Just been sent this:
In 1908 the US had a recession. The Federal government had to borrow money from JP Morgan to stay solvent. In 1912, Paul Warburg, JP Morgan, Nelson Alridge and other big players of the day met on Jekyll Island to create a “reserve bank”. This was presented to the US congress and passed over Christmas recess in 1913. The public was told it would make runs on banks impossible. In actuality what it did was act as a safety net that allowed banks to make more and more risky loans.
The Fed does two things: 1) it is the reserve bank for other banks. Banks loan out your deposits and therefore do not have 100% of deposited cash on hand. If there is a run on the bank, the Fed will loan the bank the money needed to cover the run, thus keeping the bank solvent. 2)The Fed loans money to the US federal government on demand in exchange for the future value of Treasury bonds.
A side note about money and the Federal government. The US Constituion says that the congress is responsible for weights and measures. This is so that congress is responsible for the weight of precious metals and those weights are standardized. The government can mint coin but it cannot print money. It can however borrow money. This is where the Fed comes in.
From 1914 onward, the US government began to borrow money from the fed. With the outbreak of WW1, there was a need for money and the fed was happy to provide it against the future value of T bonds. The roaring 20’s happened. Banks were enabled by the safety net of the fed made risky investments and loans. Then the stock market collapsed. The fed was supposed to prevent these problems and it seems to have caused the largest economic depression to that date.
20 years after 1913 and 4 years into the Great Depression, the first Treasury bonds were coming due. On May 1 1933, FDR issued executive order 6102 that required all gold bulion be surrendered to the federal government. He changed the value of gold from $20/oz to $35/oz and had a bank holiday. Since that time we have been compelled to use federal reserve notes. The federal government is painted into a corner where it must continually borrow fed notes against the future value of… wait for it…. the same federal reserve notes. n=n+1. The trap that was set in 1913 was sprung in 1933.
Just as Coolage was eager to get us involved in WW1, FDR was eager to get us into WW2. We were a late entrant into ww2 but we sold a lot of munitions and supplies to Europe. At the end of WW2 we (the federal reserve ) had pracitcally all the gold from 1st world countries at Ft Knox.
In 1947 there was an international meeting in Bretton Woods NH in which it was decided that the US Dollar (aka federal reserve notes) would be the currency used in all international transactions. This is why oil is traded in dollars to this day.
At this point, all of europe is de facto on the federal reserve system. They never got their gold back and must use their own currencies internally as fiat currency. The US has an advantage because it is the first “customer” of the federal reserve and can print the money it needs internationally. No other country can do that.
Through the next 60 years all other countries have come into the federal reserve system. It is a ponzi scheme where each player is beholden to the players ahead of them and seeks to profit from new entrants. The problem we face today is that there are no new entrants. North Korean is the only outlyer and they, frankly, won’t bring much with them if they did join the party.
