What Creature is This?
excerpted from the book
The Creature from Jekyll Island
a second look at the Federal Reserve
by G. Edward Griffin
American Media, 2008, paperback
William Greider in his book Secrets of The Temple, criticized
the Federal Reserve
At the time [of the Federal Reserve Act],
the conventional wisdom in Congress, widely shared and sincerely
espoused by Progressive reformers, was that a government institution
would finally harness the "money trust," disarm its
powers, and establish broad democratic control over money and
credit .... The results were nearly the opposite. The money reforms
enacted in 1913, in fact, helped to preserve the status quo, to
stabilize the old order. Money-center bankers would not only gain
dominance over the new central bank, but would also enjoy new
insulation against instability and their own decline. Once the
Fed was in operation, the steady diffusion of financial power
halted. Wall Street maintained its dominant position-and even
Anthony Sutton, former Research Fellow at the Hoover Institution
for War, Revolution and Peace, and also former Professor of Economics
at California State University, Los Angeles
[Paul] Warburg's revolutionary plan to
get American Society to go to work for Wall Street was astonishingly
simple. Even today,... academic theoreticians cover their blackboards
with meaningless equations, and the general public struggles in
bewildered confusion with inflation and the coming credit collapse,
while the quite simple explanation of the problem goes undiscussed
and almost entirely uncomprehended. The Federal Reserve System
is a legal private monopoly of the money supply operated for the
benefit of the few under the guise of protecting and promoting
the public interest.
The basic plan for the Federal Reserve System was drafted at a
secret meeting held in November of 1910 at the private resort
of J.P. Morgan on Jekyll Island off the coast of Georgia. Those
who attended represented the great financial institutions of Wall
Street and, indirectly, Europe as well. The reason for secrecy
was simple. Had it been known that rival factions of the banking
community had joined together, the public would have been alerted
to the possibility that the bankers were plotting an agreement
in restraint of trade-which, of course, is exactly what they were
doing. What emerged was a cartel agreement with five objectives:
stop the growing competition from the nation's newer banks; obtain
a franchise to create money out of nothing for the purpose of
lending; get control of the reserves of all banks so that the
more reckless ones would not be exposed to currency drains and
bank runs; get the taxpayer to pick up the cartel's inevitable
losses; and convince Congress that the purpose was to protect
the public. It was realized that the bankers would have to become
partners with the politicians and that the structure of the cartel
would have to be a central bank. The record shows that the Fed
has failed to achieve its stated objectives. That is because those
were never its true goals. As a banking cartel, and in terms of
the five objectives stated above, it has been an unqualified success.
The Jekyll Island group which conceived the Federal Reserve System
actually created a national cartel which was dominated by the
larger banks. It was also stated that a primary objective of that
cartel was to involve the federal government as an agent for shifting
the inevitable losses from the owners of those banks to the taxpayers.
The name of the game [of the Federal Reserve System] is bailout.
The objective of this game is to shift the inevitable losses from
the owners of the larger banks to the taxpayers.
... The game begins when the Federal Reserve
System allows commercial banks to create checkbook money out of
... When such a loan is placed on the
bank's books it is shown as an asset because it is earning interest
and, presumably, someday will be paid back. At the same time an
equal entry is made on the liability side of the ledger. That
is because the newly created checkbook money now is in circulation,
and most of it will end up in other banks which will return the
canceled checks to the issuing bank for payment. Individuals may
also bring some of this checkbook money back to the bank and request
cash. The issuing bank, therefore, has a potential money pay-out
liability equal to the amount of the loan asset.
When a borrower cannot repay and there
are no assets which can be taken to compensate, the bank must
write off that loan as a loss. However, since most of the money
originally was created out of nothing and cost the bank nothing
except bookkeeping overhead, there is little of tangible value
that is actually lost. It is primarily a bookkeeping entry.
A bookkeeping loss can still be undesirable
to a bank because it causes the loan to be removed from the ledger
as an asset without a reduction in liabilities. The difference
must come from the equity of those who own the bank. In other
words, the loan asset is removed, but the money liability remains.
The original checkbook money is still circulating out there even
though the borrower cannot repay, and the issuing bank still has
the obligation to redeem those checks. The only way to do this
and balance the books once again is to draw upon the capital which
was invested by the bank's stockholders or to deduct the loss
from the bank's current profits. In either case, the owners of
the bank lose an amount equal to the value of the defaulted loan.
So, to them, the loss becomes very real. If the bank is forced
to write off a large amount of bad loans, the amount could exceed
the entire value of the owners' equity. When that happens, the
game is over, and the bank is insolvent.
This concern would be sufficient to motivate
most bankers to be very conservative in their loan policy, and
in fact most of them do act with great caution when dealing with
individuals and small businesses. But the Federal Reserve System,
the Federal Deposit Insurance Corporation, and the Federal Deposit
Loan Corporation now guarantee that massive loans made to large
corporations and to other governments will not be allowed to fall
entirely upon the bank's owners should those loans go into default.
This is done under the argument that, if these corporations or
banks are allowed to fail, the nation would suffer from vast unemployment
and economic disruption.
... The end result of this policy is that
the banks have little motive to be cautious and are protected
against the effect of their own folly. The larger the loan, the
better it is, because it will produce the greatest amount of profit
with the least amount of effort. A single loan to a third-world
country netting hundreds of millions of dollars in annual interest
is just as easy to process-if not easier than a loan for $50,000
to a local merchant on the shopping mall. If the interest is paid,
it's gravy time. If the loan defaults, the federal government
will "protect the public" and, through various mechanisms
(described shortly,)will make sure that the banks continue to
receive their interest.
The individual and the small businessman
find it increasingly difficult to borrow money at reasonable rates,
because the banks can make more money on loans to the corporate
giants and to foreign governments. Also, the bigger loans are
safer for the banks, because the government will make them good
even if they default. There are no such guarantees for the small
loans. The public will not swallow the line that bailing out the
little guy is necessary to save the system. The dollar amounts
are too small. Only when the figures become mind-boggling does
the ploy become plausible.
It is important to remember that banks
do not really want to have their loans repaid, except as evidence
of the dependability of the borrower. They make a profit from
interest on the loan, not repayment of the loan. If a loan is
paid off, the bank merely has to find another borrower, and that
can be an expensive nuisance. It is much better to have the existing
borrower pay only the interest and never make payments on the
loan itself. That process is called rolling over the debt. One
of the reasons banks prefer to lend to governments is that they
do not expect those loans ever to be repaid.
Since the system makes it profitable for banks to make large,
unsound loans, that is the kind of loans which banks will make.
Furthermore, it is predictable that most unsound loans eventually
will go into default. When the borrower finally declares that
he cannot pay, the bank responds by rolling over the loan. This
often is stage managed to appear as a concession on the part of
the bank but, in reality, it is a significant forward move toward
the objective of perpetual interest.
Eventually the borrower comes to the point
where he can no longer pay even the interest. Now the play becomes
more complex. The bank does not want to lose the interest, because
that is its stream of income. But it cannot afford to allow the
borrower to go into default either, because that would require
a write-off which, in turn, could wipe out the owners' equity
and put the bank out of business. So the bank's next move is to
create additional money out of nothing and lend that to the borrower
so he will have enough to continue paying the interest.
1 - Commercial banks in the industrialized nations, backed by
their respective central banks, create money out of nothing and
lend it to the governments of underdeveloped nations. They know
that these are risky loans, so they charge an interest rate that
is high enough to compensate. It is more than what they expect
to receive in the long run.
2 - When the underdeveloped nations cannot
pay the interest on their loans, the IMF and World Bank enter
the game as both players and referees. Using additional money
created out of nothing by the central banks of their member nations,
they advance "development" loans to the governments
which now have enough to pay the interest on the original loans
with enough left over for their own political purposes.
3 - The recipient country quickly exhausts
the new supply of money, and the play returns to point number
two. This time, however, the new loans are guaranteed by the World
Bank and the central banks of the industrialized nations. Now
that the risk of default is removed, the commercial banks agree
to reduce the interest to the point anticipated at the beginning.
The debtor governments resume payments.
4 - The final play is ... the conversion
of the IMF into a world central bank as Keynes had planned, which
then issues an international fiat money. Once that "Bank
of Issue" is in place, the IMF can collect unlimited resources
from the citizens of the world through the hidden tax called inflation.
The money stream then can be sustained indefinitely - with or
without the approval of the separate nations - because they will
no longer have money of their own.
Since this game results in a hemorrhage
of wealth from the industrialized nations, their economies are
doomed to be brought down further and further, a process that
has been going on since Bretton Woods. The result will be a severe
lowering of their living standards and their demise as independent
nations. The hidden reality behind so-called development loans
is that America and other industrialized nations are being subverted
by that process. That is not an accident; it is the essence of
the plan. A strong nation is not likely to surrender its sovereignty.
Americans would not agree to turn over their monetary system,
their military, or their courts to a world body made up of governments
which have been despotic to their own people, especially since
most of those regimes have already revealed anti-American hostility.
But if Americans can be brought to the point where they are suffering
from a collapse of their economy and from a breakdown in civil
order, things will be different. When they stand in bread lines
and face anarchy in their streets, they will be more willing to
give up sovereignty in return for "assistance" from
the World Bank and the IN "peacekeeping" forces. This
will become even more acceptable if a structured demise of Communism
can be arranged ahead of time to make it appear that the world's
major political systems have converged into the common denominator
of "social democracy."
The underdeveloped nations ... are not
being raised up. What is happening to them is that their political
leaders are becoming addicted to the IMF cash flow and will be
unable to break the habit. These countries are being conquered
by money instead of arms. Soon they will no longer be truly independent
nations. They are becoming mere components in the system of world
John F Kennedy, addressed the finance ministers and central bank
governors from 102 nations at the annual meeting of the IMF/World
Bank, September 1963
Twenty years ago , when the architects
of these institutions [IMF & World Bank] met to design an
international banking structure, the economic life of the world
was polarized in overwhelming, and even alarming, measure on the
United States .... Sixty per cent of the gold reserves of the
world were here in the United States .... There was a need for
redistribution of the financial resources of the world .... And
there was an equal need to organize a flow of capital to the impoverished
countries of the world. All this has come about. It did not come
about by chance but by conscious and deliberate and responsible
CFR [ Council on Foreign Relations] members have never been shy
about calling for the weakening of America as a necessary step
toward the greater good of building world government. One of the
CFR founders was John Foster Dulles, who later was appointed Secretary-of-State
by CFR member Dwight Eisenhower. In 1939, Dulles said:
Some dilution or leveling off of the
sovereignty system as it prevails in the world today must take
place ... to the immediate disadvantage of those nations which
now possess the preponderance of power .... The establishment
of a common money... would deprive our government of exclusive
control over a national money .... The United States must be prepared
to make sacrifices afterward in setting up a world politico-economic
order which would level off inequalities of economic opportunity
with respect to nations.
CFR member Zbigniew Brzezinski was the
National Security Adviser to CFR member Jimmy In 1970, Brzezinski
... some international cooperation has
already been achieved, but further progress will require greater
American sacrifices. More intensive efforts to shape a new world
monetary structure will have to be undertaken, with some consequent
risk to the present relatively favorable American position.
At the Spring, 1983, Economic Summit in
Williamsburg, Virginia, President Ronald Reagan declared:
National economies need monetary coordination
mechanisms, and that is why an integrated world economy needs
a common monetary standard .... But, no national currency will
do - only a world currency will work.
The CFR strategy for convergence of the
world's monetary systems was spelled out by Harvard Professor
Richard N. Cooper, a CFR member who had been the Under Secretary
of State for Economic Affairs in the Carter Administration:
I suggest a radical alternative scheme
for the next century: the creation of a common currency for all
of the industrial democracies, with a ( common monetary policy
and a joint Bank of Issue to determine that monetary policy ....
How can independent states accomplish that? They need to turn
over the determination of monetary policy to a supranational body.
It is highly doubtful whether the American
public, to take just one example, could ever accept that countries
with oppressive autocratic regimes should vote on the monetary
policy that would affect monetary conditions in the United States
.... For such a bold step to work at all, it presupposes a certain
convergence of political values ....
Phrases such as, monetary coordination
mechanisms, modern world economic order, convergence of political
values, or new world order are not very specific. To the average
person, they sound pleasant and harmless. Yet, to the insiders
of the club, they are code phrases which have a specific meaning:
the termination of national sovereignty and the creation of world
government. CFR member, Richard Gardner - another adviser to President
Carter - explains the meaning of these phrases and also calls
for the Fabian strategy of deception and gradualism:
In short! "house of world order"
will have to be built from the bottom up .... An end run around
national sovereignty, eroding it piece by piece will accomplish
much more than the old-fashioned frontal assault.
As for the programmed decline of the American
economy, CFR member Samuel Huntington argues that, if higher education
is considered to be desirable for the general population, "a
program is then necessary to lower the job expectations of those
who receive a college education."
CFR member Paul Voicker, former Chairman
of the Federal Reserve
The standard of living of the average
American has to decline .... I don't think you can escape that.
By 1993, Volcker had become the U.S.
Chairman of the Trilateral Commission (TLC). The TLC was created
by David Rockefeller to coordinate the building of The New World
Order. "An end run around national sovereignty, eroding it
piece by piece.' The objective is to draw the United States, Mexico,
Canada, Japan, and Western Europe into political and economic
union. Under slogans such as free trade and environmental protection,
each nation is to surrender its sovereignty "piece by piece"
until a full-blown regional government emerges from the process.
The new government will control each nation's working conditions,
wages, and taxes. Once that has happened, it will be a relatively
simple step to merge the regionals into global government. That
is the reality behind the so-called trade treaties within the
European Union (EU), the North American Free Trade Agreement (NAFTA),
the Asia-Pacific Economic Cooperation agreement (APEC), and the
General Agreement on Tariffs and Trade (GATT). They have little
to do with trade. In the Trilateral Commission's annual report
for 1993 Volcker explains:
Paul Volker, 1993
Interdependence is driving our countries
toward convergence in areas once considered fully within the domestic
purview. Some of these areas involve government regulatory policy,
such as environmental standards, the fair treatment of workers,
In 1992, the Trilateral Commission released a report co-authored
by Toyoo Gyohten, Chairman of the Board of the Bank of Tokyo and
formerly Japan's Minister of Finance for International Affairs.
Gyohten had been a Fulbright Scholar who was trained at Princeton
and taught at Harvard Business School. He also had been in charge
of the Japan Desk of the International Monetary Fund. In short,
he represents the Japanese monetary interests within The New World
Order. In this report, Gyohten explains that the real importance
of "trade" agreements is not trade but the building
of global government:
Regional trade arrangements should not
be regarded as ends in themselves, but as supplements to global
liberalization .... Regional arrangements provide models or building
blocks for increased or strengthened globalism .... Western Europe
[the EU] represents regionalism in its truest form .... The steps
toward deepening [increasing the number of agreements] are dramatic
and designed to be irreversible .... A common currency .... central
bank.... court and parliament-will have expanded powers .... After
the Maastricht summit [the Dutch town where the meeting was held],
an Economist editorial pronounced the verdict: "Call it what
you will: by any other name it is federal government."...
In sum, the regional integration process in Europe can be seen
as akin to an exercise in nation-building.
Applying this same perspective to the
NAFTA treaty, former Secretary-of-State, Henry Kissinger (CFR),
said it "is not a conventional trade agreement but the architecture
of a new international system .... the vital first step for a
new kind of community of nations." The newspaper article
that contained this statement was appropriately entitled: "With
NAFTA U.S. Finally Creates a New World Order." David Rockefeller
(CFR) was even more emphatic. He said that it would be "criminal"
not to pass the treaty because: "Everything is in place -
after 500 years - to build a true 'new world' in the Western Hemisphere."
By early 1994, the drift toward the New
World Order had become a rush. On April 15, the government of
Morocco placed a full-page ad in the New York Times celebrating
the creation of the World Trade Organization which was formed
by the signing of the General Agreement on Tariffs and Trade (GATT)
which took place in the Moroccan city of Marrakech. While Americans
were still being told that GATT was merely a "trade"
agreement, the internationalists were celebrating a much larger
concept. The ad spelled it out in unmistakable terms:
1944, Bretton Woods: The IMF and the World
1945, San Francisco: The United Nations
1994, Marrakech: The World Trade Organization
History knows where it is going .... The
World Trade Organization, the third pillar of the New World Order,
along with the United Nations and the International Monetary Fund.
James Watt, Secretary of the Interior in the Reagan Administration,
about an incident at a Cabinet meeting in the spring of 1982 [in
[Treasury] Secretary Regan was explaining
the inability of those destitute countries to pay even the interest
on the loans that individual banks such as Bank of America, Chase
Manhattan and Citibank had made. The President was being told
what actions the United States "must" take to salvage
After the Regan and Stockman briefings,
there were several minutes of discussion before I asked, "Does
anyone believe that these less developed countries will ever be
able to pay back the principal on these loans?" When no one
spoke up, I asked, "If the loans are never going to be repaid,
why should we again bail out the countries and arrange payment
for their interest?"
The answer came from several voices at
once, "If we don't arrange for their interest payments, the
loans will go into default, and it could put our American banks
in jeopardy." Would the customers lose their money? No, came
the answer, but the stockholders might lose dividends.
... I realized that nothing in the world
could keep these high government officials from scrambling to
protect and bail out a few very large and sorely troubled American
... under the Carter Administration when Panama fell in arrears
on the payment of its loans. A consortium of banks including Chase
Manhattan, First National of Chicago and Citibank brought pressure
to bear on Washington to give the Canal to the Panamanian government
so it could use the revenue to pay interest on its loans. Although
there was massive opposition to this move among the American people,
the Senate yielded to insider pressure and passed the give-away
treaty. The Panamanian government inherited $120 million in annual
revenue, and the interest payments to the banks were restored.
[The] the inclusion of China and the former Soviet bloc into the
Grand Design for global government. As with all the other countries
in the world, the primary mechanism being used to accomplish this
goal - at least in the field of economics - is the IMF/ World
Bank. The process is: (1) the transfer of money from the industrialized
nations-which drags them down economically to a suitable common
denominator-and (2) the acquisition of effective control over
the political leaders of the recipient countries as they become
dependent upon the money stream. The thing that is new and which
sets this stage apart from previous developments is that the apparent
crumbling of Communism has created an acceptable rationale for
the industrialized nations to now allow their lifeblood to flow
into the veins of their former enemies. It also creates the appearance
of global, political "convergence," a condition which
CFR theoretician, Richard Cooper, said was necessary before own
destinies determined by governments other than their own.
... The top Communist leaders have never
been as hostile their counterparts in the West as the rhetoric
suggests. They are quite friendly to the world's leading financiers
and have worked closely with them when it suits their purposes...
the Bolshevik revolution actually was financed by wealthy financiers
in London and New York. Lenin and Trotsky were on the closest
of terms with these moneyed interests - both before and after
the Revolution. Those hidden liaisons have continued to this day
and occasionally pop to the surface when we discover a David Rockefeller
holding confidential meetings with a Mikhail Gorbachev in the
absence of government sponsorship or diplomatic purpose.
It is not unreasonable to imagine a scenario
in which the leaders of the Communist bloc come to realize they
cannot hold themselves in power much longer. There comes a point
where even physical force is not enough, especially when the loyalties
of those who hold the weapons also begin to falter. With economic
gangrene creeping up the legs of their socialist systems, they
realize they must obtain outside financial assistance or perish.
... In this scenario, the negotiators
that the Soviet Bloc needs financial support. It is agreed that
the Western nations have the capacity to provide it. It is agreed
that the best way to move money from the industrialized nations
into the Soviet bloc is through international agencies such as
the IMF/World Bank. It is agreed this cannot happen until hostility
between world systems is replaced by political convergence. It
is agreed that future conflict is wasteful and dangerous to all
parties. Therefore, it is finally agreed that the Soviet bloc
must abandon its posture of global aggression while the Western
nations continue to move toward socialism, necessary steps for
the long-range goal of merger into a world government. But, in
doing so, it must be insured that the existing Communist leaders
retain control over their respective states.
To that end, they change their public
identities to "Social Democrats." They speak out against
the brutal excesses of their predecessors and they offer greater
freedom of expression in the media. A few dispensable individuals
among their ranks are publicly purged as examples of the demise
of the old order. States that once were held captive by the Soviet
Union are allowed to break away and then return on a voluntary
basis. If any leaders of the newly emancipated states prefer true
independence instead of alignment with Russia, they are replaced.
No other changes are required. Socialism
remains the economic system of choice and, although lip service
may be given to free-market concepts, the economy and all means
of production remain under state control. The old Communists are
now Social Democrats and, without exception, they become the leaders
in the new system.
The West rejoices, and the money starts
to move. As an extra bonus, the former Bolsheviks are now hailed
by the world as great statesmen who put an end to the Cold War,
brought freedom to their people, and helped to forge a New World
When did Communism depart? We are not
quite sure. All we know is that one day we opened our newspapers
and it was accomplished. Social Democrats were everywhere. No
one could find any Communists. Russian leaders spoke as long-time
enemies of the old regime. Peristroika was here. Communism was
dead. It was not killed by an enemy. It voted itself out of existence.
It committed suicide!
Does it not seem strange that Communism
fell without a struggle? Is it not curious that the system which
was born out of class conflict and revolution and which maintained
itself by force and violence for almost a century just went away
on its own? Communism was not overthrown by people rising up with
clubs and pitchforks to throw off their yoke of tyranny. There
was no revolution or counterrevolution, no long period of fragmentation,
no bloody surges between opposing forces. Poof! It just happened.
True, there was blood in the streets in those areas where opposing
groups vied for power, but that was after Communism had departed,
not before. Such an event had never occurred in history. Until
then, it had been contrary to the way governments act; contrary
to the very nature of power which never surrenders without a life-and-death
struggle. This, indeed, is a great curiosity-which should cause
people to think.
... the so-called demise of Communism
is a Great Deception...having been stage managed for the transition
to world government.
The industrialized nations of the world are being bled to death
In a global transfer of their wealth to the less developed countries.
Furthermore, it is not being done to them by their enemies. It
is being done by their own leaders. The process is well coordinated
across national lines and perfectly dovetails with the actions
of other leaders who are doing the same thing in their respective
countries, and these leaders regularly meet together to better
coordinate their activities. This could not happen without planning.
The international version of the game called Bailout is similar
to the domestic version in that the overall objective is to have
the taxpayers cover the defaulted loans so that interest payments
can continue going to the banks. The differences are: (1) instead
of justifying this as protecting the American public, the pretense
is that it is to save the world from poverty; and (2) the main
money pipeline goes from the Federal Reserve through the IMF/
World Bank. Otherwise, the rules are basically the same.
There is another dimension to the however,
that involves more than mere profits and scam. It is the conscious
and deliberate evolution of the IMF/ World Bank into a world central
bank with the power to issue a world fiat currency. And that is
an important step in an even larger plan to build a true world
government within the framework of the United Nations.
Economically strong nations are not candidates
for surrendering their sovereignty to a world government. Therefore,
through "loans" that will never be paid back, the IMF/
World Bank directs the massive transfer of wealth from the industrialized
nations to the less developed nations. This ongoing process eventually
drains their economies to the point where they also will be in
need of assistance. No longer capable of independent action, they
will accept the loss of sovereignty in return for international
The less developed countries, on the other
hand, are being brought into The New World Order along an entirely
different route. Many of these countries are ruled by petty tyrants
who care little for their people except how to extract more taxes
from them without causing a revolt. Loans from the IMF/World Bank
are used primarily to perpetuate themselves and their ruling parties
in power-and that is exactly what the IMF/World Bank intends.
Rhetoric about helping the poor notwithstanding, the true goal
of the transfer of wealth disguised as loans is to get control
over the leaders of the less developed countries. After these
despots get used to the taste of such an unlimited supply of sweet
cash, they will never be able to break the habit. They will be
content - already are content - to become little gold-plated cogs
in the giant machinery of world government. Ideology means nothing
to them: capitalist, communist, socialist, fascist, what does
it matter so long as the money keeps coming. The IMF/ World Bank
literally is buying these countries and using our money to do
Creature from Jekyll Island