Creating Money
Step One. The Federal Open Market Committee approves the purchase of U.S. Bonds on the open market.
Step Two. The Bonds are purchased by the Fed from whoever is offering them for sale on the open market.
Step Three. The Fed pays for the bond with electronic credits to the seller’s bank, these electronic credits are based on nothing. The Fed merely creates them out of nothing.
Step Four. The bank uses these deposits as reserves. They can loan out over ten times that amount of their reserves to new borrowers all at interest.
In this manner a Fed purchase of a million dollar in bonds, gets turned into ten million dollars in bank accounts. The Feds in affect create 10% of this phony money that is not backed by anything, and the banks then create the other 90%, which is not backed by anything. To reduce the amount of money in the economy, the process is simply reversed. The Feds sell bonds to the public, and the money flows out of the purchasers bank, and loans must be reduced by ten times the amount of the sale, so a Fed sale of a million dollar bond, results in ten million dollars of less money in the economy.
The next question that must be asked is, how does all of this benefit the bankers who’s representatives conspired on Jekyll Island?
It misdirected banking reform from proper solutions.
It prevented a proper debt free currency like the greenbacks from making a comeback. The bond based system of government finance forced on Lincoln after he created greenbacks was now cast in stone.
It delegated to the bankers the right to create 90% of the nation’s money supply, based on merely fractional reserves, which the bankers then loan out at interest.
It centralized overall control of the U.S. nations money supply in the hands of a few men.
It established a central bank with a high degree of independence from effective political control. Soon after its creation, the Feds contraction of money in the early 1930’s would cause the Great Depression, and this independence has been enhanced ever since that period, through additional loss.
In order for the Federal Reserve to fool the public into believing the Fed was a governmental agency, and that the government would retain control over the bank, the planners called for the new central bank to be overseen by a board of governors, appointed by the president of the U.S., and approved by the senate. But, in reality, all the bankers had to do was be sure that their men got appointed to the board of governors. An easy enough task, since bankers have money, and money buys influence over politicians.
When the participators of the secretly held meeting at Jekyll Island returned home, the publicity blitz was on. The big New York bankers put together an educational fund of five million dollars to finance professors at respected universities to support the new bill. Woodrow Wilson was one of the first to jump on the band wagon. But, the Aldrich bill was recognized for what it was and it was quickly recognized as the bankers bill. A bill that would only become known as the money trust. As congress Lindberg stated during the bills debate, “The Aldrich Plan is the Wall Street Plan. It means another panic, if necessary, to intimidate the people. Aldrich, paid by the government to represent the people, proposes a plan for the trusts instead.” Rep. Charles A. Lindbergh (R-MN).