The Creature from Jekyll Island: A Second Look at the Federal Reserve

by G. Edward Griffin

scheme it wants, regardless of the cost. If politicians tried to raise that money through taxes, they would be thrown out of office. But being able to "borrow" it from the Federal Reserve System upon demand, allows them to collect it through the hidden mechanism of inflation, and not one voter in a hundred will complain.

subsidize home mortgages for the middle class. These measures distorted the laws of supply and demand and, from that point forward, the housing industry was moved out of the free market and into the political arena.

it was to allow governments to escape the discipline of gold so they could create money out of nothing without paying the penalty of having their currencies drop in value on world markets.

The theoreticians who drafted this plan were the well-known Fabian Socialist from England, John Maynard Keynes,96 and the Assistant Secretary of the U.S. Treasury, Harry Dexter White.

A stained-glass window in the Beatrice Webb House in Surrey, England is especially enlightening.

He eventually became the first Executive Director for the United States at the IMF.

The FBI had transmitted to the White House detailed proof of White's activities on at least two separate occasions.

the intellectual guiding lights at the Bretton Woods conference were Fabian Socialists

The goal of the organizations was to create a world currency, a world central bank, and a mechanism to control the economies of all nations.

the World Bank was seen as a vehicle for moving capital from the United States and other industrialized nations to the underdeveloped nations, the very ones over which Marxists have always had the greatest control.

One of the routine operations at the IMF is to exchange worthless currencies for dollars so the weaker countries can pay their international bills.

So, at the outset, the IMF adopted the dollar as its own international monetary unit.

SDRs are turned into loans to Third-World nations by the creation of checking accounts in the commercial or central banks of the member nations in the name of the debtor governments. These bank accounts are created out of thin air. The IMF creates dollars, francs, pounds, or other hard currencies and gives them to a Third-World dictator, with inflation resulting in the country where the currency originated.... Inflation is caused in the industrialized nations while wealth is transferred from the general public to the debtor country. And the debtor doesn't repay.100

when the dollar broke loose from gold and there was no longer a ready standard for measuring currency values, the IMF merely changed its goal and continued to expand its operation. The new goal was to "overcome trade deficits."

America has continued to finance its trade deficit with fiat money—counterfeit, if you will—a feat which no other nation in the world could hope to accomplish.

As long as the dollar remains in high esteem as

a trade currency, America can continue to spend more than it earns. But when the day arrives—as it certainly must—when the dollar tumbles and foreigners no longer want it, the free ride will be over. When that happens, hundreds of billions of dollars that are now resting in foreign countries will quickly come back to our shores as people every-where in the world attempt to convert them into yet more real estate, factories, and tangible products, and to do so as quickly as possible before they become even more worthless. As this flood of dollars bids up prices, we will finally experience the inflation that should have been caused in years past but which was postponed because foreigners were kind enough to take the dollars out of our economy in exchange for their products.

borrowing is where the action is today for most of the world, and that is where the IMF positioned itself in 1970. Its new mission was to provide loans so countries can continue to spend more than they earn, but to do so in the name of "overcoming trade deficits."

In the 1980s, the world was saddened by photographs of starving children in Ethiopia, but what the West did not realize was that this was a planned famine. It was modelled after Stalin's starvation program in the Ukraine in the 1930s and Mao's starvation of the peasants in the '40s. Its purpose was to starve the population into total

submission to the government, for it is the government which decides who will eat and who will not. Yet, right up to the time Mengistu was overthrown, the World Bank continued to send him hundreds of millions of dollars, with much of it going specifically to the Ministry of Agriculture, the very agency in charge of the resettlement program.107

George Bernard Shaw, one of the early leaders of the Fabian Socialist movement, expressed it this way: Under Socialism, you would not be allowed to be poor. You would be forcibly fed, clothed, lodged, taught, and employed whether you liked it or not. If it were discovered that you had not character and industry enough to be worth all this trouble, you might possibly be executed in a kindly manner; but whilst you were permitted to live, you would have to live well.109

A new crime was invented called "hedging against inflation," and people were arrested for charging

the free-market price for their goods and for using dollars or gold as money.

Here, finally, are the rules:

The brain trust for implementing the Fabian plan in America is called the Council on Foreign Relations (CFR).

It is not an exaggeration to describe this group as the hidden government of the United States.

Trilateral Commission. The TLC was created by David Rockefeller

Congress passed the Monetary Control Act of 1980 which authorized the Federal Reserve to "monetize foreign debt."

It classifies those loans as "assets" and then uses them as collateral for the creation of

even more money here in the United States. That was truly a revolutionary expansion of the Fed's power to inflate. Until then, it was permitted to make money only for the American government. Now, it was able to do it for any government. Since then it has been functioning as a central bank for the entire world.

The plan set a fateful precedent of "curing" the debt crisis by heaping on more debt. In this charade, bankers would lend more to Brazil with one hand, then take it back with the other. This preserved the fictitious book value of loans on bank balance sheets.

There isn't a U.S. bank that would not sell its entire Latin American portfolio for 40 cents on the dollar were it not for the possibility that skillful political lobbying might turn up a sucker willing to pay 50 or 60 or even 90 cents on the dollar. And that sucker is the U.S. Taxpayer.133

the Bolshevik revolution actually was financed by wealthy financiers in London and New York.

If their fellow citizens knew what they were really doing, they would be thrown out of office and, in some cases, might even be shot as traitors.

The international version of the game called Bailout is similar to the domestic version in that the overall objective is to have the taxpayers cover the defaulted loans so that interest payments can continue going to the banks. The differences are: (1) instead of justifying this as protecting the American public, the pretense is that it is to save the world from poverty; and (2) the main money pipeline goes from the Federal Reserve through the IMF /World Bank.

It is the conscious and deliberate evolution of the IMF/World Bank into a world central bank with the power to issue a world fiat currency.

The consequences of that process were summarized in 1966 by Alan Greenspan who, a few years later, would become Chairman of the Board of Governors of the Federal Reserve. Greenspan wrote: The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.... The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods.

When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes....

It is an amazing fact of history that the Byzantine Empire flourished as the center of world commerce for eight-hundred years without falling into bankruptcy nor, for that matter, even into debt. Not once during this period did it devalue its money.

For a while, Massachusetts had returned to specie while Rhode Island remained on fiat money. The result was that Newport, which had been the trade center for the West Indies, lost its trade to Boston and became an empty port.21

a mode of taxation the most oppressive of all because the most unequal of all.25

Fiat money is the cause of inflation, and the amount which people lose in purchasing power is exactly the amount which was taken from them and transferred to their government by this process.

It was John Maynard Keynes who observed:

A "sound" banker, alas! is not one who foresees danger, and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can readily blame him.

When the banks abandoned this practice and began to issue receipts to borrowers, they became magicians. Some have said they created money out of nothing, but that is not quite true. What they did was even more amazing. They created money out of debt.

there is no example in history where men, once they had accepted the concept of fractional money, didn’t reduce the fraction lower and lower until, eventually, it became zero.

the euphoria of being able to create money without human effort is so great that, once such a narcotic is taken, there is no politician or banker who can kick the habit. As William Sumner observed: "A man might as well jump off a precipice intending to stop half way down."

the Venetian Senate eventually succumbed to the temptation of credit. Strapped for funds and not willing to face the voters with a tax increase, the politicians decided they would authorize a new bank without restrictions against loans, have the bank create the money they needed, and then "borrow" it. So, in 1619, the Banco del Giro was formed, which, like its bankrupt predecessor, began immediately to create money out of nothing for the purpose of lending it to the government. Eighteen years later, the Bancodella Piazza del Rialto was absorbed into the new bank, and history's first tiny flame of sound banking sputtered and died.

"The Bank hath benefit of interest on all the moneys which it, the Bank, creates out of nothing."

As soon as the Bank of England was chartered in 1694, King William himself and various members of Parliament rushed to become shareholders of the new money factory they had justcreated.