The Creature from Jekyll Island - book

I'm about a third of the way through this book which though it deals with topics members here are familiar with; really explains in a way that makes it very straightforward to understand.

The section on money creation answered one issue I never quite got in a way that made it obvious. No other book, essay or article had explained it in any way before so it had remained a mystery. And once you understand this key point then EVERYTHING becomes lucid and you are filled with another level of insight into how the beast functions. And it fills you with rage and anger.

A book that I very highly recommend though its not the easiest one to track down.

Will share more when I finish.

 

It's on my must read list. If you find a reliable source, let me know. I want a copy.

Cheers

 

OK here's the insight.

We all ought to know that fiat money is debt based. It is created out of nothing by the Federal Reserve or central banks and enters the economy. Now this money needs to be paid back, and that's fine since the money is now in existence and can be repaid in full.

So where's the problem? Well, there's the small matter of interest payments. This I knew, and many essays simply leave it there or state that a fiat system is destined to fail because of this shortfall.

But here's the next level of understanding. That money that needs to be paid as interest can be paid, but it's the sickening aspect of the whole concept of fiat money.

See the interest can only be paid by the bank extracting people's real wealth/labour. An example helps.

Say there is a limited economy of ten people who each borrow $10,000 to start the economy off. They borrow this money at 20% interest say so they will have to pay $12,000 through the course of 1 year. That's $1000 a month.

So we know that the $100,000 the men have borrowed is repayable since the money is in the economy. But what about that extra $20,000 in interest? It can't be paid right?

Wrong. See the bank can advertise for 10 jobs paying $166 a month for cleaning the toilets of their ten branches. Each man takes one of these jobs and the bank therefore pays out $166 to each man which they return to the bank as the interest payment. Therefore the bank has gotten $166 worth of free labour from each man representing the interest they owe.

The borrowing and payback loops can be very large, much larger than this example but it doesn't change the concept.

The economy can redistribute that borrowed fiat money according to whatever rigged rules are put in place, but always, as long as that debt based money exists the Federal Reserve or central bank is extracting free labour/goods from the army of serfs who participate in that economy!!

Carried to its logical conclusion, and bearing in mind that the whole debt based currency is zero sum - ie money lent out extinguishes itself when paid back - if all the money returns, then the only entity who has profitted with absolutely zero effort is the central bank! Carried on indefinitely, and with more and more debt out there, it can vacuum up increasing amounts of wealth from the people. The more money the central bank can get out there, the more real wealth it can steal.

It is this, which is the dirty secret of central fractional reserve banking. That you are already a slave!

Griffin says that any interest charged on fiat money, no matter how small is usury since the money is not 'real'. It does not represent money that has been earnt and lent out. No one is forgoing a lifetime of earnings and there is no opportunity cost whatsoever. It quite literally is the biggest scam EVER!

 

money substitutes such as fiat money are not the problem per se, it's the issue of how readily they can be issued, the rate at which supply of the money substitute can be increased. the other problem is, unlike commodity money, there is no clear line at which the currency can be declared to have become fraudulent. in the case of a bank issuing redemption certificates for a precious metal, stating that the certificate can be instantly converted into a given quantity of a stated metal, when they issue more of those than they have of the metal in question, it clearly becomes fraud when they expand the supply of certificates beyond the supply of metal.

the bigger problem is fractional reserve banking. the idea that a bank can issue currency ad hoc on an arbitrary ratio of their deposits, upon the theory that the chances of that 10% (as is the convention) deposit will never be drawn out all at once suddenly. i mean, when you look into it a little deeper, that printed metal and paper/plastic isn't even 1/10th of the 'money' circulating in the economy. and with the seemingly reasonable trick called 'margin lending' you can pump those assets up from the outset up to 400, then you could of course present those assets with their leveraging as the collateral for another derivative purchase, that's putting the effective reserve ratio up into the range of 16 THOUSAND. this is clearly unsustainable. i've done a bit of leveraged forex trading and while there's no real risk of loss beyond the initial deposit, the potential for gain is ridiculous. if you understand the whole process properly, that profit is actually money being printed, virtually, in the digital databases of the fiat marketplace.

i figured out within a year how to stay on the profit side of that game, most recent experience i was sitting on 25% growth on a virtual 1000 dollars in four months.

on one hand you have the near zero interest rates of long term loans, and on the other you have these 100-400% gains on derivatives which can be indexed upon each other one on the other on the next etc etc. this has absolutely no relation to real world whatsoever. it's gone beyond the 'your dollar is 10 if you have a government granted banking license' to 'your dollar is 1000000' on a semi-regulated crazy derivatives account...

anyway, a good place to get that book and a silver half dollar is from midas resources. next year marks the sunset clause of the fed's charter. i'm doing what i can to help make sure that it's charter is not renewed. and if it is renewed, unfortunately this is gonna get very rough from here on. a whole cabal of psychopathic politician class needs to be dethroned and i hesitate to say what that means in practical terms.

in the meantime, educate everyone who you can get to lend an ear, about the true nature of the fiat currency system and fractional reserve banking, and, importantly, about why commodity money is vitally important in defending against this crime. of course everyone here knows or has an inkling about the fact that money should be a compact, durable, fungible commodity, as it is far less prone to rapid inflation and deflation.

 

hehehe, I love a good scam

I use an even simpler anology when trying to explain the concept in 60 seconds.

You as the economy need cash. I, the reserve bank, am the only peson to give out money.
I lend out money with interest, thereby setting the interest rate that everyone hears about.

If you need $100 I can lend it to you at 3% so now you now owe me $103.
But you only actually received $100 so now you're short $3.
The only way you can pay me back is to borrow more money with interest.
Not only can you never pay it off...as you borrow more and more the interest payments overtake the principal
the whole system is destined to eventually crash.



It's simple and quick...but you wanna see the looks on their faces! :lol:

 

that's a pretty succinct description. there actually is a natural rate of interest, it's based on the general market's preference for stuff now, or it's patience to wait for it a bit later, which in simple terms is how much people are saving compared to spending. it's got nothing to do with the central bank interest rate, which is intentionally below the originary, natural rate.

 

I tried educating a few the other day on the poker tables. One guy was an accountant, another an insolvency consultant and this other random guy. I asked them where does currency come from and why do we have inflation. I got 3 different answers.

Accountants answer: Something about demand side, where people want more things so things get more expensive.

Insolvency consultant: Something about the government printing money and that goods just went up over time.

The other guy (may have been a tradie): Gave me a weird answer, wasn't anything significant. He just said that the government prints it and its worth something.

Anyway, I explain to them why we have all these problems and where fiat currency / inflation comes from. Based off debt, M0,M1, M2 and the M3 money supply.

The accountant and consultant understood it, as they have seen more and more bankruptcies over the years. I proceed to tell them that the paper dollars we have will become worthless soon, in the near distant future. Having my 10oz FM bar as a card protector, I told them real money is gold and silver. My thoughts were well respected by the accountant and consultant.

The other guy proceeds to turn off and says, don't tell me your turning this conversation into a conspiracy religious argument blah blah. So he completely shut off and stopped from the conversation. I pressume this guy is and will become a sheep until is slaps him in the face. I got a typical reply you can't eat gold/silver. I said to him, its ok don't worry about it. Just keep going on with what your doing.

In the mean time I proceed to educate the other 2. By the end of the night they agree and are willing to look further into it.

It just goes to show, theres outright rejection when there is a personal bias. It seems that other guy is probably loaded on paper assets or maybe even property. Personally, I couldn't give a rats about these people. They can choose to be ignorant, I hope they lose their shirt when it slaps them hard. BTW, he was a donkey on the table, he lost a bit of money and was probably on tilt =D.

Encourage you to go around and ask people, where does money come from and why do we have inflation? Everyone wants to take a crack at answering. Generally you get the wrong answer most of the time.

Slam

 

Yes thats the usual explanation. But it doesnt reveal the true sinister theft going on. That example simply shows the bank as an entity merely lending out money according to set rules etc.

The example in the book shows that the additional money for the interest doesnt have to be borrowed. The bank gets its interest by theft. It gets free labour or free goods via the interest. Ultimately it takes all the wealth out there.

 

Don't take it personally Slam. Shutdown, Denial and Anger, that's a typical reaction when you turn people's world upside down. Whatever it's about, eg. the world is round not flat, the factory's shutting down or"The Russians are coming!!!". Everything was predictable, compartmentalised and safe then you came along and ruined the order of things

They'll fight tooth and nail to hold onto their old beliefs, ideas even until it's smacking them in the face. You've just gotta leave them behind.

 

That wasn't a challenge... it was answered 3 times over...he just doesn't read/understand what was written (and I don't have the time to argue at that level anymore)

 

The book has three examples of full reserve banks inhistory:

1. The Bank of Venice - Banco della Piazza del Rialto in 1584. Lasted 53 years before being absorbed by a frb bank due to regulatory changes.

2. The Bank of Amsterdam - founded 1609. Income solely from service fees in first 50 or so years. Temptation led the bank to allow overdrafts in 1657. The rot had started and after massive loans to Dutch East Indies Company the truth became known to public in 1790 leading to bank run and insolvency 10 months later.

3. The Bank of Hamburg - operated 200 years with scrupulous full reserve banking. Looted by Napoleon in 1813 bringing an end to the last experience of honest banking the world saw.

 

FRB is what creates credit and debt.

In a full reserve system, all money must be honest money. Prices are as stable as they can be. Governments are small. Free markets, and supply and demand determine prices. Capital and resources are deployed by free enterprise.

You don't have this unsustainable horror of a system where people sign over 25-30 or more years of their best earning years chasing a house. In the process they become serfs to the banks.

Without frb and inflation of monetary bases, house prices would stay real through market forces. The system as it stands must fail, it must be dismantled.

There is no other choice. They must be routed out and the people must never be allowed to forget this massive theft that has been committed on them.

Real money is the only cure. Real money earned, and real money voluntarily given are the cures to societies biggest problem of increasing poverty.

 

Well then how do you think full reserve banking worked before fiat came about?

the 200 page link wasn't an answer... it was to help the poor guy relieve himself of his ignorance and avoid making a further fool of himself by asking more astronomically stupid questions.

 

Just one question ( and i agree on all you have written by the way )

they, that must be routed out, so far, currently and in the future until they can, they will be acquiring real wealth and will have kept most of the capital.
What will happen with the capital in your opinion?

 

Hey Slam, the sheeple were the guys that lost money in that poker match.

My favourite explanation for fiat money is as follows,


Put 1l of concentrated raspberry cordial and mix with 10l of water ( 10:1 ratio )

and start selling those drinks to the public at 1 oz per drink, the thing is, after the first glass has been filled and 250mill of drink left the 11l bank, they will now put 250 mill of water ( dilute the drink = debase the currency) and there will still be 11l in the bank.
As people keep buying the drinks and handing in their 1oz-ers there will come a time, when the new cordial - water ratio will be so diluted as not to be able to tell the drink apart from the water - and
u still continue to hand in 1oz-ers for what they tell you is the same drink as the one you drank 10 years ago

 

I've read a lot about the Federal Reserve system in the USA, and I completely understand the notion of their fiat currency being doomed sooner or later due to ultimately unpayable debt inherent in the creation of every single Federal Reserve note.

Do we have the same system here in Oz?

The US Federal Reserve is a non-govt agency, and any profits it makes are private. My understanding here in Australia is that the Reserve Bank of Australia is our equivalent (am I correct?) and that any profits it makes go back to the govt, so it's a closed-loop system.

So leaving aside the questions of assets, resources, etc - is Australia's money creation as inherently flawed and corrupt?

If I'm totally wrong, and I admit I may be, then who does create Australian fiat currency, and are we as risky as the USA?

 

So much to clear up here....

I'll start off by saying that Creature from JI is very much like von Danikens Chariots of the Gods. Has a lot of facts woven into a completely fictional tale. Sells itself as non-fiction when in fact it is fiction. These books never stand up to close scrutiny of many of their so-called facts and when subjected to scrutiny the central thesis breaks down.

In saying that, it is a fantastic story and I would encourage everyone to read it. Like Chariots and other similar works, the Bible for instance, the central thesis can be easily disproven.

 

Check the latest G. Edward Griffin interview

http://itsrainmakingtime.com/2011/gedwardgriffin/

Interesting interview, Kim Greenhouse is a skilled interviewer.

 

Yeah, where do you think my stacking money comes from =D. Interesting to have a bankroll in PMs, liquidate as needed. Just make sure I don't have a bad week with high variance swings.


Back on topic, I was explaining how FRB is a double edge sword to those at the tables. Because without FRB and the use of the worlds cheap energy resource (oil). We wouldn't have our first world living standards today. We are all just as guilty as consuming the worlds resources, but the bankers are the most greediest of all making us all slaves for them.

I don't know how its all going to play out in the future, I'm interested to get this book and have a read of it.

Slam