[A-List] Reviewing Ellen Brown's "Web of Debt"

[Bill Totten]

Part One

by Stephen Lendman

Countercurrents.org (May 06 2009)


This is the first of several articles on Ellen Brown's superb 2007 book
titled "Web of Debt", now updated in a December 2008 third edition. It
tells "the shocking truth about our money system, (how it) trapped us in
debt, and how we can break free". Given today's global economic crisis,
it's an appropriate time to review it and urge readers to digest the
entire work, easily gotten through Amazon or Brown's webofdebt.com site.
Her book is a remarkable achievement - in its scope, depth, and importance.

In the forward, banker/developer Reed Simpson said:

"I have been a banker for most of my career, and I can report that even
most bankers (don't know) what goes on behind (top echelon) closed doors
... I am more familiar than most with the issues (Brown covered, and)
still found it an eye-opener, a remarkable window into what is really
going on ... (Although many banks follow high ethical practices),
corruption is also rampant, (especially) in the large money center
banks, in one of which I worked."

"Credible evidence (reveals) a world (banking) power elite intent on
gaining absolute control over the planet and its natural resources,
including its subservient human (ones)". Money is their "lifeblood", and
"fear (their) weapon". Ill-used, they can "enslave nations and ensure
perpetual wars and bondage". Brown exposes the scheme and offers a solution.


Debt Bondage

What president Andrew Jackson called "a hydra-headed monster ..."
entraps entire nations in debt. Financial commentator Hans Schicht
listed how:

-- by making concentrated wealth invisible;

-- "exercising control through leverage(d) mergers, takeovers" or other
holdings "annexed to loans"; and

-- using a minimum of insider front-men to exercise "tight personal
management and control".

Powerful bankers want to rule the world by creating and controlling
money, the very lifeblood of world economies without which commerce
would cease. Professor Henry Liu calls the monetary system a "cruel
hoax" in that (except for government issued coins) "there is virtually
no 'real' money in the system, only debts" - to bankers "for money they
created with accounting entries ... all done by a sleight of hand", only
possible because governments empowered them to do it.

The solution is simple but untaken. As the Constitution mandates,
money-creation power must "be returned to the government and the people
it represents". Imagine the possibilities:

-- the federal debt could be eliminated, at least a more manageable
amount before it mushroomed to stratospheric levels;

-- federal income taxes could as well; entirely for low and middle
income people and at least substantially overall;

-- "social programs could be expanded ... without sparking runaway
inflation"; and

-- financial resources would be available to grow the nation
economically and produce stable prosperity.

It's not pie-in-the-sky. It happened successfully under Abraham Lincoln
and early colonists. More on that below.

Brown's book explains that:

-- the Federal Reserve isn't federal; it's a private banking cartel
owned by its major bank members in twelve Fed districts;

-- except for coins, they "create" money called Federal Reserve notes,
in violation of the Constitution under Article I, Section 8 that gives
Congress alone the right "To coin (create) money (and) regulate the
value thereof ...";

-- "tangible currency (coins and paper money comprise) less than three
percent of the US money supply"; the rest is in computer entries for loans;

-- money that banks lend is "new money" that didn't exist before;

-- thirty percent of bank-created money "is invested for their own
accounts";

-- banks once made productive loans for industrial development; today
they're "a giant betting machine" using countless trillions for
high-risk casino-type operations - through devices like derivatives and
securitization scams;

-- since Andrew Jackson's presidency (1829 - 1837), the federal debt
hasn't been paid, only the interest - to private bankers and other
owners of US obligations;

-- the 16th Amendment authorized Congress to levy an income tax; it was
done "to coerce (the public) to pay interest to the banks on the federal
debt";

-- the amount has mushroomed to about $500 billion annually and keeps
rising;

-- creating money doesn't cause inflation; it's "caused by banks
expanding the money supply with loans";

-- developing nations' inflation was caused "by global institutional
speculators attacking local currencies and devaluing them on
international markets";

-- it could happen in America or anywhere else just as easily; and

-- escaping this trap is simple if Washington reclaims its money-issuing
power; early colonists did it; so did Lincoln.

As long as bankers control our money, we'll remain in a permanent "web
of debt" and experience cycles of boom, bust, inflation, deflation,
instability and crisis. Yet none of this has to be nor repeated and
inevitable bubbles - created by design, not chance, to advantage
empowered "moneychangers", much like today with its fallout causing
global havoc.

Prior to the Fed's creation, the House of Morgan was dominant in
contrast to the early colonists' model. Operating out of Philadelphia,
the nation's first capital, it favored state-issued and loaned out
money, collecting the interest, and "return(ing) it to the provincial
government" in lieu of taxes.

Lincoln used the same system to finance the Civil War, after which he
was assassinated and bankers reclaimed their money-issuing power. Wall
Street's "silent coup (was) the passage of the (1913) Federal Reserve
Act", the most destructive ever congressional legislation, thereafter
extracting a huge toll amounting to permanent debt bondage with national
wealth transference from the public to private bankers - with most
people none the wiser.


>From Gold to Federal Reserve Notes

After the 1862 Legal Tender Act was rescinded (the so-called Greenback
law letting the government issue its own money), new legislation
replaced it empowering bankers by making all money again
interest-bearing. Here's the problem. "As long as the money supply (is
an interest-bearing) debt owed back to private bankers ... the nation's
wealth (will) continue to be drained off into private vaults, leaving
scarcity in its wake".

Dollars should belong to everyone. Early colonists invented them as "a
new form of paper currency backed by the 'full faith and credit' of the
people". Today, a private banking cartel issues them by "turning debt
into money and demanding" due interest be paid.

Ever since, it's controlled the nation and public by entrapment in
permanent debt bondage, and they do it through the Federal Reserve
that's neither federal nor has reserves. It doesn't have money. It
creates it with electronic entries, any amount at any time for any
purpose, the main one being to enrich its owner banks.

This body is a power unto itself, secretive, unaccountable, and
independent of congressional oversight or control. It's a money-creating
machine by turning debt into money, but only a small fraction of the
total money supply. Individual commercial banks create most of it.

A 1960s Chicago Fed booklet (called Modern Money Mechanics) explained
how - through "fractional reserve" alchemy. It states:

(Banks) do not really pay out loans from the money they receive as
deposits. If they did this, no additional money would be created. What
they do when they make loans is to accept promissory notes in exchange
for credits to the borrowers' transaction accounts."

Money is created by "building up" deposits in the form of loans. They,
in turn, become deposits, not the reverse. "This unique attribute of
banking" goes back centuries, the idea being that paper receipts could
be issued and loaned out for the same gold (in those days) many times
over, so long as enough gold was held in "reserve" so depositors had
access to their money. "This sleight of hand (became known) as
'fractional reserve' banking", using money to create multiples more of it.

As for credit market debt, William Hummel (on the web site Money: What
It Is, How It Works) explains that banks create only about twenty
percent of it. The rest is by other non-bank financial institutions,
including finance companies, pension and mutual funds, insurance
companies, and securities dealers. They "recycle pre-existing funds,
either by borrowing at a low interest rate and lending at a higher (one)
or by pooling (investor) money and lending it to borrowers". In other
words, just like banks, "they borrow low and lend high, pocketing the
'spread' as their profit".

But banks do more than borrow. They also "lend the deposits they acquire
... by crediting the borrower's account with a new deposit". Banks thus
increase total bank deposits that grow the money supply. It amounts to a
sleight of hand like "magically pull(ing) money out of an empty hat".

The US "money supply is the federal debt and cannot exist without it.
(To) keep money in the system, some major player has to incur
substantial debt that never gets paid back; and this role is played by
the federal government." It's why the nation's debt can't be repaid
under a banker-controlled system. Today's size and debt service
compounds the problem, around double the amount Brown cited, growing
exponentially to unimaginable levels.


Colonial Paper Money - Another Way Predating the Republic's Birth

In 1691, three years before the Bank of England's creation,
Massachusetts became "the first local government to issue its own paper
money ..." in the form of a "bill of credit bond or IOU ... to pay
tomorrow on a debt incurred today". This money "was backed by the full
'faith and credit' of the government".

Other colonies then did the same, some as IOUs redeemable in gold or
silver or as "legal tender" money to be legally accepted to pay debts.
Cotton Mather, a famous New England minister, later redefined money -
not as gold or silver, but as a credit: "the credit of the whole country".

Benjamin Franklin so embraced the "new medium of exchange" that he's
called "the father of paper money", then called "scrip". It made the
colonies independent of British banks and let them "finance their local
governments without" taxation. It was done in two ways, and most
colonies used both:

-- direct issue "bills of credit" or "treasury notes"; essentially
government-backed IOUs to be repaid by future taxes, with no interest
owed bankers or foreign lenders; "they were just credits issued and sent
into the economy on goods and services"; and

-- a system of generating "revenue in the form of interest by taking on
the lending functions of banks; a government loan office called a 'land
bank' (issued) paper money and (loaned) it to residents (usually
farmers) at low interest rates ... the interest paid ... went into the
public coffers, funding the government"; it was the preferred way to
assure a stable currency rather than by issuing "bills of credit".

Pennsylvania did it best. It's 1723-established loan office showed "it
was possible for the government to issue new money (in lieu of) taxes
without inflating prices". For over 25 years, it collected none at all.
The loan office provided adequate revenue, supplemented by liquor import
duties. Throughout the period, prices remained stable.

Prior to this system, Pennsylvania lost "both business and residents
(for) lack of available currency". With it, its population grew and
commerce prospered. The "secret was in not issuing too much, and in
recycling the money back to the government in the form of principal and
interest on government-issued loans".

Colony-based British merchants and financiers objected strongly to
Parliament. Enough so that in 1751, King George II banned new paper
money issuance to force colonists to borrow it from UK bankers. In 1764,
Franklin petitioned Parliament to lift the ban. In London, Bank of
England directors asked him to explain colonial prosperity at a time
Britain experienced rampant unemployment and poverty. It's because
Colonial Scrip was issued, he stated, "our own money" with no interest
owed to anyone. He added:

"You do not have too many workers, you have too little money in
circulation, and that which circulates, all bears the endless burden of
unrepayable debt and usury".

With banks loaning money into the economy, more was "owed back in
principle and interest than was lent in the original loans (so) there
was never enough in circulation to pay interest and still keep workers
fully employed". Unlike banks, government can both lend and spend money
in circulation - enough to pay "interest due on the money it lent,
(keep) the money supply in 'proper proportion' and (prevent) the
'impossible contract' problem (of having) more money owed back on loans
than was created (from) the loans themselves".

Franklin's efforts notwithstanding, the Bank of England got Parliament
to pass a Currency Act making it illegal for the colonies to issue their
own money. It turned prosperity into poverty because the money supply
was halved with not enough to pay for goods and services. According to
Franklin:

"the poverty caused by the bad influence of the English bankers on the
Parliament" got colonists to hate the British enough to spark the
Revolutionary War. "The colonies would gladly have borne the little tax
on tea and other matters (if) England (hadn't taken their money), which
created unemployment and dissatisfaction". So much that outraged people
again issued their own money in spite of the ban. As a result, they
successfully financed a war against a major power - with almost no hard
currency and no taxation. Thomas Paine called it the Revolution's
"corner stone".

However, British bankers responded by attacking its "competitor's
currency", the Continental, driving down its value by flooding the
colonies with counterfeit scrip. It was "battered but remained stable".
Where Britain failed, speculators succeeded - "mostly northeastern
bankers, stockbrokers and businessmen, who bought up the revolutionary
currency at a fraction of its value after convincing people it would be
worthless after the war". It had "to compete with states' paper notes
and British bankers' gold and silver coins ... The problem might have
been avoided by making the Continental the sole official currency, but
the Continental Congress (didn't have) the power to enforce" such an
order - with no courts, police or authority to collect taxes "to redeem
the notes or contract the money supply".

Having just rebelled against British taxation, colonists weren't about
to let Congress tax them. Speculators took advantage and traded
Continentals at discounts enough to make them worthless and give rise to
the expression "not worth a Continental".


How the Government Was Persuaded to Borrow Its Own Money

John Adams once said: "there are two ways to conquer and enslave a
nation. One is by the sword. The other is by debt". The latter method is
stealth enough so people don't know what's happening and submit to their
own bondage. Openly, nothing seems changed, yet a whole new system
becomes master "in the form of debts and taxes" that people think are
for their own good, not tribute to their captors. That's today's America
writ large.

After the Revolutionary War, "British bankers and their Wall Street
vassals" pulled it off by acquiring a controlling interest in the new
United States Bank. It discredited paper scrip through rampant
Continental counterfeiting and so disillusioned the Founders that they
omitted mentioning paper money in the Constitution. Congress was given
power to "coin money (and) regulate the value thereof, (and) to borrow
money on the credit of the United States ..." It left enough wiggle room
for bankers to exploit to their advantage - but only because Congress
and the president let them.

Alexander Hamilton bears much blame, the nation's first Treasury
Secretary and Tim Geithner of his day (1789 - 1795). He argued that
America needed a monetary system independent of foreign control, and
that required a federal central bank - to handle war debts and create a
standard form of currency. In 1791, it was created, hailed at the time
as a "brilliant solution to the nation's economic straits, one that
disposed of an oppressive national debt, stabilized the economy, funded
the government's budget, and created confidence in the new paper dollars
... It got the country up and running, but left the bank largely in
private hands" - to be manipulated for private gain, much like today.
Worse still, "the government ended up in debt for money it could have
generated itself".

Instead, it had to pay interest on its own money in lieu of creating it
interest free. Today, Hamilton is acclaimed as a model Treasury
Secretary. For Jefferson, he was a "diabolical schemer, a British stooge
pursuing a political agenda for his own ends". He modeled the Bank of
the United States on the Bank of England against which colonists
rebelled. It so angered Jefferson that he told Washington he was a
traitor. It fostered a bitter feud between them with Jefferson
ultimately prevailing.

Hamilton's Federalist Party disappeared after 1820 while Jefferson and
Madison's Democratic-Republicans became the forerunner of today's
Democrats after the party split into two factions, the Whigs no longer
in existence and Jacksonians that by 1844 officially became the
Democratic Party. Shamefully they veered far from Jacksonian and
Jeffersonian principles.

For his part, Hamilton wasn't entirely bad. He stabilized the new
economy and got the country on its feet. He restored the nation's
credit, established a national currency, and made it economically
independent. However, his legacy has a dark side - a "privileged class
of financial middlemen (henceforth able) to siphon off a perpetual
tribute in the form of interest". He delivered money power into private
hands, "subservient to an elite class of oligarchical financiers", the
same Wall Street types today holding the entire nation hostage - in
permanent debt bondage.


>From Abundance to Debt

Charging excessive interest is called "usury", but originally it meant
charging anything for the use of money. The Christian Bible banned it,
and the Catholic Church enforced anti-usury laws through the end of the
Middle Ages.

Old Testament scripture was more lenient, prohibiting it only between
"brothers". Charging it to foreigners was allowed and encouraged, which
is why Jews unfairly were called "moneychangers". They, like others,
suffered greatly from money-lending schemes. For centuries, they were
"persecuted for the profiteering of a few", then scapegoated to divert
attention from the real offenders.

Fiat money is legal tender by government decree - a simple tally
representing units of value to be traded for goods and services. Paper
money was invented in 9th century Mandarin China and successfully used
to fund its long and prosperous empire. The same was true in medieval
England. The tally system worked well for over five centuries before
banker-controlled paper money began demanding payment in the form of
interest.

History portrays the Middle Ages as backward, impoverishing, and a form
of economic enslavement only the Industrial Revolution changed. In fact,
the era was entirely different, characterized by 19th century historian
Thorold Rogers as a time when "a labourer could provide all the
necessities for his family for a year by working fourteen weeks",
leaving nearly nine discretionary months to work for himself, study,
fish, travel, or do what he pleased, something today's overworked,
over-stressed, underpaid workers can't imagine.

Some attribute Middle Age prosperity to the absence of usurious lending.
Instead of paying tribute in the form of interest, "people relied
largely on interest-free tallies". They avoided depressions and
inflation since the supply and demand for goods and services grew in
proportion to each other, thus holding prices stable. "The tally system
provided an organic form of money that expanded naturally as trade (did)
and contracted (the same way) as taxes were paid".

No bankers set interest rates or manipulated markets to their advantage.
The tally system kept Britain stable and thriving until the mid-17th
century, "when Oliver Cromwell (1599 - 1658) ... needed money to fund a
revolt against the Tudor monarchy".


The Moneylenders Take Over England

In the 19th century, the Rothchild banking family's Nathan Rothchild
said it well:

"I care not what puppet (sits on) the throne of England to rule the
Empire on which the sun never sets. The man who controls Britain's money
supply controls the British empire, and I (when he ran the Bank of
England) control the British money supply."

Centuries early, moneylender power was absent. But after the 1666
Coinage Act, money-issuing authority, once the sole right of kings, was
transferred into private hands. "Bankers now had the power to cause
inflations and depressions at will by issuing or withholding their gold
coins".

King William III (1672 - 1702), a Dutch aristocrat, financed his war
against France by borrowing 1.2 million pounds in gold in a secret
transaction with moneylenders, the arrangement being a permanent loan on
which debt would be serviced and its principle never repaid. It came
with other strings as well:

-- lenders got a charter to establish the Bank of England (in 1694) with
monopoly power to issue banknotes as national paper currency;

-- it created them out of nothing, with only a fraction of them as reserves;

-- loans to the government were to be backed by government IOUs to serve
as reserves for creating additional loans to private borrowers; and

-- lenders could consolidate the national debt on their government loan
to secure payment through people-extracted taxes.

It was a prescription for huge profits and "substantial political
leverage. The Bank's charter gave the force of law to the 'fractional
reserve' banking scheme that put control of the country's money" in
private hands. It let the Bank of England create money out of nothing
and charge interest for loans to the government and others - the same
practice central banks now employ.

For the next century, banknotes and tallies circulated interchangeably
even though they weren't a compatible means of exchange. Banker money
expanded when "credit expanded and contracted when loans were canceled
or 'called', producing cycles of 'tight' money and depression
alternating with 'easy' money and inflation". In contrast, tallies were
permanent, stable, fixed money, making banknotes look bad so they had to go.

For another reason as well - because of King William's disputed throne
and fear if he were deposed, moneylenders again might be banned. They
used their influence to legalize banknotes as the money of the realm
called "funded" debt with tallies referred to as "unfunded", what
historians see as the beginning of a "Financial Revolution". In the end,
"tallies met the same fate as witches - death by fire".

They were money of the people competing with moneylending bankers. After
1834 monetary reform, "tally sticks went up in flames in a huge bonfire
started in a House of Lords stove". Ironically, it got out of control
and burned down Westminster Palace and both Houses of Parliament,
symbolically ending "an equitable era of trade (by transferring power)
from the government to the" central bank.

Henceforth, private bankers kept government in debt, never demanding the
return of principle, and profiting by extracting interest, a very
lucrative system always paying off "like a slot machine" rigged to
benefit its operators. It became the basis for modern central banking,
lending its "own notes (printed paper money), which the government swaps
for bonds (its promises to pay) and circulates as a national currency".

Government debt is never repaid. It's continually rolled over and
serviced, today with no gold in reserve to back it. Though gone, tallies
left their mark. The word "stock" comes from the tally stick. Much of
the original Bank of England stock was bought with these sticks. In
addition, stock issuance began during the Middle Ages as a way to
finance businesses when no interest-bearing loans were allowed.

In America, "usury banks fought for control for two centuries before"
getting it under the 1913 Federal Reserve Act. An issue that once
"defined American politics", today is no longer a topic for debate. It's
about time it was reopened.


Jefferson and Jackson Sound the Alarm

Moneylenders conquered Britain, then aimed to entrap America - by
provoking "a series of wars. British financiers funded the opposition to
the American War for Independence, the War of 1812, and both sides of
the American Civil War". They caused inflation, heavy government debt,
the chartering of the Bank of the United States to fund it, thus giving
private interests the power to create money.

Jefferson opposed the first US Bank, Jackson the second, and both for
similar reasons:

-- distrust of profiteers controlling the nation's money; and

-- concern about the nation's banking system falling into foreign hands.

Jefferson got Congress to refuse to renew the first US Bank charter in
1811 and learned on liquidation that two-thirds of its owners were
foreigners, mostly English and Dutch and none more influential than the
Rothschilds. Later, Madison signed a twenty-year charter. However, when
Congress renewed it, Jackson vetoed it.


The Powerful Rothschild Family

The House of Rothschild was British in name only. In the mid-18th
century, it was founded in Frankfort, Germany by Mayer Amschel Bauer,
who changed his name to Rothschild, fathered ten children, and sent his
five sons to open branch banks in major European capitals. Nathan was
the most astute and went to London. "Over the course of the nineteenth
century, NM Rothschild would become the biggest bank in the world, and
the five brothers would come to control most of the foreign-loan
business of Europe".

Belatedly, Jefferson caught on to the scheme - that "private debt
masquerading as paper money ... owed to bankers" placed the nation in
bondage. In his words, "deliver(ing) itself bound hand and foot to bold
and bankrupt adventurers and bankers ..."  Jefferson's idea for a
national bank was a wholly government-owned one issuing its own credit
without having to borrow it from private interests.

Jackson believed the same thing in calling the Bank of the United States
"a hydra-headed monster". When the bank charter was renewed, he promptly
vetoed it, yet understood that the battle was just beginning. "The hydra
of corruption is only scotched, not dead", he said.

He was right. The Bank's second president, Nicolas Biddle, retaliated
"by sharply contracting the money supply. Old loans were called in and
new ones refused. A financial panic ensued, followed by a deep economic
depression." However, Biddle's victory was short-lived. In April 1834,
the House rejected re-chartering the Bank, then January 1835 became
Jackson's "finest hour".

He did something never done before or since. He paid off the first
installment of the national debt, then reduced it to zero and
accumulated a surplus. In 1836, the Bank's charter expired. Biddle was
arrested and charged with fraud. He was tried and acquitted but spent
the rest of his life in litigation over what he'd done. "Jackson had
beaten the Bank". Imagine today if Obama defeated the Fed and its Wall
Street puppeteers instead of embracing them with limitless riches.


Lincoln Foils the Bankers and Pays with His Life

Like Jackson, Lincoln faced assassination attempts, before even being
inaugurated. "He had to deal with treason, insurrection, and national
bankruptcy" during his first days in office. Considering the powerful
forces against him, his achievements were all the more remarkable:

-- he built the world's largest army;

-- "smashed the British-financed insurrection",

-- took the first steps to abolish slavery; it became official on
December 6 1865 when the 13th Amendment was ratified, eight months after
Lincoln was assassinated;

-- during and after his tenure, the country became "the greatest
industrial giant" in the world;

-- "the steel industry was launched; a continental railroad system was
created; the Department of Agriculture was established; a new era of
farm machinery and cheap tools was promoted";

-- the Land Grant College system established free higher education;

-- the Homestead Act gave settlers ownership rights and encouraged new
land development;

-- government supported all branches of science;

-- "standardization and mass production was promoted worldwide";

-- labor productivity increased by fifty to 75%; and

-- still more was accomplished "with a Treasury that was completely
broke and a Congress that hadn't been paid" as a result.

It was because the government issued its own money. "National control
was reestablished over banking, and the economy was jump-started with a
600 percent increase in government spending and cheap credit directed at
production". Roosevelt did the same thing with borrowed money. Lincoln
did it with United States Notes called Greenbacks. They financed the
war, paid the troops, spurred the nation's growth, and did what hasn't
been done since - let the government print its own money, free from
banker-controlled debt slavery, the very system strangling us today the
way Lincoln feared would happen.

His advisor was Henry Carey, a man historian Vernon Parrington called
"our first professional economist". Lincoln endorsed his prescription:

-- "government regulation of banking and credit to deter speculation and
encourage economic development";

-- its support for science, public education and national infrastructure
development;

-- "regulation of privately-held infrastructure to ensure it met the
nation's needs";

-- government-sponsored railroads and "scientific and other aid to small
farmers";

-- "taxation and tariffs to protect and promote productive domestic
activity"; and

-- "rejection of class wars, exploitation and slavery, physical or
economic, in favor of a 'Harmony of Interests' between capital and labor".

Leaders like Jefferson, Jackson and Lincoln are sorely missed, but for
Lincoln it was costly.


He Loses the Battle with "the Masters of European Finance"

German Chancellor Otto von Bismark (1815 - 1898) called them that in
explaining how they engineered the "rupture between the North and the
South" to use it to their advantage, then later wrote in 1876:

"The Government and the nation escaped the plots of the foreign bankers.
They understood at once that the United States would escape their grip.
The death of Lincoln was resolved upon." The last Civil War battle ended
on May 13 1865. Lincoln was assassinated on April 15.

European bankers tried but failed to trap him "with usurious war loans",
at 24 to 36% interest had he agreed. Using government-issued Greenbacks
shut them out entirely, so they determined to fight back - eliminate the
thorn, then get banker-friendly legislation passed, achieved through the
National Bank Act reversing the Greenback Law. It was "only a compromise
with bankers, (but) buried in the fine print", they got what they wanted.

Although the Controller of the Currency got to issue new national
banknotes, it was just a formality. In fact, the new law "authorized the
bankers to issue and lend their own paper money". They "deposited" bonds
with the Treasury, but owned them so "immediately got their money back
in the form of their own banknotes". It was an exclusive franchise to
control the nation's money forcing government back into debt bondage
where it never had to be in the first place. A whole series of private
banks were then chartered, all empowered to create money in lieu of debt
free Greenbacks.

One other president confronted bankers and paid dearly as well - James
Garfield. In 1881, he charged:

"Whoever controls the volume of money in any country is absolute master
of all industry and commerce ... And when you realize that the entire
system is very easily controlled, one way or another, by a few powerful
men at the top, you will not have to be told how periods of inflation
and depression originate".

Garfield took office on March 4 1881. On July 2, he was shot. He
survived the next two and half months, then died on September 19. It was
a time of depression, mass unemployment, poverty, and starvation with no
safety net protections. "The country was facing poverty amidst plenty",
because bankers controlled money and kept too little of it in
circulation - an avoidable problem if government printed its own.


Gold vs Inflation - Debunking Common Fallacies

The classical "quantity theory of money" holds that "too much money
chasing too few goods" causes inflation, excess demand over supply
forcing up prices. The counter argument is that if paper money is tied
to gold, an inflation-free stable money supply will result. Another
fallacy is that adding money (demand) raises prices only if supply
remains fixed.

In fact, if new money creates new goods and services, prices stay
stable. For thousands of years, the Chinese kept prices of its products
low in spite of their money supply being "flooded with the world's gold
and silver, and now with the world's dollars ... to pay for China's
cheap products".

What's important is not what money consists of but who creates it.
"Whether the medium of exchange (is) gold or paper or numbers in a
ledger", when created by and owed to private lenders with interest,
"more money would always be owed back than was created ... spiraling the
economy into perpetual debt ... whether the money takes the form of gold
or paper or accounting entries".

Today's popularism is associated with the political left. However, 19th
century Populists saw "a darker, more malevolent force ... private money
power and the corporations it had spawned, which was threatening to take
over the government unless the people intervened".


Lincoln also feared it saying:

"I see in the near future a crisis approaching that unnerves me and
causes me to tremble for the safety of my country. Corporations have
been enthroned, an era of corruption in high places will follow, and the
money power of the country will endeavor to prolong its reign by working
upon the prejudices of the people until the wealth is aggregated in the
hands of a few and the Republic is destroyed."

Today's America is the reality he feared. A tiny elite own the vast
majority of the nation's wealth in the form of stocks, bonds, real
estate, natural resources, business assets and other investments. In
contrast, ninety percent of Americans have little or no net worth. Of
all developed nations, concentrated wealth and inequality extremes are
greatest here with powerful bankers sitting atop the pyramid, now more
than ever with their new riches extracted from public tax dollars and
Fed-created money.

_____

A follow-up article will discuss how "bankers capture(d) the money machine".

Stephen Lendman is a Research Associate of the Centre for Research on
Globalization. He lives in Chicago can be reached at
lendmanstephen at sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The
Global Research News Hour on RepublicBroadcasting.org Monday - Friday at
10 am US Central time for cutting-edge discussions with distinguished
guests on world and national issues. All programs are archived for easy
listening.

http://www.countercurrents.org/lendman060509.htm


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