Woodrow Wilson said in 1916, "A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government of free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." (Senate Document 23, 76th Congress, 1st Session, pg. 100) He said this only a few years after he signed the Federal Reserve Act of 1913 into law as President of the United States, and undoubtedly regretted it. He understood the monster that had been unleashed.
Wilson should have heeded the following warning before he signed the 1913 Act: In the Thomas Jefferson Encyclopedia, Thomas Jefferson is quoted as saying "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the bankswill deprive the people of all property until their children wake-up homeless on the continent their fathers conqueredThe issuing power should be taken from the banks and restored to the people, to whom it properly belongs." In a statement quoted from a letter written to John Taylor, (Monticello, 28 May 1816. Ford 11:533) Thomas Jefferson says, "And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." Seems to tell the story of what is slowly happening to the United States, and lately seems to have accelerated. Jefferson undoubtedly had great insight into the power of debt which our current political leaders seem to minimize. The Federal Reserve Act of 1913 created a privately held corporation according to William P.G. Harding, Governor of the Federal Reserve Board (1921), whose stock is held by primarily by a small group of families and corporations including Rothschild and Rockefeller, along with some foreign companies. Member banks own the remainder of the stock. So it is a public/private partnership, yet it is not accountable to the Federal government and has never been audited. Thomas Jefferson knew about the fraudulent nature of paper money because of his experience with the Continental currency. We may be about to learn what he knew because of this unaccountable group of powerful stockholders.
This system of paper money (aka. Fiat Currency) is essentially a system of debt, and the Federal Reserve System has created a system that thrives on the increase of debt. Over the years it has allowed banks ever increasing ratios of fractional reserves, meaning that they can lend more money than they have by simply borrowing the balance ultimately from the Federal Reserve Bank. Right now that ratio is 10%. That means they can lend $10 for every $1 they have. So the supply of money increases with every loan. For banks to continue to maintain liquidity and remain profitable, they must be able to continue to lend more money. This concern was at the center of the 2008 banking liquidity crisis. So the Federal government propped up the banks to help them continue to lend. Up to then, they had increasingly loosened lending standards to increase demand for borrowed money. This in turn increased spending in the economy. Since this has been going on for so long, the U.S. economy has become dependent on a continuation of this pattern to maintain economic growth, and when banks begin to lend again, the economy moves back into a growth phase. So consumers are increasingly encouraged, and even pressured, to increase their spending. This is especially true in economic downturns, the worst time for someone to go deeper into debt.
So our economy is now addicted to debt, and to continue our lifestyle and appearance of wealth we must continue to borrow and be creative at figuring out ways to tolerate increasing levels of debt. Unfortunately, it is a house of cards that will eventually fall. Those who are wise will flee from personal debt, and will hold assets that preserve value, as opposed to holding it in a paper currency.
For more discussion about the debt problem go to Jim's website.
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