The Age of Central Banking
January 23, 2016
THE Age of Central Banking is the age of state-sponsored usury. Central banking is the foundation of our debt-based monetary system. It concentrates power in the hands of the few, leads to centralization throughout the economy, and depends on widespread, cultivated ignorance.
You live in the Age of Central Banking, which means that you are to some degree a slave to debt. Even if your personal accounts are in good shape and you owe little or no money, you are still chained to debt through taxation, inflation and the larger economic cycles. We are so engulfed by this system, it’s hard for us to see that it is not a work of nature, nor the inevitable byproduct of “free enterprise.” It is the Capitalist version of tyranny and the root of the immigration crisis, our declining birthrate and our perpetual wars. It cannot last because it is inhuman, but how long it will last is up perhaps to the enlightened few.
Thomas Aquinas said that man cannot be virtuous without the sufficient means to ensure his material welfare. Modern society cannot be virtuous as long as the existing monetary system persists. There was a reason the Church banned usury. It destroys whole societies and leads to moral meltdown.
There are a number of good books that explain the issue in simple, clear language, accessible to those who are not economists, such as me. I am referring to books that can be read in a few days or even hours, and that give a clear overview without getting bogged down in excessive detail.
They include The Banking Swindle by Kerry Bolton, The Web of Debt: The Shocking Truth about our Monetary System and How we Can Break Free by Ellen Brown, A History of Central Banking and the Enslavement of Mankind by Stephen Mitford Goodson, Bancarotta: An Allegory about Central Banking by M.S. King and The Tyranny of the Federal Reserve, another good primer on the subject by an obscure, self-published author, Brian O’Brien.
The Federal Reserve is not a federal agency, but a consortium of private banks given the authority to regulate our money supply, an authority which the Constitution relegates to Congress alone.
Here are a few selections from O’Brien’s book, which I mentioned in a previous post.
O’Brien writes in his excellent introduction:
Yes, we Americans are still a blessed people and we are fortunate to live in a prosperous nation founded on great principles. But, unfortunately, we Americans have been cursed with a monetary system that was purposefully designed to siphon off the wealth of our nation and concentrate it into the grasping hands of a small number of usurers and speculators. This monetary system was put in place a century ago under false pretenses. Its architects made grand promises that their system would end the cycle of booms and busts that had been plaguing American families, farms and businesses. They designed a system that appeared to be aligned with American values, but this was a deception. The Federal Reserve Act of 1913 was a rejection of American values. It put in place a system that was unaccountable to the people, without checks and balances, and which concentrated power into the hands of a few who were given the authority to make decisions in secrecy that affect the lives of all of us. This system was purposefully designed to operate without the consent of the governed.
[The Tyranny of the Federal Reserve, (p. 3-4), Kindle Edition.]
This isn’t about casting aspersions on those who prosper and amass wealth, but about a vast pyramid scheme that is rigged against the people. It is not wealth that is inherently evil, but theft.
More from O’Brien:
One hundred years after the passage of the Federal Reserve Act, we can look back and say without a doubt that the Federal Reserve has totally and utterly failed in its stated objectives. It did not give us a safer and more stable monetary and financial system. Yet the Federal Reserve Bank remains in operation. It has grown to become the nexus of power not only in the United States but in all the world.
What is the legacy of the Fed’s 100-year reign?
Our once mighty industrial base has been exported overseas. Our nation, which was once the world’s greatest creditor, is now buried under the largest debt burden in history. Fewer and fewer Americans as a percentage of the population are working and more Americans have become reliant on food stamps and government handouts. The big banks that own the Federal Reserve have grown larger, more influential and more powerful than ever. They have become too big to fail. Our once mighty middle class is on the ropes. More and more of the wealth of the American nation is being concentrated into fewer and fewer hands while the ranks of the poor are growing. The once prosperous American people have fallen under the domination of a grasping international plutocracy. Our military is pulled into wars in distant countries where our youth are killed and our nation is pushed further into debt. A handful of obscenely rich people now dominate our country as the masses descend into poverty and government dependence. Our shameless politicians grovel before a few billionaires and promise them more wars in return for campaign financing. For more and more Americans, the once attainable American dream now seems like a bitter joke. These are the fruits of the Federal Reserve Act.
When it was established in 1913, the Federal Reserve was believed to be a solution to the instability caused by fractional reserve banking. Fractional reserve banking allows banks to keep only a fraction of their deposits on hand and lend out the rest. It always poses the threat of bank runs in times of panic. Banks can fail if depositors try to retrieve all of their deposits.
Back in 1907, the solution to the booms and busts caused by fractional reserve banking was not to form a new central bank. The obvious solution was to take fractional reserve banking head on.
In a fractional reserve banking system the amount of debt will always grow to exceed the money supply until the debt burden becomes so large that it can never be paid back. Then the inevitable defaults will occur and the banks will seize assets. That is the natural outcome of fractional reserve banking— the natural outcome of promising people that they can receive the money they deposited in a bank on demand when in fact the money has been lent out to others.
The solution given by the bankers to get around the weaknesses of fractional reserve banking is the central banking system. This solution is an admission by the bankers that their system is inherently unstable and needs the backing of a government-sponsored monopolistic bank in order to reduce the inherent risk of lending out multiples of money that do not actually exist. A central bank is a fractional reserve banker’s lender of last resort to provide liquidity by printing money out of thin air when the inevitable bust occurs. When a bank run occurs the central bank merely prints out enough money to satisfy the depositors so that the bank can stay afloat. The bankers use a central bank to create money from nothing to prop up their unstable money-making machines.
However, even with central banks acting as lenders of last resort, by its very nature fractional reserve banking remains unstable, whether a central bank backstops the system or not. The central banking system has done nothing to increase the stability of the fractional reserve banking system. Banks continue to create debt upon debt upon debt until the bubble pops and the inevitable contraction occurs. The system always and inevitably creates booms and busts, like the Panic of 1907. Central banks have only served to save the bankers by keeping them afloat during crises by printing money out of thin air when bank runs occur. The Fed did not stop the booms and busts and panics, it just made sure that the big banks that control the Fed wouldn’t go under when the busts occurred.
The obvious solution back in 1907 was to outlaw fractional reserve banking altogether. (pp. 85-86)
But instead, we were given central banking:
Before the existence of the Federal Reserve, banks determined the amount of money that circulated in the economy. After the creation of the Federal Reserve, the ability to withdraw money from circulation became centralized. The Fed became the one institution that determined how much or little lubricant the wheels of the economy would receive.
Simply by raising interest rates or increasing the required bank reserves, the Fed can withdraw money from circulation and an economic crisis can be created. Businesses will stop hiring and start firing. People will be thrown out of work. Elected officials will receive the blame and be thrown out of office. New politicians will be elected to take their place.
Simply by lowering interest rates, lowering the required reserves, or buying government securities, money will flood into the economy and an economic boom can be engineered. The stock market will rise. Assets will increase in price. Businesses will hire. Wages will go up. Politicians in office will be popular and get reelected.
A central bank centralizes the process of creating booms and busts and puts a handful of people in control of the economic well-being of a nation.
The Fed was not created to end booms and busts like the Panic of 1907. It was created to keep the unstable fractional reserve banking system in place and consolidate the power of the biggest bankers in the land.
What the bankers got in 1913 was a central bank that could provide them with all the credit they needed. Instead of having J.P. Morgan use his own money to rescue the fractional reserve banking system during the inevitable collapses, the bankers would use the full faith and credit the United States government to bail them out during the crises that they create. The people of the United States were made responsible for bailing out the banks. The banks keep their profits when times are good and the people shoulder the losses when times are bad. (p. 88)
Such concentration of wealth has ramifications for politics and the media, as these can be essentially controlled by those who favor the system. That explains why the mainstream media does not give much coverage to the flaws in central banking, especially in ways that make it accessible to the public. People hear about the Fed but tune out, not fully understanding what it is. The most powerful institution in America, which has the power to make or break presidents, is not widely understood.
O’Brien writes:
Do you honestly think the Fed is making its decisions for the good of the American people? Is that why some of the richest bankers in the world, Paul Warburg, J.P Morgan and John D. Rockefeller, set up the Fed— out of the goodness of their hearts?
Money is power. The Fed has the power to create $ 16 trillion out of thin air, more money than the entire yearly economic output of any nation on Earth, and far more than the yearly budget of any government. It has the power to wire enormous sums of money in secret to the banks and corporations of its choosing.
Power corrupts and absolute power corrupts absolutely. Does anyone believe that any institution should be granted absolute power over money without checks and balances or oversight? If a partial audit revealed that the Fed created $ 16 trillion and sent it to banks and corporations around the world, what would a full audit reveal?
The Federal Reserve and its beneficiaries do not want you to know. (p. 91)
To Be Continued.
