Before the advent of the internet, I often wondered how bankers made a profitable living. How did banks stay afloat on loans that wouldn’t be paid back for thirty years? Where did the new money come from for the bank to make new home loans? I knew the deposits didn’t cover the loans the bank was making for thirty-year mortgages. All of this ties into our national debt and the Federal Reserve is at the center of this as to why our money is debt.
The first fact is the Federal Reserve is not part of America’s Federal Government. It is a private bank made up of a cartel of banks. Yes, The President of the United States does appoint the chairman or chairwoman to head the Federal Reserve with the Senate’s consent, but that’s the limit to our elected officials’ involvement in the Federal Reserve. It is unclear if the head of the Federal Reserve may be removed by the President or Congress.
A clever trick Alex Jones played on the Federal Reserve was to go on the grounds of the Federal Reserve to protest. Security came from the building to tell Jones to leave or they would call the police for trespassing. Jones asked if the grounds he was standing on were part of the Federal Government which he had a right as a citizen to stand on. The security officer left and an official of the Federal Reserve returned with the security officer. The official informed Jones he was standing on private property. Jones pressed once again. The building says “Federal” Reserve on it, I assumed this was public property. Jones then asked, “Is the Federal Reserve part of the Federal Government? The official said no and the official asked Jones to leave which Jones did.
The citizens can’t be faulted for thinking the Federal Reserve is an agency under the Executive Branch of government. After all, the President nominates the chairperson, the Senate confirms the nomination, and the money-bills issued say Federal Reserve notes. What I am about to convey to you can be easily confirmed by you on the internet. Youtube has many installments that walk you through what is coming next.
Fractional Banking
Fractional banking was illegal before the formation of the Federal Reserve. In the Middle Ages from time to time, Goldsmiths were executed for the practice of fractional banking. In those days, money was in the form of gold. Gold is heavy and can be easily stolen. Goldsmiths had vaults. People brought their gold to the goldsmith for storage. The goldsmith in turn issued a note of the amount of the deposit. One day, a goldsmith noticed the people were trading his notes of deposit as money. The goldsmith reasoned he could make loans on gold that he didn’t have and collect interest on that non-existent gold! The goldsmith issued the loan in the form of a note that the person took to buy a good or service.
Banking institutions pay a yearly fee to have access to the Federal Reserve. Here’s the black magic of the Bankers’ accumulation of wealth. You want to buy a home. You go to a bank to get a thirty-year loan. The bank sends ten percent of the value of the home to the Federal Reserve. The Federal Reserve sells bonds which people and other countries buy. Then the Federal Reserve creates new money from that debt of selling those bonds. The bank you secured the loan from gets to collect the total interest of the loan which they had only ten percent exposure which they gave to the Federal Reserve! To make things clear; the Federal Reserve sells bonds to cover the amount of the home loan. Then the Federal Reserve sends the money to the bank to give to the seller. Think how many times a home is sold over a period of sixty years. A home valued at $300,000 in 2022 could represent $2,00,000 of debt.
You can see our monetary system is a house of cards that is dependent on the buying of bonds the Federal Reserve sells. The wild spending by our government is the result of the Federal Reserve’s ability to create money from debt. I remember back in the ’80s when the national debt passed one trillion dollars. Now the national debt is somewhere around twenty-nine trillion dollars. I was surprised to find out the total physical currency in circulation is one trillion dollars. The physical currency had been hovering around eight-hundred billion dollars for many years. I question whether the Federal Reserve in tandem with our government is lying on the actual amount of money in circulation.
It must cost a few billion dollars to keep a trillion dollars in circulation. During the banking crisis in 2008, the chairman of the Federal Reserve made a startling admission in my estimation. He was asked how he would transfer the needed money to a bank. The chairman said all I need is a computer terminal. So, what is the source of that digital money? How do the citizens know the chairman isn’t feathering the nests of his favorite politicians with this magical digital money?
In the Middle Ages, the citizen became dependent on the Goldsmiths’ deposit slips as a matter of perceived convenience as we are now with our debit cards. We aren’t even holding our government to the standard of printing money that is worthless by Middle Age standards. When I was a child, the money had this printed on it, this amount entitles the bearer upon demand to receive this amount in silver. Before that, it read gold. Nixon took us off the gold standard which was the only check on our government’s inflationary causing spending.
I remember as a child of eight years of age seeing ads in the newspaper for new cars for $2,500. The three-bedroom home I grew up in with a living room, a family room, and a two-car garage in California did cost just $12,000. That same home is over $400,000! Our wages have increased too but at not the same rate. My father earned more than enough as did the other fathers in those years for the family to be a one-income family. You may thank the Federal Reserve along with our government for this disparity between the ’60s to the present.
My wife had a position in a bank before we were married. I retired her to be my full-time wife. Part of Mary’s duties was to anticipate how much cash they would need for the following week. Mary would put an order to the Federal Reserve for the needed cash. There aren’t millions of dollars in the bank vaults across America. In fact, there isn’t enough cash for the citizens if we conduct all of our transactions on a cash basis. If we all bought all of our food with cash, we could bring the government to its knees. It would be amusing to be labeled as an insurrectionist for paying with cash.
My recap: Money represents debt because the Federal Reserve sells bonds to create new money on which the government has to pay interest through your tax dollars.
Therefore, the national debt can never be retired.
The monetary system is designed to keep the citizens in debt.
The monetary system in conjunction with fractional banking keeps the privileged few very wealthy at the expense of all of us.
Written by Mark Pullen. Published by Editor, Sammy Campbell.