Taking Back the Money Power
excerpted from the book
Web of Debt
The Shocking Truth About Our Money
System And How We Can Break Free
by Ellen Hodgson Brown
Third Millennium Press, 2007,
Banks create money all the time. The chief reason the U.S. government
can't do it is that a private banking cartel already has a monopoly
on the practice.
Growth in M3 is no longer officially being reported, but by 2007,
reliable private sources put it at 11 percent per year. That means
that over one trillion dollars are now being added to the economy
annually. Where does this new money come from? It couldn't have
come from new infusions of gold, since the country went off the
gold standard in 1933. All of this additional money must have
been created by banks as loans. As soon as the loans are paid
off, the money has to be borrowed all over again, just to keep
money in the system; and it is here that we find the real cause
of global scarcity: somebody is paying interest on most of the
money in the world all of the time. A dollar accruing interest
at 5 percent, compounded annually, becomes two dollars in about
14 years. At that rate, banks siphon off as much money in interest
every 14 years as there was in the entire world 14 years earlier.
That explains why M3 has increased by
100 percent or more every 14 years since the Federal Reserve first
started tracking it in 1959. According to a Fed table titled "M3
Money Stock," M3 was about $300 billion in 1959. In 1973,14
years later, it had grown to $900 billion. In 1987,14 years after
that, it was $3,500 billion; and in 2001, 14 years after that,
it was $7,200 billion. To meet the huge interest burden required
to service all this money-built-on-debt, the money supply must
continually expand; and for that to happen, borrowers must continually
go deeper into debt, merchants must continually raise their prices,
and the odd men out in the bankers' game of musical chairs must
continue to lose their property to the banks. Wars, competition
and strife are the inevitable results of this scarcity-driven
The obvious solution is to eliminate the
parasitic banking scheme that is feeding on the world's prosperity.
how? The Witches of Wall Street are not likely to release their
vice-like grip without some sort of revolution; and a violent
revolution would probably fail, because the world's most feared
military machine is already in the hands of the money cartel.
Violent revolution would just furnish them with an excuse to test
their equipment. The first American Revolution was fought before
tasers, lasers, tear gas, armored tanks, and depleted uranium
Fortunately or unfortunately, in the eye
of today's economic cyclone, we may have to do no more than watch
and wait, as the global pyramid scheme collapses of its own weight.
In the end, what is likely to bring the house of cards down is
that the Robber Barons have lost control of the propaganda machine.
Richard Russell publisher of The Dow Theory Letter
The creation of money is a total mystery
to probably 99 percent of the US population, and that most definitely
includes the Congress and the Senate. The takeover of US money
creation by the Fed is one of the most mysterious and ominous
acts in US history .... The legality of the Federal Reserve has
never been "tried" before the US Supreme Court.
Vernon Parrington summarized Greenbackers' position in the 1920s
To allow the bankers to erect a monetary
system on gold [gold standard] is to subject the producer to the
money-broker and measure deferred payments by a yardstick that
lengthens or shortens from year to year. The only safe and rational
currency is a national currency based on the national credit,
sponsored by the state, flexible, and controlled in the interests
of the people as a whole.
Stephen Zarlenga in 'The Lost Science of Money'
All of the plausible sounding gold standard
theory could not change or hide the fact that, in order to function,
the system had to mix paper credits with gold in domestic economies.
Even after this addition, the mixed gold and credit standard could
not properly service the growing economies. They periodically
broke down with dire domestic and international results. [In]
the worst such breakdown, the Great Crash and Depression of 1929-33,...
it was widely noted that those countries did best that left the
gold standard soonest.
Machiavelli, in the sixteenth century
He who introduces a new order of things
has all those who profit from the old order as his enemies, and
he has only lukewarm allies in all those who might profit from
99 percent of the U.S. money supply is owed back to private lenders
with interest, and the money to cover the interest does not exist
until new loans are taken out to cover it. Just to maintain our
debt-based money supply requires increasing levels of debt and
corresponding levels of inflation, creating a debt cyclone that
is vacuuming up our national assets. The federal debt has grown
so massive that the interest burden alone will soon be more than
the taxpayers can afford to pay. The debt is impossible to repay...
Al Martin cites a study authorized by, the U.S. Treasury in 2001,
finding that for the government to keep servicing its debt as
it has been doing, by 2013 it will have to have raised the personal
income tax rate to 65 percent. And that's just to pay the interest
on the national debt. When the government can't pay the interest,
it will he forced to declare bankruptcy, and the economy will
The economy of the rest of the planet
would collapse five days later .... The only way the government
can maintain control in a post-economically collapsed environment
is through currency and rough military might, or internal military
Mike Whitney, in an April 2005 article in Counter Punch
If the major oil producers convert from
the dollar to the euro, the American economy will sink almost
overnight. If oil is traded in euros then central banks around
the world would be compelled to follow and America will be required
to pay off its enormous $8 trillion debt.
In 1933 Franklin Roosevelt pronounced the country officially bankrupt,
exercised his special emergency powers, waved the royal Presidential
fiat, and ordered the promise to pay in gold removed from the
dollar bill. The dollar was instantly transformed from a promise
to pay in legal tender into legal tender itself. Seventy years
later, Congress could again acknowledge that the country is officially
If the Fed can buy back the government's bonds with a flood of
newly-printed dollars, leaving the government in debt to the Fed
and the banks, why can't the government buy back the bonds with
its own newly-printed dollars, debt free?
What would happen if the Social Security crisis were resolved
by simply cashing out its federal bond holdings with newly-issued
U.S. Notes? Would dangerous inflation result? The likely answer
is that it would not, because the Social Security fund would have
no more money than it had before. The government would just be
returning to the fund what the taxpayers thought was in it all
along. The bonds would be turned into cash, which would stay in
the fund where it belonged, to be used for future baby-boomer
pay-outs as intended.
The Fed owns about ten percent of the government's outstanding
securities. If the government were to buy back these securities
with cash, that money too would no doubt stay where it is, where
it would continue to serve as the reserves against which loans
were made. The cash would just replace the bonds, which would
be liquidated and taken out of circulation. Again, consumer prices
would not go up, because there would be no more money in circulation
than there was before.
That is one way to deal with the Federal
Reserve's Treasury securities, but an even neater solution has
been proposed: the government could just void out the bonds. Recall
that the Federal Reserve acquired its government securities without
consideration, and that a contract without consideration is void.
What would the Federal Reserve use in
that case for reserves? Article 30 of the Federal Reserve Act
of 1913 gave Congress the right to rescind or alter the Act at
any time. If the Act were modified to make the Federal Reserve
a truly federal agency, it would not need to keep / reserves.
It could issue "the full faith and credit of the United States"
directly, without having to back its dollars with government bonds.
Foreign central banks are reducing their reserves of U.S. securities
whether we like it or not. The tide is rolling out, and U.S. bonds
will be flooding back to U.S. shores. The question for the U.S.
government is simply who will take up the slack when foreign creditors
quit rolling over U.S. debt. Today, when no one else wants the
bonds sold at auction, the Fed and its affiliated banks step in
and buy them with dollars created for the occasion, creating two
sets of securities (the bonds and the cash) where before there
was only one. This inflationary duplication could be avoided if
the Treasury were to buy back the bonds itself and just void them
out. Congress could then avoid the debt problem in the future
by following the lead of the Guernsey islanders and simply refusing
to go into debt. Rather than issuing bonds to meet its costs,
it could issue dollars directly.
The stock market is casino of people with money to invest.
Once the government reclaims the power to create money from the
banks, it will no longer need to sell its bonds to investors.
It will not even need to levy income taxes. It will be able to
exercise its sovereign right to issue its own money, debt-free.
That is what British monarchs did until the end of the seventeenth
century, what the American colonists did in the eighteenth century,
and what Abraham Lincoln did in the nineteenth century.
Federal Reserve Chairman Ben Bernanke, in a speech in Washington
The U.S. government has a technology,
called a printing press (or today, its electronic equivalent),
that allows it to produce as many U.S. dollars it wishes at essentially
The Japanese government actually owns its central bank, the Bank
The Fed manipulates markets with accounting-entry money funneled
through its "primary dealers" - a list of about 30 investment
houses authorized to trade government securities, including Goldman
Sachs, Morgan Stanley, and Merrill Lynch.' These banks then use
the funds to buy government bonds, in the sort of maneuver that
might be called money laundering" if it were done privately.
What has allowed government to become corrupted today is that
it is actually run by the money cartel. Big Business holds all
the cards, because its affiliated banks have monopolized the business
of issuing and lending the national money supply, a function the
Constitution delegated solely to Congress. What hides behind the
banner of "free enterprise" today is a system in which
giant corporate monopolies have used their affiliated banking
trusts to generate unlimited funds to buy up competitors, the
media, and the government itself, forcing truly independent private
enterprise out. Big private banks are allowed to create money
out of nothing, lend it at interest, foreclose on the collateral,
and determine who gets credit and who doesn't. They can advance
massive loans to their affiliated corporations and hedge funds,
which use the money to raid competitors and manipulate markets.
... These giant cartels can be brought
to heel only by cutting off their source of power and returning
it to its rightful sovereign owners, the people themselves. Private
enterprise needs publicly-operated police, courts and laws to
keep corporate predators at bay. It also needs a system of truly
national banks, in which the power to create the money and advance
the credit of the people is retained by the people. We trust government
with sweeping powers to declare and conduct wars, provide for
the general welfare, and establish and enforce laws. Why not trust
it to create the national money supply in all its forms?
The bottom line is that somebody has to have the power to create
money... There are only three choices for the job: a private banking
cartel, local communities acting separately, or the collective
body of the people acting through their representative government.
Today we are operating with option #1, a private banking cartel,
and it has brought the system to the brink of collapse. The privately-controlled
Federal Reserve, which was chartered specifically to "maintain
a stable currency," has allowed the money supply to balloon
out of control. The Fed manipulates the money supply and regulates
its value behind closed doors, in blatant violation of the Constitution
and the antitrust laws. Yet it not only can't be held to account;
it doesn't even have to explain its rationale or reveal what is
... The fiat currency of the national
community has the full force of the nation behind it. And even
if the politicians in charge of managing it turn out to be no
less corrupt than private bankers, the money created by the government
will be debt-free. Shifting the power to create money to Congress
can relieve future generations of the burden of perpetual interest
payments to an elite class of financial oligarchs who have advanced
nothing of their own to earn it.
Web of Debt