What is Money?

An Adequate Money Supply

“Whosoever 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.” ~ President James Garfield (assassinated within weeks of the release of this statement during the first year of his Presidency in 1881)

Money, the means of all commercial trade except simple barter, is the measure and the instrument by which one product or service is sold and another purchased. Ideally, there should be a sufficient amount of money in circulation to represent the goods and services (supply) available to meet the needs (demand) of the people. Remove money or even reduce the supply below that which is necessary to carry on current levels of trade and the results can be catastrophic. For an example, we need only look at America’s Great Depression of the 1930s, which was also worldwide.

In 1930, America did not lack industrial capacity, fertile farmland, or skilled and willing workers. It had extensive and efficient transportation and communication systems (infrastructure), and no war had ravaged the country. The United States of America in 1930 lacked only one thing: an adequate supply of money to carry on trade and commerce.

In the early 1930s, the privatized banking industry, the only source of new money and credit, deliberately refused loans to industries, businesses, farms, and people. However, payments on existing loans were still required, and money rapidly disappeared from circulation. Goods were available to be purchased and jobs were waiting to be done, but the lack of money necessary as a means to represent trade, labor, and commerce brought the nation to a standstill. Twenty years after “The Fed” was born, America (along with the world) was purposefully put into a “depression,” and banks took possession of hundreds of thousands of farms, homes, and business properties. A majority of people, not understanding the system of money creation and contraction, were essentially robbed of their earnings, their savings, their livelihoods, and their property.

“This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson] signs this bill, the invisible government of the monetary power will be legalized... the worst legislative crime of the ages is perpetrated by this banking and currency bill… From now on, depressions will be scientifically created.” ~ Congressman Charles A. Lindbergh Sr., 1913

“The Federal Reserve definitely caused the Great Depression by contracting the amount of currency in circulation by one-third from 1929 – 1933.” ~ Milton Friedman, economist

World War II ended the “depression.” The same banking industry that throughout the 1930’s had no loans for peacetime industry now had unlimited billions to lend for a massive war movement. 

This was made possible through the creation of new money – loaned to the government and war industry by the private banking system of America. People were hired, factories went to two shifts, and “The Great Depression” was over. Some politicians were blamed for it and others took credit for ending it. However, the math is easy – it was a lack of money that brought on the depression, and an adequate money supply that ended it. Since the Great Depression – the last time America was not at war – this trend has continued. Based upon the perpetually increasing government (people’s) debt of the past century, America has built, expanded, and maintained the most powerful Military-Industrial Complex in the history of the planet. Today, we live in a permanent, debt-based war economy.

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, and the hopes of its children.” ~Dwight D. Eisenhower

“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 activities 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 by 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.” ~Former President Woodrow Wilson

When we can see the disastrous results of concentrated financial power and an artificially created shortage of money, we can better understand why our founders insisted on placing the power to “create” money and the power to control its value ONLY in the hands of Congress. Our founders believed that ALL citizens would benefit from an adequate and stable currency, and since the Federal Congress is the only legislative power subject to the citizens at the ballot box, it was, to their minds, the only safe depository of so much profit and so much power. They wrote it out in the simple, but all-inclusive: “Congress shall have the Power to Coin Money and Regulate the Value Thereof.”

Today, this network of privatized central banking operates throughout every country in the world, and has now become an international, all-powerful political apparatus.

“I am afraid that the ordinary citizen will not like to be told that banks can and do create money . . . and they who control the credit of the nation direct the policy of governments and hold in the hollow of their hands the destiny of the people.” ~ Reginald McKenna, past Chairman of the Board, Midlands Bank of England

The following section is an example of the process of money “creation” and its conversion to people’s “debt.”

Private Banks Create Money…

We “Borrow” It and Pay Them Interest

“When you or I write a check there must be sufficient funds in an account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money.”  ~ Published by the Federal Reserve Bank of Boston, titled “Putting It Simply”

The Federal Government, spending more than it has taken from its citizens in taxes, needs, for the sake of illustration, $10 billion. Since it does not have the money, and Congress has given away its authority to “create” it, the Government must go to the Federal Reserve for the $10 billion. The Federal Reserve complies and is willing to deliver $10 billion in newly created money or credit to the Federal Government in exchange for the Government's agreement to pay it back - with interest. So Congress authorizes the Treasury Department to print $10 billion in U.S. “Treasury Bonds” (government debt), which are then delivered to the Federal Reserve.

The Federal Reserve then pays the cost of printing the $10 billion (about $1,000) and makes the exchange. The Government then deposits the $10 billion and uses the money to pay its obligations. The Government has now indebted the people to private bankers for $10 billion on which the people must pay interest.

“The Federal Reserve bank buys government bonds without one penny . . . I have never yet met anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money.” ~ Congressman Wright Patman, Congressional Record, September 30, 1941

Countless such transactions have taken place since 1913 so that by the 1980s, the U.S. Government was indebted to the banking industry for over $1 trillion on which the people paid, at that time, over $100 billion a year in interest alone. By 1995, the total federal debt had grown to over $5 trillion, with an annual interest payment of $203 billion, 14% of that federal budget. In 2005, the interest payments on the federal deficit totaled $318 billion. As of the end of fiscal year 2008 (9/30/08), the federal deficit stood at $10,024,724,896,912.49 ($10+ Trillion), and increased by $100 billion on the first day of fiscal year 2009 (10/1/08). With an estimated United States population of 305,580,461 people, each citizen’s share of this debt is $32,805, and the average family share is $151,605. Since September 30, 2008, the National Debt has continued to increase an average of $7.42 billion per day, all the while continuing to collect interest.

“People who will not turn a shovel full of dirt on a project, nor contribute a pound of material, will collect more money from the United States than will the People who supply all the material and do all the work. This is the terrible thing about interest … But here is the point: If the Nation can issue a dollar bond it can issue a dollar 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 sort provided by the Constitution, pays nobody but those who contribute in some useful way. It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People. If the currency issued by the People were no good, then the bonds would be no good, either. It is a terrible situation when the Government, to insure the National Wealth, must go in debt and submit to ruinous interest charges at the hands of men who control the fictitious value of gold. Interest is the invention of Satan.” ~ Thomas A. Edison, the New York Times, December 6, 1921

“Because of the ‘fractional’ reserve system, banks, as a whole, can expand our money supply several times, by making loans and investments. Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars in accounts on their books in exchange for a borrower’s IOU.” ~ Federal Reserve Bank of New York

Furthering the irony of a Federal Reserve that isn’t federal, this banking system also possesses no actual “reserves,” as we will now see.

The Fractional (Federal) Reserve Banking System has been granted the special privilege of creating credit (debt) out of nothing – out of “thin air.” By extending this credit/debt to everyone else in society who does not have the same privilege, and then collecting from society the money plus interest, Federal Reserve banks become very rich without having to produce anything of value. Value is found in the work that people do, the services that people provide, and the products that industry creates. However, “The Fed” creates “value” out of nothing and “value” is found in the form of debt (a promise to pay).

Under this kind of banking system, United States Bonds (government/people’s debt) and “promissory notes” (individual debt) become “assets” of the banks which they then use as “reserves” to “create” more “credit” to lend. Current “reserve” requirements of 10% allow them to use, for instance, $10 billion to “create” as much as $9 billion in new “credit” (principal) to lend to states, municipalities, individuals, and businesses, which will in turn accumulate interest.

Now, it is logical to assume that this $9 billion is literally coming out of the existing $10 billion deposit. However, this is not the case – it is illegal for a bank to loan any of its customer’s deposits and it is against Federal Reserve Policy for a bank to loan any of its own assets. What actually happens is that the $9 billion is simply created out of thin air, on top of the existing $10 billion deposit. That is how the money supply is expanded, with all money coming into existence as debt. In order for the people, individually and collectively, to have money to carry on trade and commerce, they must borrow the “created credit” of the Federal Reserve Banking system.

“Of course, they [the banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes [loan contracts] in exchange for credits [money] to the borrowers’ transaction accounts.” ~ Modern Money Mechanics, Federal Reserve Bank of Chicago, 1975

In other words, the $9 billion can be created out of nothing, simply because there is a demand for such a loan along with $10 billion on deposit to satisfy the 10% reserve requirement ratio of 9:1.

Now, there are $9 billion worth of new loans available. As this money is borrowed and deposited, the process then repeats, because those deposits become part of the banks reserves. Therefore, 10% is isolated, and in turn 90% of the $9 billion ($8.1 billion) is now available as newly created money for new loans. And of course, that $8.1 billion can be loaned out and re-deposited creating an additional $7.2 billion . . . $6.5 billion . . . $5.9 billion, etc.

Like one of those Russian dolls, each layer of which contains a slightly smaller doll inside, each new deposit contains the potential for a slightly smaller loan in an infinitely decreasing series. This deposit-money creation-loan process can technically go on to infinity. The mathematical result is that about $90 billion can be created on top of the original $10 billion. In other words, for every deposit that ever occurs in the banking system, about 9 times that amount can be created out of thin air.

Now, if at any point the loan money is not deposited at a bank, the process stops. And unless each successive loan is deposited at the same bank, it cannot be said that any one bank got to multiply its initial deposit almost 90 times by issuing bank credit out of nothing. Most likely, however, at every step the new money will be deposited at a bank, and the entire system is a closed loop – bank credit created at one bank becomes a deposit in another, and vice-versa.

All of this new money has been created entirely from, and as, debt, the whole process legally authorized by the initial reserve deposit – which in our example was $10 billion – still sitting untouched at the central bank. That is, the bank’s initial central bank reserve of $10 billion allows the banking system to ultimately issue and collect interest on up to $90 billion the banks never had to begin with.

“The actual process of money creation takes place in commercial banks. As noted earlier, demand liabilities of commercial banks are money. Confidence in these forms of money also seems to be tied in some way to the fact that assets exist on the books of the banks equal to the amount of money outstanding, even though most of the assets themselves are no more than pieces of paper.” ~ Modern Money Mechanics, p. 3, Federal Reserve Bank of Chicago, 1975

While the rules are complex, the common sense reality is actually quite simple: Banks can create as much money as we can borrow. Since new money is created whenever anyone takes a loan from a bank, money is literally created as debt. As a result, the total amount of money that can be created has only one real limit – the total level of debt. And once we realize that money really is DEBT, we also realize that if there were no debt there would be no money! We are totally dependent on continually renewed bank credit for there to be any money in existence. No loans, no money, which is what happened during the Great Depression – the money supply shrank drastically as the supply of loans dried up.

Most people imagine that if all debts were paid off, the state of the economy would improve. This is certainly true on an individual level – just as we have more money to spend when our loan payments are finished, we believe that if everyone were out of debt, there would be more money to spend in general. But the truth is the exact opposite – there would be no money at all! The more money there is, the more debt there is, and the more debt there is, the more money there is. 

“This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.” ~ Robert H. Hemphill, Atlanta Federal Reserve Bank, in foreword of “100% Money” by Irving Fisher

To put it another way, every single dollar in your wallet is owed to a banking institution, because the only way money can come into existence is through a loan. Therefore, if everyone in the country were able to pay off their debts – including the government – there would not be one dollar in circulation.

“That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.” ~ Marriner S. Eccles, former Chairman of the Federal Reserve Board

The last time in American history the national debt was completely paid off was in 1835, when President Andrew Jackson shut down the central bank that preceded the Federal Reserve. In fact, Jackson’s entire political platform essentially revolved around his commitment to shut down the central bank.

“You are a den of vipers and thieves and I intend to rout you out, and by the eternal God, I will rout you out. If Congress has the right to issue paper money [currency], it was given to them to be used by [the government] and not to be delegated to individuals or corporations.”  ~ President Andrew Jackson

“The bold efforts the present bank has made to control the government are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it.” ~ President Andrew Jackson’s warning

Thus far we have discussed the following realities: (1) Money is created out of debt by privately owned banks through loans to government, businesses, and individuals. (2) These loans are based on a bank’s “Reserves” and reserves are created out of deposits. (3) Through this fractional reserve system, any one deposit allows banks to lend into existence 9 times its original value, and then collect the money plus interest.

Meanwhile, the most important element of the equation is the element which reveals the truly fraudulent nature of the system itself: Interest, or usury.

The Interest Amount is Never Created

Our U.S. Dollars: “Credit” representing a debt, or “debt instruments.” When the state and people borrow large sums, we seem to prosper. However, banks and credit companies “create” only the amount of the principal of each loan, never the extra amount needed to pay the interest. Therefore, the new money in circulation never equals the new debt added. The amount needed to pay the interest on loans is not “created,” and therefore does not exist.

Under this kind of a monetary system, where new debt always exceeds the new money no matter how much or how little is borrowed, the total debt increasingly outstrips the amount of money available to pay the debt. When the government, a business, or an individual borrows money from a bank, it almost always has to be paid back with accrued interest. In other words, almost every single dollar that exists in the entire world must be eventually returned to a bank – with interest. This begs the question: Where is the money to cover the interest supposed to come from?

The only place borrowers can go to obtain the money needed to pay the interest is the general economy’s over-all money supply. But almost all of the over-all money supply has been created in exactly the same way – as bank credit that has to be paid back with more than was created.

So everywhere, there are borrowers in the same situation, competing with each other to pay back both Principal and Interest from a total money pool which contains only Principal. It is clearly impossible for everyone to pay back the Principal plus the Interest because the interest money does not exist. And since all this money is created out of debt and randomly circulated through commerce, people become detached from their original debt and a disequilibrium exists where people are forced to compete for labor in order to pull enough money out of the money supply to cover their costs of living.

“While economic textbooks claim that people and corporations are competing for markets and resources, I claim that in reality they are competing for money - using markets and resources to do so. Greed and fear of scarcity are being continuously created and amplified as a direct result of the kind of money we are using. For example, we can produce more than enough food to feed everybody, and there is definitely enough work for everybody in the world, but there is clearly not enough money to pay for it all. In fact, the job of central banks is to create and maintain that currency scarcity. Money is created when banks lend it into existence. When a bank provides you with a $100,000 mortgage, it creates only the principal, which 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 everybody else to bring back the second $100,000.” ~ Bernard Lietaer, Former Central Banker, author of “The Future of Money”

“Credit is a system whereby a person who can’t pay gets another person who can’t pay to guarantee that he can pay.” ~ Charles Dickens

The following example will help to show the nature of this usury-debt system with its “built-in” shortage of money.

If $300,000 is Borrowed,

$718,527.60 Must Be Paid Back

When a citizen goes to a bank and borrows $300,000 to help purchase, for example, a home, the borrower agrees to pay back the loan plus interest. At 7% interest for 30 years, the borrower must agree to pay $1,995.91 per month for 30 years for a total of $718,527.60. The borrower is then required to assign to the bank the right of ownership of the property if the borrower does not make the required payments. The bank then gives the borrower a $300,000 check or a $300,000 deposit slip crediting the borrower’s checking account with $300,000. Once again, the bank has created this credit from nothing based on its ability to loan anywhere up to 9 times the amount of deposits it currently has on hand.

The borrower then writes checks to the builder, subcontractors, etc., who in turn write checks. $300,000 of new “checkbook” money is thereby added to “money in circulation.”

However, and this is the fatal flaw in a usury system, the only new money created and put into circulation is the amount of the loan, $300,000. The money to pay the interest is NOT created, and therefore was NOT added to “money in circulation.”

Even so, this Borrower (and those who follow in ownership of the property) must earn and TAKE OUT OF CIRCULATION $718,527.60, over $415,000 MORE than was put IN CIRCULATION when the origina1 $300,000 was borrowed.

In actuality, the bank collects and “pockets” the interest payments first. Towards the end of the 30 year period, when the principal is collected, the original loan amount – $300,000 in our example – comes out of circulation and ceases to exist. This is why banks would prefer the loan be paid back slowly as minimum payments, and why there is often a penalty for paying off the full loan prematurely.

What this also means is that, mathematically, defaults and bankruptcy are literally built into the system, and there will always be poor pockets of society that get the short end of the stick – like a massive “pyramid scheme”. An analogy would be a game of musical chairs, for once the music stops someone is left out to dry.

Of course, that is the point. It invariably transfers true wealth from the individual to the banks, for if you are unable to pay for your mortgage, they will take your property. This can be particularly infuriating when one realizes that the money the bank loaned to you didn’t even legally exist in the first place.

As another example, let us consider a small loan for 3 years at 18% interest. Step 1: Citizen borrows $5,000 and pays it into circulation, signing a note agreeing to pay the Banker $6,500. Step 2: Citizen pays $180 per month of their earnings to the Banker. In 3 years s/he will take OUT of circulation $1,500 more than s/he put IN circulation.

Every loan of banker "created" money (credit) puts the same process in operation and causes the same thing to happen. Each borrower adds to the total money supply when they borrow, but the payments on the loan (because of interest) then deduct a much LARGER sum from the total money supply.

Under this system, there is therefore no way all debtors, collectively, can pay off the moneylenders. As they pay the principal and interest, the money in circulation disappears and more money must be borrowed (with interest) in order to carry on trade and commerce. As time goes on, the government and the people borrow more and more from the moneylenders each generation. Since this has happened millions of times since 1913 (and continues today), we can see why America has become a debt-ridden nation where our government and people are all paying usury-tribute (interest) to a banking institution. The moneylenders, who produce nothing of value, slowly, then more rapidly, gain ownership of the land, buildings, and present and future earnings of the whole working population. In essence, the borrowers have become the servants of the lenders under this modernized form of collective debt slavery.

“Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal – that there is no human relation between master and slave.” – Leo Tolstoy

So that we can further understand that periodic withdrawal of money through interest payments will inexorably transfer all wealth in the nation to the receiver of interest, imagine yourself in a poker or dice game where everyone must buy the chips (the medium of exchange) from a “banker” who does not risk chips in the game, but simply watches and every hour reaches in and takes 10% to 15% of all the chips on the table. As the game goes on, the amount of chips in the possession of each player will go up and down with his or her “luck.” However, the TOTAL number of chips available to play the game (carry on trade and business) will decrease rapidly.

The game will get low on chips, and some players will run out. If they want to continue to play, they must buy or borrow them from the “banker.” The “banker” will sell (lend) them ONLY if the player signs a "mortgage" (promise to pay/debt) agreeing to give the “banker” some real property (car, home, business, etc.) if he or she cannot make periodic payments to pay back all of the borrowed chips – plus some EXTRA ones (interest). The payments must be made on time, whether he or she wins (makes a profit) or not.

It is easy to see that no matter how skillfully everyone plays, eventually the “banker” will end up with all of their original chips back, and except for the very best players, the rest will continue, gradually, to lose all they own as long as they stay in the game.

In real life, even if we borrow little ourselves from banking institutions, the local, state, and federal governments borrow billions in our name, appropriate the money, and then proceed to confiscate large portions of our earnings (taxes) from us and pay it back to the same bankers. We are forced to play this game, and none can leave except by death. We pay as long as we live, and our children pay after we die. If we cannot pay, the same government will foreclose on our property if banks do not foreclose themselves. Bankers risk nothing in the game, but merely take a percentage.

Within the past few decades, real “cards” have been added to this game. “Credit” cards have been promoted as a convenience and a great boon to trade. However, they are also devices by which bankers can collect 2% to 5% of every retail sale from the seller and, on average, 18% interest from buyers.

“Neither paper currency nor deposits have value as commodities. Intrinsically, a 'dollar' bill is just a piece of paper. Deposits are merely book entries.” -- Modern Money Mechanics Workbook, Federal Reserve Bank of Chicago, 1975

In the millions of transactions made each year, little actual currency changes hands, nor is it necessary that it do so. Indeed, 95% of all “cash” transactions in the U.S. are electronic or by check, so banks are perfectly safe in “creating loans” by writing the check or deposit slip, not against actual money (something of positive value), but AGAINST YOUR PROMISE TO PAY IT BACK (DEBT).

The borrower’s signature on the loan papers amounts to an obligation to pay the bank the amount of the loan plus interest or lose the house, the car, or whatever else was pledged as collateral. This is a big commitment from the borrower.

What does that same signature require of the bank? The bank gets to conjure into existence the amount of the loan and type it into the borrower’s account – not from the banks own earnings or from money that has been previously deposited, but directly from the borrower’s promise to repay the loan – in essence, from the signature itself. And it is this signature that actually creates the money, and is the only real thing of “value” contained in the entire transaction.

So, despite the endlessly presented mint footage, government-created money typically accounts for less than 5% of the money in circulation. More than 95% of all money in existence today was created by someone signing a pledge of indebtedness to a bank. And while the rules are complex, the common sense reality is actually quite simple. Banks can create as much money as we can borrow.

Our Congress is supposed to represent the people, yet the Federal Reserve Banking System does not. Hopefully, we can begin to see the ways in which these kind of potential inequities were of concern to our founders.

“The advice that you generally get is to inflate the currency. They don’t say debase the currency, they don’t say devalue the currency, they don’t say cheat the people of their savings, they say lower interest rates. The real deception is when we distort the value of money, when we create money out of thin air, we have no savings yet there’s so-called capitol. . . so my question boils down to this – how in the world can we expect to solve the problems of inflation – that is the increase in the supply of money – with more inflation?” ~ Congressman Ron Paul

The need to pay interest is why inflation is a constant in the economy, for new money is always needed to help cover the perpetual debt built into the system. Especially for long term loans such as mortgages and government debt, where the total Interest far exceeds the Principal, more and more new debt money must be created to satisfy the demand for money to service the previous debt. However, this just makes the total debt bigger. And of course, that means more Interest must ultimately be paid, resulting in an ever-escalating and inescapable spiral of mounting indebtedness, all of which transfers true wealth from those who create it (the people) to those who create nothing of value – the banks, who only create the numbers and the pieces of paper (“money”) by which to measure value. And as the money supply increases, the value of the money itself becomes increasingly worthless unless the volume of production and trade in the real world grows by the same amount.

Of course, it can’t. The Fractional Reserve System of monetary expansion is inherently inflationary, for the act of expanding the money supply without there being a proportional expansion of goods and services in the real economy will always debase the currency. Excess money is being created by the need to pay debt instead of by the need to represent an increase in supply and/or demand.  

So, what is actually giving this newly created money value? The money that already exists.

The new money essentially steals value from the existing money supply. As the total pool of money is increased – irrespective to the demand of goods and services – and as “supply and demand” finds equilibrium, prices will rise, thereby diminishing the purchasing power of each individual dollar. In essence, inflation is a hidden tax on the public.

To summarize: Due to the nature of our banking system and the kind of money we use, the economy must “grow” through steady inflation and the creation of more debt/money (debt = money). The money needed to pay the increasing debt and Interest must come from new Principal, which is always created in the form of new debt that will always come with new Interest, which in turn leads to increasing inflation – a vicious cycle indeed.

Add to this the realization that when we hear the economy is growing (and inflating) at 3% per year, it sounds like a constant rate. It is not. This year’s 3% represents more real goods and services than last year’s 3%, because it is 3% of the new total. Instead of the straight line that is naturally visualized when hearing these words, it is really an exponential curve getting steeper and steeper.

“The greatest shortcoming of the human race is our inability to understand the exponential function.” ~ Albert A. Bartlett, physicist

Hopefully we are beginning to understand why our culture and society has been built, designed, and maintained through constant and increasing competition and consumption. A debt-based economy that functions through Interest and inflation needs to constantly and exponentially grow, and the perpetual growth of the real economy requires the perpetually escalating use of real world resources and energy. More and more “stuff” must go from natural resource to garbage every year – forever, just to keep the system from collapsing.

“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” ~ Kenneth Boulding, economist

Furthermore, our “growing economy” is simply more money being created (debt) and exchanging hands more often. Eventually, the money that the banks create and loan to the government and the people will filter through the economy and then back to the banks as profit. Naturally, when a country exists within in a permanent war economy where military intervention serves its “strategic” (economic) interests, it will need to borrow money, which will infuse the economy and help it “grow,” just as World War II brought our nation out of the Great Depression. Similarly, an economy will also “grow” when someone is admitted to a hospital. In other words, curing cancer or ending war would destroy our economy. And as economic “growth” is necessary to keep the system from collapsing, it is not necessarily an accurate indicator of health for a nation or the world, to say the least. Ironically, the exponential growth rate of our economy operates very similarly in principle to the accelerated cellular growth rate of a cancerous tumor.

Meanwhile, each time money exchanges hands, the same money is subject to an Income Tax each time it does so. 

“The hardest thing in the world to understand is the income tax.” ~ Albert Einstein

“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.” ~ Thomas Jefferson

The Income Tax (16^th Amendment) was created the same year as the Federal Reserve (1913). Of course, this is not a coincidence, as the Income Tax is the only means by which the Federal Government is able to pay off the Interest on the federal deficit. And while most people believe our income taxes pay for social services and government expenses (including military spending), in actuality our taxes are used solely to pay interest on the Federal deficit. Actually, government expenditures are paid for using newly created debt that comes with interest.

“100% of what is collected is absorbed solely by interest on the Federal Debt ... all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from government.” ~ Grace Commission report submitted to President Ronald Reagan on January 15, 1984

“By this means government may, secretly and unobserved, confiscate the wealth of the people and not one man in a million will detect the theft. Should government refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud can no longer be concealed.” ~ John Maynard Keynes, economist, author of “The Economic Consequences of the Peace.”

“In other words, governments do not collect taxes to provide services, they provide services as an excuse to collect taxes.” ~ Richard J. Maybury in his book, Whatever Happened to Justice?

The Global Economic Crisis of 2009

It is only the time lag between money’s creation as new loans and its eventual repayment that keeps the over-all shortage of money from catching up and bankrupting the entire system. However, as this credit “monster” gets bigger and bigger, the need to create more and more debt money to feed it becomes increasingly urgent. This is why interest rates are so low (currently close to 0%). This is also why we get unsolicited credit card offers in the mail, and why the US Government is spending money faster than ever before. Can this really go on forever? Could it be to stave off the collapse of the entire monetary system? Isn’t a collapse inevitable? Recently, the United States Government borrowed $700 billion dollars to bail out – the banks!

“One thing to realize about our fractional reserve banking system is that, like a child’s game of musical chairs, as long as the music is playing, there are no losers.” ~ Andrew Gause, Monetary Historian

This song appears to be coming to an end – for both America and the world. Welcome to the year 2009 and beyond.

“The powers of financial capitalism had a far-reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole...Their secret is that they have annexed from governments, monarchies, and republics the power to create the world's money...” ~ Prof. Carroll Quigley, renowned Georgetown macro-historian (mentioned by former President Clinton in his first nomination acceptance speech), author of  “Tragedy & Hope: A History of the World in Our Time”

“Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits.”  ~Sir Josiah Stamp (President of the Bank of England in the 1920's, the second richest man in Britain at the time)

“ ... I am convinced that the agreement [establishing the World Bank] will enthrone a world dictatorship of private finance more complete and terrible than the Hitlerite dream. It offers no solution of world problems, but quite blatantly sets up controls which will reduce the smaller nations to vassal states and make every government the mouthpiece and tool of International Finance. It will undermine and destroy the democratic institutions of this country - in fact as effectively as ever the Fascist forces could have done… and will undoubtedly present a new menace, endangering world peace. World collaboration of private financial interests can only mean mass unemployment, slavery, misery, degradation and financial destruction. Therefore, as freedom loving Australians we should reject this infamous proposal.”                                                                                                                  
~ Labor Minister of Australia, Eddie Ward, during the inception of the World Bank at Bretton Woods, gave this warning

If your were to take a quick glance at a graph illustrating the historical values of US dollars relative to the expansion of the US money supply, the precise inverse relationship would become immediately obvious. This is why your money loses value every moment it stays in your pocket.

One dollar in 1913 required 21.60 cents to match its value in 2007 – a 96% devaluation since the Federal Reserve came into existence. Over the past 35 years, the dollar has lost over 75% of its value.

In 1910 the U.S. federal debt was only $1 billion, or $12.40 per citizen. State and local debts were practically non-existent.

By 1920, after only 6 years of the Federal Reserve, the federal debt had jumped to $24 billion, or $228 per person.

In 1960 the federal debt reached $284 billion, or $1,575 per citizen. State and local debts were expanding rapidly.

By 1981 the federal debt passed $1 trillion and was growing exponentially as “The Fed” tripled interest rates. President Ronald Reagan’s massive deficit spending along with “trickle down economics” (tax cuts for the wealthy) led to a vast inflation of the currency throughout the 1980’s and led to the full emergence of a globalized, oil-based economy.   

Today, state and local debts are now MORE than the federal, with total government debts totaling over $9 trillion, more than 4 times the value of all the land and buildings in America.

If we signed over to the moneylenders all of America we would still owe them 3 more Americas (plus interest).

However, banking institutions do not take title to everything. Indeed, the system is perpetuated through leaving people with the “illusion of ownership,” so we and our children and beyond will continue to work and pay the banking industry with more of our earnings in ever-increasing debts. Carefully read your mortgage agreement and ask yourself if you still believe you really own your home. Actually, you are listed as a “TENANT.” And even if you pay off your mortgage, you are still a “renter” via Property Taxes, which must be paid or your property will be taken away. It is, in essence, our lack of awareness and our acquiescence to this form of economic manipulation that has allowed it to take place. Now, the banking “establishment” has come to own this country with an illegal system of usury and debt as certainly as if they had marched in with a uniformed army.

“Banking institutions are more dangerous to our liberties than standing armies . . . The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.” ~ Thomas Jefferson

“I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations.”~ James Madison, 1788

All the Gold of the Nation

“The [Federal Reserve Act] as it stands seems to me to open the way to a vast inflation of the currency... I do not like to think that any law can be passed that will make it possible to submerge the gold standard in a flood of irredeemable paper currency.” ~ Henry Cabot Lodge Sr., 1913

If it is left in place long enough, the group who controls this system of debt creation will own all the gold available in the nation. In America, this part of the process took place in the midst of “The Great Depression” in 1933, when Franklin Delano Roosevelt issued executive orders 6073, 6102, 6111, and 6260, accompanied by House Joint Resolution 192 on June 5, 1933, all of which essentially outlawed the possession of gold (“hoarding”) that was then taken and used to pay off outstanding government debts to the Federal Reserve. Once the supply of real money (gold) belonged to the banks, they literally owned the entire nation. Why? Because banks take complete control of the only source of operating medium (money) available through which the nation functions. Besides those who have the privilege of “creating” money, everyone else is limited to how much money they have access to. After two or three generations and beyond, the friends and allies of the banking industry will always own all of the nation – just as America is now, essentially, owned by a very small cadre of wealthy people.  

Wherever this system operates, how long this process takes to work its way through the wealth of a nation depends upon how successful the restriction of the formal government's issuance of real money is. As the supply of real money shrinks, the people of the nation must rely on the creation of debt by a privileged few to a greater and greater extent, until all that is left is a massive amount of “unpayable debt.” Those with the privilege of creating debt become the de facto (illegally usurped) government because of the “money power” they wield.

“There is no more direct way to capture control of a nation than through its credit [money] system.” ~ Phillip A. Benson, President of the American Bankers’ Association, June 8, 1939

“Let me issue and control a Nation's money and I care not who writes the laws.” ~Mayer Amshel (Bauer) Rothschild of the Rothschild banking dynasty, 1787

“Fiat Currency” by Government Decree

In the past, privately created bank credit existed only in the form of private banknotes, which people had the choice to refuse – just as we have the choice to refuse someone’s private check today.

In the present, privately created bank credit is legally convertible to government issued “fiat” currency – the “dollars” we habitually think of as “money”. Fiat currency is money created by government fiat, or decree, and legal tender laws declare that citizens must accept this fiat money as payment for debt, or else the courts will not enforce the obligation. Therefore, the banks can only practice using this monetary system with the active cooperation of government.

First, the government passes legal tender laws to make us use the national fiat currency. Secondly, the government allows private bank credit to be issued in this government currency. Thirdly, government courts enforce debts. And lastly, the government passes regulations to protect the money system’s functionality and credibility with the public while doing nothing to inform the public about where the money really comes from.

“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.” ~ James Madison

“Our government is so corrupt that citizens no longer become incensed when they learn the CIA is running drugs [cocaine] into the U.S.” ~ Terry Reed in his book, Compromised

“This is a government of the people, by the people and for the people no longer. It is a government of corporations, by corporations, and for corporations.” ~ President Rutherford B. Hayes

 “We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This institution has impoverished the people of the United States and has practically bankrupted our government … there is not a man within the sound of my voice who does not know that this nation is run by the International bankers. . .                                  

“Mr. Chairman, the United States is bankrupt: It has been bankrupted by the corrupt and dishonest Fed. The man who deceives the people is a traitor to these United States. The Fed should be repealed, and the Fed Banks, having violated their charters, should be liquidated immediately. Faithless Government officials who have violated their oaths of office should be impeached and brought to trial…

“Some people think the Federal Reserve Banks are the United States government's institutions. They are not government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves… The sack of the United States by the Fed is the greatest crime in history. Every effort has been made by the Fed to conceal its powers, but the truth is the Fed has usurped the government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will.” ~ Louis T. McFadden, Chairman of the Committee on Banking and Currency (12 years), June 10, 1932, Congressional Record 12595-12603. He survived two assassination attempts but not a third in 1935.   

Democrat, Republican, and Independent voters who have wondered why politicians always spend more tax money than they take in should now see the reason. It takes only a little imagination to see that if Congress had been “creating” and spending or issuing into circulation the necessary increase in the money supply, there would be no national debt. Since there would be no ORIGINAL cost of money except printing, and no CONTINUING costs such as interest, federal taxes could be almost eliminated, except for instances where taxation is used as a means to take money out of circulation when there is more than enough to carry on current levels of trade (to avoid inflation). Otherwise, money, once in circulation, would remain there and go on serving its purpose as a medium of exchange for generation after generation and century after century, with NO payments to banking institutions whatsoever.

“I have never seen more Senators express discontent with their jobs... I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected.” ~ John Danforth, Republican senator from Missouri, reported in the Arizona Republic, April 21, 1992

Let us now consider a more equitable method of providing money as the medium of exchange.

“The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Governments greatest creative opportunity.” ~ Abraham Lincoln’s monetary policy, 1865, Senate document no. 23, page 91

If we were to use the Constitutional way of “creating” the money needed in the nation, Congress would spend most of its time and study on the issuance and control of an adequate supply of stable money for the people (making monetary policy an integral aspect of political discourse once again). If an increase of population, production, or demand required an increase in the medium of exchange (supply), Congress would authorize the creation, “coining,” or printing of the determined amount, of which the value would be fixed to something – anything – of intrinsic and positive value that doesn’t vary in value (as opposed to a debt or “promise to pay”). Some could be used to pay current legitimate expenses of the Federal Government, with any remaining balance paid directly to the citizens, thereby immediately increasing our standard of living and boosting the economy. For example, a payment of only $50 to each citizen would put $15.3 billion of debt-free and interest-free money into circulation.

When suggestions such as this surface, the banking lobby immediately warns that it would soon be “worthless” and would “cause inflation.” However, this would only be the case if it were being created as interest-bearing debt.  

The truth is that it is the immense usury charges on “created” credit (our debt) that is the sole cause of “inflation.” ALL prices on ALL industry, trade and labor must be raised periodically to pay the ever increasing usury charges. This is the ONLY cause of higher prices, including gas. More accurately, prices do not go up, but rather the value of your money goes down. And to repeat, inflation is more aptly described as another, more subtle, form of taxation. And while it seems true that inflation is more beneficial to debtors than creditors, in reality this inflation is the only means through which we can begin to pay back the increasing interest without going into bankruptcy and poverty and/or recognizing the fraud. Indeed, the main “responsibility” of the Federal Reserve, besides creating money, is to perpetuate the system through the regulation of interest rates and inflation.

Under a Constitutional economic system, no private banks would exist with this much power. Private banking would be what most people think it is, which is what it is supposed to be – a private entity that takes care of your real, government-issued money and, with your permission, invests it wisely. Real Government banks under the control of the people's representatives would issue and control all money and credit. They would issue not only actual currency, but could also lend limited credit at no interest for the purchase of capital goods, such as homes. A $300,000 loan would require only a $300,000 repayment, not $718,527 as it is now. Everyone who supplied materials and labor for the home would get paid just as they do today, but the banking industry would NOT get over $415,000 in usury.

“A majority of the people of the United States have lived all of their lives under emergency rule… And, in the United States, actions taken by the Government in times of great crises have, in important ways, shaped the present phenomenon of a permanent state of national emergency.” ~ Introduction to Senate Report 93-549 (93^rd Congress, 1^st session, 1973)

Instead of peace and debt-free prosperity, we have endured ever-mounting debt and periodic wars. As many are slowly coming to realize, we as a people are now, de facto, ruled by a system of banks that has become a centralized, all-powerful political apparatus. Our two large political parties have – as a means of sustaining their power – become its servants, the various departments of government its spending agencies, and the Internal Revenue Service its collection agency. In this way, the actions of our government sponsor expenditures that benefit bankers who have vested interests in many other industries, including conglomerated media, big pharmaceutical companies, and the military-industrial complex.

In 2008, the budgets for the Department of Defense and the War on Terror exceeded $554 billion, which surpasses the military budgets of the rest of the world combined. Since 1940, the US Government has borrowed over $20 trillion to supply the yearly defense budget of the military-industrial complex, which currently employs more than 7.5 million Americans.

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” ~ Dwight D. Eisenhower, farewell address, 1961

Besides creating money, creating “enemies” is also very profitable for the banking business. An American population that has essentially lived in a 75-year era of fear is asked to go billions of dollars more into debt for the financing of “military preparedness,” or “foreign aid to stop communism” (including “American Intervention”), or “The War on Terror,” as a few examples, the latter having no end in sight. When the war is over, we are billions of dollars more in debt to the banking industry. When the destroyed infrastructure of a defeated, war-torn country must be rebuilt, reconstruction will also be financed by the banking industry, which then, through reconstruction, installs debt-based centralized banking systems in these countries as well (see Latin and South America and most recently, Iraq). Historically, most wars around the globe are financed on all sides through debts and loans from the same banking industry. And these loans are made upon the condition that the victorious side pays the war debts of the defeated. The banking industry needs only to passively sit back and wait to see which side to collect from, and/or they can actively influence which side wins. Existing both nowhere and everywhere at the same time, the international banking system is a globalized corporate power.

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” ~ Napoleon Bonaparte, 1815

Consider the nature of American foreign policy since both the establishment of the Federal Reserve and the onset of the Great Depression. World War I began a year after the passage and signing of the Federal Reserve Act, while a global Great Depression facilitated the economic conditions for the emergence of World War II, with the banking industry financing both the Axis and Allied powers, as well as the nuclear armament of both Cold War powers thereafter. Today, an endless “War on Terror” means huge profits for both banks and government officials, many of whom vacillate between positions in government and positions in the Board Rooms of large defense contractors and banking establishments.  

“We will bankrupt ourselves in the vain search for absolute security.” ~ Dwight D. Eisenhower

“I wish it were possible to obtain a single amendment to our constitution - taking from the federal government their power of borrowing.” ~ Thomas Jefferson, 1798

As we begin to better understand the nature of a permanent war economy based on the furtherance of bank financed debt owed by governments and people, we can begin to see the potential correlation to a century of global military carnage. Meanwhile, the United States is the largest exporter of weapons in the world, leading a top five that consists of the five countries with permanent seats on the United Nations Security Council (Great Britain, Russia, France, and China).

History tells us of debt-free and interest-free money issued by governments. The American colonies did it in the 1700’s and their wealth soon rivaled England, bringing restrictions from Parliament. This was the main cause of the Revolutionary War. Before the war for American independence, Benjamin Franklin wrote the following:

“There is abundance in the Colonies, and peace is reigning on every border. It is difficult, and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort prevails in every home. The people, in general, keep the highest moral standards, and education is widely spread… We have no poor houses in the Colonies; and if we had some, there would be nobody to put in them, since there is, in the Colonies, not a single unemployed person, neither beggars nor tramps.” ~ Benjamin Franklin

This was not the case in England, which had a Fractional Reserve Banking system in place since 1694, and where delinquent debtors were often thrown in jail. There was much poverty in London and elsewhere in England. Here, Franklin explains the difference between England and her colonies during a visit to London:

“In the colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and have no interest to pay to anyone… You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the 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.” ~ Benjamin Franklin

Soon enough, however, the English banks imposed restrictions on the Colonies’ issuance of Colonial Scrip, possibly as a reaction to the statements of Benjamin Franklin, which were widely publicized at the time. The first law was created in 1751, with more restrictive measures in place by 1763. Because money derives its authority from its ability to pay taxes, Colonial Scrip became illegal tender with which to pay dues to Parliament. Due to these measures, poverty and unemployment began to plague the colonies just as it had in England, because the operating medium had been cut in half and there were insufficient quantities of money to pay for goods and work. Indeed, this was the cause of the Revolutionary War, and not simply “taxation without representation,” as is taught in most history books.

“The Colonies would gladly have borne the little tax on tea and other matters had it not been the poverty caused by the bad influence of the English bankers on the Parliament, which has caused in the Colonies hatred of England and the Revolutionary War.” ~ Benjamin Franklin

“I see in the near future a 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 a few hands and the Republic is destroyed.” ~ President Abraham Lincoln after the National Banking Act of 1863 was passed

If we ever created a Constitutional issue of debt-free, interest-free currency, even a limited issue, the benefits would be apparent immediately. Yet, there has not been such an effort in this country for 143 years. Abraham Lincoln was the last President to issue such debt-free and interest-free currency in 1863 (“Lincoln Greenbacks”) and was assassinated two years later, ending the implementation of this monetary policy.

“Money is the creature of law and the creation of the original issue of money should be maintained as the exclusive monopoly of national Government … No duty is more imperative for the Government than the duty it owes the People to furnish them with a sound and uniform currency, and of regulating the circulation of the medium of exchange so that labor will be protected from a vicious currency, and commerce will be facilitated by cheap and safe exchanges. Government should stand behind its currency and credit and the Bank deposits of the Nation. No individual should suffer a loss of money through depreciation or inflated currency or bankruptcy.

“Government possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by Taxation and otherwise need not and should not borrow capital at interest as a means of financing Governmental work and public enterprise. The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Governments greatest creative opportunity.

By the adoption of these principles the long felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts, and exchanges. The financing of all public enterprise, the maintenance of stable Government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own Government. Money will cease to be master and become the servant of humanity. Democracy will rise superior to the money power.”

Abraham Lincoln was assassinated later that year.

“The death of Lincoln was a disaster… There was no man in the United States great enough to wear his boots and the bankers went anew to grab the riches. I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it to systematically corrupt modern
civilization.” ~ Otto von Bismarck, German Chancellor, after the Lincoln assassination

“Right after the Civil War there was considerable talk about reviving Lincoln's brief experiment with the Constitutional monetary system. Had not the European money-trust intervened, it would have no doubt become an established institution.” ~ W. Cleon Skousen

“The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe. These bankers were afraid that the US, if they remained as one block, and as one nation, would attain economic and financial independence, which would upset their financial domination over the world.” ~ Otto von Bismark, 1876

“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than the aristocracy, more selfish than the bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes.” ~ Abraham Lincoln

On June 4, 1963 (exactly five years, to the day, before the assassination of Robert F. Kennedy), a little known attempt was made to strip the Federal Reserve Bank of its power to loan money to the government at interest. On that day, President John F. Kennedy signed Executive Order No. 11110, returning to the U.S. government the power to issue currency without going through the Federal Reserve. Kennedy’s order gave the Treasury the power “to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury.” This meant that for every ounce of silver in the U.S. Treasury’s vault, the government could introduce new money into circulation. In all, President Kennedy brought nearly $4.3 billion in U.S. Government Notes into circulation. The ramifications of this bill are enormous.

With the stroke of a pen, JFK was on his way to putting the Federal Reserve Bank of New York out of business. If enough of these silver certificates were to come into circulation, they would have eliminated the demand for Federal Reserve notes, because the silver certificates were backed by silver (something of positive value), while Federal Reserve notes are backed by only a “promise to pay” (debt). Executive Order 11110 could have prevented the national debt from reaching its current level, because it would have given the government the ability to repay its debt without going to the Federal Reserve and being charged interest in order to create new money. Executive Order 11110 gave the U.S. government the ability to create its own money backed by silver, per Article I, Section 8 of the United States Constitution.

After John F. Kennedy was assassinated just five months later, no more silver certificates were issued. This Executive Order is still valid. Why then, has no president utilized it? Most of the $10 trillion in American debt has been created since 1963, and if a U.S. president had utilized Executive Order 11110, the debt would be nowhere near the current level. President Kennedy challenged the monetary establishment by challenging the two most successful vehicles that have ever been used to drive up debt – war and the creation of money by a privately-owned central bank. His efforts to have all troops out of Vietnam by 1965 along with Executive Order 11110 could have severely cut into the economic profits and political control of the New York banking establishment.

The Old Testament says, “Unto thy brother thou shalt not lend upon usury, that the lord thy God may bless thee in all that thou settest thine hands to” (Deuteronomy 23:20).

Historically, the litany of Christian councils specifically condemning the practice of charging interest is quite impressive: the Council of Elvira (CE 305-306), Arles (314), Nice (325), Cartage (348), Taragona (516), Aix-la-Chapelle (789), Paris (829), Tours (1153), the Lateran Council (1179), Lyons (1274), and Vienna (1311), among others. The Vienna Council actually called for the excommunication of any ruler who failed to criminally punish anybody committing usury.

Additionally, the Catholic Church remained prominently in battle against the “sin of usury” until the 19^th century. Obviously, the issue of interest has been significant for thousands of years. And it is not so much money itself that is the root of evil, as much as it is the root of this kind of money – which is interest.

“Of the two sorts of money-making one, as I have just said, is a part of household management, the other is retail trade: the former necessary and honorable, the latter a kind of exchange which is justly censured; for it is unnatural, and a mode by which men gain from one another. The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest. And this term usury, which means the birth of money from money, is applied to the breeding of money, because the off-spring resembles the parent. Wherefore of all modes of making money this is the most unnatural.” ~ Aristotle

The Saracean Empire forbade interest on money for 1,000 years, and its wealth outshone even Saxon Europe. Mandarin China issued its own money, interest-free and debt-free, and many historians and collectors of art today consider those centuries to be China's time of greatest wealth, culture, and peace.

Issuing interest-free government notes leaves the money available to use in the exchange of goods and services and its only continuing cost is replacement as the paper wears out. Money is the paper or electronic ticket by which such transfers are made and should always be in sufficient quantity to transfer all possible production of the nation to ultimate consumers. Recessions and depressions take place ONLY because of a lack of an adequate supply of money.

It is as ridiculous for a nation to say to its citizens, “You will have to make sacrifices because we are short of money,” as it would be for an Airline to say “Our planes are flying, but we can’t take you because we are short of tickets.”

“The great enemy of the Truth is very often not the lie - deliberate, contrived, and dishonest - but the myth - persistent, persuasive and realistic.” ~ John F. Kennedy

“To expose a 4.2 trillion dollar rip-off of the American people by the stockholders of the 1000 largest corporations over the last 100 years will be a tall order of business” ~ Buckminster Fuller

“The few who understand the system will either be so interested from its profits or so dependent on its favors, that there will be no opposition from that class, while on the other hand, the great body of people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” ~ Rothschild Brothers of London, 1863

“Men occasionally stumble across the truth. But most of them pick themselves up and hurry off as if nothing had happened.” ~ Winston Churchill

This study of money can easily be charged with oversimplification. It is easy to imagine that somebody, at some point, would have done something about this if it were true. However, this monetary system is as old as Babylon, and even in America it dates back far before the year 1913. Actually, 1913 may be considered the year in which this plan came to full fruition, with modern banking becoming officially and completely institutionalized.

Those who control money can also control the information available to the public, which does not include a simple acknowledgment of how our money system operates. You will not see this information on television, nor will you hear it on the radio. Schools, newspapers, libraries, and bookstores rarely, if at all, contain articles or books that directly address this subject, although the literature exists (see references). However, with the help of alternative and independent media as well as the internet, many citizens are learning the truth. By all means, check the facts, do the math, and inquire further into the details. Simply using a search engine is a good place to start, in addition to the references and resources at the end of this study. Perhaps an even better place to begin is to take a look at the world and use your intuition.  

Those who further this economic agenda have been, for many years, in positions of prominence. They may not all be aware of their role and some, although aware, may find many convenient justifications for continuing their support. Here, I do not wish to directly address the inner motivations or subjective inclinations of particular people. Fractional Reserve Banking is now a global institution that has been inherited by modern civilization. Seemingly, we all must participate in this deeply rooted system in order to function and survive within the economic confines of society. However, understanding the nature of these confines can help us create a just economy that serves the needs of the people, enabling them to receive the appropriate financial rewards and compensation for their labor and creativity. Money can be entirely different than it is now. We, the People, need only explore the real implications of the meaning of money and use our collective imagination.

The Federal Reserve has never been audited by the government since it was established in 1913. In 1975 a bill, H.R. 4316, to require an audit was introduced in Congress. It was not passed. No audit of the Fed has ever been made.

“Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.” ~ Senator Barry Goldwater (Rep. AR)

Study For Yourself, Let Others Know

 “We hold these truths to be self-evident: That all men (sic) are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness; that, to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed; that whenever any form of government becomes destructive of these ends, it is the right of the people to alter or to abolish it.” – Thomas Jefferson, principal author of The Declaration of Independence

“It is not the function of government to keep the citizen from falling into error; it is the function of the citizen to keep the government from falling into error.” ~ US Supreme Court, 339 US 382,447

Compassion for all people – including oneself – and concern for future generations should make anyone deeply interested in this, the world’s greatest problem. As we move into 2009, the credit/debt bubble has been pricked, and the banking industry is foreclosing on America. However, this will only continue if nothing is done and the People continue to live in ignorance of our money system. International speculators and financiers are afraid of only one thing: an awakened citizenry, armed with the truth and a trust in their own innate power to choose wisely and compassionately. Knowledge is power, and what we do with this power is in our hands. As the wise saying goes, the price of liberty is eternal vigilance, and complacency and apathy have become the diseases of an American society that lives in relative affluence compared to the rest of the world. And while we cannot re-capture the past and prevent this from happening, we can empower ourselves to take responsibility for the global maladies of the present and co-create a future that can accommodate both the wisdom of our founders and the evolving sensibilities of current and future generations. All change takes place in the present, and the power of now belongs to the people, collectively. It is a power that has always existed, but has yet to be recognized. All we must do is exercise our rights and responsibilities, and creatively use our imaginations.

In essence, we possess the power and the ability to redefine the meaning and the nature of money, and can design it as a means and a tool to construct a civilization based upon the ideals of sustainability, abundance, equality, justice, and peace. What are the values we would like our monetary system to encourage?

Truth in Money, Inc., http://www.truthinmoney.com/index.html
Promoting sales of Truth In Money book and Figuring Out the Fed book by Thoren & Warner.

Transaction Net, http://www.transaction.net/index.html
Promoting new models of doing business online and new systems of monetary exchange.

History of Money, http://www.ex.ac.uk/~RDavies/
A fountain of information free of charge by Roy Davies in Exeter promoting his 716 page book.

Canada

Canadian Centre for Policy Alternatives, http://www.policyalternatives.ca
Best known for its publications Canadian Forum and The Monitor advocating monetary reform.

Democracy Watch, http://www.web.net/dwatch/camp/bankdir.html
Consumer watchdog lobby group which has several campaigns including bank accountability.