This is an important book to read. It gives readers a non-orthodox lens for thinking about the Federal Reserve System (the USA's central bank): what it does, what it doesn't do, the questionable circumstances under which it was created, and how its stated purposes are substantially different from its ostensible purposes.
You will never find this perspective in any economics, history or political science textbook. No one wants you to think about our central bank in this way, for reasons that become increasingly obvious as you read.
I'm grateful to this author for showing me a different way to think about our country's money supply, its banking and currency issuance policies, and for illustrating what it really means to be a "cantillon insider." Although the author never uses this specific phrase, he is quite clear in showing who benefits--and who is cruelly harmed--from loose monetary policy.
Notes:
* The central bank should be thought of as a cartel meant to consolidate control over interest rates, money creation and the money supply, and to reign in the increasingly decentralizing banking industry in the United States. Its ostensible purpose was to limit the number of banking panics and failures, something it has failed to do. But what it has done is offload the cost of bank failures to the taxpayer, while giving the impression that the Federal Reserve System "helps" the banking system as a lender of last resort.
* Fundamental to understand is the idea that the government uses various "crises" as "reasons" to create/print money: bank bailouts, bailouts of major American industrial companies (Chrysler, Penn Central, AIG), dealing with state or city insolvencies etc. See the old saying "never let a crisis go to waste." This then externalizes the costs of malinvestment or bad lending to the taxpayer, while extracting still more value from the citizenry in the form of future inflation. And because the effect of inflation takes time before its results are felt, most citizens do not realize that this "inflation tax" is being extracted from them.
* "If politicians tried to raise that money through taxes, they would be thrown out of office. But being able to 'borrow' it from the Federal reserve system upon demand, allows them to collect it through the hidden mechanism of inflation, and not one voter in one hundred will complain."
* "Lender of last resort" effectively means "money creator that confiscates wealth via inflation."
* The author has an interesting take on Mike Milken, perhaps he isn't the horrible, terrible, no-good, greedy, awful guy the established baking industry wanted us to see him as?
* As much as it's interesting to learn about "Fabianism," the Council on Foreign Relations and the various slow socialism movements in progress over the 19th and 20th Centuries, I'm not sure how much I want to read about New World Order conspiracies. But then again, maybe I'm the one being willfully blind to a key secular trend in history? It is interesting, too, that whenever anything bad happens, it always easily be blamed on "capitalism": Any structural adjustment, any austerity measures, all recessions and depressions, any environmental damage anywhere, all income and wealth inequality (which ironically derive from money printer proximity!) can always be blamed on big, bad capitalists, which then leads to more centralization and still more control of economic life by those in power.
* Note the environmental devastation of many of the World Bank funded projects over the years: for example displacement of people in India, deforestation of enormous regions of the Amazon basin in Brazil, etc., Makes one very cynical about their (current) climate change agenda.
* Looking at a system through a lens of what does the system actually do which may not be consistent with what it says that it does? Looking at the international financial system through this lens is extremely helpful, and telling. It helps you see the nature of the game, the greater chess game being played up above by our elites and those sitting closest to the money printer while the rest of us think we're playing checkers.
* Section 2, A Crash Course of Money, alone makes this book worth reading. If you're unfamiliar with how central banks work, this chapter will both inform--and appall--you. It explains how fiat money is created basically from nothing, and it's a good walkthrough of modern central bank mechanisms and operations. Everyone should be familiar with how money is created in the modern economy.
* Money may represent an asset to an individual but as an aggregate it nets out as nothing.
* The "Rothschild formula": a metaphor for a set of techniques to run a central bank, to "create" the need for a "credible enemy" to justify funding perpetual war, a perpetual arms race, or at the least to drive sovereign level borrowing and deficit spending--to be funded later with monetary debasement.
* It is sobering to see accounts of the propaganda mechanisms used to lead the United States into WWI: it reminds a reader how easily major media outlets can be bought and paid for, and how easily they can shape public opinion. Of course nothing like this could possibly happen today in our era, could it?
* There are tremendously long tangential chapters here on what could be easily dismissed as conspiracy theories (e.g., getting the United States involved in WWI, wealthy elites/wealthy bankers in the United States and England financing Trotsky and the Bolshevik revolution in Russia, etc.). One could blithely dismiss them, but they actually do make sense once you look through the lens of understanding that elite wealth always benefits from war and geopolitical conflict. What happened in the 20th century and the "endless wars" of the last fifty years is no different from Rothschild financing of "endless wars" throughout Europe in the 1700s and 1800s.
* I recommend any reader who (understandably) doesn't want to be thought of as a "conspiracy theorist" instead consider that you don't have to be slavishly literal with every single conspiracy theory about every single thing that seems conspiratorial: it's probably more helpful to just realize that often people stand a benefit from situations that look like no one could benefit from them, and those people who benefit might be aware of the benefits while no one else is aware. In other words, the lens to use is always to ask the question: cui bono?
* Once you see this, it is impossible to view any agitation for war--war with China over Taiwan, war with Russia over the Crimea or Ukraine, war with anyone and everyone in the Middle East, etc--without being incredibly cynical about those agitating for that war, and those creating scenarios that would lead to such a war.
* Interesting history of the American colonies from the standpoint of "money soundness": Initially there were hyperinflations in various colonies as they went off specie, to the point that England banned moneyprinting here. A similar thing also happened in the early days of the Continental Congress. Prosperity consistently followed any return to sound money.
* Problems of "bi-metalism" (using both silver and gold as backing): exchange rate of gold to silver would cause hoarding in one or the other, depending on the arbitrage.
* "The creature comes to America" in the form of the Bank of North America chartered by the Continental Congress in 1781. The USA's first Central bank. Its charter was not renewed. The USA's second central bank: the First Bank of the United States, conceived and proposed by Alexander Hamilton and chartered in 1791. Hamilton, a federalist, opposed by Jefferson, an anti-federalist. See also this author's suggestion that Rothschild interest and influence was behind the founding of the bank of the United States. Also very likely that there were foreign investors in the original Bank of the United States.
* In 1811 the charter renewal came up for a vote and lost, bringing to the end the existence of the second central bank of the United States. There was a so-called "wildcat banking" period in the United States around this time. Note also the War of 1812 is cited here as an early example of pushing for war, knowing the government didn't have the ability to tax to fund the conflict, thus knowing that the second order effect would be an effort to establish a central bank all over again, with the ability to print money.
* The Second Bank of the United States was the USA's third central bank; it was given a 20-year charter beginning in 1816. Andrew Jackson did not renew the charter, in fact he was elected in 1828 on an anti-bank platform, setting up a huge conflict between his administration and the director of the bank Nicholas Biddle, who worked behind the scenes to get the Senate to censure Jackson (achieved, but later rescinded), Biddle also brought about a gamesmanship lay to legislate an "early renewal" of the bank charter, which the Senate and House passed into law--but Jackson vetoed. Eventually the news got out about Biddle's involvement behind the scenes, his payments (direct and indirect) to congressional members, etc., and Jackson's censure was rescinded, and the bank's charter expired in 1836, unrenewed. [I never learned anything about this in any of my history classes. I wonder why??]
* Even Daniel Webster, known as a supporter of sound money, was caught up in Nicholas Biddle's web. Worth noting the great Daniel Webster's hypocrisy in repeated speaking of sound money in his public pronouncements... while he supported an institution that created inflationary unbacked fiat money.
* President Andrew Jackson versus a moneyed aristocracy. He framed the bank as a Hydra headed monster eating the flesh of the common man. "If I can only put down this Nicholas Biddle and his monster bank."
* How do you limit or at least control the growth (or contraction) of the money supply in an era of distributed banking with fractional reserve money creation? One way: force banks to hold assets in gold or silver coin[*] as reserves, with a limit of the issuance of banknotes to two times that capital. [* or Bitcoin]
* It's quite striking to read about state government defaults that happened in the 1830s, Alabama and Mississippi, for example, which defaulted on state bank obligations in 1837, see also Illinois in 1825. I wonder whether Illinois will be a repeat in the next several years given its budget situation...?
* US Civil War, the global chess match between Europe and European financiers versus the growing power of the United States, various interests desiring a split in the United States and also various interests desiring a war that would be "enriching"... especially to those funding both sides.
* "Greenbacks" and other crimes: The American civil war was seen as a rich man's war and a poor man's fight, it was unpopular, and money printing--inevitably followed by inflation--was used to fund it far longer than it should have been funded. Note also post-Civil War banking featured the growth of a proto-Federal Reserve-like system, with no specie backing the money, and printing of new money backed by federal government debt, all of which drove several panics in the late 1800s.
* Once again, see the Rothschild formula and the chilling quote: "The sanctity of its laws, the prosperity of its citizens, and the solvency of its treasury will be quickly sacrificed by any government in its primal act of self-survival." See also this convenient summary of the formula in one page.
* The development of JP Morgan's firm, his connections to the Rothschild banking empire in England. Benjamin Strong, leader of the US Central Bank in the 1920s, as a forerunner of the internationalists who have been running the Federal reserve ever since. For a more favorable (even hagiographical) book about Benjamin Strong, see Lords of Finance by Liaquat Ahamed.
* The idea of a "lender of last resort,"--in other words a central bank that can bail out any banking system to any extent--is held in reverence by all academic institutions, "it is one of the means by which the system perpetuates itself," using inflation as a hidden tax to cover shortfalls of fractional reserve banking.
* See the text from page 438, which gives a step-by-step plan for getting (any kind of) legislation put into action using psyops/reverse psychology. This is how the United States Central Bank was established. This is the work of sophisticated "observers of systems" who also have the ability to step outside of that system and control it or manipulate it from without, while the people "in the system" within have no idea that they're even in a system in the first place. For more on this meta-idea, see Douglas Hofstadter's incredible book Godel, Escher, Bach.
* Uncomplimentary comments about President Wilson: influenced by Wall Street power and money.
* Unbelievably skillful propaganda and misdirection play by bankers, both in the media and in the political system, to get the second Federal Reserve bill passed--a bill that was identical to the first which had failed. The brilliant idea of having the banking industry argue against the bill in the media even though they were for it! The whole point was to give the public the impression that the bankers didn't want this bill passed, thereby wrongfooting the public into wanting it passed because the bankers didn't. Gulf of Tonkin-level psyops here.
* When we heard Nancy Pelosi famously say about the Obamacare bill that "we have to pass the bill in order to see what's in it" we were hearing just the most recent example in a very long history of legislative sleight of hand. Nothing is new under the sun.
* Using war as a stabilizing mechanism to maintain government in power, and to justify abrograting the rights and freedoms of the citizens: in fact the people, under the right mechanisms of control, will give them up willingly. Likewise, "terrorism" can be used as a vector of control, and obviously right now a "pandemic" is used as an extremely effective vector of control.
* "Inflation is repudiation on the installment plan." Good piece of rhetoric right there
* Note also that Edward Griffin is still living, as hardy and crisp as ever at age 90, still doing non-trad media interviews:
https://www.youtube.com/watch?v=J54ze1TbgkA
https://www.youtube.com/watch?v=DnZzkelN6g8
To Read:
Chris Welles: The Last Days of the Club
Rose Martin: Fabian Freeway
Zygmund Dobbs: The Great Deceit
Graham Hancock: Lords of Poverty
Elgin Groseclose: Money and Man
Murray Rothbard: The Mystery of Banking
Murray Rothbard: America's Great Depression
*** Robert F. Remini: The Life of Andrew Jackson
*** Herman J. Viola: Andrew Jackson
Charles Adams: Fight, Flight, Fraud: The Story of Taxation
Derek Wilson: Rothschild: The Wealth and Power of a Dynasty
William Greider: Secrets of the Temple
Ferdinand Lundberg: America's Sixty Families
Carter Glass: Adventures in Constructive Finance