- In her extraordinary book, "Web of Debt," financial
writer Ellen Brown tells "the shocking truth about our money system,
(how it) trapped us in debt, and how we can break free." She quotes
banker/developer Reed Simpson saying:
- "Credible evidence (reveals) a world (banking) power
elite intent on gaining absolute control over the planet and its natural
resources, including its subservient human (ones)." It's the Bilderberg
Group classless society idea of rulers, serfs, and no middle class by controlling
the world's money. What Baron MA Rothschild (1818 - 1874) meant by saying:
- "Give me control over a nation's currency and I
care not who makes its laws." Today it applies globally.
- Money is bankers' "lifeblood,....fear (their) weapon."
Ill-used, they'll "enslave nations and ensure perpetual wars and bondage."
Brown explained all and proposed a solution.
- Congressman Ron Paul has led a congressional campaign
to abolish the Federal Reserve by introducing legislation in the 106th,
107th, 108th, and 110th Congresses. Each time it died in committee, but
he's not deterred. He believes it's essential to:
- -- end a private banking cartel's illegal monopoly over
the nation's money supply and price;
- -- return that power to Congress as the Constitution's
Article I, Section 8 mandates;
- -- end a fiat currency system that's dysfunctional, broken
- -- return the country to a sound, hard currency monetary
- -- replace private banking with a public alternative
at the federal, state, county, and municipal levels to end Fed dominance,
and return the nation to sustainable, productive, stable, non-inflationary
growth, free from predatory banker control.
- On February 3, Paul again tried (with no co-sponsors)
by introducing HR 833: Federal Reserve Board Abolition Act:
- "To abolish the Board of Governors of the Federal
Reserve System and the Federal reserve banks, to repeal the Federal Reserve
Act, and for other purposes."
- It was referred to the House Financial Services Committee
where no action so far has been taken.
- House and Senate measures, however, are underway to audit
the Fed. On February 26, Paul introduced HR 1207: Federal Reserve Transparency
Act of 2009:
- "To amend title 31, United States Code, to reform
the manner in which the Board of Governors of the Federal Reserve System
is audited by the Comptroller General of the United States and the manner
in which such audits are reported, and for other purposes."
- It was referred to the House Financial Services Committee
where action is now pending. As of November 20, the bill has 313 co-sponsors,
a solid majority.
- On November 20, the House Financial Services Committee
passed the Paul-Grayson "Audit the Fed" amendment 43 - 26. It's
an important step forward calling for a comprehensive Fed audit and replaces
an earlier introduced weaker one. The amendment also softens HR 3996: Financial
Stability Improvement Act of 2009, introduced by Rep. Barney Frank on November
3, now in four House committees, to more greatly empower the Fed, masquerading
as protection from further bailouts. The House is expected to vote on HR
1207 in December.
- On March 16, Senator Bernie Sanders introduced S 604:
Federal Reserve Sunshine Act of 2009:
- "A bill to amend title 31, United States code, to
reform the manner in which the Board of Governors of the Federal Reserve
System is audited by the Comptroller General of the United States and the
manner in which such audits are reported, and for other purposes."
- It was referred to the Senate Banking, Housing, and Urban
Affairs Committee and currently has 30 co-sponsors. A super (three-fifths)
majority is needed for passage to thwart a Republican filibuster to stop
- Origin of the Federal Reserve
- In 1910, the following men met secretly on the privately-owned
Jekyll Island off the Georgia coast for nine days to change America's financial
structure forever. They included:
- -- Republican Senator Nelson Aldrich;
- -- A. Piat Andrew, Assistant Treasury Secretary;
- -- Benjamin Strong, head of JP Morgan's Bankers Trust
and later de facto Fed chairman as governor of the New York Federal Reserve
Bank, the mother bank;
- -- Henry Davison, Sr., JP Morgan partner;
- -- Paul Warburg, Kuhn, Loeb & Co. partner, representative
for the Rothshilds and Warburgs in Europe, and the main Fed architect;
- -- Frank Vanderlip, William Rockefeller representative
and president of National City Bank of New York; and
- -- Charles Norton, president of 1st National Bank of
- On December 23, 1913, they prevailed when Congress passed
the Federal Reserve Act to let private bankers control the nation's money
and effectively annul the Constitution's Article I, Section 8, mandating
only to Congress the power to coin (create) money and regulate the value
thereof. Nothing ever since has been the same. Thereafter, "we the
people" meant Wall Street, not the "general welfare" or
"the blessings of liberty" as the Constitution's Preamble affirms.
- Congress established the Fed in the middle of the night
by shepherding the legislation through a carefully arranged Congressional
Conference Committee meeting between 1:30 - 4:30AM on December 22. It was
then enacted the next day when many members were away for the holidays,
most others hadn't read it, and it didn't matter for those who did because
the text was intentionally vague. The nation's money would be printed by
the US Bureau of Engraving and Printing, then issued as a government obligation,
or debt, to the private Federal Reserve with interest.
- Woodrow Wilson was Morgan's man in the White House with
an administration full of his cronies. The Federal Reserve Act was a major
coup, giving them what they long wanted and finally got, control over the
nation's money and unlimited power with it. According to Brown:
- Private bankers got "the exclusive right to 'monetize'
the government's debt (that is, print their own money and exchange it for
government securities or IOUs)." The obscure language hid the scheme's
real aim "to create money out of nothing, lend it to the government
at interest, and control the national money supply, expanding or contracting
it at will."
- Wilson signed the act, then later said:
- "I am a most unhappy man. I have unwittingly ruined
my country. A great industrial nation is controlled by its system of credit.
Our system of credit is concentrated. The growth of the nation, therefore,
and all our activites are in the hands of a few men. We have come to be
one of the worst ruled, one of the most completely controlled and dominated
governments in the civilized world. No longer a government of free opinion,
no longer a government by conviction and the vote of the majority, but
a government by the opinion and duress of a small group of dominant men"
running everything today more than Wilson ever could have imagined.
- Ron Paul: "The Federal Reserve Isn't Federal and
Has No Reserves" - It's Privately Owned by a Powerful Banking Cartel
that Runs America
- Dominant member banks own it in each of the 12 Federal
Reserve districts. The amount of stock each holds is proportional to its
size. As mother bank, the New York Fed is most dominant, owning 53% of
all shares because the nation's largest commercial banks are on Wall Street,
including JP Morgan Chase, Goldman Sachs, Citigroup, and Morgan Stanley.
Bank of America was founded in California, remains heavily concentrated
in Western and Southwestern states, yet operates globally like the other
giants. The same is true for Wells Fargo.
- The largest banks are financial superpowers with interests
in commercial and investment banking, insurance, real estate, home mortgages,
credit cards, and virtually everything related to finance, insurance and
real estate globally (the so-called FIRE sector).
- The Fed is composed of a Board of Governors in Washington
(its headquarters) and the 12 regional Districts/Banks in New York, Boston,
Philadelphia, Richmond, Atlanta, Cleveland, Chicago, St. Louis, Minneapolis,
Kansas City, Dallas, and San Francisco.
- Several times previously, the Fed's legitimacy was challenged
in federal court to no avail. Each time, the the current system was upheld
under which each Federal Reserve Bank was ruled a separate corporation
owned by commercial banks in its region. In one case, Lewis v. United States
(1982), the Ninth US Circuit Court of Appeals held that "federal reserve
banks are not federal instrumentalities....but are independent, privately
owned and locally controlled corporations (statutorily) empowered to conduct
(their affairs) without day to day direction from the federal government."
In other words, they're independent of government, can do as they please,
and take full advantage as the Federal Reserve Act allows, yet Congress
does nothing to deter them.
- Madison, Jefferson, Jackson, Lincoln and Kennedy Disagreed
- In 1691, three years before the Bank of England's founding,
Massachusetts became the first colony to issue its own money backed by
the full faith and credit of the government. Other colonies followed, called
"scrip." It freed them from British banks to run their affairs
inflation free with no taxes. For over 25 years, they needed none, yet
achieved sustained, stable, prosperous growth, the kind impossible under
a privately run system. More on that below.
- In 1751, colony-based British merchants and financiers
got King George II to ban new paper money and force colonial governments
to borrow it from UK bankers. In 1764, Benjamin Franklin petitioned to
stop it without success. Instead, the Bank of England got Parliament to
pass a Currency Act making it illegal for the colonies to issue their own
money. It turned prosperity into poverty, the root cause, Franklin believed,
for the Revolutionary War.
- America's Founders and later presidents railed against
bankers. James Madison, called them "Money Changers" saying:
- "History records that the Money Changers have used
every form of abuse, intrigue, deceit and violent means possible to maintain
their control over governments by controlling money and its issuance."
- Thomas Jefferson said:
- "I sincerely believe that banking institutions are
more dangerous to our liberties than standing armies. Already they have
raised up a money aristocracy that has set the government at defiance.
The issuing power should be taken from the banks and restored to the people
to whom it properly belongs."
- Jefferson opposed the first Bank of the United States,
Andrew Jackson the second, and both for similar reasons:
- -- distrust of profiteers controlling the nation's money;
- -- concern about the nation's banking system falling
into foreign hands.
- At Jefferson's urging, Congress refused renewal of the
first 1811 Bank of the United States charter and discovered on liquidation
that two-thirds of its owners were foreigners, mostly British and Dutch,
none more influential than the Rothschilds. Later, Madison signed a 20-year
charter, but after congressional renewal, Jackson vetoed what he called
"a hydra-headed monster" entrapping the nation in debt.
- Lincoln feared:
- "The money powers prey(ing) upon the nation in times
of peace and conspir(ing) against it in times of adversity. It is more
despotic than a monarch, more insolent than autocracy, and more selfish
than a bureaucracy. It denounces, as public enemies, all who question its
methods or throw light upon its crimes. I have two great enemies, the Southern
Army in front of me and the bankers in the rear. Of the two, the one at
the rear is my greatest foe."
- In "Web of Debt," Brown explained that they
wanted 24 - 36% interest to fund the North's war on the South. As a result,
Lincoln got Congress to pass the 1862 Legal Tender Act empowering the Treasury
to issue "Greenbacks," interest free to finance the war and grow
the economy prosperously.
- In spite of assassination threats before inauguration
as well as "treason, insurrection, and national bankruptcy" during
his first year in office, he:
- -- built the world's largest standing army;
- -- defeated the South;
- -- turned the country into the world's "greatest
- -- launched the steel industry, a continental railroad
system, and a new era of farm machinery and cheap tools;
- -- established free higher education;
- -- gave settler ownership rights and encouraged land
development through the Homestead Act;
- -- had government support all branches of science;
- -- standardized mass production methods;
- -- increased labor productivity by 50 - 75%; and
- -- more still "with a Treasury that was completely
broke and a Congress that hadn't been paid."
- How? By nationalizing banking so government could print
its own money, interest free, without paying usury to bankers. As a result,
"the economy was jump-started with a 600 percent increase in government
spending and cheap credit directed" toward productive growth, the
kind impossible under a predatory bank-run financialized system for their
- After the war, Lincoln was assassinated, of course. The
Legal Tender Act was rescinded. A new national banking act was passed,
and money became interest-bearing again in private hands.
- Nonetheless, John Kennedy confronted Wall Street by issuing
Executive Order (EO) 11110 on June 4, 1963 to:
- -- amend EO 10289 (dated September 17, 1951) designating
and empowering the Treasury Secretary to perform certain "functions
of the President without the approval, ratification, or other action of
- -- perhaps bypass the Fed and empower the president to
issue currency; it constitutionally empowered the federal government to
create and "issue silver certificates against any silver bullion,
silver, or standard silver dollars in the Treasury;"
- -- though not verified, some believe he then ordered
the Treasury Secretary to issue nearly $4.3 billion worth of United States
Notes, perhaps to replace Federal Reserve Notes; whether or not he planned
to end the Federal Reserve System is speculation, but perhaps fearing it,
among other reasons, led to his assassination five months later;
- -- in 1964, Lyndon Johnson said: "Silver has become
too valuable to be used as money;"
- -- in late 1963, US Notes were withdrawn from circulation;
- -- noted Fed critic and author of "The Creature
from Jekyll Island," G. Edward Griffin, wrote on page 569 of his book:
- "There was a third point, however, which everyone
seemed to overlook. The Executive Order 11110 did not instruct the Treasury
to issue Silver Certificates. It merely authorized it to do so if the occasion
should arise. The occasion never arose. The last issuance of Silver Certificates
was in 1957....six years before the Kennedy (EO). In 1987 (it) was rescinded
by (EO) 12608 signed by Ronald Reagan."
- Without mentioning EO 11110, it did it by amending EO
10289, rescinding the Treasury's right to issue silver-backed notes.
- Publicly-Run Banks Work
- Their history is impressive:
- -- in colonial America;
- -- under Lincoln;
- -- in early 20th century Australia when its Commonwealth
Bank created money, made loans, and charged a fraction of privately-charged
interest; until they took over, the country had one of the highest living
standards in the world;
- -- in the Middle Ages under a banker-free tally system;
- -- in China for thousands of years before private banking,
and today because Beijing directs the semi-independent People's Bank of
China to grow the economy and create millions of jobs; and
- -- in North Dakota, the only US state with its own bank
that sustains its uniqueness and strength; it's one of two states, with
Montana, running budget surpluses and the only one creating jobs because,
as Brown explains:
- "it('s) ha(d) its own credit machine (since) The
Bank of North Dakota (BND) was established by the state legislature in
1919, specifically to free farmers and small businessmen from the clutches
of out-of-state bankers and railroad men;" ever since, BND was tasked
with delivering "sound financial services that promote agriculture,
commerce and industry," something no other state can match because
they don't have state-owned banks.
- Again Brown: It works because bankers can "create
'credit' with accounting entries on their books" through fractional
reserve banking that multiplies each deposited dollar magically into about
10 in the form of loans or computer-generated funds. It lets banks re-lend
many times over, and the more deposits, the greater amount of lending for
sustained, productive growth. If all states owned public banks, they'd
be as prosperous as North Dakota, and so would America. Instead, private
bankers hold the nation hostage.
- Ostensibly, the Fed was established to stabilize the
economy, smooth out the business cycle, manage a healthy, sustainable growth
rate, and maintain stable prices. In fact, it caused 19 recessions (including
the Great Depression and current crisis nowhere near resolved and likely
to intensify) and substantial equity market declines each time ranging
from 18.8% in 1998 to 89% from October 1929 to July 1932.
- In addition, the Fed is directly responsible for inflation
and the decline in the US standard of living since 1913, and, besides the
Great Depression, especially since the 1970s. From the late 18th century
to 1913, virtually no inflation existed under the gold standard, except
during times of war. Using government data, it now takes over $2,000 to
equal $100 of pre-Fed purchasing power. In other words, a 1913 dollar is
worth about a nickel, and given recent dollar weakness, even less.
- Operating as a hidden government, Fed-created inflation
dilutes purchasing power. It practices usury through interest rate manipulation,
forcing borrowers to pay their rates. The income tax was established to
pay interest on the national debt that wouldn't exist under a public banking
system creating Treasury, not Federal Reserve notes.
- The Constitution has no federal tax provision because
the Founders believed private income was "the ultimate source of productivity."
It wasn't coincidental that the February 13, 1913 16th Amendment (establishing
an income tax) was ratified ahead of the year-end establishment of the
Fed. It's run the country ever since, and when in trouble, gets the public
to bail it out with more tax dollars, enough since 2008 to put a lien on
future generations, perhaps in perpetuity unless public pressure forces
change that won't come from the top down as long as bankers are in charge.
- Congress empowered them to commit grand theft by transferring
public wealth to themselves, a process especially virulent since the 1980s
under Reaganomics-instituted "trickle-down" designed to trickle
up. Ever since:
- -- tax cuts for the rich replaced a progressive system;
- -- the rich became super-rich;
- -- consumer debt soared;
- -- record high budget and national debt levels prevail;
- -- real wages haven't kept up with inflation;
- -- low-paying service jobs replaced higher-paying production
ones offshored to low-wage countries;
- -- technology-driven productivity pressures employees
to work harder for less; and
- -- during grim times like today, economic instability,
lost jobs, home foreclosures, depleted savings, and personal bankruptcies
have created growing poverty, hunger, homelessness, and despair with few
measures taken to address them under a system favoring wealth by transferring
it from the many to the few.
- Privatized money control imperils democracy. If the public
doesn't regain it, economic tyranny will prevail and eventually the political
kind already entrenched with a strong foothold.
- Stephen Lendman is a Research Associate of the Centre
for Research on Globalization. He lives in Chicago and can be reached at
- Also visit his blog site sjlendman.blogspot.com and listen
to the Lendman News Hour on RepublicBroadcasting.org Monday - Friday at
10AM US Central time for cutting-edge discussions with distinguished guests
on world and national issues. All programs are archived for easy listening.