Henry Ford once said if the American people understood our banking system and the process of money creation, there would be a revolution by breakfast. These are not the words of a conspiracy theorist, but of a man who understood the world around him. And after understanding it, he declared the system of money creation appalling.
But perhaps he was wrong. Perhaps we should look to someone from the banking profession for a more informed analysis. Let us try Josiah Stamp. He was director of the Bank of England from 1928 to 1941, and was reputed to have been the second richest man in Britain when he said:
“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 iniquity and born in sin. Bankers own the Earth. Take it away from them, but leave them the power to create money, and with the flick of the 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, and they ought to disappear, for then this would be a better and happier world to live in. But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit.”
After first reading this astounding statement, we might first think that it is ridiculous. We respond, “That is incorrect. Our government creates our money. The Constitution even says so in Article 1, section 8: The congress shall have power… to coin money, [and] regulate the Value thereof.” We assume then that our government creates our money, but we are wrong.
Our government does not create our money. We operate on something called the fractional-reserve system, and this means that the congressional power to create and regulate money has been delegated to private banks. This is just about as smart as delegating the power to declare war to a private company of mercenaries; obviously the mercenary wants to wage as much war as possible, and so you would quickly find yourself in a state of extreme and perpetual senseless violence.
So we are now in a situation in which private banks create our money, out of nothing, in the form of loans. Let me say it once more and plainly: loans, contrary to what we were taught, are not created from deposits. They are literally created from nothing, as a new chunk of money backed by nothing.
For something so very critical to understanding our contemporary problems, it is deeply inexcusable that our schools do not teach us anything about the fractional-reserve system and how it creates money for its own profit, separate from any democratic control. The banks have been granted a money monopoly and have turned it into a money monarchy.
Page 2 of 2 - If you are like me, you never heard a peep about the fractional-reserve in school, much less the subject of money creation. How much less baffling things would be if only this issue were understood.
It is time that this problem was remedied, and this column series is my feeble attempt to contribute to that remedy. It will be called “The Money Story.” There will be several parts, and I strongly recommend that each part be saved for reference as the story develops and the argument proceeds forward.
I know that this sounds like an incredibly dull subject, but I assure you it is a fascinating narrative that will be well worth the time required to comprehend it. Once you do, you just might begin to agree with Henry Ford that it is intolerable; you just might agree with the Constitution that it is illegal; and you just might understand what Josiah Stamp meant when he said we were paying the cost of our own slavery.
The opinions in this column do not necessarily reflect the opinions of the The McPherson Sentinel or GateHouse Media. If you have any related questions or suggestions that you would like to see explored here, simply email me at email@example.com.