The Creature from Jekyll Island

1. The Federal Reserve: A Private Banking Cartel Masquerading as a Government Agency

"The Federal Reserve System is a cartel operating against the public interest."

Origins and structure. The Federal Reserve, established in 1913, is not a government agency but a private banking cartel. It consists of 12 regional Federal Reserve banks, with the New York Fed being the most powerful. These banks are owned by member commercial banks, which receive dividends for their ownership.

Misleading facade. Despite its name and appearance, the Fed is not "federal" and has no true reserves. It operates independently from government oversight, with its policies often serving the interests of major banks rather than the public. This structure allows private bankers to influence monetary policy, interest rates, and the money supply, often at the expense of the broader economy.

Consequences for the public. The Fed's operations lead to:

• Inflation, eroding the purchasing power of citizens
• Economic instability through boom-bust cycles
• Concentration of wealth in the hands of financial elites
• Lack of true accountability to the public or elected officials

2. The Jekyll Island Conspiracy: Birth of the Federal Reserve System

"Picture a party of the nation's greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily hieing hundreds of miles South, embarking on a mysterious launch, sneaking on to an island deserted by all but a few servants, living there 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."

Secret meeting. In 1910, a group of powerful bankers met in secret on Jekyll Island, Georgia, to draft the plan for the Federal Reserve System. The attendees included:

• Nelson W. Aldrich (Senate Republican leader)
• A. Piatt Andrew (Assistant Secretary of the Treasury)
• Frank Vanderlip (President of National City Bank of New York)
• Henry P. Davison (Senior Partner at J.P. Morgan Company)
• Charles D. Norton (President of First National Bank of New York)
• Benjamin Strong (head of Bankers Trust Company)
• Paul Warburg (Partner at Kuhn, Loeb & Company)

Objectives. The primary goals of this meeting were to:

• Create a central banking system that appeared government-run but was controlled by private banks
• Establish a mechanism to create money out of thin air
• Shift the responsibility for bank failures from banks to taxpayers

Long-term impact. This secretive gathering laid the groundwork for the Federal Reserve Act, fundamentally altering the American monetary system and concentrating financial power in the hands of a few elite bankers.

3. Fiat Money: The Root of Economic Instability and Inflation

"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."

Definition and creation. Fiat money is currency not backed by a physical commodity like gold or silver. It has value only because a government declares it legal tender. The Federal Reserve creates fiat money through:

• Open market operations (buying government securities)
• Adjusting the discount rate
• Changing reserve requirements for banks

Economic consequences. The ability to create money out of thin air leads to:

• Inflation, as more money chases the same amount of goods and services
• Economic bubbles and subsequent crashes
• Wealth transfer from savers to debtors
• Encouragement of excessive government spending and debt

Historical precedent. Every fiat currency in history has eventually collapsed or been significantly devalued. Examples include:

• The Continental Currency during the American Revolution
• The French assignats during the French Revolution
• The German mark in the 1920s leading to hyperinflation

4. Fractional Reserve Banking: Creating Money Out of Thin Air

"Banks are creating money based on a borrower's promise to pay (the IOU)... Banks create money by 'monetizing' the private debts of businesses and individuals."

How it works. Fractional reserve banking allows banks to lend out more money than they have in deposits. For example, with a 10% reserve requirement:

1. A bank receives a $100 deposit
2. It keeps $10 as a reserve and lends out $90
3. The $90 loan is deposited in another bank
4. That bank keeps $9 as a reserve and lends out $81
5. This process continues, potentially creating up to $1000 from the original $100 deposit

Multiplication of money supply. This system allows for a significant expansion of the money supply beyond the actual physical currency in circulation.

Risks and instability. Fractional reserve banking introduces systemic risks:

• Bank runs if too many depositors demand their money simultaneously
• Amplification of economic boom-bust cycles
• Increased likelihood of bank failures during economic downturns

5. The Mandrake Mechanism: How Banks Profit from Debt Creation

"The entire function of this machine is to convert debt into money. It's just that simple."

Process overview. The Mandrake Mechanism, named after a comic book magician, describes how the banking system creates money from debt:

1. The government issues bonds to finance spending
2. The Federal Reserve buys these bonds with money created out of nothing
3. This money enters the banking system as deposits
4. Banks use these deposits as a base to create more loans through fractional reserve banking

Profit generation. Banks profit from this system by:

• Earning interest on money they create out of thin air
• Collecting fees for managing the money supply
• Gaining influence over government policy due to their role in financing government debt

Economic impact. This mechanism leads to:

• A constantly expanding money supply
• Perpetual inflation
• An ever-growing national debt
• Concentration of economic power in the hands of bankers

6. International Bankers' Role in Funding Both Sides of Major Wars

"The true purpose of the war, its most essential part, is to drive the entire world deeper into debt and under the control of the international bankers."

Historical pattern. International bankers have frequently funded both sides in major conflicts, including:

• The Napoleonic Wars
• The American Civil War
• World Wars I and II
• Various Cold War conflicts

Motivations. Bankers profit from war financing through:

• Interest on war loans
• Control over post-war reconstruction contracts
• Influence over geopolitical outcomes

Specific examples:

• The Rothschild family's involvement in the Napoleonic Wars
• J.P. Morgan's role in financing the Allies in World War I
• Chase Bank's dealings with Nazi Germany before and during World War II

7. The Rothschild Formula: Perpetual War for Perpetual Profit

"Let me issue and control a nation's money and I care not who writes the laws."

Key components. The Rothschild Formula, attributed to the banking dynasty, consists of:

1. Funding both sides in conflicts to ensure profitability regardless of outcome
2. Cultivating close relationships with governments to gain insider information and influence
3. Encouraging international conflicts to create demand for loans
4. Using war debts to gain control over national economies

Implementation. This strategy has been employed through:

• Secret diplomacy and intelligence gathering
• Control of media narratives to shape public opinion
• Manipulation of financial markets based on privileged information

Long-term effects. The Rothschild Formula contributes to:

• Perpetual global conflict and instability
• The rise of the military-industrial complex
• Erosion of national sovereignties in favor of international financial interests

8. Central Banks as Instruments of Economic Manipulation and Control

"The Federal Reserve System is not Federal; it has no reserves; and it is not a system at all, but rather, a criminal syndicate."

Power concentration. Central banks like the Federal Reserve concentrate economic power by:

• Controlling the money supply and interest rates
• Influencing government fiscal policies
• Acting as lenders of last resort during crises

Tools of control. Central banks manipulate the economy through:

• Open market operations (buying/selling government securities)
• Setting reserve requirements for banks
• Adjusting the discount rate for bank borrowing

Global coordination. Central banks often work together to:

• Stabilize currency exchange rates
• Coordinate responses to global financial crises
• Implement consistent monetary policies across nations

9. The Gold Standard: A Stabilizing Force Abandoned for Political Gain

"Long-term price stability is possible only when the money supply is based upon the gold (or silver) supply without government interference."

Advantages of the gold standard:

• Natural limit on money creation, preventing excessive inflation
• Stable long-term prices and currency values
• Discipline on government spending and borrowing

Abandonment process:

1. The Federal Reserve Act of 1913 began centralizing control of the money supply
2. The Gold Reserve Act of 1934 prohibited private gold ownership
3. The Bretton Woods Agreement of 1944 established a modified gold standard
4. In 1971, President Nixon ended the convertibility of the dollar to gold

Consequences of abandonment:

• Increased inflation and economic instability
• Expansion of government debt and spending
• Greater power for central banks to manipulate the economy

10. The Federal Reserve's Role in Boom-Bust Cycles and Economic Crises

"The Federal Reserve is the chief culprit in the economic booms and busts that have characterized the U.S. economy since 1913."

Cycle creation. The Fed contributes to boom-bust cycles by:

• Artificially lowering interest rates, encouraging excessive borrowing and speculation
• Expanding the money supply, leading to asset bubbles
• Tightening monetary policy, often triggering recessions

Crisis response. During economic downturns, the Fed typically:

• Lowers interest rates to near-zero
• Engages in quantitative easing (large-scale asset purchases)
• Provides emergency lending to financial institutions

Historical examples:

• The Great Depression (1929-1939)
• The Stagflation of the 1970s
• The Dot-com Bubble and Crash (late 1990s-early 2000s)
• The 2008 Financial Crisis and Great Recession

Last updated: August 11, 2024