Sunday, February 15, 2009
Monday, November 24, 2008
New machines scan IDs at border crossings
Agents along the Canada and Mexico borders are using a controversial new machine that can "read" the personal information contained in some government-issued ID cards — such as passports and driver's licenses — as travelers approach a checkpoint.
The Homeland Security Department says the new practice will tighten security and speed the flow of traffic. Privacy advocates say the technology could make Americans less secure because terrorists or other criminals may be able to steal the personal information off the ID cards remotely.
"There's this strange rush to a fancy or shiny new technology," says Lee Tien of the Electronic Frontier Foundation. The cards "are quite vulnerable" to being cloned or having their codes broken.
Machines are in place at five crossings — Blaine, Wash.; Buffalo; Detroit; Nogales, Ariz.; and San Ysidro, Calif. — as part of the government's requirement that anyone who crosses the border must show a passport or other government documents proving citizenship and identity. The machines are being activated in Buffalo today; machines in Blaine and Nogales are in use; the rest will be on line over the next couple of months.
The new technology is being used in conjunction with new government passports, passcards and driver's licenses embedded with computer chips that contain the holder's name, date of birth, nationality, passport or ID number and a digitized photo. The personal data can be "read" by a Radio Frequency Identification (RFID) machine as the person approaches a border-crossing checkpoint.
By the time a car stops at the Customs booth, the agent will have the photos and information of everyone in the car. If a name is on a watch list or database, the person will be taken in for questioning. The system will be "more efficient," says Thomas Winkowski of Customs and Border Protection.
Privacy-rights advocates warn that terrorists or other criminals can use their own machines in a process called "skimming" to read the information from as far as 50 feet. Consumer privacy expert Katherine Albrecht says the chips create the "potential for a whole surveillance network to be set up." She says police could use them to find criminals, abusive husbands to find their wives, and stores to track customers.
Homeland Security says the chips are made not to reveal personal information to machine readers — just a code, that then shows the information on the border agents' screen. The cards also come with protective sleeves for when they're not in use.
The border crossing ID requirement takes effect in June. So far, 600,000 State Department passcards and 40,000 embedded licenses from Washington state and New York have been issued.
The Homeland Security Department says the new practice will tighten security and speed the flow of traffic. Privacy advocates say the technology could make Americans less secure because terrorists or other criminals may be able to steal the personal information off the ID cards remotely.
"There's this strange rush to a fancy or shiny new technology," says Lee Tien of the Electronic Frontier Foundation. The cards "are quite vulnerable" to being cloned or having their codes broken.
Machines are in place at five crossings — Blaine, Wash.; Buffalo; Detroit; Nogales, Ariz.; and San Ysidro, Calif. — as part of the government's requirement that anyone who crosses the border must show a passport or other government documents proving citizenship and identity. The machines are being activated in Buffalo today; machines in Blaine and Nogales are in use; the rest will be on line over the next couple of months.
The new technology is being used in conjunction with new government passports, passcards and driver's licenses embedded with computer chips that contain the holder's name, date of birth, nationality, passport or ID number and a digitized photo. The personal data can be "read" by a Radio Frequency Identification (RFID) machine as the person approaches a border-crossing checkpoint.
By the time a car stops at the Customs booth, the agent will have the photos and information of everyone in the car. If a name is on a watch list or database, the person will be taken in for questioning. The system will be "more efficient," says Thomas Winkowski of Customs and Border Protection.
Privacy-rights advocates warn that terrorists or other criminals can use their own machines in a process called "skimming" to read the information from as far as 50 feet. Consumer privacy expert Katherine Albrecht says the chips create the "potential for a whole surveillance network to be set up." She says police could use them to find criminals, abusive husbands to find their wives, and stores to track customers.
Homeland Security says the chips are made not to reveal personal information to machine readers — just a code, that then shows the information on the border agents' screen. The cards also come with protective sleeves for when they're not in use.
The border crossing ID requirement takes effect in June. So far, 600,000 State Department passcards and 40,000 embedded licenses from Washington state and New York have been issued.
Thursday, November 6, 2008
Wednesday, August 13, 2008
USA a Corporation!
Below are two articles covering the fact that, since the Act of 1871 which established the District of Columbia, we have been living under the UNITED STATES CORPORATION which is owned by certain international bankers and aristocracy of Europe and Britain.
In 1871 the Congress changed the name of the original Constitution by changing ONE WORD -- and that was very significant as you will read.
Some people do not understand that ONE WORD or TWO WORDS difference in any "legal" document DO make the critical difference. But, Congress has known, and does know, this.
I'm told this corporation, established in 1871, will be cancelled by NESARA and NESARA will also restore the ORIGINAL Constitution which assists in restoring our Constitutional Rights and the Bill of Rights and our rights as described in the Declaration of Independence.
1871, February 21: Congress Passes an Act to Provide a Government for the District of Columbia, also known as the Act of 1871*
With no constitutional authority to do so, Congress creates a separate form of government for the District of Columbia, a ten mile square parcel of land (see, Acts of the Forty-first Congress," Section 34, Session III, chapters 61 and 62).
The act -- passed when the country was weakened and financially depleted in the aftermath of the Civil War -- was a strategic move by foreign interests (international bankers) who were intent upon gaining a stranglehold on the coffers and neck of America.
Congress cut a deal with the international bankers (specifically Rothschilds of London) to incur a DEBT to said bankers. Because the bankers were not about to lend money to a floundering nation without serious stipulations, they devised a way to get their foot in the door of the United States.
The Act of 1871 formed a corporation called THE UNITED STATES. The corporation, OWNED by foreign interests, moved in and shoved the original Constitution into a dustbin. With the Act of 1871, the organic Constitution was defaced -- in effect vandalized and sabotage -- when the title was capitalized and the word "for" was changed to "of" in the title.
* Info from yet unpublished book, "Pentimento: Freedom Revisited." As you will see when reading, just as much of my knowledge of the Trading with the Enemy Act came from Gene Schroder, et al. this, too, came from elsewhere -- from Lisa Guilian of Babel Magazine, whom I first "met" by way of an article by Patrick Bellringer. So, we cooperate as we study and learn the truth. C. E.
THE CONSTITUTION OF THE UNITED STATES OF AMERICA is the constitution of the incorporated UNITED STATES OF AMERICA.
It operates in an economic capacity and has been used to fool the People into thinking it governs the Republic. It does is not!
Capitalization is NOT insignificant when one is referring to a legal document. This seemingly "minor" alteration has had a major impact on every subsequent generation of Americans.
What Congress did by passing the Act of 1871 was create an entirely new document, a constitution for the government of the District of Columbia, an INCORPORATED government. This newly altered Constitution was not intended to benefit the Republic. It benefits only the corporation of the UNITED STATES OF AMERICA and operates entirely outside the original (organic) Constitution.
Instead of having absolute and unalienable rights guaranteed under the organic Constitution, we the people now have "relative" rights or privileges. One example is the Sovereign's right to travel, which has now been transformed (under corporate government policy) into a "privilege" that requires citizens to be licensed.
By passing the Act of 1871, Congress committed TREASON against the People who were Sovereign under the grants and decrees of the Declaration of Independence and the organic Constitution.
[Information courtesy of Lisa Guliani, www.babelmagazine.com. The Act of 1871 became the FOUNDATION of all the treason since committed by government officials.]
The UNITED STATES Isn't a Country - It's a Corporation!
In preparation for stealing America, the puppets of Britain's banking cabal had already created a second government, a Shadow Government designed to manage what the common herd believed was a democracy, but what really was an incorporated UNITED STATES. Together this chimera, this two-headed monster, disallowed the common herd all rights of sui juris. [sovereignty]
Congress, with no authority to do so, created a separate form of government for the District of Columbia, a ten-mile square parcel of land. WHY and HOW did they do so? First, Lisa Guliani of Babel Magazine, reminds us that the Civil War was, in fact, "little more than a calculated front with fancy footwork by backroom players." Then she adds:
"It was also a strategic maneuver by British and European interests (international bankers) intent on gaining a stranglehold on the coffers of America. And, because Congress knew our country was in dire financial straits, certain members of Congress cut a deal with the international bankers (in those days, the Rothschilds of London were dipping their fingers into everyone's pie). . . . . There you have the WHY, why members of Congress permitted the international bankers to gain further control of America. . . . . .
"Then, by passing the Act of 1871, Congress formed a corporation known as THE UNITED STATES. This corporation, owned by foreign interests, shoved the organic version of the Constitution aside by changing the word 'for' to 'of' in the title. Let me explain: the original Constitution drafted by the Founding Fathers read: 'The Constitution for the united states of America.' [note that neither the words 'united' nor 'states' began with capital letters] But the CONSTITUTION OF THE UNITED STATES OF AMERICA' is a corporate constitution, which is absolutely NOT the same document you think it is. First of all, it ended all our rights of sovereignty [sui juris]. So you now have the HOW, how the international bankers got their hands on THE UNITED STATES OF AMERICA."
To fully understand how our rights of sovereignty were ended, you must know the full meaning of sovereign:
SOVEREIGN
"Chief or highest, supreme power, superior in position to all others; independent of and unlimited by others; possessing or entitled to; original and independent authority or jurisdiction."
--Webster--
In short, our government, which was created by and for us as sovereigns -- free citizens deemed to have the highest authority in the land -- was stolen from us, along with our rights. Keep in mind that, according to the original Constitution, only We the People are sovereign. Government is not sovereign. The Declaration of Independence says, "government is subject to the consent of the governed." That's us -- the sovereigns. When did you last feet like a sovereign? As Lisa Guliani explained:
"It doesn't take a rocket scientist or a constitutional historian to figure out that the U.S. Government has NOT been subject to the consent of the governed since long before you or I were born. Rather, the governed are subject to the whim and greed of the corporation, which has stretched its tentacles beyond the ten-mile-square parcel of land known as the District of Columbia. In fact, it has invaded every state of the Republic. Mind you, the corporation has NO jurisdiction beyond the District of Columbia. You just think it does.
"You see, you are 'presumed' to know the law, which is very weird since We the People are taught NOTHING about the law in school. We memorize obscure facts and phrases here and there, like the Preamble, which says, 'We the People. establish this Constitution for the United States of America.' But our teachers only gloss over the Bill of Rights. Our schools (controlled by the corporate government) don't delve into the Constitution at depth. After all, the corporation was established to indoctrinate and 'dumb-down' the masses, not to teach anything of value or importance.
"Certainly, no one mentioned that America was sold-out to foreign interests, that we were beneficiaries of the debt incurred by Congress, or that we were in debt to the international bankers. Yet, for generations, Americans have had the bulk of their earnings confiscated to pay a massive debt that they did not incur. There's an endless stream of things the People aren't told. And, now that you are being told, how do you feel about being made the recipient of a debt without your knowledge or consent?
"After passage of the Act of 1871, Congress set a series of subtle and overt deceptions into motion, deceptions in the form of decisions that were meant to sell us down the river.
"Over time, the Republic took it on the chin until it was knocked down and counted out by a technical KO [knock out]. With the surrender of the people's gold in 1933, the 'common herd' was handed over to illegitimate law. (I'll bet you weren't taught THAT in school.)
"Our corporate form of governance is based on Roman Civil Law and Admiralty, or Maritime, Law, which is also known as the 'Divine Right of Kings' and the 'Law of the Seas' -- another fact of American history not taught in our schools. Actually, Roman Civil Law was fully established in the colonies before our nation began, and then became managed by private international law. In other words, the government -- the government created for the District of Columbia via the Act of 1871 -- operates solely under Private International Law, not Common Law, which was the foundation of our Constitutional Republic.
"This fact has impacted all Americans in concrete ways. For instance, although Private International Law is technically only applicable within the District of Columbia, and NOT in the other states of the Union, the arms of the Corporation of the UNITED STATES are called 'departments' --i.e., the Justice Department, the Treasury Department. And those departments affect everyone, no matter where (in what state) they live. Guess what? Each department belongs to the corporation -- to the UNITED STATES.
"Refer to any UNITED STATES CODE (USC). Note the capitalization; this is evidence of a corporation, not a Republic. For example, In Title 28 3002 (15) (A) (B) (C), it is unequivocally stated that the UNITED STATES is a corporation. Translation: the corporation is NOT a separate and distinct entity; it is not disconnected from the government; it IS the government -- your government. This is extremely important! I refer to it as the 'corporate EMPIRE of the UNITED STATES,' which operates under Roman Civil Law outside the original Constitution. How do you like being ruled by a corporation? You say you'll ask your Congressperson about this? HA!!
"Congress is fully aware of this deception. So it's time that you, too, become aware of the deception. What this great deception means is that the members of Congress do NOT work for us, for you and me. They work for the Corporation, for the UNITED STATES. No wonder we can't get them to do anything on our behalf, or meet or demands, or answer our questions.
"Technically, legally, or any other way you want to look at the matter, the corporate government of the UNITED STATES has no jurisdiction or authority in ANY State of the Union (the Republic) beyond the District of Columbia. Let that tidbit sink in, then ask yourself, could this deception have occurred without full knowledge and complicity of the Congress? Do you think it happened by accident? If you do, you're deceiving yourself.
"There are no accidents, no coincidences. Face the facts and confront the truth. Remember, you are presumed to know the law. THEY know you don't know the law or, for that matter, your history. Why? Because no concerted effort was ever made to teach or otherwise inform you. As a Sovereign, you are entitled to full disclosure of all facts. As a slave, you are entitled to nothing other than what the corporation decides to 'give' you.
"Remember also that 'Ignorance of the law is no excuse.' It's your responsibility and obligation to learn the law and know how it applies to you. No wonder the corporation counted on the fact that most people are too indifferent, unconcerned, distracted, or lazy to learn what they need to know to survive within the system. We have been conditioned to let the government do our thinking for us. Now's the time to turn that around if we intend to help save our Republic and ourselves -- before it's too late.
"As an instrument of the international bankers, the UNITED STATES owns you from birth to death. It also holds ownership of all your assets, of your property, even of your children. Think long and hard about all the bills taxes, fines, and licenses you have paid for or purchased. Yes, they had you by the pockets. If you don't believe it, read the 14th Amendment. See how 'free' you really are. Ignorance of the facts led to your silence. Silence is construed as consent; consent to be beneficiaries of a debt you did not incur. As a Sovereign People we have been deceived for hundreds of years; we think we are free, but in truth we are servants of the corporation.
"Congress committed treason against the People in 1871. Honest men could have corrected the fraud and treason. But apparently there weren't enough honest men to counteract the lust for money and power. We lost more freedom than we will ever know, thanks to corporate infiltration of our so-called 'government.'
"Do you think that any soldier who died in any of our many wars would have fought if he or she had known the truth? Do you think one person would have laid down his/her life for a corporation? How long will we remain silent? How long will we perpetuate the MYTH that we are free? When will we stand together as One Sovereign People? When will we take back what has been as stolen from the us?
"If the People of America had known to what extent their trust was betrayed, how long would it have taken for a real revolution to occur? What we now need is a Revolution in THOUGHT. We need to change our thinking, then we can change our world. Our children deserve their rightful legacy -- the liberty our ancestors fought to preserve, the legacy of a Sovereign and Fully Free People."
In 1871 the Congress changed the name of the original Constitution by changing ONE WORD -- and that was very significant as you will read.
Some people do not understand that ONE WORD or TWO WORDS difference in any "legal" document DO make the critical difference. But, Congress has known, and does know, this.
I'm told this corporation, established in 1871, will be cancelled by NESARA and NESARA will also restore the ORIGINAL Constitution which assists in restoring our Constitutional Rights and the Bill of Rights and our rights as described in the Declaration of Independence.
1871, February 21: Congress Passes an Act to Provide a Government for the District of Columbia, also known as the Act of 1871*
With no constitutional authority to do so, Congress creates a separate form of government for the District of Columbia, a ten mile square parcel of land (see, Acts of the Forty-first Congress," Section 34, Session III, chapters 61 and 62).
The act -- passed when the country was weakened and financially depleted in the aftermath of the Civil War -- was a strategic move by foreign interests (international bankers) who were intent upon gaining a stranglehold on the coffers and neck of America.
Congress cut a deal with the international bankers (specifically Rothschilds of London) to incur a DEBT to said bankers. Because the bankers were not about to lend money to a floundering nation without serious stipulations, they devised a way to get their foot in the door of the United States.
The Act of 1871 formed a corporation called THE UNITED STATES. The corporation, OWNED by foreign interests, moved in and shoved the original Constitution into a dustbin. With the Act of 1871, the organic Constitution was defaced -- in effect vandalized and sabotage -- when the title was capitalized and the word "for" was changed to "of" in the title.
* Info from yet unpublished book, "Pentimento: Freedom Revisited." As you will see when reading, just as much of my knowledge of the Trading with the Enemy Act came from Gene Schroder, et al. this, too, came from elsewhere -- from Lisa Guilian of Babel Magazine, whom I first "met" by way of an article by Patrick Bellringer. So, we cooperate as we study and learn the truth. C. E.
THE CONSTITUTION OF THE UNITED STATES OF AMERICA is the constitution of the incorporated UNITED STATES OF AMERICA.
It operates in an economic capacity and has been used to fool the People into thinking it governs the Republic. It does is not!
Capitalization is NOT insignificant when one is referring to a legal document. This seemingly "minor" alteration has had a major impact on every subsequent generation of Americans.
What Congress did by passing the Act of 1871 was create an entirely new document, a constitution for the government of the District of Columbia, an INCORPORATED government. This newly altered Constitution was not intended to benefit the Republic. It benefits only the corporation of the UNITED STATES OF AMERICA and operates entirely outside the original (organic) Constitution.
Instead of having absolute and unalienable rights guaranteed under the organic Constitution, we the people now have "relative" rights or privileges. One example is the Sovereign's right to travel, which has now been transformed (under corporate government policy) into a "privilege" that requires citizens to be licensed.
By passing the Act of 1871, Congress committed TREASON against the People who were Sovereign under the grants and decrees of the Declaration of Independence and the organic Constitution.
[Information courtesy of Lisa Guliani, www.babelmagazine.com. The Act of 1871 became the FOUNDATION of all the treason since committed by government officials.]
The UNITED STATES Isn't a Country - It's a Corporation!
In preparation for stealing America, the puppets of Britain's banking cabal had already created a second government, a Shadow Government designed to manage what the common herd believed was a democracy, but what really was an incorporated UNITED STATES. Together this chimera, this two-headed monster, disallowed the common herd all rights of sui juris. [sovereignty]
Congress, with no authority to do so, created a separate form of government for the District of Columbia, a ten-mile square parcel of land. WHY and HOW did they do so? First, Lisa Guliani of Babel Magazine, reminds us that the Civil War was, in fact, "little more than a calculated front with fancy footwork by backroom players." Then she adds:
"It was also a strategic maneuver by British and European interests (international bankers) intent on gaining a stranglehold on the coffers of America. And, because Congress knew our country was in dire financial straits, certain members of Congress cut a deal with the international bankers (in those days, the Rothschilds of London were dipping their fingers into everyone's pie). . . . . There you have the WHY, why members of Congress permitted the international bankers to gain further control of America. . . . . .
"Then, by passing the Act of 1871, Congress formed a corporation known as THE UNITED STATES. This corporation, owned by foreign interests, shoved the organic version of the Constitution aside by changing the word 'for' to 'of' in the title. Let me explain: the original Constitution drafted by the Founding Fathers read: 'The Constitution for the united states of America.' [note that neither the words 'united' nor 'states' began with capital letters] But the CONSTITUTION OF THE UNITED STATES OF AMERICA' is a corporate constitution, which is absolutely NOT the same document you think it is. First of all, it ended all our rights of sovereignty [sui juris]. So you now have the HOW, how the international bankers got their hands on THE UNITED STATES OF AMERICA."
To fully understand how our rights of sovereignty were ended, you must know the full meaning of sovereign:
SOVEREIGN
"Chief or highest, supreme power, superior in position to all others; independent of and unlimited by others; possessing or entitled to; original and independent authority or jurisdiction."
--Webster--
In short, our government, which was created by and for us as sovereigns -- free citizens deemed to have the highest authority in the land -- was stolen from us, along with our rights. Keep in mind that, according to the original Constitution, only We the People are sovereign. Government is not sovereign. The Declaration of Independence says, "government is subject to the consent of the governed." That's us -- the sovereigns. When did you last feet like a sovereign? As Lisa Guliani explained:
"It doesn't take a rocket scientist or a constitutional historian to figure out that the U.S. Government has NOT been subject to the consent of the governed since long before you or I were born. Rather, the governed are subject to the whim and greed of the corporation, which has stretched its tentacles beyond the ten-mile-square parcel of land known as the District of Columbia. In fact, it has invaded every state of the Republic. Mind you, the corporation has NO jurisdiction beyond the District of Columbia. You just think it does.
"You see, you are 'presumed' to know the law, which is very weird since We the People are taught NOTHING about the law in school. We memorize obscure facts and phrases here and there, like the Preamble, which says, 'We the People. establish this Constitution for the United States of America.' But our teachers only gloss over the Bill of Rights. Our schools (controlled by the corporate government) don't delve into the Constitution at depth. After all, the corporation was established to indoctrinate and 'dumb-down' the masses, not to teach anything of value or importance.
"Certainly, no one mentioned that America was sold-out to foreign interests, that we were beneficiaries of the debt incurred by Congress, or that we were in debt to the international bankers. Yet, for generations, Americans have had the bulk of their earnings confiscated to pay a massive debt that they did not incur. There's an endless stream of things the People aren't told. And, now that you are being told, how do you feel about being made the recipient of a debt without your knowledge or consent?
"After passage of the Act of 1871, Congress set a series of subtle and overt deceptions into motion, deceptions in the form of decisions that were meant to sell us down the river.
"Over time, the Republic took it on the chin until it was knocked down and counted out by a technical KO [knock out]. With the surrender of the people's gold in 1933, the 'common herd' was handed over to illegitimate law. (I'll bet you weren't taught THAT in school.)
"Our corporate form of governance is based on Roman Civil Law and Admiralty, or Maritime, Law, which is also known as the 'Divine Right of Kings' and the 'Law of the Seas' -- another fact of American history not taught in our schools. Actually, Roman Civil Law was fully established in the colonies before our nation began, and then became managed by private international law. In other words, the government -- the government created for the District of Columbia via the Act of 1871 -- operates solely under Private International Law, not Common Law, which was the foundation of our Constitutional Republic.
"This fact has impacted all Americans in concrete ways. For instance, although Private International Law is technically only applicable within the District of Columbia, and NOT in the other states of the Union, the arms of the Corporation of the UNITED STATES are called 'departments' --i.e., the Justice Department, the Treasury Department. And those departments affect everyone, no matter where (in what state) they live. Guess what? Each department belongs to the corporation -- to the UNITED STATES.
"Refer to any UNITED STATES CODE (USC). Note the capitalization; this is evidence of a corporation, not a Republic. For example, In Title 28 3002 (15) (A) (B) (C), it is unequivocally stated that the UNITED STATES is a corporation. Translation: the corporation is NOT a separate and distinct entity; it is not disconnected from the government; it IS the government -- your government. This is extremely important! I refer to it as the 'corporate EMPIRE of the UNITED STATES,' which operates under Roman Civil Law outside the original Constitution. How do you like being ruled by a corporation? You say you'll ask your Congressperson about this? HA!!
"Congress is fully aware of this deception. So it's time that you, too, become aware of the deception. What this great deception means is that the members of Congress do NOT work for us, for you and me. They work for the Corporation, for the UNITED STATES. No wonder we can't get them to do anything on our behalf, or meet or demands, or answer our questions.
"Technically, legally, or any other way you want to look at the matter, the corporate government of the UNITED STATES has no jurisdiction or authority in ANY State of the Union (the Republic) beyond the District of Columbia. Let that tidbit sink in, then ask yourself, could this deception have occurred without full knowledge and complicity of the Congress? Do you think it happened by accident? If you do, you're deceiving yourself.
"There are no accidents, no coincidences. Face the facts and confront the truth. Remember, you are presumed to know the law. THEY know you don't know the law or, for that matter, your history. Why? Because no concerted effort was ever made to teach or otherwise inform you. As a Sovereign, you are entitled to full disclosure of all facts. As a slave, you are entitled to nothing other than what the corporation decides to 'give' you.
"Remember also that 'Ignorance of the law is no excuse.' It's your responsibility and obligation to learn the law and know how it applies to you. No wonder the corporation counted on the fact that most people are too indifferent, unconcerned, distracted, or lazy to learn what they need to know to survive within the system. We have been conditioned to let the government do our thinking for us. Now's the time to turn that around if we intend to help save our Republic and ourselves -- before it's too late.
"As an instrument of the international bankers, the UNITED STATES owns you from birth to death. It also holds ownership of all your assets, of your property, even of your children. Think long and hard about all the bills taxes, fines, and licenses you have paid for or purchased. Yes, they had you by the pockets. If you don't believe it, read the 14th Amendment. See how 'free' you really are. Ignorance of the facts led to your silence. Silence is construed as consent; consent to be beneficiaries of a debt you did not incur. As a Sovereign People we have been deceived for hundreds of years; we think we are free, but in truth we are servants of the corporation.
"Congress committed treason against the People in 1871. Honest men could have corrected the fraud and treason. But apparently there weren't enough honest men to counteract the lust for money and power. We lost more freedom than we will ever know, thanks to corporate infiltration of our so-called 'government.'
"Do you think that any soldier who died in any of our many wars would have fought if he or she had known the truth? Do you think one person would have laid down his/her life for a corporation? How long will we remain silent? How long will we perpetuate the MYTH that we are free? When will we stand together as One Sovereign People? When will we take back what has been as stolen from the us?
"If the People of America had known to what extent their trust was betrayed, how long would it have taken for a real revolution to occur? What we now need is a Revolution in THOUGHT. We need to change our thinking, then we can change our world. Our children deserve their rightful legacy -- the liberty our ancestors fought to preserve, the legacy of a Sovereign and Fully Free People."
Monday, July 14, 2008
American Owned- I Think Not!
The Plaza Hotel
This National Historic Landmark near Central Park in New York City, where fictional Eloise lived, has passed through many hands over the years, including Hilton's and Trump's. After Donald Trump's divorce from wife Ivana, who was the Plaza's president, Donald sold the hotel for $325 million in 1995 to a partnership between Saudi Prince Al-Walid and Singapore-owned Millennium & Copthorne Hotels. Now it's owned by Israeli billionaire Yitzhak Tshuva's El-Ad Group.
Anheuser-Busch
Beer drinkers were shocked when Belgian beer juggernaut InBev put the moves on Anheuser-Busch, which initially tried to fend off the bid. However, on July 14 it was announced InBev would buy its rival for $52 billion. The deal sees control over America's largest brewer move overseas.
The Flatiron Building
Located in Manhattan, Daniel Burnham's 1902 Flatiron Building has been a National Historic Landmark since 1989. According to Wikipedia, it is shown in the opening credits of 'The Late Show With David Letterman,' and was used as the Daily Bugle building in the 'Spider-Man' films. It is a popular spot for tourist photographs. Italian real estate investor Valter Mainetti, who likes to collect trophy properties, bought a share of the Flatiron in 2006, then recently brought his share up to 53%.
The Chrysler Building
Many New Yorkers consider the Chrysler Building the prettiest in the city. Briefly the world’s tallest building, this 1928 Art Deco gem has gargoyles designed for its original tenant, the Chrysler Corporation. Cooper Union, a private college, owns the land and leases it out. In the 1950s Chrysler lost control of the building. TMW, the German arm of an Atlanta fund, bought most of the lease in 2001.
Now the Abu Dhabi Investment Council controls 75%
Caribou Coffee &
Church's Chicken
A Minneapolis couple thought up Caribou Coffee on their honeymoon trip out west. They opened their first shop in 1992. Six years later they sold out to the predecessor of Arcapita, which is backed by the Bahrain-based First Islamic Investment Bank. Arcapita, which conforms to Sharia Law, also owns Church's Chicken.
7-Eleven
The Southland Ice Company started selling food at off hours to customers in 1927. By 1946 -- long before the concept of 24/7 -- the company changed the store name to 7-Eleven to advertise its long hours. The founder tried to buy out the company but got caught in the market crash of 1987. His largest franchisee, Japan's Ito-Yokado, got equity and now its parent, Seven and I, own 7-Eleven.
Holiday Inn
A Memphis family driving to D.C. was appalled by local motels, so the father, Kemmons Wilson, already an entrepreneur and builder, vowed to start his own chain. He opened the first Holiday Inn -- named after the Bing Crosby movie -- in 1952. The green neon signs sprang up around the country, luring weary travelers with the promise of consistent quality. He retired 27 years later and then the firm was bought by Brits from Bass (as in the beer), a company that later morphed into InterContinental Hotels Group.
Dial Soap
Armour, the Chicago meatpacking company, sold, canned and used the byproduct tallow to make soap. When they added a germicide in 1948, Armour branded the soap Dial because you could wear it for 24 hours -- or around the dial. The company went through many corporate machinations, was owned by Greyhound for a while, and in 2004 the Dial Corporation was bought by conglomerate Henkel KGaA, based in Dusseldorf, Germany.
Shell
It's hard to imagine a Dutch company called Koninklijke Nederlandsche Petroleum Maatschappij becoming a household name in the U.S., so call it by its nickname: Shell, or the more formal Royal Dutch Shell. The Shell nickname comes from a British trading company that specialized in Asian shells in the 1830s, then turned to oil. The Royal Dutch part comes from an oil company started in 1890 and merged with Shell in 1907.
T-Mobile
The one thing consistent in T-Mobile's decade-and-a-half history has been grating TV ads starring first Jamie Lee Curtis, then Catherine Zeta-Jones. What hasn't been consistent is its name or nationality. The company started as Western Wireless, which merged then spun off as VoiceStream Wireless. In 2001 it was bought and rebranded by Deutsche Telekom, the publicly traded remnant of the former state-owned German telephone company.
Firestone
Henry Firestone started the Firestone Tire and Rubber Company in Akron, Ohio, in 1900. The company expanded rapidly across the country and into all kinds of other businesses. In the 1970s the company had to pay the then-largest corporate fine ever after its radial tires were blamed in 34 deaths. The company cut back radically and sold itself to Japan's Bridgestone in 1988.
The Pennsylvania Turnpike?
For the last two years, Pennsylvania has been mulling over whether to offer a 75-year lease for its turnpike. If it does, the leading contenders are foreign. The deal has hit a snag because of analysis that shows the highest bid of $12.8 billion from a Spanish company is too low and would likely result in higher tolls and lower infrastructure funding.
This National Historic Landmark near Central Park in New York City, where fictional Eloise lived, has passed through many hands over the years, including Hilton's and Trump's. After Donald Trump's divorce from wife Ivana, who was the Plaza's president, Donald sold the hotel for $325 million in 1995 to a partnership between Saudi Prince Al-Walid and Singapore-owned Millennium & Copthorne Hotels. Now it's owned by Israeli billionaire Yitzhak Tshuva's El-Ad Group.
Anheuser-Busch
Beer drinkers were shocked when Belgian beer juggernaut InBev put the moves on Anheuser-Busch, which initially tried to fend off the bid. However, on July 14 it was announced InBev would buy its rival for $52 billion. The deal sees control over America's largest brewer move overseas.
The Flatiron Building
Located in Manhattan, Daniel Burnham's 1902 Flatiron Building has been a National Historic Landmark since 1989. According to Wikipedia, it is shown in the opening credits of 'The Late Show With David Letterman,' and was used as the Daily Bugle building in the 'Spider-Man' films. It is a popular spot for tourist photographs. Italian real estate investor Valter Mainetti, who likes to collect trophy properties, bought a share of the Flatiron in 2006, then recently brought his share up to 53%.
The Chrysler Building
Many New Yorkers consider the Chrysler Building the prettiest in the city. Briefly the world’s tallest building, this 1928 Art Deco gem has gargoyles designed for its original tenant, the Chrysler Corporation. Cooper Union, a private college, owns the land and leases it out. In the 1950s Chrysler lost control of the building. TMW, the German arm of an Atlanta fund, bought most of the lease in 2001.
Now the Abu Dhabi Investment Council controls 75%
Caribou Coffee &
Church's Chicken
A Minneapolis couple thought up Caribou Coffee on their honeymoon trip out west. They opened their first shop in 1992. Six years later they sold out to the predecessor of Arcapita, which is backed by the Bahrain-based First Islamic Investment Bank. Arcapita, which conforms to Sharia Law, also owns Church's Chicken.
7-Eleven
The Southland Ice Company started selling food at off hours to customers in 1927. By 1946 -- long before the concept of 24/7 -- the company changed the store name to 7-Eleven to advertise its long hours. The founder tried to buy out the company but got caught in the market crash of 1987. His largest franchisee, Japan's Ito-Yokado, got equity and now its parent, Seven and I, own 7-Eleven.
Holiday Inn
A Memphis family driving to D.C. was appalled by local motels, so the father, Kemmons Wilson, already an entrepreneur and builder, vowed to start his own chain. He opened the first Holiday Inn -- named after the Bing Crosby movie -- in 1952. The green neon signs sprang up around the country, luring weary travelers with the promise of consistent quality. He retired 27 years later and then the firm was bought by Brits from Bass (as in the beer), a company that later morphed into InterContinental Hotels Group.
Dial Soap
Armour, the Chicago meatpacking company, sold, canned and used the byproduct tallow to make soap. When they added a germicide in 1948, Armour branded the soap Dial because you could wear it for 24 hours -- or around the dial. The company went through many corporate machinations, was owned by Greyhound for a while, and in 2004 the Dial Corporation was bought by conglomerate Henkel KGaA, based in Dusseldorf, Germany.
Shell
It's hard to imagine a Dutch company called Koninklijke Nederlandsche Petroleum Maatschappij becoming a household name in the U.S., so call it by its nickname: Shell, or the more formal Royal Dutch Shell. The Shell nickname comes from a British trading company that specialized in Asian shells in the 1830s, then turned to oil. The Royal Dutch part comes from an oil company started in 1890 and merged with Shell in 1907.
T-Mobile
The one thing consistent in T-Mobile's decade-and-a-half history has been grating TV ads starring first Jamie Lee Curtis, then Catherine Zeta-Jones. What hasn't been consistent is its name or nationality. The company started as Western Wireless, which merged then spun off as VoiceStream Wireless. In 2001 it was bought and rebranded by Deutsche Telekom, the publicly traded remnant of the former state-owned German telephone company.
Firestone
Henry Firestone started the Firestone Tire and Rubber Company in Akron, Ohio, in 1900. The company expanded rapidly across the country and into all kinds of other businesses. In the 1970s the company had to pay the then-largest corporate fine ever after its radial tires were blamed in 34 deaths. The company cut back radically and sold itself to Japan's Bridgestone in 1988.
The Pennsylvania Turnpike?
For the last two years, Pennsylvania has been mulling over whether to offer a 75-year lease for its turnpike. If it does, the leading contenders are foreign. The deal has hit a snag because of analysis that shows the highest bid of $12.8 billion from a Spanish company is too low and would likely result in higher tolls and lower infrastructure funding.
Tuesday, June 24, 2008
Money, Banks, and the Federal Reserve
It has been called "the most astounding piece of sleight of hand ever invented." The creation of money has been privatized, usurped from Congress by a private banking cartel. Most people think money is issued by fiat by the government, but that is not the case. Except for coins, which compose only about one one-thousandth of the total U.S. money supply, all of our money is now created by banks. Federal Reserve Notes (dollar bills) are issued by the Federal Reserve, a private banking corporation, and lent to the government.1 Moreover, Federal Reserve Notes and coins together compose less than 3 percent of the money supply. The other 97 percent is created by commercial banks as loans.2
Don't believe banks create the money they lend? Neither did the jury in a landmark Minnesota case, until they heard the evidence. First National Bank of Montgomery vs. Daly (1969) was a courtroom drama worthy of a movie script.3 Defendant Jerome Daly opposed the bank's foreclosure on his $14,000 home mortgage loan on the ground that there was no consideration for the loan. "Consideration" ("the thing exchanged") is an essential element of a contract. Daly, an attorney representing himself, argued that the bank had put up no real money for his loan. The courtroom proceedings were recorded by Associate Justice Bill Drexler, whose chief role, he said, was to keep order in a highly charged courtroom where the attorneys were threatening a fist fight. Drexler hadn't given much credence to the theory of the defense, until Mr. Morgan, the bank's president, took the stand. To everyone's surprise, Morgan admitted that the bank routinely created money "out of thin air" for its loans, and that this was standard banking practice. "It sounds like fraud to me," intoned Presiding Justice Martin Mahoney amid nods from the jurors. In his court memorandum, Justice Mahoney stated:
Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis, . . . did create the entire $14,000.00 in money and credit upon its own books by bookkeeping entry. That this was the consideration used to support the Note dated May 8, 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr. Morgan admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note.
The court rejected the bank's claim for foreclosure, and the defendant kept his house. To Daly, the implications were enormous. If bankers were indeed extending credit without consideration – without backing their loans with money they actually had in their vaults and were entitled to lend – a decision declaring their loans void could topple the power base of the world. He wrote in a local news article:
This decision, which is legally sound, has the effect of declaring all private mortgages on real and personal property, and all U.S. and State bonds held by the Federal Reserve, National and State banks to be null and void. This amounts to an emancipation of this Nation from personal, national and state debt purportedly owed to this banking system. Every American owes it to himself . . . to study this decision very carefully . . . for upon it hangs the question of freedom or slavery.
Needless to say, however, the decision failed to change prevailing practice, although it was never overruled. It was heard in a Justice of the Peace Court, an autonomous court system dating back to those frontier days when defendants had trouble traveling to big cities to respond to summonses. In that system (which has now been phased out), judges and courts were pretty much on their own. Justice Mahoney, who was not dependent on campaign financing or hamstrung by precedent, went so far as to threaten to prosecute and expose the bank. He died less than six months after the trial, in a mysterious accident that appeared to involve poisoning.4 Since that time, a number of defendants have attempted to avoid loan defaults using the defense Daly raised; but they have met with only limited success. As one judge said off the record:
If I let you do that – you and everyone else – it would bring the whole system down. . . . I cannot let you go behind the bar of the bank. . . . We are not going behind that curtain!5
From time to time, however, the curtain has been lifted long enough for us to see behind it. A number of reputable authorities have attested to what is going on, including Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s. He declared in an address at the University of Texas in 1927:
The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.
Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta in the Great Depression, wrote in 1934:
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.6
Graham Towers, Governor of the Bank of Canada from 1935 to 1955, acknowledged:
Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created -- brand new money.7
Robert B. Anderson, Secretary of the Treasury under Eisenhower, said in an interview reported in the August 31, 1959 issue of U.S. News and World Report:
[W]hen a bank makes a loan, it simply adds to the borrower's deposit account in the bank by the amount of the loan. The money is not taken from anyone else's deposit; it was not previously paid in to the bank by anyone. It's new money, created by the bank for the use of the borrower.
How did this scheme originate, and how has it been concealed for so many years? To answer those questions, we need to go back to the seventeenth century.
The Shell Game of the Goldsmiths
In seventeenth century Europe, trade was conducted primarily in gold and silver coins. Coins were durable and had value in themselves, but they were hard to transport in bulk and could be stolen if not kept under lock and key. Many people therefore deposited their coins with the goldsmiths, who had the strongest safes in town. The goldsmiths issued convenient paper receipts that could be traded in place of the bulkier coins they represented. These receipts were also used when people who needed coins came to the goldsmiths for loans.
The mischief began when the goldsmiths noticed that only about 10 to 20 percent of their receipts came back to be redeemed in gold at any one time. They could safely "lend" the gold in their strongboxes at interest several times over, as long as they kept 10 to 20 percent of the value of their outstanding loans in gold to meet the demand. They thus created "paper money" (receipts for loans of gold) worth several times the gold they actually held. They typically issued notes and made loans in amounts that were four to five times their actual supply of gold. At an interest rate of 20 percent, the same gold lent five times over produced a 100 percent return every year, on gold the goldsmiths did not actually own and could not legally lend at all. If they were careful not to overextend this "credit," the goldsmiths could thus become quite wealthy without producing anything of value themselves. Since only the principal was lent into the money supply, more money was eventually owed back in principal and interest than the townspeople as a whole possessed. They had to continually take out loans of new paper money to cover the shortfall, causing the wealth of the town and eventually of the country to be siphoned into the vaults of the goldsmiths-turned-bankers, while the people fell progressively into their debt.8
Following this model, in nineteenth century America, private banks issued their own banknotes in sums up to ten times their actual reserves in gold. This was called "fractional reserve" banking, meaning that only a fraction of the total deposits managed by a bank were kept in "reserve" to meet the demands of depositors. But periodic runs on the banks when the customers all got suspicious and demanded their gold at the same time caused banks to go bankrupt and made the system unstable. In 1913, the private banknote system was therefore consolidated into a national banknote system under the Federal Reserve (or "Fed"), a privately-owned corporation given the right to issue Federal Reserve Notes and lend them to the U.S. government. These notes, which were issued by the Fed basically for the cost of printing them, came to form the basis of the national money supply.
Twenty years later, the country faced massive depression. The money supply shrank, as banks closed their doors and gold fled to Europe. Dollars at that time had to be 40 percent backed by gold, so for every dollar's worth of gold that left the country, 2.5 dollars in credit money also disappeared. To prevent this alarming deflationary spiral from collapsing the money supply completely, in 1933 President Franklin Roosevelt took the dollar off the gold standard. Today the Federal Reserve still operates on the "fractional reserve" system, but its "reserves" consist of nothing but government bonds (I.O.U.s or debts). The government issues bonds, the Federal Reserve issues Federal Reserve Notes, and they basically swap stacks, leaving the government in debt to a private banking corporation for money the government could have issued itself, debt-free.
Theft by Inflation
M3, the broadest measure of the U.S. money supply, shot up from $3.7 trillion in February 1988 to $10.3 trillion 14 years later, when the Fed quit reporting it. Why the Fed quit reporting it in March 2006 is suggested by John Williams in a website called "Shadow Government Statistics" (shadowstats.com), which shows that by the spring of 2007, M3 was growing at the astounding rate of 11.8 percent per year. Best not to publicize such figures too widely! The question posed here, however, is this: where did all this new money come from? The government did not step up its output of coins, and no gold was added to the national money supply, since the government went off the gold standard in 1933. This new money could only have been created privately as "bank credit" advanced as loans.
The problem with inflating the money supply in this way, of course, is that it inflates prices. More money competing for the same goods drives prices up. The dollar buys less, robbing people of the value of their money. This rampant inflation is usually blamed on the government, which is accused of running the dollar printing presses in order to spend and spend without resorting to the politically unpopular expedient of raising taxes. But as noted earlier, the only money the U.S. government actually issues are coins. In countries in which the central bank has been nationalized, paper money may be issued by the government along with coins, but paper money still composes only a very small percentage of the money supply. In England, where the Bank of England was nationalized after World War II, private banks continue to create 97 percent of the money supply as loans.9
Price inflation is only one problem with this system of private money creation. Another is that banks create only the principal but not the interest necessary to pay back their loans. Since virtually the entire money supply is created by banks themselves, new money must continually be borrowed into existence just to pay the interest owed to the bankers. A dollar lent at 5 percent interest becomes 2 dollars in 14 years. That means the money supply has to double every 14 years just to cover the interest owed on the money existing at the beginning of this 14 year cycle. The Federal Reserve's own figures confirm that M3 has doubled or more every 14 years since 1959, when the Fed began reporting it. 10 That means that every 14 years, banks siphon off as much money in interest as there was in the entire economy 14 years earlier. This tribute is paid for lending something the banks never actually had to lend, making it perhaps the greatest scam ever perpetrated, since it now affects the entire global economy. The privatization of money is the underlying cause of poverty, economic slavery, underfunded government, and an oligarchical ruling class that thwarts every attempt to shake it loose from the reins of power.
This problem can only be set right by reversing the process that created it. Congress needs to take back the Constitutional power to issue the nation's money. "Fractional reserve" banking needs to be eliminated, limiting banks to lending only pre-existing funds. If the power to create money were returned to the government, the federal debt could be paid off, taxes could be slashed, and needed government programs could be expanded. Contrary to popular belief, paying off the federal debt with new U.S. Notes would not be dangerously inflationary, because government securities are already included in the widest measure of the money supply. The dollars would just replace the bonds, leaving the total unchanged. If the U.S. federal debt had been paid off in fiscal year 2006, the savings to the government from no longer having to pay interest would have been $406 billion, enough to eliminate the $390 billion budget deficit that year with money to spare. The budget could have been met with taxes, without creating money out of nothing either on a government print press or as accounting entry bank loans. However, some money created on a government printing press could actually be good for the economy. It would be good if it were used for the productive purpose of creating new goods and services, rather than for the non-productive purpose of paying interest on loans. When supply (goods and services) goes up along with demand (money), they remain in balance and prices remain stable. New money could be added without creating price inflation up to the point of full employment. In this way Congress could fund much-needed programs, such as the development of alternative energy sources and the expansion of health coverage, while actually reducing taxes.
Don't believe banks create the money they lend? Neither did the jury in a landmark Minnesota case, until they heard the evidence. First National Bank of Montgomery vs. Daly (1969) was a courtroom drama worthy of a movie script.3 Defendant Jerome Daly opposed the bank's foreclosure on his $14,000 home mortgage loan on the ground that there was no consideration for the loan. "Consideration" ("the thing exchanged") is an essential element of a contract. Daly, an attorney representing himself, argued that the bank had put up no real money for his loan. The courtroom proceedings were recorded by Associate Justice Bill Drexler, whose chief role, he said, was to keep order in a highly charged courtroom where the attorneys were threatening a fist fight. Drexler hadn't given much credence to the theory of the defense, until Mr. Morgan, the bank's president, took the stand. To everyone's surprise, Morgan admitted that the bank routinely created money "out of thin air" for its loans, and that this was standard banking practice. "It sounds like fraud to me," intoned Presiding Justice Martin Mahoney amid nods from the jurors. In his court memorandum, Justice Mahoney stated:
Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis, . . . did create the entire $14,000.00 in money and credit upon its own books by bookkeeping entry. That this was the consideration used to support the Note dated May 8, 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr. Morgan admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note.
The court rejected the bank's claim for foreclosure, and the defendant kept his house. To Daly, the implications were enormous. If bankers were indeed extending credit without consideration – without backing their loans with money they actually had in their vaults and were entitled to lend – a decision declaring their loans void could topple the power base of the world. He wrote in a local news article:
This decision, which is legally sound, has the effect of declaring all private mortgages on real and personal property, and all U.S. and State bonds held by the Federal Reserve, National and State banks to be null and void. This amounts to an emancipation of this Nation from personal, national and state debt purportedly owed to this banking system. Every American owes it to himself . . . to study this decision very carefully . . . for upon it hangs the question of freedom or slavery.
Needless to say, however, the decision failed to change prevailing practice, although it was never overruled. It was heard in a Justice of the Peace Court, an autonomous court system dating back to those frontier days when defendants had trouble traveling to big cities to respond to summonses. In that system (which has now been phased out), judges and courts were pretty much on their own. Justice Mahoney, who was not dependent on campaign financing or hamstrung by precedent, went so far as to threaten to prosecute and expose the bank. He died less than six months after the trial, in a mysterious accident that appeared to involve poisoning.4 Since that time, a number of defendants have attempted to avoid loan defaults using the defense Daly raised; but they have met with only limited success. As one judge said off the record:
If I let you do that – you and everyone else – it would bring the whole system down. . . . I cannot let you go behind the bar of the bank. . . . We are not going behind that curtain!5
From time to time, however, the curtain has been lifted long enough for us to see behind it. A number of reputable authorities have attested to what is going on, including Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s. He declared in an address at the University of Texas in 1927:
The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.
Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta in the Great Depression, wrote in 1934:
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.6
Graham Towers, Governor of the Bank of Canada from 1935 to 1955, acknowledged:
Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created -- brand new money.7
Robert B. Anderson, Secretary of the Treasury under Eisenhower, said in an interview reported in the August 31, 1959 issue of U.S. News and World Report:
[W]hen a bank makes a loan, it simply adds to the borrower's deposit account in the bank by the amount of the loan. The money is not taken from anyone else's deposit; it was not previously paid in to the bank by anyone. It's new money, created by the bank for the use of the borrower.
How did this scheme originate, and how has it been concealed for so many years? To answer those questions, we need to go back to the seventeenth century.
The Shell Game of the Goldsmiths
In seventeenth century Europe, trade was conducted primarily in gold and silver coins. Coins were durable and had value in themselves, but they were hard to transport in bulk and could be stolen if not kept under lock and key. Many people therefore deposited their coins with the goldsmiths, who had the strongest safes in town. The goldsmiths issued convenient paper receipts that could be traded in place of the bulkier coins they represented. These receipts were also used when people who needed coins came to the goldsmiths for loans.
The mischief began when the goldsmiths noticed that only about 10 to 20 percent of their receipts came back to be redeemed in gold at any one time. They could safely "lend" the gold in their strongboxes at interest several times over, as long as they kept 10 to 20 percent of the value of their outstanding loans in gold to meet the demand. They thus created "paper money" (receipts for loans of gold) worth several times the gold they actually held. They typically issued notes and made loans in amounts that were four to five times their actual supply of gold. At an interest rate of 20 percent, the same gold lent five times over produced a 100 percent return every year, on gold the goldsmiths did not actually own and could not legally lend at all. If they were careful not to overextend this "credit," the goldsmiths could thus become quite wealthy without producing anything of value themselves. Since only the principal was lent into the money supply, more money was eventually owed back in principal and interest than the townspeople as a whole possessed. They had to continually take out loans of new paper money to cover the shortfall, causing the wealth of the town and eventually of the country to be siphoned into the vaults of the goldsmiths-turned-bankers, while the people fell progressively into their debt.8
Following this model, in nineteenth century America, private banks issued their own banknotes in sums up to ten times their actual reserves in gold. This was called "fractional reserve" banking, meaning that only a fraction of the total deposits managed by a bank were kept in "reserve" to meet the demands of depositors. But periodic runs on the banks when the customers all got suspicious and demanded their gold at the same time caused banks to go bankrupt and made the system unstable. In 1913, the private banknote system was therefore consolidated into a national banknote system under the Federal Reserve (or "Fed"), a privately-owned corporation given the right to issue Federal Reserve Notes and lend them to the U.S. government. These notes, which were issued by the Fed basically for the cost of printing them, came to form the basis of the national money supply.
Twenty years later, the country faced massive depression. The money supply shrank, as banks closed their doors and gold fled to Europe. Dollars at that time had to be 40 percent backed by gold, so for every dollar's worth of gold that left the country, 2.5 dollars in credit money also disappeared. To prevent this alarming deflationary spiral from collapsing the money supply completely, in 1933 President Franklin Roosevelt took the dollar off the gold standard. Today the Federal Reserve still operates on the "fractional reserve" system, but its "reserves" consist of nothing but government bonds (I.O.U.s or debts). The government issues bonds, the Federal Reserve issues Federal Reserve Notes, and they basically swap stacks, leaving the government in debt to a private banking corporation for money the government could have issued itself, debt-free.
Theft by Inflation
M3, the broadest measure of the U.S. money supply, shot up from $3.7 trillion in February 1988 to $10.3 trillion 14 years later, when the Fed quit reporting it. Why the Fed quit reporting it in March 2006 is suggested by John Williams in a website called "Shadow Government Statistics" (shadowstats.com), which shows that by the spring of 2007, M3 was growing at the astounding rate of 11.8 percent per year. Best not to publicize such figures too widely! The question posed here, however, is this: where did all this new money come from? The government did not step up its output of coins, and no gold was added to the national money supply, since the government went off the gold standard in 1933. This new money could only have been created privately as "bank credit" advanced as loans.
The problem with inflating the money supply in this way, of course, is that it inflates prices. More money competing for the same goods drives prices up. The dollar buys less, robbing people of the value of their money. This rampant inflation is usually blamed on the government, which is accused of running the dollar printing presses in order to spend and spend without resorting to the politically unpopular expedient of raising taxes. But as noted earlier, the only money the U.S. government actually issues are coins. In countries in which the central bank has been nationalized, paper money may be issued by the government along with coins, but paper money still composes only a very small percentage of the money supply. In England, where the Bank of England was nationalized after World War II, private banks continue to create 97 percent of the money supply as loans.9
Price inflation is only one problem with this system of private money creation. Another is that banks create only the principal but not the interest necessary to pay back their loans. Since virtually the entire money supply is created by banks themselves, new money must continually be borrowed into existence just to pay the interest owed to the bankers. A dollar lent at 5 percent interest becomes 2 dollars in 14 years. That means the money supply has to double every 14 years just to cover the interest owed on the money existing at the beginning of this 14 year cycle. The Federal Reserve's own figures confirm that M3 has doubled or more every 14 years since 1959, when the Fed began reporting it. 10 That means that every 14 years, banks siphon off as much money in interest as there was in the entire economy 14 years earlier. This tribute is paid for lending something the banks never actually had to lend, making it perhaps the greatest scam ever perpetrated, since it now affects the entire global economy. The privatization of money is the underlying cause of poverty, economic slavery, underfunded government, and an oligarchical ruling class that thwarts every attempt to shake it loose from the reins of power.
This problem can only be set right by reversing the process that created it. Congress needs to take back the Constitutional power to issue the nation's money. "Fractional reserve" banking needs to be eliminated, limiting banks to lending only pre-existing funds. If the power to create money were returned to the government, the federal debt could be paid off, taxes could be slashed, and needed government programs could be expanded. Contrary to popular belief, paying off the federal debt with new U.S. Notes would not be dangerously inflationary, because government securities are already included in the widest measure of the money supply. The dollars would just replace the bonds, leaving the total unchanged. If the U.S. federal debt had been paid off in fiscal year 2006, the savings to the government from no longer having to pay interest would have been $406 billion, enough to eliminate the $390 billion budget deficit that year with money to spare. The budget could have been met with taxes, without creating money out of nothing either on a government print press or as accounting entry bank loans. However, some money created on a government printing press could actually be good for the economy. It would be good if it were used for the productive purpose of creating new goods and services, rather than for the non-productive purpose of paying interest on loans. When supply (goods and services) goes up along with demand (money), they remain in balance and prices remain stable. New money could be added without creating price inflation up to the point of full employment. In this way Congress could fund much-needed programs, such as the development of alternative energy sources and the expansion of health coverage, while actually reducing taxes.
Money, Banks, and the Federal Resrve
It has been called "the most astounding piece of sleight of hand ever invented." The creation of money has been privatized, usurped from Congress by a private banking cartel. Most people think money is issued by fiat by the government, but that is not the case. Except for coins, which compose only about one one-thousandth of the total U.S. money supply, all of our money is now created by banks. Federal Reserve Notes (dollar bills) are issued by the Federal Reserve, a private banking corporation, and lent to the government.1 Moreover, Federal Reserve Notes and coins together compose less than 3 percent of the money supply. The other 97 percent is created by commercial banks as loans.2
Don't believe banks create the money they lend? Neither did the jury in a landmark Minnesota case, until they heard the evidence. First National Bank of Montgomery vs. Daly (1969) was a courtroom drama worthy of a movie script.3 Defendant Jerome Daly opposed the bank's foreclosure on his $14,000 home mortgage loan on the ground that there was no consideration for the loan. "Consideration" ("the thing exchanged") is an essential element of a contract. Daly, an attorney representing himself, argued that the bank had put up no real money for his loan. The courtroom proceedings were recorded by Associate Justice Bill Drexler, whose chief role, he said, was to keep order in a highly charged courtroom where the attorneys were threatening a fist fight. Drexler hadn't given much credence to the theory of the defense, until Mr. Morgan, the bank's president, took the stand. To everyone's surprise, Morgan admitted that the bank routinely created money "out of thin air" for its loans, and that this was standard banking practice. "It sounds like fraud to me," intoned Presiding Justice Martin Mahoney amid nods from the jurors. In his court memorandum, Justice Mahoney stated:
Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis, . . . did create the entire $14,000.00 in money and credit upon its own books by bookkeeping entry. That this was the consideration used to support the Note dated May 8, 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr. Morgan admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note.
The court rejected the bank's claim for foreclosure, and the defendant kept his house. To Daly, the implications were enormous. If bankers were indeed extending credit without consideration – without backing their loans with money they actually had in their vaults and were entitled to lend – a decision declaring their loans void could topple the power base of the world. He wrote in a local news article:
This decision, which is legally sound, has the effect of declaring all private mortgages on real and personal property, and all U.S. and State bonds held by the Federal Reserve, National and State banks to be null and void. This amounts to an emancipation of this Nation from personal, national and state debt purportedly owed to this banking system. Every American owes it to himself . . . to study this decision very carefully . . . for upon it hangs the question of freedom or slavery.
Needless to say, however, the decision failed to change prevailing practice, although it was never overruled. It was heard in a Justice of the Peace Court, an autonomous court system dating back to those frontier days when defendants had trouble traveling to big cities to respond to summonses. In that system (which has now been phased out), judges and courts were pretty much on their own. Justice Mahoney, who was not dependent on campaign financing or hamstrung by precedent, went so far as to threaten to prosecute and expose the bank. He died less than six months after the trial, in a mysterious accident that appeared to involve poisoning.4 Since that time, a number of defendants have attempted to avoid loan defaults using the defense Daly raised; but they have met with only limited success. As one judge said off the record:
If I let you do that – you and everyone else – it would bring the whole system down. . . . I cannot let you go behind the bar of the bank. . . . We are not going behind that curtain!5
From time to time, however, the curtain has been lifted long enough for us to see behind it. A number of reputable authorities have attested to what is going on, including Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s. He declared in an address at the University of Texas in 1927:
The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.
Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta in the Great Depression, wrote in 1934:
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.6
Graham Towers, Governor of the Bank of Canada from 1935 to 1955, acknowledged:
Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created -- brand new money.7
Robert B. Anderson, Secretary of the Treasury under Eisenhower, said in an interview reported in the August 31, 1959 issue of U.S. News and World Report:
[W]hen a bank makes a loan, it simply adds to the borrower's deposit account in the bank by the amount of the loan. The money is not taken from anyone else's deposit; it was not previously paid in to the bank by anyone. It's new money, created by the bank for the use of the borrower.
How did this scheme originate, and how has it been concealed for so many years? To answer those questions, we need to go back to the seventeenth century.
The Shell Game of the Goldsmiths
In seventeenth century Europe, trade was conducted primarily in gold and silver coins. Coins were durable and had value in themselves, but they were hard to transport in bulk and could be stolen if not kept under lock and key. Many people therefore deposited their coins with the goldsmiths, who had the strongest safes in town. The goldsmiths issued convenient paper receipts that could be traded in place of the bulkier coins they represented. These receipts were also used when people who needed coins came to the goldsmiths for loans.
The mischief began when the goldsmiths noticed that only about 10 to 20 percent of their receipts came back to be redeemed in gold at any one time. They could safely "lend" the gold in their strongboxes at interest several times over, as long as they kept 10 to 20 percent of the value of their outstanding loans in gold to meet the demand. They thus created "paper money" (receipts for loans of gold) worth several times the gold they actually held. They typically issued notes and made loans in amounts that were four to five times their actual supply of gold. At an interest rate of 20 percent, the same gold lent five times over produced a 100 percent return every year, on gold the goldsmiths did not actually own and could not legally lend at all. If they were careful not to overextend this "credit," the goldsmiths could thus become quite wealthy without producing anything of value themselves. Since only the principal was lent into the money supply, more money was eventually owed back in principal and interest than the townspeople as a whole possessed. They had to continually take out loans of new paper money to cover the shortfall, causing the wealth of the town and eventually of the country to be siphoned into the vaults of the goldsmiths-turned-bankers, while the people fell progressively into their debt.8
Following this model, in nineteenth century America, private banks issued their own banknotes in sums up to ten times their actual reserves in gold. This was called "fractional reserve" banking, meaning that only a fraction of the total deposits managed by a bank were kept in "reserve" to meet the demands of depositors. But periodic runs on the banks when the customers all got suspicious and demanded their gold at the same time caused banks to go bankrupt and made the system unstable. In 1913, the private banknote system was therefore consolidated into a national banknote system under the Federal Reserve (or "Fed"), a privately-owned corporation given the right to issue Federal Reserve Notes and lend them to the U.S. government. These notes, which were issued by the Fed basically for the cost of printing them, came to form the basis of the national money supply.
Twenty years later, the country faced massive depression. The money supply shrank, as banks closed their doors and gold fled to Europe. Dollars at that time had to be 40 percent backed by gold, so for every dollar's worth of gold that left the country, 2.5 dollars in credit money also disappeared. To prevent this alarming deflationary spiral from collapsing the money supply completely, in 1933 President Franklin Roosevelt took the dollar off the gold standard. Today the Federal Reserve still operates on the "fractional reserve" system, but its "reserves" consist of nothing but government bonds (I.O.U.s or debts). The government issues bonds, the Federal Reserve issues Federal Reserve Notes, and they basically swap stacks, leaving the government in debt to a private banking corporation for money the government could have issued itself, debt-free.
Theft by Inflation
M3, the broadest measure of the U.S. money supply, shot up from $3.7 trillion in February 1988 to $10.3 trillion 14 years later, when the Fed quit reporting it. Why the Fed quit reporting it in March 2006 is suggested by John Williams in a website called "Shadow Government Statistics" (shadowstats.com), which shows that by the spring of 2007, M3 was growing at the astounding rate of 11.8 percent per year. Best not to publicize such figures too widely! The question posed here, however, is this: where did all this new money come from? The government did not step up its output of coins, and no gold was added to the national money supply, since the government went off the gold standard in 1933. This new money could only have been created privately as "bank credit" advanced as loans.
The problem with inflating the money supply in this way, of course, is that it inflates prices. More money competing for the same goods drives prices up. The dollar buys less, robbing people of the value of their money. This rampant inflation is usually blamed on the government, which is accused of running the dollar printing presses in order to spend and spend without resorting to the politically unpopular expedient of raising taxes. But as noted earlier, the only money the U.S. government actually issues are coins. In countries in which the central bank has been nationalized, paper money may be issued by the government along with coins, but paper money still composes only a very small percentage of the money supply. In England, where the Bank of England was nationalized after World War II, private banks continue to create 97 percent of the money supply as loans.9
Price inflation is only one problem with this system of private money creation. Another is that banks create only the principal but not the interest necessary to pay back their loans. Since virtually the entire money supply is created by banks themselves, new money must continually be borrowed into existence just to pay the interest owed to the bankers. A dollar lent at 5 percent interest becomes 2 dollars in 14 years. That means the money supply has to double every 14 years just to cover the interest owed on the money existing at the beginning of this 14 year cycle. The Federal Reserve's own figures confirm that M3 has doubled or more every 14 years since 1959, when the Fed began reporting it. 10 That means that every 14 years, banks siphon off as much money in interest as there was in the entire economy 14 years earlier. This tribute is paid for lending something the banks never actually had to lend, making it perhaps the greatest scam ever perpetrated, since it now affects the entire global economy. The privatization of money is the underlying cause of poverty, economic slavery, underfunded government, and an oligarchical ruling class that thwarts every attempt to shake it loose from the reins of power.
This problem can only be set right by reversing the process that created it. Congress needs to take back the Constitutional power to issue the nation's money. "Fractional reserve" banking needs to be eliminated, limiting banks to lending only pre-existing funds. If the power to create money were returned to the government, the federal debt could be paid off, taxes could be slashed, and needed government programs could be expanded. Contrary to popular belief, paying off the federal debt with new U.S. Notes would not be dangerously inflationary, because government securities are already included in the widest measure of the money supply. The dollars would just replace the bonds, leaving the total unchanged. If the U.S. federal debt had been paid off in fiscal year 2006, the savings to the government from no longer having to pay interest would have been $406 billion, enough to eliminate the $390 billion budget deficit that year with money to spare. The budget could have been met with taxes, without creating money out of nothing either on a government print press or as accounting entry bank loans. However, some money created on a government printing press could actually be good for the economy. It would be good if it were used for the productive purpose of creating new goods and services, rather than for the non-productive purpose of paying interest on loans. When supply (goods and services) goes up along with demand (money), they remain in balance and prices remain stable. New money could be added without creating price inflation up to the point of full employment. In this way Congress could fund much-needed programs, such as the development of alternative energy sources and the expansion of health coverage, while actually reducing taxes.
Don't believe banks create the money they lend? Neither did the jury in a landmark Minnesota case, until they heard the evidence. First National Bank of Montgomery vs. Daly (1969) was a courtroom drama worthy of a movie script.3 Defendant Jerome Daly opposed the bank's foreclosure on his $14,000 home mortgage loan on the ground that there was no consideration for the loan. "Consideration" ("the thing exchanged") is an essential element of a contract. Daly, an attorney representing himself, argued that the bank had put up no real money for his loan. The courtroom proceedings were recorded by Associate Justice Bill Drexler, whose chief role, he said, was to keep order in a highly charged courtroom where the attorneys were threatening a fist fight. Drexler hadn't given much credence to the theory of the defense, until Mr. Morgan, the bank's president, took the stand. To everyone's surprise, Morgan admitted that the bank routinely created money "out of thin air" for its loans, and that this was standard banking practice. "It sounds like fraud to me," intoned Presiding Justice Martin Mahoney amid nods from the jurors. In his court memorandum, Justice Mahoney stated:
Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis, . . . did create the entire $14,000.00 in money and credit upon its own books by bookkeeping entry. That this was the consideration used to support the Note dated May 8, 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr. Morgan admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note.
The court rejected the bank's claim for foreclosure, and the defendant kept his house. To Daly, the implications were enormous. If bankers were indeed extending credit without consideration – without backing their loans with money they actually had in their vaults and were entitled to lend – a decision declaring their loans void could topple the power base of the world. He wrote in a local news article:
This decision, which is legally sound, has the effect of declaring all private mortgages on real and personal property, and all U.S. and State bonds held by the Federal Reserve, National and State banks to be null and void. This amounts to an emancipation of this Nation from personal, national and state debt purportedly owed to this banking system. Every American owes it to himself . . . to study this decision very carefully . . . for upon it hangs the question of freedom or slavery.
Needless to say, however, the decision failed to change prevailing practice, although it was never overruled. It was heard in a Justice of the Peace Court, an autonomous court system dating back to those frontier days when defendants had trouble traveling to big cities to respond to summonses. In that system (which has now been phased out), judges and courts were pretty much on their own. Justice Mahoney, who was not dependent on campaign financing or hamstrung by precedent, went so far as to threaten to prosecute and expose the bank. He died less than six months after the trial, in a mysterious accident that appeared to involve poisoning.4 Since that time, a number of defendants have attempted to avoid loan defaults using the defense Daly raised; but they have met with only limited success. As one judge said off the record:
If I let you do that – you and everyone else – it would bring the whole system down. . . . I cannot let you go behind the bar of the bank. . . . We are not going behind that curtain!5
From time to time, however, the curtain has been lifted long enough for us to see behind it. A number of reputable authorities have attested to what is going on, including Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s. He declared in an address at the University of Texas in 1927:
The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.
Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta in the Great Depression, wrote in 1934:
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.6
Graham Towers, Governor of the Bank of Canada from 1935 to 1955, acknowledged:
Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created -- brand new money.7
Robert B. Anderson, Secretary of the Treasury under Eisenhower, said in an interview reported in the August 31, 1959 issue of U.S. News and World Report:
[W]hen a bank makes a loan, it simply adds to the borrower's deposit account in the bank by the amount of the loan. The money is not taken from anyone else's deposit; it was not previously paid in to the bank by anyone. It's new money, created by the bank for the use of the borrower.
How did this scheme originate, and how has it been concealed for so many years? To answer those questions, we need to go back to the seventeenth century.
The Shell Game of the Goldsmiths
In seventeenth century Europe, trade was conducted primarily in gold and silver coins. Coins were durable and had value in themselves, but they were hard to transport in bulk and could be stolen if not kept under lock and key. Many people therefore deposited their coins with the goldsmiths, who had the strongest safes in town. The goldsmiths issued convenient paper receipts that could be traded in place of the bulkier coins they represented. These receipts were also used when people who needed coins came to the goldsmiths for loans.
The mischief began when the goldsmiths noticed that only about 10 to 20 percent of their receipts came back to be redeemed in gold at any one time. They could safely "lend" the gold in their strongboxes at interest several times over, as long as they kept 10 to 20 percent of the value of their outstanding loans in gold to meet the demand. They thus created "paper money" (receipts for loans of gold) worth several times the gold they actually held. They typically issued notes and made loans in amounts that were four to five times their actual supply of gold. At an interest rate of 20 percent, the same gold lent five times over produced a 100 percent return every year, on gold the goldsmiths did not actually own and could not legally lend at all. If they were careful not to overextend this "credit," the goldsmiths could thus become quite wealthy without producing anything of value themselves. Since only the principal was lent into the money supply, more money was eventually owed back in principal and interest than the townspeople as a whole possessed. They had to continually take out loans of new paper money to cover the shortfall, causing the wealth of the town and eventually of the country to be siphoned into the vaults of the goldsmiths-turned-bankers, while the people fell progressively into their debt.8
Following this model, in nineteenth century America, private banks issued their own banknotes in sums up to ten times their actual reserves in gold. This was called "fractional reserve" banking, meaning that only a fraction of the total deposits managed by a bank were kept in "reserve" to meet the demands of depositors. But periodic runs on the banks when the customers all got suspicious and demanded their gold at the same time caused banks to go bankrupt and made the system unstable. In 1913, the private banknote system was therefore consolidated into a national banknote system under the Federal Reserve (or "Fed"), a privately-owned corporation given the right to issue Federal Reserve Notes and lend them to the U.S. government. These notes, which were issued by the Fed basically for the cost of printing them, came to form the basis of the national money supply.
Twenty years later, the country faced massive depression. The money supply shrank, as banks closed their doors and gold fled to Europe. Dollars at that time had to be 40 percent backed by gold, so for every dollar's worth of gold that left the country, 2.5 dollars in credit money also disappeared. To prevent this alarming deflationary spiral from collapsing the money supply completely, in 1933 President Franklin Roosevelt took the dollar off the gold standard. Today the Federal Reserve still operates on the "fractional reserve" system, but its "reserves" consist of nothing but government bonds (I.O.U.s or debts). The government issues bonds, the Federal Reserve issues Federal Reserve Notes, and they basically swap stacks, leaving the government in debt to a private banking corporation for money the government could have issued itself, debt-free.
Theft by Inflation
M3, the broadest measure of the U.S. money supply, shot up from $3.7 trillion in February 1988 to $10.3 trillion 14 years later, when the Fed quit reporting it. Why the Fed quit reporting it in March 2006 is suggested by John Williams in a website called "Shadow Government Statistics" (shadowstats.com), which shows that by the spring of 2007, M3 was growing at the astounding rate of 11.8 percent per year. Best not to publicize such figures too widely! The question posed here, however, is this: where did all this new money come from? The government did not step up its output of coins, and no gold was added to the national money supply, since the government went off the gold standard in 1933. This new money could only have been created privately as "bank credit" advanced as loans.
The problem with inflating the money supply in this way, of course, is that it inflates prices. More money competing for the same goods drives prices up. The dollar buys less, robbing people of the value of their money. This rampant inflation is usually blamed on the government, which is accused of running the dollar printing presses in order to spend and spend without resorting to the politically unpopular expedient of raising taxes. But as noted earlier, the only money the U.S. government actually issues are coins. In countries in which the central bank has been nationalized, paper money may be issued by the government along with coins, but paper money still composes only a very small percentage of the money supply. In England, where the Bank of England was nationalized after World War II, private banks continue to create 97 percent of the money supply as loans.9
Price inflation is only one problem with this system of private money creation. Another is that banks create only the principal but not the interest necessary to pay back their loans. Since virtually the entire money supply is created by banks themselves, new money must continually be borrowed into existence just to pay the interest owed to the bankers. A dollar lent at 5 percent interest becomes 2 dollars in 14 years. That means the money supply has to double every 14 years just to cover the interest owed on the money existing at the beginning of this 14 year cycle. The Federal Reserve's own figures confirm that M3 has doubled or more every 14 years since 1959, when the Fed began reporting it. 10 That means that every 14 years, banks siphon off as much money in interest as there was in the entire economy 14 years earlier. This tribute is paid for lending something the banks never actually had to lend, making it perhaps the greatest scam ever perpetrated, since it now affects the entire global economy. The privatization of money is the underlying cause of poverty, economic slavery, underfunded government, and an oligarchical ruling class that thwarts every attempt to shake it loose from the reins of power.
This problem can only be set right by reversing the process that created it. Congress needs to take back the Constitutional power to issue the nation's money. "Fractional reserve" banking needs to be eliminated, limiting banks to lending only pre-existing funds. If the power to create money were returned to the government, the federal debt could be paid off, taxes could be slashed, and needed government programs could be expanded. Contrary to popular belief, paying off the federal debt with new U.S. Notes would not be dangerously inflationary, because government securities are already included in the widest measure of the money supply. The dollars would just replace the bonds, leaving the total unchanged. If the U.S. federal debt had been paid off in fiscal year 2006, the savings to the government from no longer having to pay interest would have been $406 billion, enough to eliminate the $390 billion budget deficit that year with money to spare. The budget could have been met with taxes, without creating money out of nothing either on a government print press or as accounting entry bank loans. However, some money created on a government printing press could actually be good for the economy. It would be good if it were used for the productive purpose of creating new goods and services, rather than for the non-productive purpose of paying interest on loans. When supply (goods and services) goes up along with demand (money), they remain in balance and prices remain stable. New money could be added without creating price inflation up to the point of full employment. In this way Congress could fund much-needed programs, such as the development of alternative energy sources and the expansion of health coverage, while actually reducing taxes.
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