle are finding their highly skilled computer talent in those states as the last the social welfare model is alive and thriving.

Conditions are much different in the state of Andhra Pradesh where farming has been the target of poverty eradication. Andhra Pradesh has the highest number of farmer suicides in India. These tragedies have generally allowed the amount Have unrepeatable debts for expensive seeds and chemicals for export crops that did not produce the promise returns. The parallels between the British Empire and the New World Order Empire were striking. It’s just that the British Crown relied on brute force to achieve its objectives while the end who elite mostly used financial terrorism, the British Empire was built by colonizing other countries seizing their natural resources and shipping them back to England to feed the British industrialists factories. In the wake of the Redcoat invasions, local cultures were often trampled and replaced by a more “progressive” British way of life.

Credit Card Statistics

Approximately 60% of credit card users do not pay off their monthly balances and among those users, the average debt carried on their car just close to $12,000.

In 2003, Freddie Mac was embroiled in a $5 billion accounting scandal, in which it was called cooking the books in order to make things look rosier than they were. In 2004. Fannie Mae was caught in a similar scandal.

In 2006, Fannie agreed to pay 400 million for its misbehavior 50 million to the US government and 350 million to defrauded shareholders, and it tried to straighten out his books. But investigators said the accounting could be beyond repair, since some 16 billion had something disappeared.

The Semic Experiment in Italy

An interesting experiment in alternative financing was reported in the October 7 2000. Wall Street Journal. It was a brainchild of Professor Giacinto Auriti, a wealthy local academic in Italy. According to the journal, Professor hoped to convince the world that central bankers are the biggest con artists in modern history, modern history, his main thesis. For centuries, central banks have been robbing the common man. He goes on to conclude that this debt based money was Russia has roughly half the purchasing power it would have if it were issued directly to the populace for free to breath.

This professor Giacinto Auriti printed up and issued his own debt free bills called Simec. He agreed to trade Simec for Lire and to redeem each Simec for two Lire from local merchants, armed with their Simec the town’s folk and later their neighbors elsewhere in central Italy’s took the region by storm, consumers went to participating stores to snap up smoked prosciutto and designer shoes and other goods that half price. At first people thought This can’t be true. There must be some rip off hidden somewhere.

“We doubled the money in people’s pockets injecting blood into a lifeless body says professor or retie People were so happy they thought they were dreaming.” – Giacinto Auriti 

Non participating stores meanwhile, remained empty week after week by mid August says the professor a total of 2.5 billion Simek had been spent.

The professor had primed the pump by doubling the town’s money supply. As a result, goods that had been sitting on the shelves for lack of purchasing power started to move the profession. Giacinto Auriti lost money on the deal since he was redeeming the Semak at twice what he had charged for them. But the local merchants liked the results so much they eventually took over them. Having Semik in circulation for the system won’t work without new money. The professor was releived of having to put his own money into the venture. The obvious limitation with this system is that it requires a wealthy local benefactor to get a going. Ideally, the benefactor would be the government itself issuing permanent money in the form of national currency people concerned about the soundness of the dollar may like the idea of trading in privately issued precious coins. Private silver and gold exchanges go back for centuries. The US dollar is defined in the constitution in terms of silver and at one time, people could bring their own silver to the mint to be turned into coins.

What is Money?

Money is a token representing value. A monetary system is a contractual agreement among a group of people to accept those tokens at an agreed upon value and trade. The ideal group for this contract renewal agreement is a larger community called a nation. But if that larger group can’t be brought to the task, any smaller group can enter into an agreement get together and trade. Historically, community currencies have arisen spontaneously when national currencies were scarce or unobtainable. When the German Mark became worthless during the Weinmar hyperinflation of the 1920s, many German cities began issuing their own currencies. Hundreds of communities in the United States, Canada and Europe did the same during the Great Depression. When unemployment was so high that people had trouble acquiring dollars. People lack money but had skills and there was plenty of work to be done. We have been deluded into thinking that what is wrong with the system is that the government has a monopoly over creating the money supply. The government lost its monopoly when King George II forbade the colonies from printing their own money in the 18th century, banks have created most of the national money supply for most of our national history. The government itself must beg for from the private cartel to get the money it needs.

How Metals or Intrinsit Money Cannot be Money and What is the Purpose of Money?

The purpose of money is to tally the value of goods and services traded, facilitating commerce between buyers and sellers. If the yardstick by which value is tallied keeps stretching and shrinking itself, commerce is impaired. During the gold rush of the 1850s, the supply of gold shot up and consumer prices shot up with it. From 1917 to 1920, the gold supply surged again, as gold came pouring into the country. In exchange for war materials, the money supply became seriously inflated and consumer prices doubled. Although the money supply was supposedly being strictly regulated by the Federal Reserve. During the 1970s, the value of gold soared from $440 an ounce to $800 an ounce, dropping back to a low of $255 per ounce in February of 2001. If you were on a fixed income, and paying your rent and gold coins that you had stashed away earlier, you would have made out well in the 1970s, but you might be paying double or triple the effective rent thereafter. Again, people on fixed incomes generally prefer a currency that has a fixed and predictable value even if it’s made of paper. Some alternatives for pegging currencies that would be more stable than the price of gold alone, are discussed in chapter 46.

Beyond the question of price stability, there are major practical problems involved in using gold as a medium of exchange. If only gold is used pennies, nickels and dimes will be so small, they’ll get lost in your wallet, while large purchases such as houses will have to be transacted and gold bars too heavy to carry in a suitcase.

Gold Must Come With Paper Receive Repesentation

To be workable and efficient, the monetary system needs to be supplemented with checkbook money and electronic money. But that means exposing it to the same tampering and manipulation to which the current Fiat system is subject.

The Problem of Keeping Golds in Circulation

There was also the problem discussed earlier of keeping gold coins in circulation. If the coins are stamped with a value that is the actual market value of the metal of the time that coin is produced. They are liable to get smelted for their metal as soon as the market value goes up. Coins are therefore usually issued with a face value or nominal value that is far in excess of their intrinsic worth. But that destroys a very thing the coins are supposed to be good for preserving value. The more serious downside of using gold as a medium of exchange is that productivity becomes tied to the availability of the metal. When gold flooded the market after a major gold discovery in the 19th century, there was plenty of money to hire workers so production and employment went up. When gold was scarce as when the bankers raise interest rates and called in loans. There was insufficient money to hire workers so production and employment went down. But what did the availability of gold have to do with the ability of farmers to farm of miners to mine a builders to build? Not much.

The green backers argued that the work should come first. Like in the medieval tally system, the money would follow as a receipt, acknowledging payment. The paper money issued by the government did represent something of real value, but it wasn’t gold. The greenback was a receipt for a quantity of goods or services delivered to the government which the bearer could then trade in the community for other goods or services of equivalent value. The receipt was simply a tally and accounting tool for measuring value.

Gold Can Simple Increase in Value to Cover All Human Needs?

Goldbugs argue that there will always be enough gold in a gold based money system to go around because prices will will naturally adjust downward so that the supply matches the demand. But we’ve seen that this fundamental premise of the classical theory of money. This theory of money has not worked well in practice.

This also undermines the argument that gold can be a stable money rather than a currency.

The drawbacks of limiting the medium of exchange to precious metals were obvious as soon as the founding fathers decided on a precious metal standard at the Constitutional Convention when the money supply contract and so sharply that farmers rioted in the streets in Shay’s rebellion. When gold left the country during the Great Depression, a vicious deflationary spiral was initiated in which insufficient money to pay workers led to demand which led to more goods remaining unsold which caused even more workers to get laid off. Fruit was left to rot in the fields. Because it wasn’t economical to put to pick it and sell it. To further clarify these points.

The Shipwreck on Desert Island Teaching Scenario 1: Gold As Money

You are shipwrecked on desert island.

You and nine of your mates wash ashore with a treasure chest containing 100 gold coins.

You decide to divide the coins and the essential tasks equally among your group.

Your task is making the baskets. As you are new to the task you only turn out 10 baskets the first month,. You keep one and sell the other (9) to your friends for one coin each using your own coins to purchase the wares of the others.

So far so good.

But the second month your baskets have worn out, but you have gotten much more proficient and making them you managed to make 20 baskets. You mates say they would like to have two baskets each but alas, they have only one coin to allotted to basket purchase, you must either cut your sales price in half or cut back on production. The other islanders face the same problem with their production potential.

The net result is price deflation and depression you have no incentive to increase your production and you have no way of to earn extra coin so that you can better your standard of living.

The situation gets worse over the years, as the islanders multiply but the gold coins don’t. You can’t afford to feed your young children on the meager income you get from your baskets. If you make more baskets their price simply gets depressed and you’re left with the number of coins you had to start with.

You try borrowing from a friend but he too needs his coins and will agree only if you will agree to pay him interest.

Where is this interest to come from?

There are not enough coins in the community to cover the new cost. Then miraculously another show washes ashore containing a chest with 50 more gold coins. The lone survivor from the ship agrees to lend 40 of his coins at 20% interest. The islanders consider this a great blessing until the time comes to pay the debt back when they realize there are no extra coins in the island to cover the interest.

The creditor demands lifetime servitude instead and the system degenerates into debt and bankruptcy. Just as the gold base system did historically in the outside world.

Scenario 2: Tally Sticks as Money (i.e. Government Issued Debt Free Money)

Now, consider under another scenario your companions are shipwrecked on a desert island but your ship is not blessed or cursed with a chest of gold coins. No problem says one of your mates who happens to be an accountant. We will keep count of your productivity with notched wood. tallies he assumes the general function of tally maker and collector and distributor of wares.

For his service, he pays himself a fair starting wage of 10 tallies a month. Your task again is basket weaving. The first month you make 10 baskets. You keep one and trade the rest with the accountant for nine tallies which you use to purchase the work product of your mates

The second month you make 20 baskets, keep two and request 18 tallies from the accountant for the other baskets this time you get your price since the accountant has an unlimited supply of trees. It can make as many he’s just needed.

Tally sticks have no real sound value themselves and cannot become scarce. They’re just a measure of the goods and services in the market. By collecting 18 tallies for 18 baskets you have kept your baskets private stable and you now have extra money to put in your straw mattress for a rainy day. You take a month off to explore the island funding a vacation with your savings. When you need extra tallies to build a larger house you borrow them from the accountant who tallies the debt when in accounting entry, you pay principal and interest on this loan by increasing your basket production in trading the additional baskets for additional tallies who pockets the interest. The community decides that it is not something that tally maker is rightfully entitled to, since the credit he extended was not his own, but was an asset of the community and he’s already getting paid for.

As for the interest you just as a group agree it will be used to pay for services needed by the community, cleaning roads standing guard against wild animals. caring for those who can’t work and so forth, rather than being siphoned off by a private lender the interest goes back back into the community. Work can be used to pay the interest on other loans. When you and your chosen mate are fruitful and multiply your children make additional baskets and you’re paying family’s wealth also multiplies.

Why Is There No Inflation Under the Tallies as Money Scenario?

There’s no shortage of tallies as they are pegged to the available goods and services. They multiply along with this real wealth, but they don’t inflate beyond real wealth. This is because tallies and wealth goods and services are come into existence at the time when you are comfortable with your level of production, say 20 baskets a month.

No new tallies are necessary to fund your business. The system already contains the 20 tallies needed to cover the basket output, you receive them in payment for your baskets. spend them on the wares. The other islanders keep tallies in circulation. The money supply is permanently expandable. Growing is needed to cover real growth and productivity and the interest on loans. Excess growth is avoided by returning money to the community, either as interest due on loans or is free fee or tax for other services to furnish to the community.

Precious metals can preserve value in the event of economic collapse, and community currencies are viable alternative money sources when other money is not to be had. But in a happier ending to our economic fairy tale, the national money supply would be salvaged before collapses, and that is threatened to collapse the dollar today.

What is threatening to collapse the dollar today is not that it is not backed by gold, it is that 99% of the US money supply is owed back to private lenders at interest. The result is a massive and growing federal debt on which the interest burden alone will soon be more than the tax payers can afford to pay. The debt is impossible to repay in the precopernican world in which the money is created as a debt to private banks. But the Wizard of Oz might have said, we’ve just been looking at the matter wrong.

The Wrong Way of Looking at Money

We have allowed our money to rotate in a firm moment around an elite class of financiers, when it should be rotating around the collective body of the people. When that when that Copernican shift is made, the water of free flowing money supply can transform the arid desert of debt into the green abundance envisioned by our forefathers, we can have all the abundance we need without taxes or debt.

We can have it just by eliminating the financial parasite that’s draining our abundance away. The Wizard of Oz solved impossible problems just by looking at them differently. The Wizard showed that the Cowardly Lion that he had courage all along, showed the Scarecrow that he had brains all along, showing the Tin Woodman that he had a heart all along. If the kingdom of Oz had had a Congress, the wizard might have shown it that it had the means to pay off its national debt all along.

Paying Off the Debt by Turning Bonds into Legal Tender: And Paying off the Debt With a Single Coin

It could pay off the debt by turning its bonds into what they should have been all along legal tender.

The day is fast approaching when the US Congress may have no other alternative but to pay off debts in this way. The federal debt has reached crisis proportions. In the 1980s, a chairman of the coinage subcommittee of the US House of Representatives pointed out that the national debt could be paid with a single coin.

“The Constitution gives Congress the power to coin money and regulate its value with no limitate shouldn’t put on the value of the coin it creates. The entire national debt could be extinguished with a single coin minted by the US Mint stamp with the appropriate face value.”

Today this official might have suggested nine coins each with a face value of $1 trillion.

One problem with this clever solution is making change for a trillion dollar coin. As Andrew Jackson observed when the founding fathers gave Congress the power to coin money, they did not mean to limit Congress to metal money and let the banks create the rest. They meant to give the power to create entire national money supply to Congress. Jefferson said the constitution needed to be amended to suit the times and today the coin of the times is paper money, checkbook money and electronic money. The issue here however, is something else.

The Fake Social Security Crisis

Well, what happened at the social security crisis? Were was resolved by simply cashing out its federal bond holdings with newly issued US notes. With dangerous inflation results. The answer is that it would not because the Social Security fund would have no more money than it had before. The government would just be returning to the fund with the taxpayer started had all along.

The bonds will be turned into cash which would stay in the fund where the money belong to be used for future baby boomer payouts as intended. Another governmental agency holding a major chunk of the federal debt is the Federal Reserve itself. The Fed now owns about 10% of the government’s outstanding securities. If the government were to buy back these securities and cash that money too would no doubt stay where it is. Where would constitute continue to serve as the reserves against which loans are made.

Which would stay in the fund where the money belonged to be used for future baby boomer payouts as intended. Another governmental agency holding a major chunk of the federal debt is the Federal Reserve itself. The Fed now owns about 10% of the government’s outstanding securities. If the government were to buy back these securities would cash the money to would no doubt stay where it is where it will continue to serve as the reserves against which the loan loans were made. The cash would just replace the bonds, which would be liquidated and take it out, taken out of circulation. Again, consumer prices would not go up because there would be no more money in circulation and there was before. A final objection that has been raised to paying off the federal debt with newly issued money fiat money is that foreign lenders would be discouraged from purchasing US government bonds in the future. But the wizard’s response to that argument would no doubt be so what once a government reclaims the power to create money from the banks that will no longer need to sell its bonds to investors.

The Government Under Debt-Free Money Would Not Need to Collect Income Tax

It will not even need to levy income taxes. It will be able to exercise its sovereign rights issue its own money debt free. That is what British monarchs did until the end of the 17th century. What the American colonists and then as did in the 18th century, and what Abraham Lincoln did in the 19th century. It has been proposed in the 21st century, not just by cranks and crack cranks and crackpots in the money reform camp, but by none other than Federal Reserve Chairman Chairman Ben Bernanke, he himself. At least that is what he appears to have proposed. The suggestion is made several years before he became chairman of the Federal Reserve.

William Jennings Bryant, the cowardly lion in The Wizard of Oz proved his courage by challenging the banking cartels right to create the national money supply. He said in the speech that won him the Democratic nomination in 1896.

“We believe that the right to coin money and issue money is a function of government. Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson and tell them as he did, that the issue of money is a function of government. And the debate should go out of the governing business.”

Why Reform Requires Financial Reform

When we have restored the money of the Constitution, all of the necessary reforms will be possible. And then until that is done, there is no reform that can be accomplished. The Bank of England was actually nationalized in 1946. But the monetary scheme did not change much as a result, the government took over the function of printing paper money, but in England as in the United States, printed paper money makes up only a very small percentage of the money supply. The bankers still have the power to create money as loans, leaving them in control of the money spigots in monetary reform making it happen, James Robertson observed that 97% of Britain’s money supply is now created by banks when they advanced credit. The result is a grossly unfair windfall the banks would use get the use of money that is properly an asset of the people. He proposed reforming the system so that it would be illegal for banks to create money as loans, just as it is illegal to forge coin or counterfeit banknotes. Only the central bank could create new money. It sounded good in theory, but when he ran the plan passed several government officials they objected that the banks would go broke under such a scheme. Depriving banks of the right to advanced credit on the credit multiplier system would increase the costs of borrowing would raise the cost of payment services would force banks to cut costs, close branches and reduce jobs and would damage the international competitivess a British banks and therefore the British economy as a whole. An official with the title shadow Chancellor of the Exchecher warned legislation against a credit multiplier would lead to the migration from the City of London of the largest collection of banks in the world they would be a disaster for the British economy.

Another official bearing the title Treasury Minister, argued that banks were obligated to bid for funds from lenders in order to make loans to their customers, the cost of banks of extending credit would be significant. And there was the rub in London banking is very big business. If the banks were to move on mass to the continent, the British economy would collapse like a house of cards.

The Reform Conceived by The Money Masters

A model Monetary Reform Act on the website of the documentary video, The Money Masters would go even further, they would impose a 100% reserve requirement on all bank deposits, including savings deposits, banks of service deposits could not lend at all unless they were using their own money.

If banks wanted to make loans by the people’s money, they would have to set up separate institutions for the purposes called not banks, not called banks, which could land only pre existing funds.

The proposed Monetary Reform Act provides by the end of the transitionary period for every dollar deposited, banks must have $1 of the United States note on hand or invested in a Treasury Department deposit account.

William Hummel points out that if bank if private banks could no longer lend their deposits many times over on a fractional reserve system, they would have little incentive to service the depository needs of the public. He writes.

“Depository functions are basically clerical and offer little opportunity for income other than fees for service, banks have less incentive to seek customer deposits when they cannot be used to back the creation of new deposits, as in a fractional reserve system. It would therefore make sense to simplify the banking business by transferring the depository role to a system of bank branches acting as one unit and one entity under the Federal Reserve.”

Such a system would have a number of advantages, since all deposits would be entries in a common computer network. Determining balances and clearing cheques would be done instantly, thereby eliminating checking system float and its logistic complexities with a Fed operating as a sole depository payments would only involve the transfer of deposits between accounts within a single bank. This would allow for instant clearing, eliminate the nuisance of checking system flow, and significantly reduce associated costs. Additional advantages include the elimination of any need for deposit insurance, and ending overnight sweeps and other sterile games that banks play to get around a fractional reserve requirement.

In Hummel’s model, the Fed would be the sole depository, and only its branches would be called banks. Institutions, formerly called banks would have to close down their depository operations and would become private financial institutions, along with financial companies, pension funds, mutual funds, insurance companies and the like.

Basing A New Money System On Postal Banking

In how credit money shapes the economy, Robert Guttman makes a similar proposal. He notes that the public’s basic banking needs are fairly simple, we need a safe place to keep our money and a practical way to transfer it to others. Those needs could be served by a government agency on the model of the now defunct US Postal savings system, which operated successful from 1911 to 1967, providing a safe and efficient place for customers to save and transfer funds. It issued US Postal saving bonds and various denominations and they paid annual interest as well as postal savings certificates and domestic money orders. The US Postal savings system was set up to get money out of hiding, attract the savings of immigrants accustomed to saving at post offices in their native countries provide safe depositories for people who had lost confidence in private banks and furnish more convenient depositories for working people that were provided by private banks.

The postal system paid 2% interest on deposits per year, the minimum deposit was $1 and the maximum was $2500. Another limitation of a 100% reserve system the extension of credit by private banks plays an important role and regularly In the national money supply, public borrowing is the natural determinant of money monetary growth. When banks extend credit the money supply expands naturally to meet the needs of growth and productivity. If they weren’t 100% reserve requirement were imposed the money supply could not grow in this organic way. So monetary growth would have to be brought about by some artificial means.

An alternative that has been proposed for the government to expand the money supply according to a set formula. Like Andrew Jackson and Abraham Lincoln, Benjamin Franklin was a self taught genius. He invented bifocals, the Franklin stove, the odometer and the lightning rod. He was also called the father of paper money, he did not actually dive devise the banking system using colonial Pennsylvania, but he wrote about it and promoted it and understood the superiority over the private British gold based system. When the directors of the Bank of England asked what was responsible for the booming economy of the young colonies. Franklin explained that the colonial governments issued their own money which they both lent and spent into the economy. He is reported to have said legitimate governments can both spend and lend money to circulation while banks can only lend significant amounts of their promissory banknotes. Thus, when your bankers here in England place money in circulation, there’s always a debt principle to be returned and usury to be paid. The result is that you have always too little credit in circulation, and that which circulates all bears the endless burden of unpayable debt and usury. A money supply created by banks was never sufficient, because the bankers created only the principal and not the interest to pay back their loans. A government on the other hand, could not only lend that but spend money into the economy, recovering the interest shortfall and keeping the money supply in balance.

In an article titled the monetary system for the new millennium. Canadian money reforms advocate Roger Langrick explains this in contemporary terms, he begins by illustrating the mathematical problem arising from a money supply created as a debt lent and interest.

The Problem With Not Enough Money to Pay Back the Loan

Imagine the first bank which prints and lends out $100. For its effort, it asks for the borrower to return $110 in one year, that is it asked for 10% interest, unwittingly or perhaps wittingly, the bank has created a mathematically impossible situation. The only way in which the borrower can return 110% of the bank’s money is if the bank prints and lends $10 or more at 10% interest.

The result of creating $10 and demanding 110 minimum return is that the collective borrowers of a nation are forever chasing a phantom, which can never be caught the mythical $10 that were never created, the debt is in fact unrepeatable.

Each time $100 is created for the nation, the nation’s overall indebtedness to the system has increased by $110. The only solution at present is increased borrowing to cover the principal plus the interest of that which has been borrowed. a better solution, says lambrick is to allow the government to issue enough new debt free greenbacks to cover the interest charge not created by the bank as loans.

Instead of taxes, governments would be empowered to create money for its own expenses, up to the balance of the debt shortfall that the banking industry created. $100 in a year, the government would create $10 which it would use for its own expenses. Abraham Lincoln used successfully when he created $5 million in greenbacks to fight the Civil War. In Langrick’s example a private banking industry pockets the interest, which must be replaced every year by a 10% issue of new greenbacks. But there is another possibility the loans could be advanced by the government itself. The interest would then return to the government and will be spent back into the economy in a circular flow without the need to continually issue more money to cover the increased shortfall. Government is the only interest charging lender might not be a practical solution today, but it is a theoretical extreme that can be contrasted with the existing system to clarify the issues. compare these two hypothetical models. The Wicked Witch of the West rules over a dark five term with a single private bank owned by the which the bank issues and lends all the money in the world. Charging an interest rate of 10%. The rate the which prints 100, which dollars and lends them to her constituents and demands 110 back. The people don’t have the extra 10 so the which creates $10 on her books and lends them as well. The money supply must continually increase the cover the interest, which winds up in the witch’s private coffers. She gets progressively richer as people slip further into debt. She uses her accumulated profits to buy things she wants. She is particularly fond of little thatched houses and shops of what she has an increasingly large collection. to fund the operations over five times she taxes the people heavily adding to their financial burdens. A Glinda the Good Witch of the South, runs around in a more people friendly way. All the people in the land are issued and lent by a People’s Bank operated for their benefit. She begins by creating 110 people dollars. She lands 100 of these dollars at 10% interest and spends the extra $10 into the community on programs designed to improve the general welfare. Things such as pensions for retirees, social services, infrastructure, education, research and development. The $110 circulates in the community and becomes back to the People’s Bank is principal and interest on loans. Glinda again lens $110 a lens $100 of this money into the community and spends the other $10 on public programs, supplying the interest for the next round of loans, while providing the people with jobs and benefits. For many years she just recycles the same $110 without creating new money than one year a cyclone comes up and destroys many of the charming little thatched houses. The people ask for extra money to rebuild.

No problem, says Gilda.

She will just print more people’s dollars and use them to pay for the necessary labor and materials. Inflation is avoided because the supply increases along with the demand. Best of all taxes are unknown in this realm. It sounds good in a fairy tale in a land with a benevolent Queen and only one bank but things are a bit different in the real world. For one thing enlightened benevolent queens are hard to come by. For another thing returning all the interest collected on loans to the government would require nationalizing not only the whole banking system, but every other form of private lending and interest, an alternative that is clearly too radical for current Western thinking. A more realistic model would be a dual lending system, semi private, private and semi public. The government would be the issue the initial issuer and lender of funds and the private financial institutions would recycle this money as loans, private lenders would still be siphoning interest into their own coffers just not as much. The money supply will therefore still be needed to expand to cover interest charges just not by as much the actual amount of which would it would need to expand and how this expansion would be achieved without creating dangerous price inflation is addressed in chapter 44. instituting a system of government owned banks may sound radical in the United States, but some countries have done have already done it and some other countries are ripe for radical reform.

Rodney Shakespeare co author of Seven Steps to Justice and author of the modern universal paradigm suggests that significant monetary reform may come first and the Islamic communities, Islamic scholars and the economists and economists are keenly aware of the limitations of the current Western system and are actively seeking change, the oil rich Islamic countries may have the cloud to pull it off. In a series of international conferences held in Malaysia, Indonesia and Bangladesh, Islamic thinkers have been working to come up with a viable alternative to the Western banking system. The interest question is a major issue for these reformers because usually is forbidden in the Korean. Western economists got around religious prescription against usury by really redefining the term to mean excessive interest, but Islamic purists still hold to the older interpretation. As noted earlier, Islamic lawyers have gone to great lengths to design contracts that avoid interest charges. In order to avoid infringing on religious law. The most common alternative is a contract in which the banker buys a property and sells it to the client at a higher price to be paid in installments over time. But skeptical Islamic scholars maintain these arrangements merely amount to interest bearing loans by other names. They use descriptions descriptive terms such as the usury of deception and the jury prudence of legal tricks.

Why is Deflation A Central Banker’s Worst Nightmare? (When the Central Bank is Private)

Duncan wrote deflation is the central bank’s worst nightmare when prices begin to fall. Interest rates follow them down once, interest rates fall to zero, as is the case in Japan and President, central bank’s become powerless to provide any further stimulus to the economy through conventional means, and monetary policy becomes powerless. The extent of the US Federal Reserve’s concern over the threat of deflation is demonstrated in fed staff, research papers, and the speeches delivered by fed governors at the time.

The Australian Commonwealth Bank

Australia’s Commonwealth Bank was a People’s Bank that not only issued paper money but made loans and collected interest on them. When private banks were demanding 6% interest Commonwealth Bank finance the Australian Government’s First World War effort at an interest rate of a fraction of 1%. The result was a save Australian some 12 million in bank charges.

After the First World War, the bank’s governor used the bank’s credit power to save Australians from the depression conditions in other countries. It financed production and home building and lent funds to local governments for the construction of roads. tramways harbors gas works in electric power plants.

At the beginning of the 20th century, Australia had a standard of living that was among the highest in the world. But after its bank was privatized, the country fell heavily into debt. By the end of the century, its standard of living had dropped to 23rd.

Can the Government Be Efficient in Banking?

A common objection to getting the government involved in business is that it is notoriously inefficient in those pursuits. But Reid Mandell, author of Selling Uncle Sam maintains that this reputation is undeserved. It has resulted largely because only enterprise prizes left to the government or those from which private enterprise can’t make a profit. She cites survey showing that in-house operation of publicity providing services, publicly provided services are generally more efficient than contracting them out. When privatizing public infrastructure for private profit has typically led to increased costs and efficiency and corruption. A case in point is the deregulation and privatization of electricity in California, which met with heavy criticism as an economic disaster for the state.

Complex publicly provided services tend to break down when privatization just from the complexity of contracting and supervising the contract. privatization of the British rail system caused rate increases rail accidents and system breakdown, to the point that a majority of the British public now favors returning to government ownership and operation. government services may appear to be inefficient because the local government doesn’t have enough funding to do the job properly. But this inefficiency is not the result of a lack of motivation among government workers caused by inadequate competition. clerks working for The government have to compete and perform, to hold on to their jobs just as clerks working for private industry.

Private Banking Based Faux Free Enterprise

What hides behind the banner of free enterprise today is a system in which giant corporate corporate monopolies have used their affiliated banking trusts to generate unlimited funds to buy up competitors, the media and the government itself, forcing truly independent private enterprise out. Big private banks are allowed to create money out of nothing lended an interest in foreclose on the collateral and determine who gets credit who doesn’t. They can’t advance massive loans to their affiliated cartels and hedge funds would use the money to raid competitors and manipulate markets. If some players have the power to create money and others don’t the playing field is not level but allow some favorite players to dominate and coerce others.

Why Private Banking Will Not Allow the Government to Create its Own Money

In his April 2005 newsletter, Richard Russell observed that the creation of money is a total mystery to probably 99% of the population. Then he proceeded to unravel the mystery and a few sentence sentences to simplify when the US government needs money. It either collected in taxes or issues bonds, these bonds are sold to the Fed and the Fed in turn, makes book entry deposits this fed money created out of thin air is then made available to the US government. But if the Fed if the US government can issue treasury bills, notes and bonds, I can also issue currency as it did prior to the formation of the Reserve. If the US issued its own currency, the money would cover all of its expenses and the income tax. Wouldn’t be needed. So that’s the objection. What’s the objection to getting rid of the Fed and less funding the US government lending US issue. It’s own currency.

Easy.

It cuts out the bankers and eliminates the income tax. In a February 2005 article titled The death of banking and macro politics, hands she wished, reached similar conclusions he wrote, If prime ministers and presidents would only be blessed with the most basic knowledge of the perversity of banking, they would not go on to their knees to the central banker and ask His Highness for loans. With a little bit of brains, they would expropriate all banking institutions, expropriation would bring enough money into the National Treasury for the people not to have to pay taxes for years to come.

Is the Current Private Banking System Bankrupt?

Recall Murray Rothbard his contention that the whole commercial banking system is bankrupt and belongs in receivership. Banks owe depositors, many times the amount of money they have on reserve, they have managed to avoid a massive run on the banks by lowering their depositors into a false sense that all as well, using devices such as FDIC deposit insurance, and a reserve system that allows banks to borrow money created out of nothing from the Federal Reserve. But that bailout system is providing is provided at taxpayer expense. By rights said Rothbard. The whole banking system should be put into receivership and the bank should be jailed as embezzlers.

If Congress is going to take back the power of creating money, it will have to take control of the lending business.

Since over 97% of the money supply is now created in commercial banks, as commercial loans as David Lewis observes, in some sense a big banks considered too big to fail or already nationalized since their survival depends on a system of taxpayer-funded bailouts. If taxpayer money is keeping the ship from sinking, the taxpayers are entitled to step in and take the home. banking institutions supported by taxpayer money can and should be made. As Dean Baker says:

“From an economic standpoint, the nation is certainly no better off if people do their gambling on Wall Street rather than in Atlantic City, or Las Vegas. In fact, there are reasons to believe that the nation is better off if people gamble in Las Vegas, since gambling on Wall Street can destabilize the functioning of financial markets. Many economists have argued that speculators caused the rise of stocks and other assets to diverge from their fundamental values.”

Getting Rid of Third World Debt

The Wizard of Oz might have said that this was another instance of disorganized thinking. The problem could be solved in the same way that it was created by sleight of hand, the debts could be canceled simply by avoiding them out in the bank’s books no depositors or creditors would lose any money because no depositors or creditors advance around money in the original loans. According to British economist Michael Robotham writing in 1998 of the 2,200 billion currently outstanding in the third world or developing countries, debt, the vast majority represents money created by commercial banks in parallel with debt in no sense that the loans advanced by the World Bank and IMF constitute monies owed to the creditor nations of the World Bank and IMF, the World Bank cooperates directly with commercial banks in the creation and supply of money in parallel with debt. The IMF negotiates directly with commercial banks to arrange combined IMF commercial loan packages. If the money is owed to commercial banks, it was created with accounting entries. Rob Balsam observes that the Third World debt represents a liability on the bank’s books only because the rules of banking say their books must be balanced. He suggests two ways. The rules of banking might be changed and liquidate unfair and oppressive debts. The first option is to remove the obligation on banks to maintain parity between assets and liabilities or to be more precise to allow banks to hold reduced levels of assets, equivalent to the Third World debt bonds a cancel. Thus, if a commercial bank had held 10 billion worth of developing country debt bonds after cancellation, it would be permitted in perpetuity, to have $10 billion deficits on to asset. This is a simple matter of bookkeeping.

Conclusion

This is strikingly important book.