I’m Not an Economist … But I Did Stay at the Jekyll Island Inn Last Night

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

–Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)

Fed chief Ben Bernanke

Fed chief Ben Bernanke decided last week to turn the money spigots on in perpetuity (QE3). That’s right … another stimulus! This time it’s for Wall Street. The Federal Reserve will now start printing money at the rate of $40 billion a month until the Fed feels it has sufficiently stimulated the economy. (If I get “stimulated” any more, it’s going to shrivel up and die.)

A little crash course on the Fed: the Federal Reserve (central bank) was established under the utmost secrecy in 1910 by Sen. Nelson Aldridge Rockefeller, Rothschild’s representative Paul Wahrburg (“Daddy Warbucks”), president and head of J.P. Morgan, and a couple of big bankers from New York. It was only after the Federal Reserve Act had been passed in 1913 that these individuals admitted to their involvement in the secret meeting at Jekyll Island, Georgia. This banking cartel was referred to at the time as the “Money Trust.”

The Federal Reserve–Central Bank of America

The Fed is a private corporation–the central bank of America. The Federal Reserve charges interest on every dollar purchased by the federal government. This creates a debt-based economy that only benefits big banks, whereby the banks profit from interest on the national debt. The monetary mechanism used by the big central banks is called fractional reserve lending–also referred to as the Mandrake Mechanism–named after Mandrake the Magician.

For example, fractional reserve banking allows a bank to only keep 10% of their assets in reserve–a bank customer deposits $100, but the bank can turn around and lend $900 from that $100, since the bank only has to keep 10% of its assets in reserve by law, thereby creating money out of thin air. The bank charges interest on the loan–interest on money that doesn’t technically exist–only on paper. This goes on and on and on.

Central banking practices like those employed by the Fed are nothing new. There are several times in our history where we have established a central bank and it has always lead to economic chaos–inflationary and deflationary cycles, recessions, depressions, money contractions, unemployment, etc. Debt-based currency throughout U.S. history has consistently led to economic instability.

“The Federal Reserve definitely caused the Great Depression by contracting the amount of currency in circulation by one-third from 1922 to 1933.”

–1996, Milton Friedman

Timeline of U.S. Central Banks

  • 1776-1790: U.S. Independence – Free Banking -no formal central bank.
  • 1791-1811: First Bank of the United States.
  • 1816-1836: Second Bank of the United States.
  • 1837-1862: Free Banking Era -no formal central bank.
  • 1862-1913: System of National Banks.
  • 1914-current: A consortium of 12 privately held banks (cartel) called the Federal Reserve Bank. The largest share holder of the Fed–Rothschild’s of London.

What is particularly disturbing about the Fed’s recent actions is the fact that we are officially upside down on our national debt–around 102% debt as a ratio (or share) to GDP. At a time when the U.S. is in dire need of a strong dollar to stimulate economic growth, the Fed is now going to print money in perpetuity, further weakening an already weak dollar. Apparently, the Fed is going to purchase securities to encourage lending by banks. Hello?!? It is all the fractional lending that got us into this mess in the first place!

Debt to GDP from 1929 to present. (click to enlarge)

Now, consider the horrific numbers of our national debt-to-GDP ratios since 1900:

Federal debt began the 20th century at less than 10 percent of GDP. It jerked above 30 percent as a result of World War I and then declined in the 1920s to 16.3 percent by 1929. Federal debt started to increase after the Crash of 1929, and rose above 40 percent in the depths of the Great Depression.

Federal debt exploded during World War II to over 120 percent of GDP, and then began a decline that bottomed out at 32 percent of GDP in 1974. Federal debt almost doubled in the 1980s, reaching 60 percent of GDP in 1990 and peaking at 66 percent of GDP in 1996, before declining to 56 percent in 2001. Federal debt started increasing again in the 2000s, reaching 70 percent of GDP in 2008. Then it exploded in the aftermath of the Crash of 2008, reaching 102 percent of GDP in 2011.

Federal debt has breached 100 percent of GDP twice since 1900: during World War II and in the aftermath of the Crash of 2008.

Source: http://www.usgovernmentspending.com/federal_debt

We need to abolish the Federal Reserve and the whole notion of fractional reserve banking–a practice that literally indebted all the European governments to the central bankers, and now America. He who controls the money supply controls the money. If the federal government would print its own debt-free currency, like Lincoln did with the “Greenback,” the U.S. could pay off its debt and increase the money supply, which leads to prosperity. As it stands now, our government is simply trying to borrow its way out of economic disaster–analogous to trying to drink oneself sober. Once again, this only benefits the banking cartel (Federal Reserve) who charges interest on all those loans. The Fed wants debt; it enriches itself by encouraging large national debt.

“Whoever controls the volume of money in any country is 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 periods of inflation and depression originate.”

–1881, President James Garfield

But I believe that the wheels are coming off the cart for the Fed and the central banks of Europe, due to the fact that all the borrowing on imaginary money is leading to such massive national debts that the scheme is starting to implode under its own nefarious weight. If something is not done, the U.S. dollar will certainly collapse (like many leftists hope it will) and the U.S. will be forced into adopting an international reserve asset, like the IMF’s SDR (special drawing rights) currency–also based on a fractional reserve system, but not our own, thereby ceding our economic sovereignty to a global corporation. If you don’t believe this is a real sovereign threat, it might interest you to know that SDR’s are already redeemable for federal reserve notes (dollars) and are entering circulation.

There is nothing our federal government can do to improve the economy as long as the current Federal Reserve monetary system is in place. All the stimulus money in the entire world will never get us out of this hole. Our national debt is just like consumer debt: it is the interest that is killing us. Under Obama’s watch, our credit rating has been downgraded from a prefect AAA rating to AA-. As our national debt skyrockets, the multiple downgrades on our credit rating since Obama has taken the helm causes interest payments on the debt to skyrocket accordingly. Just take a look at these dismal numbers:

Since Obama has taken office ….
[through Q2 2012 for comparative purposes]

–> For every $1 added to the economy, we’ve added more than $3 in debt

–> added $5.23 trillion in debt vs. $1.68 trillion to the economy
–> 50% increase in debt vs. 12% increase in economic output

Total Public Debt:

$10,626T [Jan 20, 2009]
$15,856T [Jun 30, 2012]

–> $5.23 trillion increase in debt

[source: Treasury Dept]

……

GDP

$13,923T [Q1 2009]
$15,606T [Q2 2012]

–> $1.68 trillion increase in GDP

[source: BEA]

For every dollar that has entered the economy, Obama has added more than three dollars in debt.

Current solutions provided by our political leaders and economic pundits are mostly based upon an already flawed and broken monetary system. In carpenter’s terms: they’re trying to polish a turd. Taxing every so-called rich person in the country at a rate of 100% would barely put a dent in our current federal deficit, let alone the astronomical national debt; it is not a viable solution.

With the IMF (International Monetary Fund) in control of some 70% of the world’s gold, it would not behoove the U.S. to adopt a pure gold standard, either. Remember, he who controls the money supply controls the wealth. It is not so much what a currency is backed up with, but whether its quantity is tightly-controlled in proportion to the size of the population. Conversely, only relying on so-called austerity measures to reduce humongous national debts would result in a severe contraction in the global money supply, which could cause a world-wide depression.

Colonial Scrip

Although opponents of a debt-free monetary system not backed up with gold or silver disparagingly refer to it as “fiat money,” it is worth noting that the U.S. colonies were built using “Colonial Scrip”–an interest-free currency printed by the colonists. Additionally, Rome built its empire with copper and bronze coins; King Henry of England built up the British Empire with his debt-free Tally Sticks in the 1200′s, as William Still points out in his excellent documentary The Secret of Oz. The success of “fiat money” in both the Roman and British Empires was due to its quantity (supply) being tightly-controlled.

“Give me control of a nation’s money supply, and I care not who makes its laws.”

–M.A. Rothschild

Remember, the opponents of a debt-free currency are defending the biggest “fiat money” money system there is–federal reserve notes (U.S. dollars) that are backed up by nothing but the paper they are printed on, not to mention the interest-bearing IOU’s (U.S. Bonds) that are simply created out of thin air and purchased by the Fed and Red China–perpetuating massive federal debt ad nauseum.

Like the title of this article states, I’m not a financial expert or economist, but I sure can smell a scam (The Fed)–just look at the economic numbers since 1929. A return to a debt-free currency must be seriously debated and explored, in my opinion. Anybody have a better idea?

“Although we have so foolishly allowed the [power of issuing our own debt-free money] to be filched from us by private individuals, I think we may recover it …. The states should be asked to transfer the right of issuing paper money to the Congress, in perpetuity.”

–Thomas Jefferson


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About Brent P.

Editor-in-Chief at TheRightPlanet.com, writer, tech editor, software engineer, web developer, graphic design, anti-Marxist, pro-American guitar shredding Glock owner.
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