“It is not too much to say that governments are now superseded by financial institutions... the efforts of those in control of financial policy are, primarily, if not entirely, concerned with making the world safe for bankers, rather than making the world safe.... the world cannot be made safe without removing the banker, painlessly or otherwise, from the commanding position which he now occupies.”
C.H. Douglas, The Monopoly Of Credit, 1932
The overlooked reason for today’s bailout mess and the economic-financial crisis stems from the private control of credit and money creation, as well as the recent creation of unregulated, unbacked, quasi-money instruments called derivatives and credit swaps also created by the big bank owners of the Federal Reserve.
The private “Federal” Reserve and its big bank owners are the main culprits and root cause in the creation of inflation and depression via the expansion and contraction of money. The business cycle, and its magnified boom-bust periods, is largely a creature of monetary policies geared to private interests, with little or no public interest imput. Who lends, to whom, for what, at what cost, and who has a say?
In short, we are abjectly dependent on our "independent" central bank. Independent of whom? The People, of course... and this in direct contravention of the founders intent.
Private banks are in the business of creating debt-money and interest and fee income. There is no real public interest per se in this process.
In any case, for years before securitization emerged loans were more local and held by community-based lending institutions. As a consequence, more oversight and concern for these loans and their security were in play.
With the advent of securitization of bank loans, and their sale to pension funds and foreign investors, a process was created whereby the banks could continually exceed their traditional capital and fractional reserve requirements by selling loans to Wall Street. As long as loan could be sold, this meant there was no end to debt-money creation and fee and interest profit. For this reason, banks became less concerned with the quality of loans given that they could be packaged and sold – often with bogus credit ratings provided by Wall Street.
This process was exacerbated by the commission and fee driven structure of mortgage lending in which any deal is put thru in order to generate a commission. This would not happen with a system of Treasury-Direct home loans via local banks, with people on salary, funded not by “fed” debt-money but by treasury dollars created for home loans, and with loans held over term by our Treasury and public central bank.
Under the current corrupt system lending expanded beyond reason and the quality of loans and their security continued to drop. Again, this applied in spades to the home loan market where securitization and implicit taxpayer guarantees made it possible for banks to get loans off their books and continue to make loans, fees, and interest beyond reasonable limits. What else could one expect in a thoroughly privatized process in an era of deregulation?
The process of debt-money involves the “magic” creation of loan money credit “out of thin air.” At the same time, the total sum of interest which will become due is not created. For this reason, private debt-money creation and interest-rate setting powers mean, eventually, our assets flow to the big banks (owners of the Fed) as the economy cannot generate enough profit to pay the interests costs. Private central bank debt piles up, and is either refinanced and loans extended (in perpetuity as with our goverment debt) or defaults begin to multiply and assets go back to the banks – in particular, those money center banks who not only own the federal reserve but access its money at will. In addition, ruinous inflation for the people is then the answer to "reflate" the economy and save the big bank owners of the Fed.
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Whither the public? Why, given the utter corruption and calamitous mismanagement, are we only pursuing a selective, half-baked, nationalization process?
The absence of public interest in private money creation power means, in a profit-seeking system, that lending and debt money creation continue until no more loans can be sold and banks retrench and a collapse follows. Then we give them more money and they still don't lend! Exactly this dismal boom-bust, rob the public, depression dynamic - serving to greatly exacerbate normal business cycles - is built-in to the system as we know it. We can safely say, its the structure, stupid!
“This boom-bust economic cycle is totally unnecessary and is the fundamental cause of the inherent instability in our economy. It is due to too-rapid increases in the money supply due to deficit spending and then the multiplier effect of fractional reserve banking (described above) and to lenders greedy to take advantage of such a system that rewards lending with more and more interest revenue; followed by a too-rapid contraction of the money supply (such as we are experiencing now), necessary to combat the inflationary effects of the former phase, both the direct result of the Federal Reserve Act of 1913. We urgently need to reform this system that rewards greed and results in ever-increasing swings from boom-to-bust - destroying ordinary businesses and farms in the process. We need to repeal or fundamentally reform the Federal Reserve Act of 1913, and to replace it with a system that eliminates the ability of private banks to "create" and multiply money as loans.”
Patrick Carmack, The Money Masters
The real question is when, in these awful episodes in which the public is so badly fleeced and made destitute amidst horrendous social carnage, does the power of monetary policy shift to the public? When will the people regain the ownership of their central bank and monetary policy – if for nothing else then that being the price of today’s taxpayer bailout?
Despite the seriousness of today’s financial chaos, our own representatives are still not even broaching this question of taking back the Fed stock - and this despite the fact taxpayers are bailing out the owners of the Federal Reserve, and taking all their “toxic waste” debt which was created and multiplied to the chaos point by the very fact of a lack of any real public interest and oversight in the debt-money creation system!
Even today, Congress can’t even proceed to audit the “Fed” - much less require the real owners of “our” central bank stock to appear before the American people. Shame on Congress!
The Founders of this country well understood the banker problem, as they had seen the chaos, predation, and perfidy of the private ‘Bank Of England.’ They warned us time and time again about this corrupt system. But the American public has been kept in the dark about the real owners of “our” economy and society. The corporate media is a handmaiden of the big bankers today, and only the internet has served to educate people about their past and a banking history effectively buried in “our” educational institutions.
Like everything else in our society, including an undemocratic "free trade" policy, the bailout process is top-down and utterly plutocratic. Wall Street Oligarchs create the mess and then they bring the rescue plan. Driven by a Goldman-Sachs owned Treasury department, the White House then fronts it and tells Congress it has no choice. Except for phone calls to legislators the public is left out despite the fact we must pay the bill – and the only way the bill can be paid is with our tax money or more borrowed debt-money from this same crisis-causing private central bank!
Regardless of any bailout legislation passed, the Congress should proceed to nationalize the Fed and return the “purse powers” to the public, as the Constituion intended. They should join with other lower chambers - the people's representatives - around the world and put an end to private central banking in order to avoid gangs of foreign private banks attacking those seeking the public interest.
Otherwise, the dismal dynamic and debt slavery we are witnessing today, and have seen so many times in the past, will continue to be repeated... to our everlasting indebtedness.