Creature From Jekyll Island by G. Edward полностью

($1 million less 10% reserve). In bankers' language, that $900,000 is called...

| EXCESS RESERVES "

The word "excess" is a tipoff that these so-called reserves have a special destiny. Now that they have been

transmuted into an excess, they are considered as avail-

able for lending. And so in due course these excess

reserves are converted into ...

| BANK LOANS

But wait a minute. How can this money be loaned out

when it is owned by the original depositors who are still free to write checks and spend it any time they wish?

Isn't that a double claim against the same money? The

answer is that, when the new loans are made, they arc

not made with the same money at all. They are made with brand new money created out of thin air for that purpose. The nation's money supply simply increases by

ninety per cent of the bank's deposits. Furthermore, this new money is far more interesting to the banks than the

old. The old money, which they received from deposi-

tors, requires them to pay out interest or perform serv-

ices for the privilege of using it. But, with the new money, the banks collect interest, instead, which is not too bad considering it cost them nothing to make. Nor is

that the end of the process. When this second wave of fiat money moves into the economy, it comes right back into

the banking system, just as the first wave did, in the form o f . . .

MORE COMMERCIAL BANK DEPOSITS

The process now repeats but with slightly smaller num-

bers each time around. What was a "loan" on Friday comes back into the bank as a "deposit" on Monday. The deposit then is reclassified as a "reserve" and ninety per cent of that becomes an "excess" reserve which, once again, is available for a new "loan." Thus, the $1 million THE MANDRAKE MECHANISM 199

of first wave fiat money gives birth to $900,000 in the second wave, and that gives birth to $810,000 in the third wave ($900,000 less 10% reserve). It takes about twenty-eight times through the revolving door of deposits

becoming loans becoming deposits becoming more

loans until the process plays itself out to the maximum

effect, which is...

BANK FIAT MONEY = UP TO 9 TIMES GOVERNMENT

The amount of fiat money created by the banking cartel

is approximately nine times the amount of the original

government debt which made the entire process possi-

ble. When the original debt itself is added to that figure, we finally have ...

| TOTAL HAT MONEY = UP TO 10 TIMES GOVERNMENT

The total amount of fiat money created by the Federal

Reserve and the commercial banks together is approxi-

mately ten times the amount of the underlying govern-

ment debt. To the degree that this newly created money

floods into the economy in excess of goods and services,

it causes the purchasing power of all money, both old

and new, to decline. Prices go up because the relative

value of the money has gone down. The result is the

same as if that purchasing power had been taken from us

in taxes. The reality of this process, therefore, is that it is a . . .

HIDDEN TAX = UP TO 10 TIMES THE NATIONAL DEBT**)

Without realizing it, Americans have paid over the

years, in addition to their federal income taxes and excise taxes, a completely hidden tax equal to many times the

national debt! And that still is not the end of the process.

Since our money supply is purely an arbitrary entity

' with nothing behind it except debt, its quantity can go 1- That is a theoretical maximum. In actual practice, the banks can seldom loan out all of the money they are allowed to create, and the numbers fall short of the maximum.

I

200 THE CREATURE FROM JEKYLL ISLAND

down as well as up. When people are going deeper into

debt, the nation's money supply expands and prices go

up, but when they pay off their debts and refuse to

renew, the money supply contracts and prices tumble.

That is exactly what happens in times of economic or

political uncertainty. This alternation between periods of expansion and contraction of the money supply is the

underlying cause of...

| BOOMS, BUSTS, AND DEPRESSIONS

Who benefits from all of this? Certainly not the average

citizen. The only beneficiaries are the political scientists in Congress who enjoy the effect of unlimited revenue to

perpetuate their power, and the monetary scientists

within the banking cartel called the Federal Reserve

System who have been able to harness the American

people, without their knowing it, to the yoke of modern

feudalism.

RESERVE RATIOS