November 9th, 2006

Financial Conspiracies

The following is from a talk on October 19, 2006 by Brian Farmer at the Red Lion Hotel, Salt Lake City, UT.

After an introduction, Brian Farmer’s talk begins:

Thank you for that flattering description of tonight’s speaker. As I was sitting off to the side here, listening to that introduction, I could not help but feel a bit embarrassed, because, you see, I’m basically a modest kind of guy. In fact, it’s that very modesty that prevents me mentioning my many other virtues! On the other hand, there are times when it doesn’t pay to be modest: such as when you’re applying for a job, for example. What you’ve just heard about me is the kind of information you would find in my resume. At this point, some of you may be thinking, “Gee, I wonder what he would put in his cover letter.”

Well, since the whole point of the resume and cover letter exercise is to “get that interview,” you have to project yourself as not only highly qualified, but also as so interesting that whoever is sifting through all of those boring applications will say, “Wow, I want to meet this person!” So, here is an example of what I might say in a cover letter:

“I am a dynamic figure, often seen spending my weekends scaling mountains, and crushing ice. I have been known to remodel office cubicles on my lunch breaks, making them more efficient in the area of heat retention. I can cook Minute Rice in forty seconds. I once single-handedly defended a small village on the Amazon River from a horde of ferocious army ants, using only a shovel and a large glass of water. I enjoy urban hang gliding. I can hurl tennis rackets at small moving objects with deadly accuracy. I know the exact location of every food item in the supermarket. On Friday nights, to let off steam, I participate in full-contact karaoke. I have made extraordinary four-course meals, using only a toaster. Small children, and even my wife, trust me.”

And that, ladies and gentlemen, leads us to the topic of my presentation. Because, when I told my wife that I was going on a speaking tour, and that the topic of my speech was going to be about a monetary conspiracy, she asked me two questions:
1) “Can I get a ‘Brian Farmer World Tour’ T-shirt”? Unfortunately, I had to disabuse her of certain misconceptions. Her second question was more to the point:
2) “Why do you have to keep using that word ‘conspiracy’? It makes you sound like some kind of paranoid nut case.”

So, I asked her what term I should use, instead of “conspiracy.” After a long pause, she replied, “I guess I’ll have to go and look that word up.”

I then assured my wife that she did not need to do that, as I had already done it, and proceeded to explain it to her. Finally, she said, “Well, in that case, I guess it would be okay.”

After that experience, it occurred to me that it would be useful for us here tonight to define what we mean by the term “conspiracy,” so that we really understand what we are talking about. The dictionary defines a conspiracy as “a secret agreement among a group of persons, in order to promote or protect selfish interests.” We can see, then, that a conspiracy is composed of three elements:
1) secrecy,
2) the involvement of more than one person, and
3) selfish motives, that is, the seeking of personal gain at the expense of others.
And that is precisely what I am going to be talking about.

Our story begins much as Charlie Brown’s dog Snoopy began his story, typing away on the roof of his dog house: “It was a dark and stormy night.…” The time was November of 1910; the scene was a New Jersey railway station. The last Southbound of the day was preparing for departure around 10:00 p.m. At a siding near the far end of the platform stood a car that looked quite different from the other cars at the station. Its gleaming black paint was accented with brass fittings, and on the center of each side was a plaque bearing the single word: ALDRICH. This was the private car of Senator Nelson Aldrich of Rhode Island, one of the most powerful men in Washington. He was the Republican “whip” in the Senate, and Chairman of the National Monetary Commission. As an investment associate of J.P. Morgan, Aldrich was considered to be the political spokesman for big business. And he was closely connected to the Rockefeller’s: His grandson, Nelson Aldrich Rockefeller, would eventually become Governor of New York, and, ultimately, Vice-President of the United States.

Shortly after Senator Aldrich boarded his car that night, several more passengers joined him. These fellow travelers had been instructed to arrive separately, to pretend that they did not know each other, and to avoid reporters. They had also been told that, once inside the car, they were to address each other only by their first names, so as not to reveal each other’s identity to the porters and servants.

Back at the main gate, the southbound train began its departure. But no sooner had it cleared the platform, when it suddenly came to a stop, reversed direction, and began moving back toward the station. Soon the slam of couplers could be heard, and most of the passengers on the train probably assumed that the mail car was being coupled to the end of the train. The forward motion quickly resumed, and the passengers finally settled down for the long trip ahead. Little did they know that, riding in the car at the end of their train were seven men who represented an estimated one-fourth of the total wealth of the entire world.

Who, then, were Senator Aldrich’s six fellow travelers that night?
1. Abraham Piatt Andrew, Assistant Secretary of the United States Treasury;
2. Frank A. Vanderlip, president of the National City Bank of New York, the most powerful of the banks at that time, representing William Rockefeller and the international investment banking house of Kuhn, Loeb & Company;
3. Henry P. Davison, senior partner of the J.P. Morgan Company;
4. Charles D. Norton, president of J.P. Morgan’s First National Bank of New York;
5. Benjamin Strong, head of J.P. Morgan’s Bankers Trust Company; and
6. Paul M. Warburg, a partner in Kuhn, Loeb & Company, a representative of the Rothschild banking dynasty in England and France, and brother of Max Warburg, who was head of the Warburg banking consortium in Germany and the Netherlands.

(Speaking of the Rothschild dynasty, it is worth noting that one of the Rothschild’s was supposed to have said, “Let me issue and control a nation’s money and I care not who writes the laws.” As it turned out, that was a hint, as to what these men were up to.)

At this point, it might be interesting to provide a little background on the man whose name popped up several times on that list: J.P. Morgan. Obviously, this guy was a major league heavy hitter, since he was represented by half of the guests in that group. J.P. Morgan was born in Hartford, Connecticut in 1837. Morgan was never popular at school, and his arrogant manner failed to impress his classmates, just as it would later alienate the American public. His habits, such as writing to Paris in fluent French to order a pair of $900 boots, only served to confirm the impression of his arrogance. Beginning in 1857, he worked as an agent and attorney for several financial firms in New York, and escaped military service during the Civil War, by paying $300 to a substitute. Finally, in 1893, Morgan became senior partner in Drexel, Morgan & Co.

In 1895 the firm became J.P. Morgan & Co. and went on to become one of the most powerful banking houses in the world. Its accomplishments were numerous. J.P. Morgan & Co. financed the formation of the United States Steel Corporation, the world’s first billion-dollar corporation. Morgan arranged the corporate merger that resulted in the formation of the corporation that we now know as General Electric. J.P. Morgan & Co. purchased several shipping lines, creating an Atlantic shipping combine that eventually became the owner of the White Star Line, which was the builder and operator of the famous passenger liner RMS Titanic. For those of you who enjoy interesting bits of trivia, Morgan was supposed to be on the maiden voyage of the Titanic. But because of business on the continent, he had to remain in Europe longer than originally planned. These unexpected developments happened so close to the Titanic’s departure that his luggage had already been loaded on board, and went down with the ship.

J.P. Morgan & Co. bought and reorganized four of the five major American railroads. In 1912, a Congressional committee found that the partners of J.P. Morgan & Co., along with the directors of the two largest New York banks dominated by Morgan, controlled total resources of more than $22 billion. At that time, this sum was comparable to the value of all the property in the twenty-two states west of the Mississippi River.

In his satirical history of the United States, It All Started with Columbus, Richard Armour commented that “Morgan, who was a direct sort of person, made his money in money… Morgan became immensely wealthy because of his financial interests… This Morgan is usually spoken of as ‘J.P.’ to distinguish him from Henry Morgan, the pirate.”

And now, back to our story…

The aforementioned elite group of financiers was embarked on a thousand-mile train journey that ultimately brought them to the small town of Brunswick, Georgia. Just off the coast from Brunswick was one of the islands that sheltered the eastern seaboard, from South Carolina down to Florida, and that had become popular as winter resorts for the very wealthy from up North. This particular island had recently been purchased by J.P. Morgan and some of his business associates. It was called Jekyll Island.

Even after arrival at the remote island lodge, the secrecy continued. For nine days, these men continued to address each other by their first names only. In addition, the regular full-time caretakers and servants had been given vacation, and a new, carefully screened staff had been brought in for the occasion. This was done, to ensure that none of the servants might recognize the identities of these special guests. The reason for all of this secrecy was very simple: If it became known that rival factions of the banking community had met together, the public would have been alerted to the possibility that the bankers were plotting an agreement to limit competition, enhance profits, and who knows what else. As it turned out, that is exactly what they did. Out of this meeting came the blueprint for the Federal Reserve System.

At this point, you may be wondering, “If this meeting was so secret, then how do we know that it actually took place?” Well, as Ben Franklin put it, “Three can keep a secret, if two of them are dead.” Eventually, a secret leaks out. The first leak about this meeting found its way into print in 1916, six years after the Jekyll Island meeting, and three years after the Federal Reserve Act had been approved by Congress. It appeared in an article written by B.C. Forbes, a young financial reporter, who later founded Forbes Magazine. The article was primarily in praise of Paul Warburg, who apparently let the story out, during conversations with the writer, because the opening paragraph contained this dramatic but accurate summary of the nature and purpose of the meeting:

Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily hastening hundreds of miles South, embarking on a mysterious launch, sneaking on to an island deserted by all but a few servants, living there for a full week under such rigid secrecy, that the names of not one of them was once mentioned lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing. I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written.

Later, in 1930, Paul Warburg himself wrote a massive book, almost two thousand pages in length, entitled The Federal Reserve System, Its Origin and Growth, in which he described the meeting and its purpose. And in the February 9, 1935 issue of the Saturday Evening Post, there appeared an article written by another attendee of that secret meeting. In that article, Frank Vanderlip stated the following:

Despite my views about the value to society of greater publicity for the affairs of corporations, there was an occasion, near the close of 1910, when I was as secretive-indeed, as furtive-as any conspirator…. I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of what eventually became the Federal Reserve System….
We were told to leave our last names behind us. We were told, further, that we should avoid dining together on the night of our departure. We were instructed to come one at a time and as unobtrusively as possible to the railroad terminal on the New Jersey side of the Hudson, where Senator Aldrich’s private car would be in readiness, attached to the rear end of a train for the South….
Once aboard the private car we began to observe the taboo that had been fixed on last names. We addressed one another as Ben, Paul, Nelson, Abe. Davison and I adopted even deeper disguises, abandoning our first names. On the theory that we were always right, he became Wilbur and I became Orville, after those two aviation pioneers, the Wright brothers….
The servants and train crew may have known the identities of one or two of us, but they did not know all, and it was the names of all printed together that would have made our mysterious journey significant in Washington, on Wall Street, even in London. Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.

There you have it, ladies and gentlemen, straight from the horse’s mouth. Conspiracy theory? No, conspiracy fact!

So, what was so special about this “banking bill”? Well, what those seven men hammered out during their sojourn on Jekyll Island was nothing less than an agreement on the structure and operation of a banking cartel. As with all cartels, the goal was to come up with an agreement that would maximize profits, by minimizing competition among rival members. But what compelled them to do this? What was going on back then that made these men feel so threatened?

For one thing, the number of banks was growing at a phenomenal rate. During the first decade of the twentieth century, the number of banks had doubled to twenty thousand. Furthermore, most of them were springing up in the South and West, causing the New York banks to experience a decline in market share. That was a trend that the New York bankers wanted to stop, if not reverse.

Competition was also coming from a trend in industry to finance growth out of retained earnings, or profits, rather than borrowing from the banks. By 1910, the year of the Jekyll Island meeting, something like seventy percent of the funding for America’s corporate growth was generated internally, making industry increasingly independent of the banks. Even the federal government was becoming thrifty: It had a growing stockpile of gold, and was reducing the national debt. The reduction of corporate and government debt was another trend that the New York bankers wanted to halt and reverse.
But the biggest threat came from the general public, in the form of bank runs. Now, what is a bank run, and how does it work? When you deposit money in a bank, you will usually deposit it into a checking account. You have the right to take your money out of such an account on demand, at any time. However, banks do not keep all of the money in these so-called “demand deposit accounts” stored in a vault, as reserves against withdrawals. Instead they use that money to create loans, or invest it in other income-generating assets. So, at any given time, a bank can only pay out a small fraction of those deposits. The system of demand deposits works quite well, unless a large number of people demand to take their money out of the bank at the same time. This generally does not happen, unless people begin to think that their money is no longer safe in the bank. So, a bank run typically occurs, when the depositors believe that a bank may go insolvent and, if they do not take their money out right away, they may lose it all.
Bank runs sometimes occurred, because there were no strict regulations back then about how much a bank had to keep in reserve, and there was no deposit insurance, so, public confidence in banks was not as high as it is today. In the absence of such regulations, some banks pursued very aggressive lending practices, in order to maximize their profits. News of a major loan default could spark a run on a bank and that, in turn, could spark runs on other banks, leading to a financial panic. In fact, such a panic had taken place in October of 1907. Complete ruin of the national economy was averted, when J.P. Morgan stepped in to meet the crisis. Morgan organized a team of bank and trust executives that redirected money between banks, secured international lines of credit, and bought the plummeting stocks of healthy corporations. Within a few weeks the panic passed, and by February of 1908, confidence in the economy was restored. In May of 1908, Congress passed legislation that established the National Monetary Commission, to investigate the panic, and to propose legislation to regulate banking. The chairman of that Commission, as I pointed out earlier, was none other than Senator Nelson Aldrich. And that brings us right back to the secret meeting on Jekyll Island, where legislation to regulate banking was being drawn up by, that’s right, bankers!
In attempting to form a banking cartel, these conspirators were well aware that a cartel is not self-sustaining and not self-regulating. That’s because, with the passage of time, one member invariably becomes stronger than the others and tries to cheat on the deal that formed the cartel in the first place. In order for this cartel to work, it would have to be sustained and regulated by the federal government, and the legislation creating this cartel would have to be enacted under the deception that it would be for the protection of the public.
In summary, these were the main challenges that faced that small but powerful group assembled on Jekyll Island:
1. How to stop the growing influence of small, rival banks and ensure that control over the nation’s financial resources would remain in the hands of the big New York banks;
2. How to reverse the trend of private capital formation and recapture the industrial loan market;
3. How to protect the banking industry from bank runs;
4. In the event of a bank failure, how to shift the losses from the bank to the taxpayers;
5. How to convince Congress that the scheme was a measure to protect the public.

It was understood that the bankers would have to become partners with the politicians, and that the structure of the cartel would have to be that of a central bank. To cover up the fact that a central bank is merely a cartel that has been legalized, its backers had to lay down a thick smoke screen of misleading jargon, focusing on how it would supposedly benefit commerce, the public, and the nation by:
1. Promoting full employment,
2. Bringing stability to the banking system,
3. Lowering interest rates,
4. Providing funds for beneficial industrial projects,
5. Preventing financial panics in the economy, and so on.
Those were to be the stated goals of the legislation that they were drawing up, the goals that they would use to deceive Congress and the public. There had to be not the slightest hint that their master plan was really designed to serve private interests at the expense of the public.

For starters, if the name of the scheme could incorporate words that were emotionally neutral, perhaps even alluring, then half of the battle would be won. For purposes of public relations, and to ease passage of the banking legislation that they were drafting, they would devise a name that would avoid the word “bank” altogether, and conjure up the image of a government operation. That led to the generation of the first word, “Federal.” The second word, “Reserve,” was designed to give the impression that monetary reserves existed somewhere, which would give the appearance of financial soundness. Finally, they came up with the word, “System,” to generate the image of a strong, extensive, and well-organized network. As a further ploy, a structure of twelve regional institutions was conceived, to create the illusion of decentralization.

A disagreement arose at the Jekyll Island meeting over the name to be given to the proposed legislation. Paul Warburg wanted it to be called the National Reserve Bill or the Federal Reserve Bill, which would conjure up the desired psychological imagery of government and reserves. But Aldrich wanted his name attached to the bill, arguing that, since he was chairman of the National Monetary Commission, which had been created specifically to make recommendations for banking reform, people would be confused, if his name were not associated with the bill. Warburg, on the other hand, pointed out that the Aldrich name was associated in the minds of the public with Wall Street interests, the so-called “Money Trust,” and that would be an unnecessary obstacle to passage of the bill. In the end, the politician’s ego won out over the banker’s logic.

Warburg turned out to be right, of course. Aldrich was already well known as a Republican spokesman for big business and banking, so, his name on a bill for banking reform was an easy target for the opposition. After the Aldrich Bill was submitted to the Senate, it was attacked as “the Wall Street Plan” sponsored by “the champion of the Money Trust.” The bill never even got out of committee for a vote. But the groundwork had been done, and power shifts in Washington would soon provide the opportunity for a second attempt at passage.

Republican President William Howard Taft, who would have been expected to support the Aldrich Bill, had refused to do so. This marked him for political extinction, because the Money Trust wanted a President who would aggressively promote the bill. For the election of 1912, the candidate selected to replace Taft was Woodrow Wilson, who had publicly declared his support for the plan. To make sure that Taft did not win his bid for re-election, the Money Trust encouraged the former Republican President, Teddy Roosevelt, to run on the Progressive ticket. The result, as planned, was that Roosevelt pulled enough Republican votes away from Taft to hand Wilson the election. Both Wilson and Roosevelt had campaigned vigorously against the evils of the Money Trust, while being dependent on the Money Trust for campaign funding. Obviously, to describe the election of 1912 as a textbook example of power politics and voter deception would be an understatement.

After Wilson was elected, the Aldrich Bill was given cosmetic surgery, and re-emerged as the Glass-Owen Bill. Although now sponsored by two Democrats, it was essentially still the Jekyll Island plan. New York bankers put on a show of opposing this revised legislation, in order to try and convince Congress, and the public, that they were fearful of it. The new bill actually was written with many sound features, which were included to make it more acceptable, during Congressional debate, but which were designed to be dropped in later years. In other words, the strategy was to “get something on paper, anything, and we can change it later, when nobody is paying attention anymore.” To win the support of the Populists under William Jennings Bryan, the Jekyll Island team also engineered what appeared to be compromises, but actually were, as President Wilson called them, mere “shadows,” while the “substance” that the bankers wanted remained. In short, Congress was bamboozled by a cunning psychological and political scheme.

The bill was finally released from the joint House and Senate conference committee on December 22, 1913, just as Congress was preoccupied with departure for the Christmas recess, and in no mood for debate. It quickly passed in the House and in the Senate, and President Wilson signed it into law the next day. The Creature from Jekyll Island was finally unleashed.

What are the consequences of this historic event? The bottom line is that Congress and the Money Trust entered into a partnership in which Congress has access to unlimited funding, without having to openly reveal to voters that they are being taxed, through the process of monetary inflation, and the banking system has the privilege of collecting interest on money that is created out of virtually nothing. To see how this is done, we will walk through an example. But, before we jump into this, a word of warning: Don’t expect the mechanics of this process to make any sense. A process does not have to make sense, in order to be advantageous and profitable to those in control. Okay, let’s begin….

Congress ordinarily gets the money it spends from the U.S. Treasury Department. But there are times when the Treasury Department reports that the money collected through taxation is not sufficient to cover federal government spending. No problem. The Government Printing Office steps forward with pieces of paper called Treasury Bonds or Treasury Notes. Some of these bonds and notes are sold to the public, to financial institutions, and even to foreign entities, in short, to whomever wants to buy them. Whatever is not sold is taken to the Federal Reserve, where a check is written in exchange for them. There is no money in any account to cover this check! Anyone else doing this would be sent to prison. But it is legal for the Fed, because Congress wants the money, and this is the easiest and sneakiest way to get it. To raise taxes would be political suicide, and to print very large amounts of currency would be too obvious and too controversial. By using the Federal Reserve, the process is mysteriously hidden away inside the banking system.

The Federal Reserve check received by the government is then deposited in one of the twelve Federal Reserve banks. The funds now in the government’s account are used to pay government expenses. Recipients of these government checks deposit them into their own bank accounts. Then through the magic of so-called “fractional reserve banking,” these commercial bank deposits play a very lucrative role for the banks. How? It works like this….

The banks are permitted by the Fed to hold only a small fraction of their deposits in reserve, as little as 10%. So, for example, if a bank receives $1,000,000 in deposits, it only needs to keep $100,000 on hand as reserves, which means that the remaining $900,000 are available for lending. That $900,000 moves out into the economy as loans, but eventually works its way back into the banking system as deposits. The process now repeats, with 10% of the $900,000 (that is, $90,000) becoming reserves, allowing the remaining $810,000 to be used for lending. This process repeats itself over and over until it reaches its maximum effect, which is that the total amount of money created by the Federal Reserve and the commercial banks can be up to ten times the amount of the original government debt that was funded by the Fed.

When this newly created money flows into the economy, it causes the purchasing power of all money, both old and new, to decline. Prices of goods and services go up, because the relative value of the money has gone down. The result is the same as if that purchasing power had been taken from us through direct taxation. Without realizing it, you have been paying, in addition to your income taxes, a hidden tax possibly greater than our national debt of almost $9 trillion! How can I make that claim? Consider the following: It turns out that the total amount of U.S. Treasury securities presently held by the Federal Reserve is almost $1.1 trillion. Given the theoretical 10:1 expansion of the money supply for every dollar of government debt funded by the Fed, that means that up to around $10 trillion of the total money supply could have been created out of thin air.

And that brings up the obvious question: What is the total money supply? Well, according to the Fed, it’s a wee bit more than $10 trillion. That means that almost all of the money now in existence was created out of thin air!

Who benefits from this process? The only beneficiaries are the politicians in Washington, who enjoy an unlimited source of funds, to perpetuate their power, and the bankers, who have been able to enrich themselves, by creating money from nothing, and then charging interest on it.

At this point, some of you may be wondering, “But haven’t we always had monetary inflation, and haven’t increases in wages and salaries pretty much kept up with that inflation?” We can answer the first question by using one of the inflation calculators easily found on the Internet. The one I used showed that, from 1913, when the Federal Reserve System was created, until 2005, a span of 92 years, what cost $100 in 1913 would have cost $1,911 in 2005. Or, to put it another way, what cost $100 in 2005 would have cost just $5.23 in 1913.

Now let’s go back 92 years from 1913 and see what kind of results we get. The inflation calculator shows that what cost $100 in 1821 would have cost $69 in 1913. That’s right; prices actually went down over those 92 years!? How could that be!? For one thing, the currency was not devalued during that time, because the U.S. was on the so-called “gold standard,” a monetary system in which the value of the dollar was fixed to a certain weight of gold. Also, this was a period of time when the U.S. economy was growing faster than the money supply, thanks to significant increases in productivity, after the start of the Industrial Revolution. And, of course, the Federal Reserve System was not operating, during that time.

So, to answer the first question, no, we have not always had monetary inflation. As for the second question, (Haven’t increases in wages and salaries pretty much kept up with inflation?) it appears that they have, because our standard of living today appears to be higher than it was 92 years ago. But our wage and salary increases come after the recognition that prices of goods and services have already increased, due to the injection of new money into the economy, by the federal government and the banking system. The benefits of this new money accrue primarily to the government and to the banks, not to the public. By the time you have gotten your pay raise, the purchasing power of that newly injected money has already been exploited by the government. As a result, you and I are left in the position of constantly trying to play catch-up. We can only try to imagine how much higher our standard of living would be, if all of that purchasing power had not been stolen from us.

To give you an idea of how much the banks have profited from this scheme, consider a thirty-year mortgage on a house, at an interest rate of 6.5%, which is approximately the going rate these days. To make the example simple, we will assume no down payment, which is also possible these days. So, if the loan amount were $200,000, then the monthly payment would be $1,264. At the end of 30 years, you would have paid a total of $455,040. Think about what that means. The amount of money that paid for the land, the building materials, and the labor that went into the construction of that house was $200,000. But the amount of money paid to those who provided nothing but the financing for the purchase of the property was even greater: $255,040! Now, you might argue that those who provided the money should be compensated for the so-called “time value of money,” or the “opportunity cost” of giving that money to you, rather than investing that money somewhere else and getting a return on it. But remember: The money you borrowed from the bank was not obtained through the sweat off the banker’s brow. That money sprung into existence the moment the loan was created, through a few keystrokes on a computer! The bank is charging interest on money created from nothing! But when you repay the loan, you repay it with money that you had to earn through the sweat off your brow. So, in effect, you have been turned into a slave!

The accepted version of history is that the Federal Reserve was created to stabilize our economy. One of the most widely-used textbooks on the subject, Economics, by Paul A. Samuelson, states:

It sprang from the panic of 1907, with its alarming epidemic of bank failures. The country was fed up once and for all with the anarchy of unstable private banking.

But, if you look at the record of the Fed since 1913, you see the irrational, speculative booms of the 1920s, 1980s, and 1990s; the crashes of 1929, 1987, and 2000; the Great Depression of the 1930s; numerous economic recessions; and a monetary inflation that has eroded 95% of the dollar’s purchasing power. And today, you see debt at historically unprecedented levels, both business and personal bankruptcies at an all-time high, interest on the national debt taking up 7% of the federal budget, our industrial base being shipped to China, and a trade deficit at a level that history shows always leads to a debased currency and a lower standard of living. To claim that the Fed has stabilized the U.S. economy, well, as Howard Cosell used to say on Monday night football, “It strains the credulity of a rational man.”

One can only conclude that the Fed is simply incapable of achieving its stated objectives. After all, over the 93 years of its existence, the Fed has had every opportunity to work out any procedural flaws. It has been able to experiment with the monetary theories put forward by economists; it has been able to exploit the more than one hundred revisions to its charter recommended by the experts; and it has been able to operate independently of either political party. That leads to an obvious question: Why is the Fed incapable of achieving its stated objectives? And the simple answer is: because those were never its true objectives! Remember, the Federal Reserve System is just a cartel with a government façade. Sure, those who run it would like to see full employment, high productivity, low inflation, and all of those good things that they claim the Fed promotes. After all, they don’t want to kill the goose that lays the golden eggs. But when there is a conflict between what is good for the public and what is good for the cartel, the cartel will always try to make sure that it comes out on top.

Recall the five true objectives of those conspirators on Jekyll Island:
1. To stop the growing influence of small, rival banks and ensure that control over the nation’s financial resources would remain in the hands of the big New York banks.
2. To reverse the trend of private capital formation and recapture the industrial loan market.
3. To protect the banking industry from bank runs.
4. To shift major loan losses from the banks to the taxpayers by way of government bailouts.
5. To convince Congress that the scheme was a measure to protect the public.
History shows that they have succeeded in accomplishing all of those objectives.

So, we can now begin to come up with a list of reasons for abolishing the Federal Reserve System:
1. As just pointed out, it is incapable of accomplishing its stated objectives, because they are in conflict with its true objectives.
2. As earlier shown, it is a cartel operating against the public interest.
3. Relating to those two points, its attempts to manipulate interest rates and the money supply actually serve to destabilize the economy.
4. Because of its ability to charge interest on money created from nothing, it is the supreme instrument of usury.
5. It generates our most unfair tax, because the poor are least able to protect themselves from the theft of their purchasing power through monetary inflation.

But it doesn’t stop there, because the Creature from Jekyll Island has siblings, and is an accomplice in their nefarious activities. The International Monetary Fund and the World Bank were created at a meeting of international financiers and politicians at Bretton Woods, New Hampshire, in 1944, during the closing months of World War II. They announced that these newly created institutions, funded primarily by the major industrialized nations, with the U.S. contributing the lion’s share, would act to help foster international trade, and stabilize currency exchange rates. In actual practice, these institutions help to exploit Third World countries, under the guise of loans allegedly made to foster economic development. Let’s look at a typical scenario, to show how the scam works.

A loan is offered to a Third World country by the World Bank, or any of a number of other international lending institutions, such as the U.S. government’s own Agency for International Development. From all outward appearances, the loan is designed to fund a necessary infrastructure project, such as the building of a road or rail system, an electrical power grid, or whatever. The underdeveloped country is lured into accepting a large loan, by way of exaggerated forecasts on the potential economic benefits from the project. This results in a lucrative contract going to some multinational construction company, such as Halliburton, or Bechtel, while the targeted country ends up with a loan it cannot repay, because the economic forecasts do not pan out.

When the country defaults, the lending agency, together with the governments that fund it (almost invariably the U.S.), step in to demand their pound of flesh. This can include control over U.N. votes, the installation of military bases, or access to natural resources. Never mind that these countries are all too often ruled by tyrants. The main thing is that they have been bought. As long as they play the game, they are allowed to stay in power, and rule over their impoverished subjects. Otherwise, they are overthrown and replaced by a more compliant puppet. If that doesn’t work, military action is taken. Ultimately, these kinds of loans are guaranteed by the U.S. taxpayer, because the U.S. government backs up the institutions that make the loans.

Again, you are probably wondering how I can make these claims with a straight face. I can, because someone who was intimately involved in the process has written a book about his experiences. In addition to that, after Confessions of an Economic Hit Man became a New York Times bestseller, the man who recruited the author was interviewed, and stated:

Basically, his story is true. What John [Perkin’s] book says is, there was a conspiracy to put all these countries on the hook, and that happened…. Many of these countries are still over the barrel and have never been able to repay the loans.

There you have it, ladies and gentlemen, straight from the horse’s mouth. Conspiracy theory? No, conspiracy fact!

Earlier I described how the banking system is able to make enormous profits, by charging interest on money created out of thin air. The bulk of these profits flows into the coffers of the so-called “money center” banks in New York. A logical question is: What is this money being used for? Well, we can get a hint, from an entry in the Congressional Record, by U.S. Congressman Oscar Callaway in 1917:

In March, 1915, the J.P. Morgan interests, the steel, shipbuilding, and powder interest, and their subsidiary organizations, got together 12 men high up in the newspaper world and employed them to select the most influential newspapers in the United States and sufficient number of them to control generally the policy of the daily press….They found it was only necessary to purchase the control of 25 of the greatest papers… An agreement was reached; the policy of the papers was bought, to be paid for by the month; an editor was furnished for each paper to properly supervise and edit information regarding the questions of preparedness, militarism, financial policies, and other things of national and international nature considered vital to the interests of the purchasers.

Yes, that river of wealth flowing to the money center banks is being used to buy influence, and gain control over politicians, political parties, the media, and other important institutions, in order to create a so-called “New World Order.” You think I’m off my rocker to say that? Well, guess what, David Rockefeller, former head of Chase Manhattan Bank, and another grandson of Senator Nelson Aldrich, recently had his memoirs published, in which he stated the following:

For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents, such as my encounter with Castro, to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.

There you have it, ladies and gentlemen, straight from the horse’s mouth. Conspiracy theory? No, conspiracy fact!

Time constraints require me to now come to the end of my presentation. I have tried to make the case that the Federal Reserve System needs to be abolished. It needs to be abolished, because it is the starting point of a process that will lead to the destruction of our nation. The chain of events begins with money created from nothing by a central bank, which leads to government debt, which causes inflation, which undermines the economy, which impoverishes the people, which provides an excuse for increasing government power, which is an on-going process that leads to a government so big that it can give you everything you want, and take everything you have. It is worth keeping in mind the warning attributed to George Washington:

Government is not reason; it is not eloquence; it is force! Like fire, it is a dangerous servant, and a fearful master.

So, what can we do to short-circuit this process? We have to start by educating the public about the problems created by the Federal Reserve System. Congress created this monster, and Congress can slay it. That power rests in the hands of only 535 people: 435 Representatives and 100 Senators. To control a majority, the voters would only have to influence the election of 268 people. By using the political freedom that still remains in our system, we can overthrow the government every two years without firing a shot.

But the campaign does not stop there. We also have to educate the public about the U.S. Constitution, and teach them the importance of taking it seriously. We have to instruct people how to become influential within their communities, and within the organizations to which they belong. We have to show how to convert that influence into changing public policy. This is where the John Birch Society comes into play. We have been following this strategy for decades, because it is the only strategy that will work.

Threats to your freedom are on the rise everywhere, because advocates of big government have taken leadership control of the power centers within our society. Power centers are institutions, organizations, and social groups, such as political parties, labor unions, church groups, the media, academia, professional societies, and all kinds of special interest groups that have political power, based on their claim to represent their members, and on their ability to mold public opinion.

The solution is to take back control of the power centers of society the same way they were captured in the first place, and put them into the hands of people who are more interested in freedom than in big government. To reach that goal, it will be necessary for those who love freedom to do more than complain. We must organize and we must act. That’s why the John Birch Society needs you, and why you need the John Birch Society.

The cynics will claim that it’s too late in the game to change the status quo. But the truth is that the status quo is constantly changing. And those changes can sometimes be dramatic. Consider that small, ragtag bunch at Valley Forge, during the winter of 1777-1778. They were up against the biggest and most powerful empire that the world had ever seen. Their cause seemed hopeless. But they hung in there, went on to victory, and launched the greatest and most successful political experiment in the history of the human race. When it comes to what a small group of committed and dedicated people can do, under dynamic leadership, the sky is the limit. So, do not listen to those who are cynical and apathetic! They are just trying to encourage you to do nothing. Remember what British statesman Edmund Burke said: “The only thing necessary for the triumph of evil is for good people to do nothing.”

Americans are allowing their nation to be stolen from right under their noses, because they do not understand what is happening. The starting point for any realistic plan for saving America is to awaken the people to what is happening, and to show them what they can do about it. That is what the John Birch Society is trying to do, and we invite you to join us, in this epic undertaking. Thank you.

One Response to “Financial Conspiracies”

  1. Dustin Davis
    November 13, 2006 at 12:41 pm #

    That was an interesting read for sure. Thanks Connor.

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