A Historical Perspective: The Banking Monopoly

In 1913, the U.S. Congress passed a bill called the Federal Reserve Act of 1913. This bill allowed an independent group to privatize, and take control of America’s monetary system. The Federal Reserve Bank’s name was chosen to deceive the American people into believing that it is a branch of the U.S. government. It isn’t. This privately held monopoly gives great power to a handful of international bankers

The Federal Reserve has no reserves. The name was created prior to the Federal Reserve Act being passed in 1913. This was done to make Americans believe the U.S. banking system operated in the public interest. The truth is the Federal Reserve is a private bank owned by private shareholders, and runs purely for private profits, and thereby creating massive debt to the American people. This privately held organization pays no taxes on the trillions of dollars it makes.

The Federal Reserve was chartered by an act of deceit, through an act of congress when most had gone home for Christmas holiday on December 23rd, 1913. .. No recess had been called, most senators had gone home, yet three senators passed the act with a unanimous voice vote. There was no objection. If there had been one person present in the absence of a quorum, the bill would not have been passed.

In 1923, Representative Charles A. Lindbergh, a Republican from Minnesota, and father of the famous aviator Lucky Lindberg stated, “The financial system has been turned over to the Federal Reserve Board.

Senator Aldrich would later admit .. Before the passage of this Act, the New York Bankers could only dominate the reserves of New York. Now, we are able to dominate the bank reserves of the entire country ... John D. Rockefeller : “Competition is sin.”

A Historical Perspective: The Banking Monopoly

Thank you for sharing this information. Articles on the topic of banking are always interesting and informative but offer little regarding ways to improve banking.

I guess the reason this article by Carl Martin Andersen impressed me is because it tells a story.

There is also an informative publication from the Chicago Federal Reserve titled "Modern Money Mechanics" explaining fractional reserve banking.

Once upon a time in America

By Carl Martin Andersen,

Once upon a time, there was a powerful island nation with a strong navy and colonies far and wide. It had a king and a queen who ruled the land and all their royal subjects.

Some of the royal subjects were unhappy because the king tried to force them to believe in his god instead of the god they wanted to believe in. It was also very difficult for a poor person to earn money, to care for a family, or buy a house.

Some of these unhappy people, the Freedom Lovers, heard about a place where there was no king. Only beautiful beaches, great forests, and huge mountains, a lovely place where the people could choose their own god and would be free to do whatever they wished with their lives. They felt like slaves to the king because of his control over their life, forced religion, and very heavy taxes.

The Freedom Lovers did not want to be anyone's slave, not even a king's slave. This belief in freedom from slavery was so strong that their great-great-great grandchildren fought among themselves in a bloody and terrible war to end slavery in their new land forever, but that is another story for another time.

So, these brave people packed up their families and their things and left their homes behind to find a new life in this new place. They combined their little bit of money to hire a small ship, the April Flower and its brave Captain, Smit Johnson to take them to what they now called "Opportunity Land”. Since only one or two ships that they knew of had ever made the trip, no one (not even the Captain) was quite sure how to get there. All they really knew was they wanted to go there very badly.

Well, the people were eager and their Captain was brave so finally the day came that they left their island home and their island king for a new life in Opportunity Land. It was a long and frightful journey with storms and rough seas shaking their little ship and making people sick. They were often afraid and some spoke of turning around, of giving up their dreams of a new life in this new place. Finally, a sailor high up on the mainmast shouted, "Land Ho!" and they found themselves in a beautiful new country. It felt good to put their feet on firm, dry ground after so many months at sea.

There were birds, and deer, and turkeys, and lots of other animals as well as trees and mountains. It was indeed a beautiful place to make a new life. There were also strange looking local people who did not speak the Islander language but for a time, would prove to be good friends. It was not an easy life for these people in Opportunity Land. The weather was cold in the winter and food was hard to find. Many people, weak from not eating enough, became sick and died. Lucky for the rest of the Freedom Lovers, their Captain was a good leader and a strong man.

Captain Johnson told the Freedom Lovers that they all must work together to build their homes, feed their families, and survive the long, cold winter. The Captain made a strict rule that if a Freedom Lover wanted to share the food gathered by the others, and share the buildings they all built together, the Freedom Lover must work. The wise Captain knew that some people would cut wood to build the cabins and for firewood, some would sew clothing, others would look after children, and some would actually find food for everyone to eat. He knew that if they all did their fair share of the work, they would all have enough to eat and would all survive the bitter cold winter.

He also knew that if some were allowed to be lazy and their laziness was rewarded with food, he would soon have a lot of lazy people on his hands. The more people didn't work, the more the working people would wonder why they should work. Fewer and fewer people would work until the working people couldn't support all the non-workers. The whole community of Freedom Lovers might die because they didn't each produce their share.

This one brave man made the rules in this colony of Freedom Lovers and he did it to help the people survive. He was not mean or heartless but he was strict because he knew all the people would die if some people took the food but didn't give anything back to the community. The Captain was fortunate that he was leader of a group of brave people who were not afraid to work for the good of themselves and their neighbors.

This one small colony of Freedom Lovers did survive that first winter, thanks to the strong leadership of Captain Johnson and some help from the strange local people. The local people couldn't talk to the Freedom Lovers but they could see the Freedom Lovers were hungry so they shared their food. The next Spring and Summer, the locals taught the Freedom Lovers how to grow corn and other food and save it for winter. In the fall, after a successful summer of farming and growing lots of food, the Freedom Lovers wanted to give thanks to their God and to their new friends, the locals. They invited the locals to a big feast of turkey, venison, pumpkin, corn, and other great foods. During this meal, the Freedom Lovers thanked God and they thanked their new friends for all their help. Everyone had such a good time that they agreed to do it again the next year, and this became a tradition known as "Thank Locals Day”.

When the king and his banker friends heard how well the Freedom Lovers were doing and how rich the land they had found was, he decided to make this new place part of the island kingdom. The Freedom Lovers didn't mind too much because they could still worship their own God and pretty much do what they wanted with their lives. They had been born islanders and it made them feel a little safer having a country again.

And just in case they forgot to which country they belonged, the king sent a whole bunch of soldiers to remind them…

After a while, the king started forcing the Freedom Lovers to buy things from his banker friends and to pay tax on things they bought like coffee and tea. This started to bother the Freedom Lovers because they had left the island kingdom to get away from the king, his control, his bankers, and his taxes. Soon the Freedom Lovers realized that all the bad things they tried to leave behind them in the old country had followed them to Opportunity Land. The king had seen the huge land they found and thought he could make a lot of money by collecting taxes and claiming ownership of the land. Since he had the army, he could do it.

Some of the Freedom Lovers started talking about fighting the king's army and making their own new country with their own laws. This made the king very angry and afraid. He was afraid he would lose his new colony and all the riches there. The king's soldiers started taking the Freedom Lovers' weapons away from them so they wouldn't be able to fight. The king's soldiers also started sleeping in the Freedom Lovers' homes without being invited.

The Freedom Lovers had come to Opportunity Land by themselves with no help from the king and no army to protect them. They spent their own savings to come and didn't know if there were dangerous animals or dangerous people but they did know they wanted to be ready to protect themselves. They used their guns to hunt animals for food and to protect themselves from bad people. Taking a gun from a Freedom Lover really threatened his survival and that of his family but the king didn't care about that. He only cared that the colonies could make him richer and more powerful.

Finally, all the rules, the taxes, and the king's army taking the Freedom Lovers' property (their guns, their food, and their homes), became too much for the Freedom Lovers to accept. The Freedom Lovers went to war with the king's army and announced to the whole world that they were not part of the Island Kingdom anymore. They made their own country and they called it "Freedom Land”. The king ordered his army to fight and kill all the Freedom Lovers if necessary to keep Opportunity Land a part of the Island Kingdom. It was a very long and bitter fight. Many people died on both sides. The soldiers burned houses and farms and killed many Freedom Lovers but the Freedom Lovers never gave up. At long last, the king's general knew he and his army had been beaten so he gave up, gathered what was left of his army, and went home.

During the war, the Freedom Land government did not have enough money. At that time, most money was in the form of coins made of silver or gold and the Freedom Lovers just didn't have enough to pay for the war. Instead of letting the Freedom Lovers lose the war because they didn't have enough money, a bank helped the government make paper money and the government promised to trade the paper money for silver and gold after the war. With so much more of this paper money in the economy with really no more things to buy, the price of everything naturally went up. This effect (inflation) came about because of a principle known as the law of supply and demand.

The people had such a hard time with the rising prices of food and other supplies and it took so long for the young government to get enough gold to pay all the people for their paper money, that they decided this kind of money is no good. The pain of this economic trouble fresh in their minds, the Freedom Lovers vowed never to allow this kind of "fake money" in Freedom Land again. They had learned the hard lesson that if money doesn't have real value, it can ruin the economy and make it easy for bankers to take advantage of the people.

When the war was finished, the leaders of this young nation had to sit down and decide how the government would work. Would they have a king? How would they make laws and how would they enforce them? Well, they came up with a really good system where all the people get to choose who will fill the most important positions in government. Also, with bad memories of the money problems during the war, they made a strict rule that only their legislature could make coins and control their value. They never wanted to put a banker in charge of the money again!

Also, they wanted everyone to know that all Freedom Lovers were equal, and there would be no special titles (like Duke, Count, etc. which were favorites of the king) for Freedom Lovers. They even wrote down a list of rights that each Freedom Lover was guaranteed. They remembered all the things the king didn't want them to do so they made a list of rights that guaranteed each Freedom Lover could do all those things. This list promised that all Freedom Lovers could have their own ideas and speak them if they wished, that the government could not take their property from them without a good reason AND an order from a judge, they could worship any god they chose, and that all Freedom Lovers were allowed to have guns and the government could never take them away.

It was important to the Freedom Lovers that everyone understand that the Freedom Land government did not give these rights to the people. Freedom Lovers believe that these rights were given to them and all people by their "creator" (whichever god a person chooses to believe in). The purpose of the list of rights was only to remind people that they had these rights and to tell bad people that the government would protect these rights as the most important rights of all. Also, the list was made to remind the government that its power came from the people. The people were the boss of the government, not the other way around like it was with the king.

The young nation grew strong and its people prospered. People all over the world admired them because they were brave and independent. They took care of themselves and didn't want the government getting involved in their lives but when people from other lands were in trouble because of an earthquake or flood; the Freedom Lovers were always first in line to send food, medical supplies, and other help. They became known around the world as hardworking, successful, and very generous people. Freedom Land became a model for other new countries making new governments. Freedom Land was truly "Opportunity Land" because anyone willing to work could make a good life and earn a good living.

Freedom Land became rich and the island nation became poor so the king made a plan to take most of the money from Freedom Land and give it to the island nation and its rich bankers. The king would work with the bankers to see that all Freedom Lovers would eventually work for him, without actually knowing it. All the bankers in the world know each other and work together so it was easy for the king to send some bankers to Freedom Land and work out an arrangement where the rich bankers in Freedom Land and the rich bankers in the island nation would get even richer by taking money from the hardworking Freedom Lovers.

Now the Freedom Lovers would never just give their money to the king so it had to be a really sneaky plan. They talked to some bankers and some bad people in the Freedom Land government and they made their plan. They would use their power to make the economy in Freedom Land bad so the people would suffer. This would help them get a new law passed giving the foreign and Freedom Lover bankers the right to print all the money. They had to make a new big bank but they couldn't call it a bank because all the earlier problems had caused Freedom Lovers to hate banks and bankers. They decided to call this new bank the Freedom Lovers National Safety Net or FNSN. They would pretend that the FNSN was actually part of the government so the people would feel safe from the hated bankers. But really, it was just a big bank, run by the bankers, for the bankers. The Freedom Land banker asked the Islander banker, how could we do this?

The Islander banker introduced another friend of his, an expert banker from another country. His name was Mr. Battle Burg. Mr. Battle Burg explained that they would help some friends of his in the Freedom Land government write a new law that gave them the right to create all the money. The banks would be able to just print as much money as they wanted and then loan it to the people and the government. The law would also require the Freedom Land government to borrow all its money from the new bank. Since the people already hated bankers, they would have to be careful not to let anyone know there were bankers involved or that the new law would actually form a special kind of really big, powerful bank. That's why they called it the Freedom Lover's National Safety Net, instead of the "Central Bank of Freedom Land" so the ordinary people and even most of the people in the government would be fooled.

So, Mr. Battle Burg wrote the new law and his friends in the legislature brought the new law to a vote one day right after most of the members had gone home for Christmas. They did not invite or even accept much discussion or debate about the new law; they just forced a vote and the new law passed. The only legislator brave enough to speak out against this new law was a gentleman from the North Country. His name was Augustus L. Charles. Mr. Charles could see what the bankers were trying to do so he spoke out against the new law. He argued against it in the legislature and he spoke out in public because he knew Mr. Battle Burg, the king's banker, and the other bankers were just trying to steal all the Freedom Lovers money. But Mr. Charles was only one man, fighting against many powerful men, so he lost. The Freedom Lovers lost.

And then arsonists burned down Mr. Charles’ beautiful farmhouse in the North Country…

After this new law was passed forming the FNSN, the only way any money could come out where the people could use it was if someone borrowed it. When you borrow money, you have to pay "interest" - kind of like paying money to "rent" someone else's money. So if you borrow $100 for a year at ten percent interest, at the end of the year you have to pay the bank $110. You pay the bank the extra $10 for letting you use its money for a year. Pretty good deal, huh? If I want to loan you $100, I have to actually HAVE $100. The bank just has to print it on their printing machine! The other big problem is if the only way for money to come into existence is for someone to borrow it, then there is never enough money to pay the bank back. Huh? How could that be you ask?

It works something like this: Say you had an island with five farms on it and you decided to give those farms to five different people who would live there forever. The only rule is that you get to be the banker and print all the money so before these five new farmers can buy tools or even eggs from each other they need some money. So you (the banker) agree to loan each farmer $100 for one year at ten percent interest. That means that in one year, each farmer will have to pay you $110.00. They promise that they will pay you the $110 or give you their farm.

Let's see how this would work: You loan $100 to each farmer so there is a total of $500 circulating in our little "economy”. The farmers grow their crops, raise their animals and buy and sell to each other for a year. The day comes they must all pay you your $110. The first farmer pays you $110 and thanks you for the loan. Since you (the banker) now have $110 of the original $500 that was in circulation, there is now only $390 left in circulation. The second farmer pays you $110 and thanks you for the loan. There is now $280 left in circulation. The third farmer pays you $110 and thanks you for the loan. Now there is $170 left in circulation. The fourth farmer pays you the $110 he owes you, leaving $60 in circulation.

The last farmer approaches you with a long face. Farmer number five says that he doesn't have enough money to pay your money back. He explains he had a hard year and even though his friends, the other four farmers, loaned him all the money they had to help him pay, he still only has $60. You make a sympathetic face but you smile inside because you know that there never was enough money for him to pay. You tell him you're sorry but remind him of your agreement.

At this point, you, the banker, have a choice. You have the right to take his farm away from him right then and there. Because you're a smart banker though, you offer the fifth farmer another loan. People work a lot harder if they think they own the farm. Of course, he has to borrow enough to pay off the old loan, plus some extra to live on. It gives him a chance to keep his farm so of course he takes it. The other farmers also have to borrow some money so they can operate their businesses and live their lives as well because remember, when they paid back their loans, all the money in our little economy went back into the bank. And again, the money they borrow is never enough to pay back all the loans plus interest so at least one of them will have the same problem next year as farmer number five did this year.

You (the banker) will probably just keep loaning money back to them so you can keep them working for you on their farms, earning the money to pay you interest. But, whenever you want, you can just reduce the money supply (by not loaning out any more money) so the loans can't be repaid and you can start taking their farms away from them.

See why it's so dangerous to put bankers in charge of the money?

Now, back to our story…

So, the King's government was in a lot of trouble. They didn't have enough gold to pay for all things the king and his government wanted to buy. The island's products were expensive and Freedom Land's products were lower priced so none of the Freedom Lovers wanted to buy the Islander's products even though they had enough money to do so. The bankers knew that the Freedom Lovers would never start buying Island products just to help the Islanders so they had to think of a way to get them to send their money to the Island Kingdom voluntarily.

The bankers in Freedom Land started loaning out a lot of money. Since they had the right to just print however much they wanted, they simply printed it out and loaned it to anyone who asked. Since there was a lot of money floating around in the economy, people bought a lot of things so more workers were needed so wages went up so the workers needed to buy more things so more factories were built, and so on. This also made the price of products go up which didn't seem so important at the time but it did make the island products more affordable in comparison.

It seemed like a great time where the people were making money and a lot of them were getting rich. Then prices went so high that Island products were cheaper than Freedom Lover products so a lot of Freedom Lover money went to the Island to buy things like clothes, furniture, and other stuff. We all want to buy lower priced things, don't we? Well the Freedom Land economy was still growing like crazy and people were still buying things, borrowing money, buying stock, and feeling richer and richer all the time.

But then the day came when even the bankers couldn't keep up with all the money leaving to go to the island and there just wasn't enough money left in Freedom Land to run the country. People tried to take their money out of their banks but the banks didn't have it to give them because it had all already gone to the Island Kingdom. There was a huge panic and lots of banks had to close because they had no money. Factories closed, people lost their jobs, stocks lost their value, and most of the people lost all their money.

Another problem for the bankers was that they had promised to trade all the dollars they issued for gold but they had issued more dollars than they had gold! So, if everyone took their dollars to the bank and demanded gold, the banks wouldn't have enough gold. So the president, Mr. Rosey Delayno, told the people that anyone who had gold in their home was causing the problems with the economy. He issued an order that everyone had to turn in their gold to the government in exchange for paper money and that paper money couldn't be traded for gold anymore. The people knew that their money no longer had any real value so they lost even more confidence in the economy.

Many had borrowed money to buy houses and farms and now had no way to earn the money to pay the bank. When the "experts" at the FNSN were asked what the problem was, they stroked their chins, looked thoughtful, and said augustly, "Oh, the economy is hard to predict. It's bad now though. There just isn't enough money! These are bad times. We'll all just have to do our best."

At the same time, the banks started taking homes and farms from people who couldn't make their payments. They pretended they were sorry about it so the people wouldn't feel so bad but how can you not feel bad when someone takes your house away from you?

For over ten years, this economic doldrums stayed with the Freedom Lovers. Many, many lost their homes and their farms and all the experts at the banks would say was, "These are bad times. We all have to do our best. There just isn't enough money!"

Then something terrible happened. A World War! The Freedom Lovers had to help the Islanders protect their country from the Battle Burgers. The Battle Burgers wanted to take over the world and make everyone who wasn't a Battle Burger into a slave. The Islanders and their powerful friends in the Freedom Land government convinced the Freedom Lovers that if the Island Nation was conquered by the Battle Burgers, then Freedom Land wouldn't be far behind. The Freedom Lovers still didn't want to be slaves so they knew they had to fight.

But wait a minute, you say? The Freedom Land Government didn't have any money! How could they buy guns, planes, tanks, bullets, and all the other things you need for a war (like bandages and hospital beds) when they had no money? Their good friends the Bankers, led by Mr. Battle Burg and his friends loaned them all the money they needed! Wasn't that kind of the bankers? (A bit odd though, wouldn't you say? Mr. Battle Burg loaning money to the Freedom Lovers to help the Islanders fight the Battle Burgers?)

And boy did the Freedom Land government borrow money from the FNSN bankers! Can you imagine the trillions of dollars the Freedom Land Government needed to put 16,000,000 soldiers, sailors, and marines in uniform, equip them with weapons, ships, tanks, etc. They also needed to feed them and care for them when they became sick or wounded and to pay life insurance to their families when they were killed in battle? The number has so many zeros you can hardly count them all!

But our good friends the bankers were happy to loan the Freedom Lovers all the money they needed to fight the terrible Battle Burgers. After all, the Freedom Lovers were fighting for their lives, for their very freedom! The bankers also didn't mind collecting the interest on loans they made with money they just printed on their printing machine. Pretty good deal for the bankers, wouldn't you say? Most of us have to actually earn the money before we can loan it to someone else but a bank can just create it out of nothing!

Then when the government started buying lots of things for the war, the factories opened up, people went back to work and started earning money. They could buy food for their children and feed themselves so although they were sad and afraid about the war, they were happy to have a job.

Well the Freedom Lovers went off, fought the Battle Burgers, and beat them. It took four years but they did it and boy were they proud! Since everyone had been working during the war, many people could get loans to buy back their old houses. Everyone was so happy about winning the war, having jobs, and being back in their own house again that they didn't realize what the bankers had done to them…

Aren't you wondering how it was for over ten years, the FNSN banks had no money to lend the people but suddenly when there was a war, there were no limit to the amount of money they could loan to the government?

So am I, fellow Freedom Lover. So am I…

Carl Andersen carl@skyviking.com

May 21, 2002

1 Actually, the COST of things didn't go up. The amount of chicken food and work needed to produce one egg hasn't changed since man started raising chickens. What goes up is the PRICE which is another way of saying the value of the money goes down. This is known as "inflation" where the supply of money is "inflated" (increased) without actually increasing the value of the money. For example: If a dollar will buy a dozen eggs today and we double the amount of dollars in circulation, in not very many days it will take two dollars to buy a dozen eggs. The effort and chicken feed required to produce them won't have changed but since the money supply doubled, the value of each dollar is cut in half. This is another flaw in this money system where the bankers can just make as much money as they want.

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