The Truth Behind the Federal Reserve
A Review of the DVD The Money Masters: How International Bankers Gained Control of America
July 29, 2008
Review by Chris Masterjohn
If the American people ever allow private banks to control 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 prosperity until their children will wake up homeless on the continent their fathers conquered. — Thomas Jefferson
Did you know that the Federal Reserve, which controls the nation's money supply, is privately owned? That the congressional bill establishing it was written by the most powerful bankers in the world under highly secretive conditions that one of them openly referred to as a conspiracy several decades later? That the policies of the Federal Reserve are precisely what have run our country into debt and have produced the current financial crisis?
Did you know that the system of privately owned banks beginning in England in 1694 and now dominating the United States and every developed nation have financed most of the world's wars in the last three hundred years, greatly enabled and extended them by financing both sides, and driven these countries into massive debt, essentially enslaving governments and populations to international banking institutions?
The Money Masters (Google Video; YouTube; purchase DVD) is an excellent two-DVD set that explains how the international bankers came to power and how they took over America.
We cannot even begin to understand how great concentrations of economic and political power have developed in our country, why our farmers are being driven out of the agricultural industry in droves, how the advocates of world government are aiming to subjugate the nutritional supplement industry to the much more concentrated pharmaceutical industry, or why we are approaching a massive financial crisis that threatens to vaporize the average person's wealth while enriching only the very tip-top figures in the banking industry, unless we understand what real money is and what kind of an unthinkable crime and complete conspiracy the formation of our central bank has been. Money Masters is not flawless — I disagree with some of its solutions and I will explain this below — but it is the best DVD I know of that tells the story.
And this is a story everyone who cares about our country and the world should know.
Here is a brief synopsis of it, with some of my critical comments following.
In This Review
The Rise of the Bankers
The banking indsustry evolved out of the gold industry. Goldsmiths would give certificates of ownership to customers so that they could hold on to their gold and keep it safe until needed.
However, eventually the goldsmiths discovered a process we now call "fractional reserve banking." They realized that at any given time, only a small number of people would come in to retrieve their gold. So they could make a lot more money if they simply issued ownership certificates for gold that didn't exist.
This, of course, is outright fraud. It is the exact same thing as making counterfeit money - but has nevertheless been the standard of the banking industry ever since.
The goldsmiths also discovered that if they increased the supply of this counterfeit money, they could produce an "economic boom" in which people would engage in much more risky economic projects requiring large loans - in fact, one of these absurd economic projects once included a plan to drain the Red Sea and search for gold the Egyptian army lost as they were chasing the Israelites - but then when they tightened the money supply the economy would shrink, causing a depression, which would allow them to foreclose on land, buildings and other goods purchased by the loans, allowing them to acquire these things at pennies on the dollar.
The Rise of Privately Owned Central Banks
Much of Christian Europe enacted usury laws that greatly hurt economic development by banning the collection of interest on loans. This stopped people from lending, and thus stopped anyone from engaging in economic activity that they couldn't finance themselves.
In the seventeenth century, however, the kings and queens of England relaxed the prohibition of interest, allowing the banking industry to flourish once again, then tightened them, causing a backlash. The bankers financed a revolution against King Charles, financed many wars, and threw the country into a great depression. The government was so indebted to the bankers that it sold them the right to establish a central bank that would have an exclusive monopoly on the right to produce the nation's money.
The bankers used this sale as an oppotunity to expand on an old trick. Rather than paying the government the full price for the rights to the central bank, they put up only part of the capital, and then printed money out of thin air to "loan" to themselves to put up the rest!
Around the same time, the Rothschild family was coming to power in Germany. Moses Amschel Bauer, a goldsmith, opened a German moneychanging shop whose logo was an eagle against a red shield. From the German for "red shield," his son, Mayer Amschel Bauer, changed his last name from Bauer to Rothschild.
Rothschild had five sons whom he sent all over Europe to establish centers of banking power. The family quickly learned that loaning to governments was far more profitable than loaning to individuals because the loans were larger and were secured by the government's power to tax. Moreover, so long as governments are supplied with sufficient finances, they can get involved in extensive wars, which destroy things that need to be rebuilt, and thus consume massive amounts of money. Once the debt is established, the government becomes locked into an endless cycle of using taxes to pay off interest as it goes further and further into debt.
Nathan Mayer Rothschild went to London and financed the wars against Napoleon, multiplying his 20,000 pounds by a factor of 2,500 in just 17 years. The Rothschilds financed American monopolies of railroads and steel, the diamond monopolies of Africa, and much of JP Morgan's financial exploits in America.
The Rise of Central Banking in America
In the century leading up to the American Revolution, gold and silver were so scarce in America that the colonies printed their own money called "colonial scrip." When King George asked Ben Franklin how the colonies became so prosperous, Franklin told him it was because they printed their own money and therefore never fell in debt to the bankers.
Once King George heard this, he banned the colonial scrip, causing a massive depression in the colonies. Moreover, England had engaged in four large wars in the century following the establishment of its own privately owned central bank, and was nearly 150 million pounds in debt - leading the king to levy taxes against the colonies. Franklin attributed the American Revolution primarily to the economic disaster resulting from the prohibition of colonial scrip.
To finance the war, the Continental Congress issued a new form of paper money, but produced so much of it that it plunged America even further into economic disaster. By the end of the war, a pair of shoes sold for $5,000!
Fast forward a few years. Alexander Hamilton wanted a robust national debt to align the interests of the wealthy with the government. If the government was in debt to the rich, the rich would support high taxes so it could pay them interest on the loans, and the government would do their bidding since they'd be pulling its purse strings.
After making a false start before the Constitutional Convention of 1787, Hamilton and the wealthy businessman Robert Morris successfully created a privately owned central bank called the First Bank of the United States in 1791. This was just one year after Mayer Amschel Rothschild stated, "Let me issue and control a nation's money, and I care not who writes its laws."
This time, the bankers pushed their fraudulent "fractional reserve" scheme to its limits. The government put up 20 percent of the capital for the bank, and the bankers put up the rest. But where did they get the other 80 percent? They took it on loan from the bank!
By lending out four dollars for every one dollar the bank held on reserves, the 20 percent of the capital the government put up suddenly morphed into the 80 percent the bankers were supposed to supply! So the bankers took control of the nation's money supply without contributing anything except their keen ability to form conspiracies against the public.
After five years, the nation was $8 million in debt and inflation had gone up 70 percent. Thomas Jefferson stated that if he could obtain one constitutional amendment, it would be one that prohibited Congress from borrowing money. As president, Jefferson moved to abolish the central bank, although this was not fully accomplished until Madison's presidency several years later.
The same scenario repeated itself in 1816, and President Andrew Jackson, who campaigned on the slogan "Jackson and No Bank" abolished it, and was the only president in US history to ever completely pay off the national debt. That's right, after Jackson's presidency, we were debt-free!
Prosperity Without a Central Bank
For 77 years, America was without a central bank. Even though the bankers had engaged in many other activities to increase their power - like getting "national bank" charters allowing them to practice fractional reserve lending, banning the use of America's abundant silver as money to make the common man dependent on the bankers' gold, deliberately causing economic depression to buy up masses of land at pennies on the dollar - the free market favored the common man, and the bankers' power diminised over time.
America began building an economy built on savings rather than debt. In 1913, so many small banks had popped up that only 29 percent of banks and only 55 percent of deposits were controlled by the Big Boys that had formed the central banks and "national banks" of old. Corporations were borrowing less and investing savings instead - 70 percent of corporate funding came from profits instead of loans. If things continued the way they were going, America would have been free of the big bankers who always sought to own her.
The Formation of the Federal Reserve
The big bankers had a plan. By restricting the money supply in 1907, they caused an economic panic. JP Morgan saved the day by printing money out of thin air to create an economic "boom," and many widely revered him as an American hero, including Woodrow Wilson of Princeton University, who later became president.
The heads of the big banks gathered in a secret meeting on Jekyll Island off the coast of Georgia. They were so secretive that they made a pact to only use their first names, so even the servants of the house in which they met would not know who they were.
In an article called "The 'First Names Club'" appearing in the February 9, 1935 edition of the Saturday Evening Post, Frank Vanderlip, one of the participants, wrote the following:
I was as secretive, indeed as furtive, as any conspirator . . . Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.
The bill initially failed in Congress, but the bankers financed the presidential campaign of their supporter, Woodrow Wilson, gave the bill a different name, gathered around it a different crowd of congressional supporters, and rammed it through. That bill was eventually signed into law as the Federal Reserve Act.
The income tax amendment was pushed through at the same time in order to produce a means of paying interest on the debt into which the Fed would soon plunge the country, although it would be decades before the "income tax" would come to mean a tax taken out of your paycheck.
How the Fed Works
Usually when the media talks about the Fed, it talks about the Fed adjusting interest rates. But the Fed really controls interest rates by controlling the money supply.
The main way the Fed controls the money supply, as described in The Money Masters, is to purchase government bonds. The decision to purchase bonds is made by the Fed's Open Market Committee. These bonds can be purchased from the government as it issues new ones, or from banks, corporations, and individuals who hold previously issued bonds. The Fed purchases them with electronic credits that have no existence as physical money, thus increasing the money supply.
These e-credits then count as "reserves" in banks that hold them. Since banks are allowed to lend out over ten dollars for every dollar they hold, this e-money that was created out of thin air multiplies itself by a factor of ten, allowing even more money to be created out of thin air.
There are two other methods of controlling interest rates and the money supply that Money Masters does not discuss. The Fed can raise or lower the "discount rate" at which it lends to other banks and financial institutions, and it can raise or lower the "reserve requirement." The reserve requirement is the quantity of money that a bank must have on reserve in order to lend a given quantity of money. For example, if the reserve requirement is ten percent, a bank can loan out $10 for every $1 it has on reserve.
In other words, the Fed not only has the right to make money out of thin air, but it also controls the amount of money other banks are allowed to make out of thin air.
Why is this bad? It's simple: when the money supply goes up, there are more dollars chasing the same amount of goods and services, so the value of the dollar goes down and prices go up. But the prices take time to go up, so the people who get the money first - like the Fed, Congress, and the Fed's favorite corporations and banks whose bonds it decides to purchase - get the full value of the money. By the time it winds up in our hands, its value has gone down.
So the system is essentially designed to transfer wealth from the common men and women of the country into the hands of the elite corporations and bankers.
Nefarious Activities of the Fed
The story hardly ends there. Money Masters documents a great many nefarious activities in which the Fed and the international bankers who own it have engaged since its inception.
The Fed and the bankers who owned it financed the Bolshevik takeover of Russia, the Nazi takeover of Germany, and all sides of both world wars, making massive profits, and forever plunging these countries into massive debt.
Now, having established central banks in all the major countries, these same bankers have established institutions like the International Monetary Fund (IMF) and the World Bank. After taking over the nations of the world, they are now constructing a supra-national governmental and economic system that will transcend national boundaries, giving them absolute power.
It is quite possible, in fact, that these bankers orchestrated a decades-long multi-generational plan to steal the gold of American's citizens and transfer it into the global central bank, the IMF.
Franklin D. Roosevelt confiscated the nation's gold during the Great Depression. As he signed the bill, he stated he hadn't even read it, but the "experts" said it was the best thing for the country.
After the government stole its citizens' gold, the gold was stored at Fort Knox. Federal law requires the government to audit this gold on a yearly basis, but an audit hasn't been performed since President Eisenhower ordered one in 1953!
In the early 1970s, Nixon took us off the pseudo-gold standard we were on at the time. Simultaneously, he legalized the possession of gold by Americans, allowing the sale of gold to private citizens, driving the price of it through the roof.
In 1982, President Reagan organized the Gold Commission to investigate a possible return to the gold standard. The commission determined that the United States government no longer owned any gold at all - it had all been transferred to the Fed as collateral on the national debt!
Some years before, an aide to Nelson Rockefeller leaked a plan on the part of the Rockefellers and other international bankers to hoist the nation's gold to the press, but she disappeared the next day and has never been heard from since. Did such a plan exist?
Quite possibly, there has been no audit of the gold at Fort Knox because there is no gold at Fort Knox. That gold, which used to belong to the American people, has probably been sold in tiny amounts at very high prices back to private citizens, but perhaps largely transferred to the IMF.
Fixing the Problem
These bankers and mega-corporations are not all-powerful. They had taken over America twice before, and we had all-American heroes like Thomas Jefferson, James Madison, and Andrew Jackson who destroyed them.
Today, the situation is different, because the bankers have purchased the major media and set up para-governmental institutions like the Council on Foreign Relations or the more secretive and powerful Bilderberg Group that have a much more powerful grip on the electoral process. Today, a mass movement is required to push for change - but change is still possible.
Money Masters offers a solution, which I partly disagree with but is definitely an excellent first step towards a solution.
The creators of the movie say that we cannot return to a gold standard, because the central banks of the world and the IMF have concentrated most of the gold. Going to a gold standard would put the power right into their hands.
Their solution - which is supported by Nobel Prize-winning economist Milton Freedman - is to have the government reclaim its constitutional power to print money. The government should print it's own debt-free money to pay off the national debt. To avoid inflation, the government should increase the reserve requirement proportionally so that the money supply always stays the same. To this end, they advocate the Monetary Reform Act.
Where I think The Money Masters goes wrong, however, is in advocating a pure fiat paper money system. That is, a system where the government simply declares paper money to have a given amount of value, backed by no hard assets like precious metals.
They point out how well colonial scrip worked, but in reality the paper money system fell apart as soon as the government went to war. In a hard money system, where the value of the money is determined by the inherent value of the metal it is based on, the government could only go to war if it convinced the population to pay the taxes needed to finance it.
With a fiat system, whether to go to war is determined by politicians. With a privately owned central bank, whether to go to war is determined by the bankers who profit from the war. With a hard money system with no central bank, whether to go to war is determined by the people.
The bankers used gold to concentrate their power leading up to the formation of the Fed, but they only did this by ramming legislation through Congress that banned the use of silver, which was easily available to the common men and women of the country.
At the same time, merely going back to the gold standard or even a privately traded gold-based economy will not solve the problem. Most of the world's gold is, in fact, owned by the central bankers. The nation is in debt $9.5 trillion, but this debt was manufactured by a system put in place by a powerful conspiracy of men who made their wealth by stealing from the populace through deals with the government and fraudulent practices like fractional reserve banking.
In short, going back to precious metal-backed money and doing nothing else would be like banning the slave trade but telling the slaves who are already captured that they need to buy their freedom. The Monetary Reform Act would free the slaves.
The publicly owned paper money system advocated by Money Masters should exist alongside freely traded precious metals and any other type of privately created currency. Fractional reserve banking should be prosecuted as fraud. Taxes should be acceptable in both public fiat money and precious metals.
Eventually, I believe the fiat system would fade out by itself. Businesses and individuals would prefer to hold precious metals because the value would be more stable. The trading of metals would check the government's ability to print extra money, because the more it did so, the more people would choose to hold money backed by precious metals.
Eventually, people would freely choose to trade in currency with real value; as the demand for the fiat money sank, the government would prefer taxes be paid in hard currency and would phase out its fiat money.
Small banks would sprout up around the country, but banking would not be nearly as lucrative because individual businesses and corporations would finance their projects with savings and profits instead of debt.
The plan of the Money Masters would be forever foiled, and America would forever be free - so long as the populace vigilantly remembered what freedom means.
You can buy The Money Masters here, watch it on YouTube here, or watch it on Google Video here.