The Creature from Jekyll Island: A Second Look at the Federal Reserve
The New American
September 5, 1994
Has it ever occurred to you that the federal government has no need of taxes for revenue? Are you aware that banks prefer lending to governments because governments seldom repay loans? Do you realize that if all debts, both public and private, were paid, there would be no money at all in circulation?
These are only a few of the startling facts that fill the pages of this illuminating expose of the Insider scam called the Federal Reserve System (Fed). Although author G. Edward Griffin admits to having wondered if another book on the Federal Reserve is necessary (his six pages of bibliography suggest that the subject may have previously attracted attention), it is unlikely that any book has ranged across 2,000 years of money and banking from Diocletian to the Rothschilds to Alan Greenspan — and tied it into the new world order — as thoroughly as The Creature From Jekyll Island.
Griffin cuts through the obscurities about the Fed that are intentionally meant to mystify and disarm its victims (all of us). Convinced that the subject of money and banking is too arcane and complicated to understand, we victims are trapped in a world view that utterly fails to jibe with reality. The money manipulators, says Griffin, are exploiting our ignorance for the advancement of their own appalling plans; the urgency of awakening us to our danger has driven Griffin to write this extraordinary book.
Although Griffin has never held an academic position, he is a top-notch teacher. Making this little-understood subject simple by splendid organization, his account is divided into six sections with varying numbers of chapters; each section and chapter is introduced by a concise paragraph while each chapter is also summarized. Thus the reader is kept in touch with where he has been and where he is going, an ingenious and helpful device considering the enormous scope of Griffin’s narrative.
His explanations and definitions are meticulously worded; one can sense the care with which each word was chosen, leaving no room for confusion. Griffin continually draws documentation from primary sources, quoting letters, speeches, and published works that both enlighten and horrify. His own writing is difficult to quote; it is so trenchant that nearly every sentence entices. Yet at the same time Griffin has mastered the art of speaking personally to the reader, who never loses the feeling of being directly addressed. All this adds up to a superbly clear, engrossing book that, once started, is impossible to put down.
Setting the Stage
In order to help us fully understand our present predicament, Mr. Griffin ranges far afield in explaining the historical, economic, and political antecedents of today’s money system. We are given a crash course on the nature of money; the origin of banks and the concept of fractional reserves; how this led to the seductive idea of using the same money over and over; how this inevitably led to economic disaster wherever and whenever tried. We are instructed about the Rothschild formula, which perfected the art of making enormous profits from loans to governments, especially for wars; how this led to preventing any one nation from becoming strong enough to establish peace (the famous balance of power); how those who could instigate wars or revolutions were financed (including the Bolsheviks in 1917); how we Americans were sucked into World War I in order to save J.P. Morgan’s loans to England; how environmentalism is now the weapon of choice replacing war.
We are taken to the super-secret meeting of Insider financiers and Rothschild agent Paul Warburg on Jekyll Island in 1910 where the basic plan for what became the Federal Reserve Act was formulated; we learn that these plotters were already affiliated with the conspiratorial British one-world Round Table group which preceded the Council on Foreign Relations (our secret government); we are astounded by the brazen deception of Congress that pushed through this unconstitutional act creating the Insiders’ fundamental tool — a central bank with the ability to inflate. We are told how this same tool has been expanded internationally through the International Monetary Fund (IMF) and World Bank in order to create worldwide inflation, pay enormous sums of perpetual interest on never paid-up loans to Insider banks, and socialize the Third World, all courtesy of us unsuspecting taxpayers. Lastly, Griffin foretells our dismaying fate if our course is not altered; then he lays out a step-by-step procedure of how to alter it, inviting us to join with him in doing so.
Griffin looks the Fed “creature” straight in the eye and tells us it is not federal, it has no reserves, and it is not a bank. It is, in fact, a pernicious cartel operating against the public interest. The widespread belief that the Federal Reserve exists to “stabilize the economy” is hogwash; the real reason for its existence is the making of money — not out of “thin air” as is commonly supposed, but, more accurately, out of debt. Griffin explains that it is the act of borrowing by the federal government that causes money to spring into existence.
Griffin takes us through the Open Market steps by which Treasury IOUs (bonds) are inverted by the Federal Reserve into money through the issuance of Federal Reserve checks with no money in existence to cover them; anyone else doing this would go to jail. Congress has made this legal for the Fed, however, because this hidden process allows our congressmen to enjoy unlimited revenue without having to visibly raise taxes. Without this service, says Griffin, the monetary/political partnership would dissolve, and Congress would abolish the Fed.
Griffin explains that these Federal Reserve checks are endorsed by the government, deposited in a Federal Reserve bank, and used to pay government expenses by checks which create the first wave of fiat (unbacked paper) money that floods into the economy. Recipients deposit these checks into commercial banks that are part of the Fed system. Here is where the real inflationary action is. (The Federal Reserve holds “only” seven percent of the national debt of almost $5 trillion. The 12 percent held by foreigners and the 56 percent held by Americans are not inflationary because the money used for purchase already existed.)
Commercial banks, like the Federal Reserve, also create money out of nothing — and collect interest on it — by multiplying every dollar deposited nine times. This amazing feat is accomplished through the device of fractional reserves, whereby the Fed allows 90 percent of deposits to be loaned out. As deposits become loans and loans become deposits, this process repeats with smaller numbers each time around. For instance, $1 million in government money (first wave) gives birth to $900,000 (second wave), which gives birth to $810,000 (third wave), etc., until the process plays itself out. Thus, the banking cartel creates an amount of money that is nine times the amount of the original government debt that made the process possible.
Griffin shows that when the original debt is added in, the Federal Reserve and the commercial banks together have created approximately ten times the amount of the underlying government debt. Since this newly created money causes the purchasing power of all money to decline, the resulting rise in prices is, in reality, a hidden tax. As Griffin puts it:
Griffin is astonished at the public’s indifference to this fleecing; he blames it on ignorance based on disinformation. Nothing could prove him more right than the current deception that inflation is higher prices caused by full employment and a strong economy; therefore, letting the “steam” out of the economy and slowing growth (and thereby employment) is “good.” This talk is madness. Alan Greenspan, chairman of the Federal Reserve (who has the temerity to say he is “worried about inflation”), is repeating this claptrap as he pretends to control inflation by increasing interest rates that merely devastated the bond market, clobbered the stock market, and helped only the bankers. Thus the Insiders are perfectly protected and the scam rolls on.
There are many more threads to Griffin’s discourse on the operations of the banking cartel that should not be missed, such as:
• Why the U.S. has to be, must be, in debt.
• How the Discount Window (Fed loans to banks) creates more phony money.
• How the federal government could operate without levying any taxes whatsoever.
• How the Fed causes booms and busts.
• How, since 1913, our money has depreciated by over 1,000 percent.
• How a gold standard automatically stabilizes prices.
• How the Fed can now monetize the debts of foreign governments!
Without the extensive knowledge offered by Griffin, no American can fully understand the financial reality of our time.
Understanding the Game
Also critical to our reality check is an understanding of how the Fed protects and enriches the banking brotherhood in the international arena. The game our Insiders are playing makes the Rothschilds look like novices. Here it is in a nutshell: The game starts with a mammoth loan (created out of nothing through the magic of fractional reserves) from one of our megabanks (Citicorp, Chase Manhattan, Bank of America, etc.) to a Third World country with scant means of servicing the debt much less ever repaying the principle. Are these top bankers stupid? Hardly; Griffin explains that this is the kind of loan these bankers love, since they make their money from interest on the loan, not on repayment of the loan. They prefer the loan never to be repaid. They know they can’t lose because the Federal Reserve guarantees that massive loans that go into default will not be allowed to seriously affect the issuing bank (too big to fail) because this would “disrupt the entire economy.”
So, says Griffin, “since the System makes it profitable for banks to make large, unsound loans, that is the kind of loans banks will make. Furthermore, it is predictable that most unsound loans will go into default.” Sure enough; pretty soon default threatens. The bank creates additional money out of nothing and lends that so its interest stream continues on both the original loan plus the new loan (the “roll-over” play). At the next crisis, the bank creates still more money out of nothing to cover the interest on both loans plus an additional amount for the borrower to spend freely (the “up-the-ante” play). Finally the bank agrees to a lower interest rate and a longer period for repayment (the “rescheduling” play). Eventually it is time for the “Final Maneuver.” Congress agrees to guarantee future payments and the whole mess is shifted to the backs of U.S. taxpayers while the borrower is trapped into an IMF “austerity” program that makes an “end run” around his sovereignty.
Now money moves through various foreign aid channels to the deadbeat borrower, who continues to pay perpetual interest to the bank. Almost all of this money is generated by the Federal Reserve; as it moves out into the economy it dilutes the value of the money already there. The American people, says Griffin, have no idea they are footing the bill to enrich the Insider bankers.
Founders’ Fears Realized
Readers may be surprised to learn that the Federal Reserve is the fourth central bank the United States has had, the previous three having crashed in inevitable raging inflation and widespread economic disaster. So clearly did our Founders understand and fear worthless paper money forced on the public by legal tender laws (precisely what we now have) that they filled the proceedings of the Constitutional Convention with statements of their horror of it. We Americans today, deprived of hearing such truth, need to listen to their words:
• John Langdon of New Hampshire: “I would rather reject the whole [Constitution] than grant the new government the right to issue fiat money.”
• George Reed of Delaware: “The right to issue fiat money would be as alarming as the mark of the beast in Revelation.”
• Thomas Paine: “The punishment of a member of Congress who should move for such a law ought to be death.”
Griffin does not stop with presenting the known picture, but projects today’s reality into the future. His first projection is a doomsday scenario; his second is a realistic plan for saving our country and ourselves. These chapters might, after all, be the most important ones in the book.
Griffin sees doomsday as an engineered financial debacle the severity of which will cause panicked Americans to welcome a World Bank “rescue” with a world currency. The IMF/World Bank is already functioning — in conjunction with the Federal Reserve — as a world central bank. A world currency is already designed, awaiting a crisis to justify its introduction. From this point on, writes Griffin, there will be no escape from the new world order. At present the U.S. is being deliberately weakened by seemingly insane spending both at home and abroad: As just one more dismaying example, during President Clinton’s recent trip to Europe he blithely promised more billions of dollars to Poland, Ukraine, and the Baltic countries. The name of the game is to spend — on anything, anywhere. The object is to bring down the system.
Life in the New World Order
What will life be like in the Insiders’ new world order? Griffin spells it out from the words of the Insiders themselves. One source is the 1966 secret Hudson Institute study commissioned by Defense Secretary Robert McNamara, entitled Report from Iron Mountain. This study cold-bloodedly discusses various means by which government might control the populace and perpetuate itself in power in the absence of war (UN peace).
Griffin’s review (with extensive quotes) of this truly diabolical Insider study is masterful; he takes it apart and shows us its consummate evil. The study’s premise is that historically the only means by which a government has ever been able to “secure the subordination of citizens to the state” is war. Only war has been able to provide the external threat without which no government can accumulate power. War is used to make the masses put up with all kinds of privation, taxation, and controls without complaint. No amount of sacrifice in the name of victory is rejected. Resistance is viewed as treason.
But, says Griffin, Report From Iron Mountain explains that the war system may have to be replaced because “it may now be possible to create a world government in which all nations will be disarmed and disciplined by a world army, a condition which we will call peace.” In this case, what could be a substitute for war?
Here, explains Griffin, is the origin of the stratagem to promote ecological doom as the new enemy that threatens the entire world. The threat need not be real, provided the masses can be convinced it is real. Credibility is the key, not reality. Griffin writes that Report From Iron Mountain explains the avalanche of phony scientific claims that are uncritically publicized by the Insider-controlled media, as well as the funding of environmental “crazies” by corporations and businesses that would appear to have the most to lose. He sees the plan as being brilliantly successful.
The barrage of propaganda has had a phenomenal result. Politicians are now being elected on nothing but “concern for the environment and a promise to clamp down on nasty industries,” with no one caring about the damage done to the economy or our freedoms. Just as no sacrifice is too great in time of war, what happens to the economy or our freedom is of no consequence “when the very planet on which we live is sick and dying.”
Griffin introduces us to multi-millionaire Maurice Strong, the powerful UN environmental czar, who gives us the whole line: The U.S. is committing environmental aggression against the rest of the world. Current lifestyles of the affluent middle class — high meat intake, frozen and convenience foods, electric household appliances, cars, air conditioning, suburban housing — all this has to go. The world’s ecosystems can be preserved only by lowering our standard of living by rationing, taxation, and political domination by world government.
Reading this section will forever change the way in which you view government. Yet, says Griffin, this perverted, power-mad Insider fix need not prevail. None of these dreadful things needs to happen. He outlines a procedure by which the Federal Reserve can be abolished, the national debt paid, and the country returned to a sound monetary system based on silver and gold. All that is needed are the efforts of concerned and caring Americans. Griffin invites us to join him in freeing ourselves from the one-world conspirators. It can be done.