Web of Debt
I just ordered the book Web of Debt by Ellen Hodgson Brown J.D. after reading her article at Le Metropole Cafe (free trials available here) titled FINANCIAL MELTDOWN: THE END OF A 300 YEAR PONZI SCHEME. She writes that in the recent crisis with hedge funds over sub-primes, the central banks created out of thin air, over $300 Billion. To put that amount of money into perspective, it would take a mere $188 Billion “to repair all of the 74,000 U.S. bridges known to be defective, preventing another disaster like that in Minneapolis in July.” How did we get into these problems?
Before 1913, multiple private banks issued banknotes with their own names on them; and as in England, the banks issued notes for much more gold than was in their vaults. The scheme worked until the customers got suspicious and all demanded their gold at once, when there would be a “run” on the banks and they would have to close their doors.
A cartel of banks persuaded Congress to establish the Federal Reserve in 1913
The Federal Reserve (or “Fed”) was instituted to rescue the banks from these crises by creating and lending money on demand. The banks themselves were already creating money out of nothing, but the Fed served as a backup source, generating the customer confidence necessary to carry on the fractional-reserve lending scheme.
The central bank rescued the its member buddies after the credit bubble they produced came crashing down.
Brown writes that today what we think of as money, coins and paper currency, amounts to 3% of the total money supply. “The rest is created by commercial banks as loans.”
Among other problems with this system of money creation is that banks create the principal but not the interest necessary to pay back their loans; and that is where the Ponzi scheme comes in.
In our credit based economy, you need more and more borrowers to pay the interest. You even help those unqualified to borrow with 110 percent home loans. Brown writes before 1933 when we went off the gold standard, dollar backing with gold tended to limit the expansion of the money supply. Since then the FED has created bubble after bubble. When one collapses, the solution is to bail out the banks which creates another bubble. Brown writes
…we simply cannot afford the bank bailouts coming down the pike. If it takes $300 billion to avert a market collapse precipitated by a few failing hedge funds, what will the price tag be when the $400-plus trillion derivatives bubble collapses?
Our Constitution says
Article I, Section 8, Clause 5. The Congress shall have Power…To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.
It doesn’t say anything about a cartel of bankers. It is way past time to take our power back!
Web of Debt
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