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 (original 1994)

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 enhanced it.

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 nothing.

... 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 socialism.

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 [1943], 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 planning.

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 wrote:

... 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, and taxation.

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 Bank
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 his memoirs]

[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 the situation.

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 Banks.

... 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 Order.

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 aid.

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 it.

The Creature from Jekyll Island

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