"They would go to the Fed if they knew what the Fed was"

Video take by some Wall Street traders who watch as protesters of Occupy Wall Street are arrested, with one person in the background of the video suggesting he wanted to shoot the protesters with a Glock pistol.

The most salient point of the video, however, comes near the end at about the 6:45 mark.

Commenting on how it has taken the protesters almost a month to find their way down to Wall Street itself, one trader says: "They would go to the Fed if they knew what the Fed was!"

And that dear reader is the issue in a nutshell. 

Whatever the cornucopia of complaints the #Occupy Wall Street individuals may have, the root of the problem is the Federal Reserve - the privately owned Central Bank who currently has the authority to control the money supply.

US President Thomas Jefferson saw this when he said:

• "The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."

He also said:

• "A private central bank issuing the public currency is a greater menace to the liberties of the people than a standing army... We must not let our rulers load us with perpetual debt."

President Andrew Jackson also saw this. When he disbanded the US Central Bank (created after the time of Thomas Jefferson and called, at the time, the 2nd Bank of the United States).

When it came time to renew the bank’s charter in 1832, President Jackson put his re-election bid on the line and, after winning the election, vetoed Congress’ attempt to renew that Charter. When he vetoed the Charter renewal he said:

• "Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? Is there not cause to tremble for the purity of our elections in peace and for the independence of our country in war? Controlling our currency, receiving our public monies, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than a naval and military power of the enemy."

Most people do not understand the Federal Reserve Bank.

It is necessary to understand that the Federal Reserve is not owned by the United States government as many believe.

The central bank, the Federal Reserve Bank, is a private bank, owned by some of the richest and most powerful people in the world. This bank has nothing to do with the U.S. government other than the connection that allows it to print US currency.

The Federal Reserve Bank has a total, government-enforced monopoly in money.

This is the root of all the problems which the protestors at #Occupy Wall Street, and all those in sympathy with them, wish to address.

And to address those problems, efforts must be focused on the root of the problem: Central Banks and the US Federal Reserve.

That's why Ralph Nader recently said on CNN:

• “The Federal Reserve is now a government within a government. It is totally out of control. Congress doesn't control it. It's funded by the banks and we either have constitutional government or we don't."

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The History of Central Banks - Part 1 (48 B.C. - 1791 A.D.)

A great many people believe the current crisis we are in is a direct result of the playing out of the debt-based monetary system and the scourge of Central Banks in our society.

A battle over the place and power of a central bank in America has rumbled throughout U.S. history.

It has pitted capitalists against populists who feared the wealthy few would hog power and crush liberty. The skirmishing has resurfaced amid the current credit crackup, with book after book faulting the Federal Reserve for allowing Americans to run up some $34 trillion in domestic non-financial debt.    

But most people have no idea what the Central Bank is and what role they play in our economy.

US Republican Presidential Candidate Ron Paul has vowed to end the Central Bank and has written a book about it.

But what is the Central Bank? 

How did it evolve and what is their place in our economy?

To understand why there is a push to end the US Federal Reserve we must understand the history behind the Central Banks.  That's what this series will be about.  The content is adapted from a history written by Andrew Carrington.

It will be long and broken down into multiple parts, but I hope you will take the time to read through it all.

In this first installment we look at the period from 48 BC to the introduction of the first Central Bank in the United States in 1791, the Bank of North America.

Central Banks sprung from the money changers of the time, so we start with them.

(Click on all images to enlarge)

48 B.C.

We can find reference to the money changers in the time of Julius Ceasar.

Julius Caesar took back from the money changers the power to coin money and then minted coins for the benefit of all. With this new, plentiful supply of money, he established many massive construction projects and built great public works. By making money plentiful, Caesar won the love of the common people.

But the money changers hated him for it and this is why Caesar was assassinated. Immediately after his assassination came the demise of plentiful money in Rome, taxes increased, as did corruption.

Eventually the Roman money supply was reduced by 90%, which resulted in the common people losing their lands and homes.

The growth and contraction of the money supply is a common theme throughout economic history.

30 A.D.

We next find reference to the money changers in the Bible in the time of Jesus Christ.

When Jews came to Jerusalem to pay their Temple tax, they could only pay it with a special coin, the half-shekel. This was a half-ounce of pure silver, about the size of a quarter. It was the only coin at that time which was pure silver and of assured weight, without the image of a pagan Emperor, and therefore to the Jews it was the only coin acceptable to God.

Unfortunately these coins were not plentiful, the money changers had cornered the market on them, and so they raised the price of them to whatever the market could bear. They used their monopoly they had on these coins to make exorbitant profits, forcing the Jews to pay whatever these money changers demanded.

Jesus Christ in the last year of his life uses physical force to throw the money changers out of the temple. He threw the money changers out as their monopoly on these coins totally violated the sanctity of God's house. These money changers called for his death days later.

1024

The money changers had control of Medieval England's money supply and at this time were generally known as goldsmiths.

This is when the concept of paper money started out.

Paper money was simply a receipt you would get after depositing gold with a goldsmith, in their safe rooms or vaults.

This paper started being traded as it was far more convenient than carrying around a lot of heavy gold and silver coins.

Over time, to simplify the process, the receipts were made to the bearer, rather than to the individual depositor, making it readily transferable without the need for a signature. This broke the tie to any identifiable deposit of gold.

Eventually the goldsmiths recognized that only a fraction of depositors ever came in and demanded their gold at any one time, so they found out how they could cheat on the system. They started to issue more receipts than they had gold to back those receipts and no one would be any the wiser. They would loan out these receipts (which were not backed by the gold they had in their depositories) and collect interest on them.

This was the birth of the system we know today as Fractional Reserve Banking, and like this system of today this meant the goldsmiths were able to make astronomical amounts of money by loaning out what were essentially receipts. Critics of the paper money system call these receipts "fradulent receipts" because they were receipts for gold the goldsmiths didn't possess.

As the goldsmiths gradually got more confident with the system they had created, they would loan out up to 10 times the amount of paper receipts vs the gold they had in their deposits.

To simplify how they made money on this let's give an example in which a goldsmith charges the same rate of interest to creditors and debtors. In this example a goldsmith would pay interest of 6% on gold you had deposited with them, and then charge 6% interest on the paper receipts (money) you borrowed from them.

As they would lend out ten times what you had deposited with them, they're paying you 6% interest while they are making 60% interest.

This is how they made money on your gold.

The goldsmiths also discovered that their control of this fraudulent money supply gave them control over the economy and the assets of the people. They exacted their control by rowing the economy between easy money and tight money.

The way they did this was to make money easy to borrow and therefore increase the amount of money in circulation. Then they would suddenly tighten the money supply, taking it out of circulation by making loans more difficult to get or stopping offering loans altogether.

Why did they do this?

Because the result would be a certain percentage of the people being unable to repay their previous loans. By not having the facility to take out loans they would go bankrupt and be forced to sell their assets to the goldsmiths for literally pennies on the dollar.

This is the early version of what some claim is exactly what happens in the world economy of today. Today we use words like, "the business cycle," "boom and bust," "recession," and "depression." Critics contend it is nothing more than an extension of the money changer game of pulling money from the money supply, but on a much grander scale.

1100

King Henry I succeeds King William II to the throne of England. During his reign he decided to take the power the money changers had over the people, and he did this by creating a completely new form of money that took the form of a stick.

This stick was called, a "talley stick," and ended up being the longest lasting form of currency, lasting 726 years until 1826 (even though other currencies came and went in that same period and ran alongside the talley sticks).

The talley stick was a stick of polished wood into which notches were cut along one side, to indicate the denomination of money the stick represented. The stick was then split lengthwise through the notches, so that both pieces had a record of the notches. The King kept one half to protect against counterfeiting and the other half was spent into the economy and circulated as money.

It was also one of the most successful money systems in history, as the King demanded that all the King's taxes had to be paid in, "talley sticks," so this increased their circulation and acceptance as a legitimate form of money. This system would work well in keeping the power away from the money changers in England.

1225

St. Thomas Aquinas is born. And as the leading theologian of the Catholic Church, he argues that the charging of interest is wrong because it applies to "double charging," charging for both the money and the use of the money.

This concept followed the teachings of Aristotle that taught the purpose of money was to serve the members of society and to facilitate the exchange of goods needed to lead a virtuous life. Interest was contrary to reason and justice because it put an unnecessary burden on the use of money.

Thus, Church law in Middle Ages Europe forbade the charging of interest on loans and even made it a crime called, "usury."

1509

King Henry VIII succeeds King Henry VII to the throne in England. During his reign he relaxed the laws regarding usury, and and the money changers did not waste any time in re-asserting themselves over the population.

They quickly made their gold and silver coin system plentiful again. It is interesting to note that under King Henry VIII the Church of England separated from Roman Catholicism, whose Church law prevented the charging of interest on money.

England will become a prominent place for the money changers to codify their practice.

1553 

Queen Mary I succeeds Lady Jane Grey's nine day reign to the throne in England.

During her reign, Queen Mary I, a staunch Catholic, tightened the usury laws again. The money changers were not amused and in revenge they tightened the money supply by hoarding gold and silver coins and causing the economy to plummet.

1558

Queen Elizabeth I succeeds Queen Mary I, her half sister, to the throne in England.

During her reign, Queen Elizabeth I decided that in order to wrest control of the money supply she would have to issue her own gold and silver coins. She did this through the public treasury and successfully took control of the money supply from the money changers.

1609

The money changers in the Netherlands establish the the first central bank in history, in Amsterdam.

1642

Oliver Cromwell is financed by the money changers for the purposes of formenting a revolution in England, and allowing them to take control of the money system again.

After much bloodshed, Cromwell finally purges the parliament, overthrows King Charles I and puts him to death in 1649.

The money changers immediately consolidate their power and for the next few decades plunge Great Britain into a costly series of wars. They also take over a square mile of property in the center of London which becomes known as the City of London.

1688

The money changers in England following a series of squabbles with the Stuart Kings, Charles II (1660 - 1685) and James II (1685 - 1688), conspire with their far more successful money changing counterparts in the Netherlands, who had already set up a central bank there.

They decide to finance an invasion by William of Orange of Netherlands who they sound out and establish will be more favorable to them. The invasion is successful and William of Orange ascends to the throne in England as King William III in 1689.

1694 

Following a costly series of wars over the last 50 years, English Government officials go, cap in hand, to the money changers for loans necessary to pursue their political purposes. The money changers agree to solve this problem in exchange for a government sanctioned privately owned bank which could issue money created out of nothing.

This was deceptively named the "Bank of England." Critics content this was done for the sole purpose of duping the general public into believing it was part of the government, which it was not.

Like any other private corporation the Bank of England sold shares to get started.

The private investors, whose names were never revealed, were supposed to put up £1,250,000 in gold coins to buy their shares in the bank, but only £750,000 was ever received. Despite that the bank was duly chartered and began loaning out several times the money it supposedly had in reserves, all at interest... a theme that lies at the heart of every private Central Bank throughout history.

Although the Bank of England's private investors were never revealed, one of the Directors, William Paterson, stated:

• "The Bank hath benefit of interest on all monies which it creates out of nothing.”

Furthermore the Bank of England would loan government officials as much of the new currency as they wanted, as long as they secured the debt by direct taxation of the British people.

The Bank of England amounted to nothing less than the legal counterfeiting of a national currency for private gain, and thus any country that would fall under the control of a private bank would amount to nothing more than a plutocracy.

Soon after the Bank of England was formed it attacked the talley stick system, as it was money outside of the power of the money changers, just as King Henry I had intended it to be.

1698 

Following four years of the Bank of England, their plan to control the money supply had come on in leaps and bounds. They had flooded the country with so much money that the Government debt to the Bank had grown from the initial £1,250,000, to £16,000,000, in only four years.

That's an increase of 1,280%.

Critics content this increase in the money supply is the first step in a crucial process.

If the money in circulation in a country is £5,000,000, and a central bank is set up and prints another £15,000,000, then by sending this money out into the economy through loans etc, reduces the value of the initial £5,000,000 in circulation before the bank was formed.

This is because the initial £5,000,000 is now only 25% of the economy.

It also gives the bank control of 75% of the money in circulation with the £15,000,000 they sent out into the economy.

This inflation which is the reduction in worth of money borne by the common person, due to the economy being flooded with too much money, an economy which the Central Bank are responsible for.

Critics content Stage 2 of the Central Bank plan occurs as this inflation takes hold. The common person's money is worth less so he has to go to the bank to get a loan to help run his business etc. When the Central Bank is satisfied there are enough people with debt out there, the bank tightens the supply of money by not offering loans. 

Stage 3 occurs as the Central Bank sits back and waits for the debtors to them to go bankrupt, allowing the bank to then seize from them real wealth, businesses and property etc, for pennies on the dollar.

Inflation never effects a central bank in fact they are the only group who can benefit from it, as if they are ever short of money they can simply print more.

1757 

Benjamin Franklin travels to England and spends the next 18 years of his life there until just before the start of the American Revolution.

1760

Mayer Amschel Bauer changes him name to Mayer Amschel Rothschild and sets up the, House Of Rothschild, and soon learns that if he loans out money to Governments and Royalty then this is far more profitable than loaning to individuals. This is because the loans made are bigger and backed by their nations' taxes. He trains his five sons in the art of money creation.

1764

Benjamin Franklin is asked by officials of the Bank of England to explain the prosperity of the colonies in America. He replies:

• "That is simple. In the Colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay no one."

As a result of Franklin's statement, the British Parliament hurriedly passed the Currency Act of 1764. This prohibited colonial officials from issuing their own money and ordered them to pay all future taxes in gold or silver coins.

Referring to move after this act was passed, Franklin would state the following in his autobiography:

• "In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the colonies were filled with the unemployed... The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money which created unemployment and dissatisfaction."
  
  "The viability of the colonists to get power to issue their own money permanently out of the hands of King George III  and the international bankers was the prime reason for the revolutionary war."

Control of America's money system will change hands 8 times since 1764.

1775

April 19th sees the start of the revolutionary war in Lexington, Massachusetts.

By this time the colonies had been drained of silver and gold coins as a result of British taxation. As a result of this, the continental government had no choice but to print money to finance the war.

At the start of the revolution the American money supply stood at $12,000,000. By the end of the war it was nearly $500,000,000 and as a result the currency was virtually worthless.

An example of this is that a pair of shoes now sold for $5,000 dollars. This also shows the danger of printing too much money. The reason Colonial Scrip had worked was because just enough was used to facilitate trade.

1781 (The Central Bank comes to America) 

Towards the end of the American Revolution the Continental Congress were desperate for money, so they allowed Robert Morris, their Financial Superintendent, to open a privately owned central bank, in the hope this would sort out the money problem.

Morris was a wealthy man who had grown wealthier during the revolution by trading in war materials.

This first central bank in America was called the Bank of North America, which was set up with a four year charter, and was closely modeled after the Bank of England. It was allowed to practice the fraudulent system of fractional reserve banking, so it could create money it didn't have, then charge interest on it.

The bank's charter called for private investors to put up $400,000 of initial capital, which Morris found himself unable to raise. Nevertheless he unashamedly used his political influence to have gold deposited in the bank, which had been loaned to America by France. Morris then loaned the money he needed to buy this bank from this deposit of gold that belonged to the government, or rather the American people.

This Bank of North America, again deceptively named so the common people would believe it was under the control of the government, was given a monopoly over the national currency.

Next up will be Part 2 (1791 - 1865).

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The Battle for the Message Begins

I suspect over the next few weeks we will see a theme appear in some of the media coverage of the Occupy Wall Street protests as they spread across North America.

And the theme will focus on the one like in this story, How silly are the End the Fed signs at Occupy Kansas City?

Adbusters, the Vancouver-based anti-consumerist magazine, called on people in July’s 97th issue to flood into Lower Manhattan on September 17 to “occupy Wall Street for a few months.”

Obstentially the movement is to protest against corporate greed. But 'End the Fed' is an important component of real solutions for 'Occupy Wall Street'.

And I would suggest that a titanic battle is now underway to try and extinquish the 'End the Fed' component.

Articles in support of the movement are starting to pop up as well, like this one: Ron Paul and Occupy Wall Street should jointly call for full public disclosure of all Fed bailout money.

US Republican Presidential candidate Ron Paul Supports the ‘Occupy Wall Street’ Movement and there are a great many who do not want the two messages linked.

Understanding the role of central banks is our current economic situation is crucial.

And driving a wedge between the protestors and this concept is going to be a major theme in the coming weeks.

As Ralph Nader said on CNN...“The Federal Reserve is now a government within a government. It is totally out of control. Congress doesn't control it. It's funded by the banks and we either have constitutional government or we don't."

The power elite DO NOT WANT the 'Occupy Wall Street' movement to get anywhere near embracing this message because it is within this message that real reform and real solutions lie.

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Great little cartoon

Above is a creative 30 minute cartoon I came across while reading ZeroHedge today.

You may recall a post I made on December 21, 2009 that detailed an excellent video called the Secret of Oz.

The Secret of Oz is a follow up film by Ben Still to an earlier work titled, "The Money Masters: How Banks Create the World's Money".

In 'The Secret of Oz', Still argues that the United States is headed for a deep depression unless lawmakers address the root of the problem: mounting interest payments on the national debt.

America once abolished their central bank after a massive debate and political battle. The reasons bare stark similarity to many of the economic problems currently being encountered.

From 1836 to 1913 there was no central bank. This is also a period of massive American prosperity.

America could fund it's economic system without incurring any Federal debt.

In 1913 the bankers won the political battle and the concept of a central bank was restored: The US Federal Reserve was born.

Every time a dollar is created, it is a loan to the Federal Government... a debt that must be repaid with interest, money acquired through income tax (it's no coincidence the IRS and the concept of income tax was also created in 1913).

Above is an interesting little cartoon that attempts to explain the battle over the concept of the central bank... and the role of banks in the housing collapse and credit bubble of the last few decades.

All money is created out of debt, but it doesn't have to be that way. Nations don't have to borrow money from banks. Sovereign nations can create their own money - debt free - just as it was done from 1836-1913.

It's a broad, difficult concept to fully appreciate.

But as this new decade dawns, I believe - in review come 2021 - this topic will be seen as one of the BIGGEST issues of this decade.

This cartoon attempts to examine the issue. I encourage you to track down a copy of the Secret of Oz and check out this cartoon if the topic interests you.

From the description of this cartoon video:

• The AMERICAN DREAM is a 30 minute animated film that shows you how you've been scammed by the most basic elements of our government system. All of us Americans strive for the American Dream, and this film shows you why your dream is getting farther and farther away. Do you know how your money is created? Or how banking works? Why did housing prices skyrocket and then plunge? Do you really know what the Federal Reserve System is and how it affects you every single day? THE AMERICAN DREAM takes an entertaining but hard hitting look at how the problems we have today are nothing new, and why leaders throughout our history have warned us and fought against the current type of financial system we have in America today. You will be challenged to investigate some very entrenched and powerful institutions in this nation, and hopefully encouraged to help get our nation back on track.

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