Taking Back the Money Power
excerpted from the book
Web of Debt
The Shocking Truth About Our Money System And How We Can
by Ellen Hodgson Brown
Third Millennium Press, 2007, paperback
Banks create money all
the time. The chief reason the U.S. government can't do it is that a private
banking cartel already has a monopoly on the practice.
Growth in M3 is no
longer officially being reported, but by 2007, reliable private sources put it
at 11 percent per year. That means that over one trillion dollars are now being
added to the economy annually. Where does this new money come from? It couldn't
have come from new infusions of gold, since the country went off the gold
standard in 1933. All of this additional money must have been created by banks
as loans. As soon as the loans are paid off, the money has to be borrowed all
over again, just to keep money in the system; and it is here that we find the
real cause of global scarcity: somebody is paying interest on most of the money
in the world all of the time. A dollar accruing interest at 5 percent,
compounded annually, becomes two dollars in about 14 years. At that rate, banks
siphon off as much money in interest every 14 years as there was in the entire
world 14 years earlier.
That explains why M3 has increased by 100 percent or
more every 14 years since the Federal Reserve first started tracking it in
1959. According to a Fed table titled "M3 Money Stock," M3 was about
$300 billion in 1959. In 1973,14 years later, it had grown to $900 billion. In
1987,14 years after that, it was $3,500 billion; and in 2001, 14 years after
that, it was $7,200 billion. To meet the
huge interest burden required to service all this money-built-on-debt, the
money supply must continually expand; and for that to happen, borrowers must
continually go deeper into debt, merchants must continually raise their prices,
and the odd men out in the bankers' game of musical chairs must continue to
lose their property to the banks. Wars, competition and strife are the
inevitable results of this scarcity-driven system.
The obvious solution is to eliminate the parasitic
banking scheme that is feeding on the world's prosperity. how? The Witches of Wall Street are not likely to release their
vice-like grip without some sort of revolution; and a violent revolution would
probably fail, because the world's most feared military machine is already in
the hands of the money cartel. Violent revolution would just furnish them with
an excuse to test their equipment. The first American Revolution was fought
before tasers, lasers, tear gas, armored tanks, and depleted uranium weapons.
Fortunately or unfortunately, in the eye of today's
economic cyclone, we may have to do no more than watch
and wait, as the global pyramid scheme collapses of its own weight. In the end,
what is likely to bring the house of cards down is that the Robber Barons have
lost control of the propaganda machine.
Richard Russell publisher of The Dow Theory Letter
The creation of money is a total mystery to probably
99 percent of the US population, and that most definitely includes the Congress
and the Senate. The takeover of US money creation by the Fed is one of the most
mysterious and ominous acts in US history .... The legality of the Federal
Reserve has never been "tried" before the US Supreme Court.
Vernon Parrington summarized Greenbackers' position in the 1920s
To allow the bankers to erect a monetary system on
gold [gold standard] is to subject the producer to the money-broker and measure
deferred payments by a yardstick that lengthens or shortens from year to year.
The only safe and rational currency is a national currency based on the
national credit, sponsored by the state, flexible, and controlled in the
interests of the people as a whole.
Stephen Zarlenga in 'The Lost Science of Money'
All of the plausible sounding gold standard theory
could not change or hide the fact that, in order to function, the system had to
mix paper credits with gold in domestic economies. Even after this addition,
the mixed gold and credit standard could not properly service the growing
economies. They periodically broke down with dire domestic and international
results. [In] the worst such breakdown, the Great Crash and Depression of
1929-33,... it was widely noted that those countries did best that left the
gold standard soonest.
Machiavelli, in the sixteenth century
He who introduces a new order of things has all
those who profit from the old order as his enemies, and he has only lukewarm
allies in all those who might profit from the new.
99 percent of the U.S. money supply is owed back to
private lenders with interest, and the money to cover the interest does not
exist until new loans are taken out to cover it. Just to maintain our
debt-based money supply requires increasing levels of debt and corresponding
levels of inflation, creating a debt cyclone that is vacuuming up our national
assets. The federal debt has grown so massive that the interest burden alone
will soon be more than the taxpayers can afford to pay. The debt is impossible
Al Martin cites a study authorized by, the U.S. Treasury in 2001, finding that
for the government to keep servicing its debt as it has been doing, by 2013 it
will have to have raised the personal income tax rate to 65 percent. And that's
just to pay the interest on the national debt. When the government can't pay
the interest, it will he forced to declare bankruptcy, and the economy will
The economy of the rest of the planet would collapse
five days later .... The only way the government can maintain control in a
post-economically collapsed environment is through currency and rough military
might, or internal military power...
Mike Whitney, in an April 2005 article in Counter Punch
If the major oil producers convert from the dollar
to the euro, the American economy will sink almost overnight. If oil is traded
in euros then central banks around the world would be compelled to follow and
America will be required to pay off its enormous $8 trillion debt.
In 1933 Franklin Roosevelt pronounced the country officially bankrupt,
exercised his special emergency powers, waved the royal Presidential fiat, and
ordered the promise to pay in gold removed from the dollar bill. The dollar was
instantly transformed from a promise to pay in legal tender into legal tender
itself. Seventy years later, Congress could again acknowledge that the country
is officially bankrupt, propose
If the Fed can
buy back the government's bonds with a flood of newly-printed dollars, leaving
the government in debt to the Fed and the banks, why can't the government buy
back the bonds with its own newly-printed dollars, debt free?
What would happen if the Social Security crisis were resolved by simply cashing
out its federal bond holdings with newly-issued U.S. Notes? Would dangerous
inflation result? The likely answer is that it would not, because the Social
Security fund would have no more money than it had before. The government would
just be returning to the fund what the taxpayers thought was in it all along.
The bonds would be turned into cash, which would stay in the fund where it
belonged, to be used for future baby-boomer pay-outs as intended.
The Fed owns about ten percent of the government's outstanding securities. If
the government were to buy back these securities with cash, that money too
would no doubt stay where it is, where it would continue to serve as the
reserves against which loans were made. The cash would just replace the bonds,
which would be liquidated and taken out of circulation. Again, consumer prices
would not go up, because there would be no more money in circulation than there
That is one way to deal with the Federal Reserve's
Treasury securities, but an even neater solution has been proposed: the
government could just void out the bonds. Recall that the Federal Reserve
acquired its government securities without consideration, and that a contract
without consideration is void.
What would the Federal Reserve use in that case for
reserves? Article 30 of the Federal Reserve Act of 1913 gave Congress the right
to rescind or alter the Act at any time. If the Act were modified to make the
Federal Reserve a truly federal agency, it would not need to keep / reserves.
It could issue "the full faith and credit of the United States"
directly, without having to back its dollars with government bonds.
Foreign central banks are reducing their reserves of U.S. securities whether we
like it or not. The tide is rolling out, and U.S. bonds will be flooding back
to U.S. shores. The question for the U.S. government is simply who will take up
the slack when foreign creditors quit rolling over U.S. debt. Today, when no
one else wants the bonds sold at auction, the Fed and its affiliated banks step
in and buy them with dollars created for the occasion, creating two sets of
securities (the bonds and the cash) where before there was only one. This
inflationary duplication could be avoided if the Treasury were to buy back the
bonds itself and just void them out. Congress could then avoid the debt problem
in the future by following the lead of the Guernsey islanders and simply
refusing to go into debt. Rather than issuing bonds to meet its costs, it could
issue dollars directly.
The stock market is casino of people with money to invest.
Once the government reclaims the power to create money from the banks, it will
no longer need to sell its bonds to investors. It will not even need to levy
income taxes. It will be able to exercise its sovereign right to issue its own
money, debt-free. That is what British monarchs did until the end of the
seventeenth century, what the American colonists did in the eighteenth century,
and what Abraham Lincoln did in the nineteenth century.
Federal Reserve Chairman Ben Bernanke, in a speech in Washington DC, 2002
The U.S. government has a technology, called a
printing press (or today, its electronic equivalent), that allows it to produce
as many U.S. dollars it wishes at essentially no cost.
The Japanese government actually owns its central bank, the Bank of Japan.
The Fed manipulates markets with accounting-entry money funneled through its
"primary dealers" - a list of about 30 investment houses authorized
to trade government securities, including Goldman Sachs, Morgan Stanley, and
Merrill Lynch.' These banks then use the funds to buy government bonds, in the
sort of maneuver that might be called money laundering" if it were done
What has allowed government to become corrupted today is that it is actually
run by the money cartel. Big Business holds all the cards, because its
affiliated banks have monopolized the business of issuing and lending the
national money supply, a function the Constitution delegated solely to
Congress. What hides behind the banner of "free enterprise" today is
a system in which giant corporate monopolies have used their affiliated banking
trusts to generate unlimited funds to buy up competitors, the media, and the
government itself, forcing truly independent private enterprise out. Big
private banks are allowed to create money out of nothing, lend it at interest,
foreclose on the collateral, and determine who gets credit and who doesn't.
They can advance massive loans to their affiliated corporations and hedge
funds, which use the money to raid competitors and manipulate markets.
... These giant cartels can be brought to heel only
by cutting off their source of power and returning it to its rightful sovereign
owners, the people themselves. Private enterprise needs publicly-operated
police, courts and laws to keep corporate predators at bay. It also needs a
system of truly national banks, in which the power to create the money and
advance the credit of the people is retained by the people. We trust government
with sweeping powers to declare and conduct wars, provide for the general
welfare, and establish and enforce laws. Why not trust it to create the
national money supply in all its forms?
The bottom line is that somebody has to have the power to create money... There
are only three choices for the job: a private banking cartel, local communities
acting separately, or the collective body of the people acting through their
representative government. Today we are operating with option #1, a private
banking cartel, and it has brought the system to the brink of collapse. The
privately-controlled Federal Reserve, which was chartered specifically to
"maintain a stable currency," has allowed the money supply to balloon
out of control. The Fed manipulates the money supply and regulates its value
behind closed doors, in blatant violation of the Constitution and the antitrust
laws. Yet it not only can't be held to account; it doesn't even have to explain
its rationale or reveal what is going on.
... The fiat currency of the national community has
the full force of the nation behind it. And even if the politicians in charge
of managing it turn out to be no less corrupt than private bankers, the money
created by the government will be debt-free. Shifting the power to create money
to Congress can relieve future generations of the burden of perpetual interest
payments to an elite class of financial oligarchs who have advanced nothing of
their own to earn it.