[A-List] The Web of Debt

Bill Totten shimogamo at ashisuto.co.jp
Sun Mar 15 20:55:37 MDT 2009

The Shocking Truth About Our Money System And How We Can Break Free

by Ellen Hodgson Brown, JD

Exploding the Myths about Money

Our money system is not what we have been led to believe. The creation
of money has been "privatized", or taken over by a private money cartel.
Except for coins, all of our money is now created as loans advanced by
private banking institutions - including the private Federal Reserve.
Banks create the principal but not the interest to service their loans.
To find the interest, new loans must continually be taken out, expanding
the money supply, inflating prices - and robbing you of the value of
your money.

Not only is virtually the entire money supply created privately by
banks, but a mere handful of very big banks is responsible for a massive
investment scheme known as "derivatives", which now tallies in at
hundreds of trillions of dollars. The banking system has been contrived
so that these big banks always get bailed out by the taxpayers from
their risky ventures, but the scheme has reached its mathematical
limits. There isn't enough money in the entire global economy to bail
out the banks from a massive derivatives default today. When the
investors realize that the "insurance" against catastrophe that they
have purchased in the form of derivatives is worthless, they are liable
to jump ship and bring the whole shaky edifice crashing down.

Web of Debt unravels the deceptions in our money scheme and presents a
crystal clear picture of the financial abyss towards which we are
heading. Then it explores a workable alternative, one that was tested in
colonial America and is grounded in the best of American economic
thought, including the writings of Benjamin Franklin, Thomas Jefferson
and Abraham Lincoln. If you care about financial security, your own or
the nation's, you should read this book.

Captured by the Debt Spider

President Andrew Jackson called the banking cartel a "hydra-headed
monster eating the flesh of the common man". New York Mayor John Hylan,
writing in the 1920s, called it a "giant octopus" that "seizes in its
long and powerful tentacles our executive officers, our legislative
bodies, our schools, our courts, our newspapers, and every agency
created for the public protection". The debt spider has devoured farms,
homes and whole countries that have become trapped in its web. In a
February 2005 article called "The Death of Banking", financial
commentator Hans Schicht wrote:

"The fact that the Banker is allowed to extend credit several times his
own capital base and that the Banking Cartels, the Central Banks, are
licensed to issue fresh paper money in exchange for treasury paper,
[has] provided them with free lunch for eternity ... Through a network
of anonymous financial spider webbing only a handful of global King
Bankers own and control it all ... Everybody, people, enterprise, State
and foreign countries, all have become slaves chained to the Banker's
credit ropes" {1}.

Schicht writes that he had an opportunity in his career to observe the
wizards of finance as an insider at close range. The game has gotten so
centralized and concentrated, he says, that the greater part of US
banking and enterprise is now under the control of a small inner circle
of men. He calls the game "spider webbing". Its rules include:

* Making any concentration of wealth invisible.

* Exercising control through "leverage" - mergers, takeovers, chain
share holdings where one company holds shares of other companies,
conditions annexed to loans, and so forth.

* Exercising tight personal management and control, with a minimum of
insiders and front-men who themselves have only partial knowledge of the

The late Dr Carroll Quigley was a writer and professor of history at
Georgetown University, where he was President Bill Clinton's mentor. Dr
Quigley wrote from personal knowledge of an elite clique of global
financiers bent on controlling the world. Their aim, he said, was
"nothing less than to create a world system of financial control in
private hands able to dominate the political system of each country and
the economy of the world as a whole". This system was "to be controlled
in a feudalist fashion by the central banks of the world acting in
concert, by secret agreements". {2} He called this clique simply the
"international bankers". Their essence was not race, religion or
nationality but was just a passion for control over other humans. The
key to their success was that they would control and manipulate the
money system of a nation while letting it appear to be controlled by the

The international bankers have succeeded in doing more than just
controlling the money supply. Today they actually create the money
supply, while making it appear to be created by the government. This
devious scheme was revealed by Sir Josiah Stamp, director of the Bank of
England and the second richest man in Britain in the 1920s. Speaking at
the University of Texas in 1927, he dropped this bombshell:

"The modern banking system manufactures money out of nothing. The
process is perhaps the most astounding piece of sleight of hand that was
ever invented. Banking was conceived in inequity and born in sin ...
Bankers own the earth. Take it away from them but leave them the power
to create money, and, with a flick of a pen, they will create enough
money to buy it back again ... Take this great power away from them and
all great fortunes like mine will disappear, for then this would be a
better and happier world to live in ... But, if you want to continue to
be the slaves of bankers and pay the cost of your own slavery, then let
bankers continue to create money and control credit." {3}

Professor Henry C K Liu is an economist who graduated from Harvard and
chaired a graduate department at UCLA before becoming an investment
adviser for developing countries. He calls the current monetary scheme a
"cruel hoax". When we wake up to that fact, he says, our entire economic
world view will need to be reordered, "just as physics was subject to
reordering when man's world view changed with the realization that the
earth is not stationary nor is it the center of the universe" {4}. The
hoax is that there is virtually no "real" money in the system, only
debts. Except for coins, which are issued by the government and make up
only about one one-thousandth of the money supply, the entire US money
supply now consists of debt to private banks, for money they created
with accounting entries on their books. It is all done by sleight of
hand; and like a magician's trick, we have to see it many times before
we realize what is going on. But when we do, it changes everything. All
of history has to be rewritten.

The following chapters track the web of deceit that has engulfed us in
debt, and present a simple solution that could make the country solvent
once again. It is not a new solution but dates back to the Constitution:
the power to create money needs to be returned to the government and the
people it represents. The federal debt could be paid, income taxes could
be eliminated, and social programs could be expanded; and this could all
be done without imposing austerity measures on the people or sparking
runaway inflation. Utopian as that may sound, it represents the thinking
of some of America's brightest and best, historical and contemporary,
including Abraham Lincoln, Thomas Jefferson and Benjamin Franklin. Among
other arresting facts explored in this book are that:

* The "Federal" Reserve is not actually federal. It is a private
corporation owned by a consortium of very large multinational banks.
(Chapter 13)

* Except for coins, the government does not create money. Dollar bills
(Federal Reserve Notes) are created by the private Federal Reserve,
which lends them to the government. (Chapter 2)

* Tangible currency (coins and dollar bills) together make up less than
three percent of the US money supply. The other 97 percent exists only
as data entries on computer screens, and all of this money was created
by banks in the form of loans. (Chapters 2 and 17)

* The money that banks lend is not recycled from pre-existing deposits.
It is new money, which did not exist until it was lent. (Chapters 17 and 18)

* Thirty percent of the money created by banks with accounting entries
is invested for their own accounts. (Chapter 18)

* The American banking system, which at one time extended productive
loans to agriculture and industry, has today become a giant betting
machine. An estimated $370 trillion are now riding on complex high-risk
bets known as derivatives - 28 times the $13 trillion annual output of
the entire US economy. These bets are funded by big US banks and are
made largely with borrowed money created on a computer screen.
Derivatives can be and have been used to manipulate markets, loot
businesses, and destroy competitor economies. (Chapters 20 and 32)

* The US federal debt has not been paid off since the days of Andrew
Jackson. Only the interest gets paid, while the principal portion
continues to grow. (Chapter 2)

* The federal income tax was instituted specifically to coerce taxpayers
to pay the interest due to the banks on the federal debt. If the money
supply had been created by the government rather than borrowed from
banks that created it, the income tax would have been unnecessary.
(Chapters 13 and 43)

* The interest alone on the federal debt will soon be more than the
taxpayers can afford to pay. When we can't pay, the Federal Reserve's
debt-based dollar system must collapse. (Chapter 29)

* Contrary to popular belief, creeping inflation is not caused by the
government irresponsibly printing dollars. It is caused by banks
expanding the money supply with loans. (Chapter 10)

* Most of the runaway inflation seen in "banana republics" has been
caused, not by national governments over-printing money, but by global
institutional speculators attacking local currencies and devaluing them
on international markets. (Chapter 25)

* The same sort of speculative devaluation could happen to the US dollar
if international investors were to abandon it as a global "reserve"
currency, something they are now threatening to do in retaliation for
what they perceive to be American economic imperialism. (Chapters 29 and 37)

* There is a way out of this morass. The early American colonists found
it, and so did Abraham Lincoln and some other national leaders: the
government can take back the money-issuing power from the banks.
(Chapters 8 and 24)

The bankers' Federal Reserve Notes and the government's coins represent
two separate money systems that have been competing for dominance
throughout recorded history. At one time, the right to issue money was
the sovereign right of the king; but that right got usurped by private
moneylenders. Today the sovereigns are the people, and the coins that
make up less than one one-thousandth of the money supply are all that
are left of our sovereign money. Many nations have successfully issued
their own money, at least for a time; but the bankers' debt-money has
generally infiltrated the system and taken over in the end. These
concepts are so foreign to what we have been taught that it can be hard
to wrap our minds around them, but the facts have been substantiated by
many reliable authorities. To cite a few -

Robert H Hemphill, Credit Manager of the Federal Reserve Bank of
Atlanta, wrote in 1934:

"We are completely dependent on the commercial Banks. Someone has to
borrow every dollar we have in circulation, cash or credit. If the Banks
create ample synthetic money we are prosperous; if not, we starve. We
are absolutely without a permanent money system. When one gets a
complete grasp of the picture, the tragic absurdity of our hopeless
position is almost incredible, but there it is. It is the most important
subject intelligent persons can investigate and reflect upon." {5}

Graham Towers, Governor of the Bank of Canada from 1935 to 1955,

"Banks create money. That is what they are for ... The manufacturing
process to make money consists of making an entry in a book. That is all
... Each and every time a Bank makes a loan ... new Bank credit is
created - brand new money." {6}

Robert B Anderson, Secretary of the Treasury under Eisenhower, said in
an interview reported in the August 31 1959 issue of US News and World

"[W]hen a bank makes a loan, it simply adds to the borrower's deposit
account in the bank by the amount of the loan. The money is not taken
from anyone else's deposit; it was not previously paid in to the bank by
anyone. It's new money, created by the bank for the use of the borrower."

Michel Chossudovsky, Professor of Economics at the University of Ottawa,
wrote during the Asian currency crisis of 1998:

"[P]rivately held money reserves in the hands of 'institutional
speculators' far exceed the limited capabilities of the World's central
banks. The latter acting individually or collectively are no longer able
to fight the tide of speculative activity. Monetary policy is in the
hands of private creditors who have the ability to freeze State budgets,
paralyse the payments process, thwart the regular disbursement of wages
to millions of workers (as in the former Soviet Union) and precipitate
the collapse of production and social programmes." {7}

Today, Federal Reserve Notes and US dollar loans dominate the economy of
the world; but this international currency is not money issued by the
American people or their government. It is money created and lent by a
private cartel of international bankers, and this cartel has the United
States itself hopelessly entangled in a web of debt. By 2006, combined
personal, corporate and federal debt in the United States had reached a
staggering 44 trillion dollars - four times the collective national
income, or $147,312 for every man, woman and child in the country. {8}
The United States is legally bankrupt, defined in the dictionary as
being unable to pay one's debts, being insolvent, or having liabilities
in excess of a reasonable market value of assets held. By October 2006,
the debt of the US government had hit a breath-taking $8.5 trillion.
Local, state and national governments are all so heavily in debt that
they have been forced to sell off public assets to satisfy creditors.
Crowded schools, crowded roads, and cutbacks in public transportation
are eroding the quality of American life. A 2005 report by the American
Society of Civil Engineers gave the nation's infrastructure an overall
grade of D, including its roads, bridges, drinking water systems and
other public works. "Americans are spending more time stuck in traffic
and less time at home with their families", said the group's president.
"We need to establish a comprehensive, long-term infrastructure plan".
{9} We need to but we can't, because government at every level is broke.

Money in the Land of Oz

If governments everywhere are in debt, who are they in debt to? The
answer is that they are in debt to private banks. The "cruel hoax" is
that governments are in debt for money created on a computer screen,
money they could have created themselves. The vast power acquired
through this sleight of hand by a small clique of men pulling the
strings of government behind the scenes evokes images from The Wizard of
Oz, a classic American fairytale that has become a rich source of
imagery for financial commentators. Editorialist Christopher Mark wrote
in a series called "The Grand Deception":

"Welcome to the world of the International Banker, who like the famous
film, The Wizard of Oz, stands behind the curtain of orchestrated
national and international policymakers and so-called elected leaders" {10}

The late Murray Rothbard, an economist of the classical Austrian School,

"Money and banking have been made to appear as mysterious and arcane
processes that must be guided and operated by a technocratic elite. They
are nothing of the sort. In money, even more than the rest of our
affairs, we have been tricked by a malignant Wizard of Oz." {11}

In a 2002 article titled "Who Controls the Federal Reserve System?",
Victor Thorn wrote:

"In essence, money has become nothing more than illusion - an electronic
figure or amount on a computer screen ... As time goes on, we have an
increasing tendency toward being sucked into this Wizard of Oz vortex of
unreality [by] magician-priests that use the illusion of money as their
control device" {12}

James Galbraith wrote in The New American Prospect:

"We are left ... with the thought that the Federal Reserve Board does
not know what it is doing. This is the 'Wizard of Oz' theory, in which
we pull away the curtains only to find an old man with a wrinkled face,
playing with lights and loudspeakers." {13}

The analogies to The Wizard of Oz work for a reason. According to later
commentators, the tale was actually written as a monetary allegory, at a
time when the "money question" was a key issue in American politics. In
the 1890s, politicians were still hotly debating who should create the
nation's money and what it should consist of. Should it be created by
the government, with full accountability to the people? Or should it be
created by private banks behind closed doors, for the banks' own private

William Jennings Bryan, the Populist candidate for President in 1896 and
again in 1900, mounted the last serious challenge to the right of
private bankers to create the national money supply. According to the
commentators, Bryan was represented in Frank Baum's 1900 book The
Wonderful Wizard of Oz by the Cowardly Lion. The Lion finally proved he
was the King of Beasts by decapitating a giant spider that was
terrorizing everyone in the forest. The giant spider Bryan challenged at
the turn of the twentieth century was the Morgan/Rockefeller banking
cartel, which was bent on usurping the power to create the nation's
money from the people and their representative government.

Before World War I, two opposing systems of political economy competed
for dominance in the United States. One operated out of Wall Street, the
New York financial district that came to be the symbol of American
finance. Its most important address was 23 Wall Street, known as the
"House of Morgan". J P Morgan was an agent of powerful British banking
interests. The Wizards of Wall Street and the Old World bankers pulling
their strings sought to establish a national currency that was based on
the "gold standard", one created privately by the financial elite who
controlled the gold. The other system dated back to Benjamin Franklin
and operated out of Philadelphia, the country's first capital, where the
Constitutional Convention was held and Franklin's "Society for Political
Inquiries" planned the industrialization and public works that would
free the new republic from economic slavery to England. {14} The
Philadelphia faction favored a bank on the model established in
provincial Pennsylvania, where a state loan office issued and lent
money, collected the interest, and returned it to the provincial
government to be used in place of taxes. President Abraham Lincoln
returned to the colonial system of government-issued money during the
Civil War; but he was assassinated, and the bankers reclaimed control of
the money machine. The silent coup of the Wall Street faction culminated
with the passage of the Federal Reserve Act in 1913, something they
achieved by misleading Bryan and other wary Congressmen into thinking
the Federal Reserve was actually federal.

Today the debate over who should create the national money supply is
rarely heard, mainly because few people even realize it is an issue.
Politicians and economists, along with everybody else, simply assume
that money is created by the government, and that the "inflation"
everybody complains about is caused by an out-of-control government
running the dollar printing presses. The puppeteers working the money
machine were more visible in the 1890s than they are today, largely
because they had not yet succeeded in buying up the media and cornering
public opinion.

Economics is a dry and forbidding subject that has been made
intentionally complex by banking interests intent on concealing what is
really going on. It is a subject that sorely needs lightening up, with
imagery, metaphors, characters and a plot; so before we get into the
ponderous details of the modern system of money-based-on-debt, we'll
take an excursion back to a simpler time, when the money issues were
more obvious and were still a burning topic of discussion. The plot line
for The Wizard of Oz has been traced to the first-ever march on
Washington, led by an obscure Ohio businessman who sought to persuade
Congress to return to Lincoln's system of government-issued money in
1894. Besides sparking a century of protest marches and the country's
most famous fairytale, this little-known visionary and the band of
unemployed men he led may actually have had the solution to the whole
money problem, then and now ...

(c) Copyright 2007 Ellen Brown. All Rights Reserved.



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