“The Federal Reserve is the chief culprit behind the economic crisis. Its unchecked power to create endless amounts of money out of thin air brought us the boom and bust cycle and causes one financial bubble after another.” Ron Paul
…by Jonas E. Alexis
Jackson knew that fractional reserve banking was a sophisticated way of cheating that always ends up killing the economy. In order to restore the economy, Jackson reasoned that he had to kill usurious bankers.
Yet some of his detractors, both past and present, have tried to dismiss him as ignorant, saying that he knew little about economy and that the Bank was not really responsible for the economic disaster.
The question is really simple: If the Bank was a responsible financial institution, why did it contribute to the national debt? If Jackson was so ignorant and unscrupulous, why did he eliminate the national debt by January 1835? Historian and economist Murray N. Rothbard writes,
“Far from being the ignorant bumpkins that most historians have depicted, the Jacksonians were steeped in the knowledge of sound economics, particularly of the Ricardian Currency School.”
The Jacksonians were not against all banking systems but against usurious bankers, who Jackson called “hydra-headed” monsters “eating the flesh of the common man.”
Jackson fearlessly and unapologetically wrote that such bankers “are a den of vipers and thieves” who will eventually destroy families if no one stops them. He wrote,
“I have determined to rout you out and, by the Eternal, I will rout you out.”
Jackson not only vowed to fight for a return to progress in the economy, but also to expose the usurious activities of bankers who were manipulating the nation for their own ends, meaning he had to get into a political fight with usurers like Nicholas Biddle, president of the Second Bank of the United States.
Biddle figured that economic power is like controlling the remote control of a television—you can switch it back and forth as you see fit. He put it quite bluntly:
“Nothing but widespread suffering will produce any effect on Congress. Our only safety is in pursuing a steady course of firm restriction—and I have no doubt that such a course will ultimately lead to restoration of the currency and the re-charter of the Bank.”
Two authors who do not agree with Jackson and called some of his views on central banking “a handicap” wrote,
“Biddle hoped, by damaging the economy, to stir up opposition to Jackson; in the process, he showed that Jackson had not been wrong to fear the power of a major bank to distort the economy for its own purposes… Biddle was able to bribe, cajole, or otherwise pressure congressmen into taking his side against the president.”
Jackson and his followers had good reason to fear what the usurious bankers could do, due to Biddle’s close, but brief, ties with the Rothschild family, which was one of the “industrial forces” that controlled the financial world in the eighteenth and nineteenth centuries.
This was even admitted by socialist historian Gustavus Myers, who wrote in The History of the Great American Fortunes that
“under the surface, the Rothschilds long had a powerful influence in dictating American financial laws. The law records show that they were the power in the old Bank of the United States.”
Similarly, philo-Semitic historian Niall Ferguson writes that “the Rothschilds really did see some kind of constitutional control over public finances as desirable, if only as a way of reassuring British investors.” Mooney writes that
“the Rothschild family stands out in history as the prime example of manipulating the power of international banking…By means of usury on international scale, they were able to consolidate great wealth and power to turn world affairs according to their own fancy.”
The Rothschilds financed wars in England and America, collecting huge interest rates and making a massive profit. Jewish poet Heinrich Heine himself noted,
“No one does more to further the revolution than the Rothschilds themselves…and, though it may sound even more strange, these Rothschilds, the bankers of kings, these princely pursestring-holders, whose existence might be placed in the gravest danger by a collapse of the European state system, nevertheless carry in their minds a consciousness of their revolutionary mission.”
According to Heine, “the Rothschild ‘system’ is also potentially revolutionary in itself ” because since it
“possesses the moral force or power which religion has lost, it can act as a surrogate for religion—indeed, it is a new religion, and when the old religion [Christianity] finally goes under it will provide substitutes for its practical blessings strangely enough, it is once again the Jews who invented this new religion.”
Heine saw James Rothschilds as “a powerful destroyer of patrician privilege, and the founder of a new democracy.”
The fact is that they initiated a rigorous program which eventually paid off the federal debt, something that had never happened in the history of America—and some historians assert that it probably will never happen again.
The first thing they did was to completely abolish central banking, which they saw as the Frankenstein behind national debt. Once again they were not against banking per se, but against fractional reserve banking.
Sure enough, Biddle stopped the economy by “contracting the money supply,” which led to what today is called an economic bubble, and blamed it all on Jackson without realizing that such immoral activity would make Jackson’s case. Jackson wrote,
“The Bank is trying to kill me, but I will kill it.”
Eventually, Biddle was caught, and by 1835 Jackson had undone the damage he had caused—he “reduced the national debt to zero and accumulated a surplus.”
In general, there is no clear indication that the founding fathers repudiated usurious contracts, but they understood that the “industrial forces” wanted not only to exploit the poor, but to use their power to dominate the nation at large.
Abraham Lincoln and Benjamin Franklin were cognizant of those forces which are still with us today—Lincoln witnessed where usurious contracts could take the country, as government debt increased 400% over the course of only four years—between 1861 and 1865. The debt went from $66.5 million to $2.67 billion.
One entity in the history of United States that has been involved in sophisticated cheating is the Federal Reserve System, which happens to be the third central banking system in the United States and is privately owned.
The Federal Reserve System was signed into law by President Woodrow Wilson on December 23, 1913, and the United States has never been the same with respect to the debt ceiling. Historian David A. Stockman writes that by 1978 “the Federal Reserve was fast becoming a warehouse for the national debt.” The Fed, Rothbard stated,
“is accountable to no one; it has no budget; it is subject to no audit; and no Congressional committee knows of, or can truly supervise, its operations.”
Since the Fed is only internally accountable, there are no checks and balances, and all sorts of cheating can happen—and did. The Fed would probably have been closed down long ago if it was known to the public from its inception that it was not really federal.
There are important facts that must be stated here at the outset: the Fed is not federal (it is a private corporation which is being run by Zionist bankers); the Fed can print money out of thin air; the Fed is not accountable to the government; and the Fed has been involved in covert operations for a long time. Stockman writes that
“Eventually, the Federal Reserve would capitulate to the bullying of Lyndon Johnson and Richard Nixon by throwing open the switches on its printing press. This unleashed a virulent inflation that would cause consumer prices to nearly triple between 1967 and 1980.”
The Federal Reserve System was called “the engine of inflation,” and Ron Paul acknowledges, “Since the Fed’s creation in 1913 the dollar has lost more than 96% of its value, and by recklessly inflating the money supply the Fed continues to distort interest rates and intentionally erodes the value of the dollar.”
Thomas Sowell himself declares,
“As the Federal Reserve tightened money and credit in the early 1980s in order to curb inflation, unemployment rose while bankruptcies and business failures reached levels not seen in decades.”
But the Fed’s covert operation came into full bloom in 2008 when it used taxpayer money to bail out the big wheelers. Stockman declares,
“The Fed’s horridly indefensible rescue of Long-Term Capital Management became the paradigm for what has become a permanent regime of bailouts and central banks rigging of the nation’s money and capital markets.”
The Fed (along with Goldman Sachs and Morgan Stanley) unleashed “toxic assets” upon decent Americans and “did nothing to ameliorate the huge losses being incurred by these gullible customers.” Stockman continues to say,
“Instead, the Washington bailouts rescued the perpetrators, not the victims; that is, the bailout benefits were captured almost exclusively by the Wall Street insiders and fund managers who owned the common stock and long-term bonds of these two firms.
“Yet it was these punters who deserved to take punishing losses. It was they who enabled Goldman and Morgan Stanley—along with Bear Stearns, Lehman, and the investment banks embedded inside Citigroup and JPMorgan—to grow into giant, reckless predators.”
Similarly, Paul Craig Roberts declares in his recent work The Failure of Laissez Fair Capitalism,
“When the bubble burst, the former bankers running the US Treasury provided massive bailouts at taxpayer expense for the irresponsible gambles made by banks that they formerly headed. The Federal Reserve joined the rescue operation.
“An audit of the Federal Reserve released in July, 2011, revealed that the Federal Reserve had provided $16 trillion—a sum larger than US GDP or the US public debt—in secret loans to bail out American foreign banks, while doing nothing to aid the millions of American families being foreclosed out of their homes.
“Political accountability disappeared as all public assistance was directed to the mega-rich, whose greed had produced the financial crisis.”
“Fannie and Freddie, the Federal Reserve, the tax code, and Wall Street had all conspired to preternaturally jack up housing prices by 180 percent between 1994 and 2007, thereby paving the way for a thundering crash that since then has wiped out upward of four-fifths of the bubble-era gain in many leading markets….
“Herein lies the real evil of the Greenspan-Bernanke regime of financial repression and wealth effects levitation: it destroyed free market interest rates in the name of monetary central planning and thereby unshackled democratic politicians from the ancient fiscal disciplines.”
Thomas Sowell and Milton Friedman both agreed that the Federal Reserve System’s monetary policies during the 1930s were destructive, “confused and counterproductive.” As an example, Sowell writes that
“the Federal Reserve raised the interest rate in 1931, as the downturn in the economy was nearing the bottom, with business failing and banks collapsing by the thousands all across the country, along with massive unemployment.”
Sowell also rightly observes that the Federal Reserve controls
“the total amount of money and credit in the economy as a whole, to one degree or another, thereby controlling indirectly the aggregate demand for the nation’s goods and services…
“An unguarded statement by the chairman of the Federal Reserve Board, or a statement that is misconstrued by financiers, can set off a panic in Wall Street that causes stock prices to plummet.
“Or, if the Federal Reserve Board chairman sounds upbeat, stock price may soar—to unsustainable levels that would ruin many people when the prices come back down.
“Given such drastic repercussions, which can affect financial markets around the world, Federal Reserve Board chairmen over the years have learned to speak in highly guarded and Delphic terms that often leave listeners puzzled as to what they really mean.”
Did you catch that? The dreadful few ultimately decide who lives and dies economically. They can freeze up the economy if they so choose. That of course probably keep Sowell and Friedman up at night, but they could never bring themselves to the fact that the Federal Reserve is right in line with the capitalist system which they espouse and defend throughout their entire academic careers. After all, Friedman ended up getting a Nobel Prize.
And here again we come to a breaking point in our discussion: capitalism is not just economic exchange. In any capitalist society, the dreadful few will inexorably dominate the economic system, which leads to the conclusion that they will oppress the poor in order to get Mammon.
Moreover, Sowell and of course Friedman could never tell us who are the shadowy figures which happen to take over the Federal Reserve. We all know them by now: Donald L. Kohn, Randall S. Mishkin, Frederic S. Kroszner, Alan Greenspan, Bern Bernanke, Robert Rubin, Larry Summers, Arthur Levitt, and more recently Janet Yellen and Stanley Fishcher.
J. J. Goldberg of the Jewish Daily Forward, in his examination of two of Hollywood’s recent movies, American Hustle and The Wolf of Wall Street, declares,
“Right now America is thinking about the unending financial crisis. And when we think about the crisis, we encounter names like Lehman, Goldman and Sachs. Like Fuld, Blankfein and Greenberg. We taught ourselves and our neighbors years ago not to notice when names like those surface in these situations. Noticing can spawn ugly thoughts.
“The question is, how much longer can we expect folks not to notice? Maybe that’s what these movies are saying. Maybe something is bubbling in America’s subconscious that we need to think about.”
Goldberg quotes LA Jewish Journal editor Rob Eshman saying,
“We are blessed to be living at a time of unparalleled Jewish power and wealth, and it makes us so uneasy, we prefer to talk about everything but. …We are enjoying unprecedented wealth as millions struggle on minimum wages, facing hunger, unemployment, benefit cuts, homelessness.
“We look to our rabbis and institutions for guidance, but too many of them are afraid to upset the wealthy donors upon whom they are dependent. So we talk instead about Israel, about Swarthmore, and our communities become breeding grounds for the next Madoff, the next Belfort.”
Goldberg concludes, “He’s right. We need to talk.”
Indeed. Let’s open up the debate. Let’s discuss this rationally and historically.
Printing money out of thin air, which is what the Fed does, is a usurious enterprise, and it goes back to the early centuries. In seventeenth-century England, gold and silver were the primary means of exchange.
Since people were not able to easily carry around large stores of gold and silver, a new career cropped up: goldsmithing. The goldsmiths promised to hold the gold and silver and gave people a receipt for the amount of gold received.
This new economic method was thrilling on the surface precisely because people were tired of carrying around and storing huge amounts of gold.
However, there was a huge problem. Goldsmiths realized that only a small amount of people actually came in and demanded their gold, leaving room for the goldsmiths to cheat the system. They began to commit what one writer called “acts of embezzlement” at an astronomical rate.
They printed extra receipts—paper money—and loaned them out and charged interest on them, though the economy couldn’t support it. This was called fractional reserve banking, which arose in England during the 1660s.
Men such as George Washington, John Quincy Adams, Andrew Jackson, Martin van Buren, Henry Harrison, and James K. Polk saw the dangers of this system, so they rejected paper money. The Panic of 1819 convinced Polk that paper money would eventually bring economic collapse.
The early goldsmiths found that they could loan out ten times as much as they actually had in stock, which is an obvious way of cheating in economics. Banks in the United States do the same thing.
Modern capitalists such as Thomas Sowell are very careful to not label this system cheating, instead calling it “vulnerable.”
Milton Friedman has written an entire book on the history of money in the United States, and the notion that fractional reserve banking could be immoral is not mentioned once. On the contrary, Milton implies that fractional reserve banking could be legitimate.
From the birth of paper money to the economic crisis in 2008, the goldsmiths, who gradually evolved into money changers and later usurious bankers, made huge profits off the poor and needy, and played an influential role in the economic collapse of any society.
From 1642 to 1649, the goldsmiths were the key players who financed the wars in England. By 1694, the Bank of England was created by the Whig oligarchs. Ever since, England has been in debt.
The same thing happened in America in 1690 when paper money was introduced in Massachusetts. In order to pay the soldiers, the government borrowed a huge amount of money from Boston merchants, putting the state into debt; the same thing happened in 1692.
By 1711, many observers saw that paper money was killing the economy. Yet those failed experiments did not stop the spread of paper money in every colony, except Virginia. It continued to create “a boom-bust economy.” Rothbard writes,
“When new paper money was injected into the economy, an inflationary boom would result, to be followed by a deflationary depression when the paper money supply contracted.”
During the Revolutionary War, the Continental Congress turned back to paper money to finance the war. In 1775, they issued a sum of $6 million; in 1776, $13 million, in 1777 $64 million, and in 1778 $64 million. Over a period of five years Congress issued $225 million, a process that drove the economy into madness again.
By 1782, Robert Morris, a signer of the Declaration of Independence, had fully established the first Bank of North America (not to be confused with the First Bank of the United States) and lo and behold, the bank had permission from the government to issue paper money, which took a huge toll on the “hapless taxpayer.”
It was quickly perceived that there was a huge difference between paper money and specie, and Morris tried to reconcile the issue by pleading that the former is better. But by 1776, Morris was fully aware that the “Continental currency,” as he called it, was weakening the economy in the United States.
In the final analysis, that attempt failed, and by 1783 Morris ended up selling much of the Bank’s capital.
The first Bank of America was a dismal failure, and right after it ended, the Bank of New York and the Massachusetts Bank gained some ground by trying to substitute specie with paper money, an activity that led to recession.
By 1791, the first Bank of the United States was established and it began to fight against specie by printing out paper money.
By 1796, ten more banks were operating and within five years, eighteen more were functioning. The establishment of those banks would have been impossible without Alexander Hamilton.
Jefferson and his followers argued that the Constitution did not give the federal government license to establish a bank. Some Hamilton sympathizers declared that he only wanted “a federal government that actively supported economic development,” leaving the impression that Jefferson did not want an “economic development.” At the end of the day, Hamilton got the upper hand.
Hamilton’s mother was Rachel Levine, and he attended a Jewish school which “had a thriving population of Sephardic Jews.” Whether Hamilton liked it or not, he was certainly aware of the political struggle. Biographer Ron Chernow writes,
“Perhaps from this exposure at an impressionable age [during his schooling], Hamilton harbored a life-long revenge for the Jews. In later years, he privately jotted on a sheet of paper that the ‘progress of the Jews…from their earliest history to the present time has been and is entirely out of the ordinary course of human affairs.
“Is it not then a fair conclusion that the cause also is an extraordinary one—in other words that it is the effect of some great providential plan?’”
In a nutshell, banks from their inception assaulted the economic order by creating massive inflation which drove the United States into massive debt. The wars opened the door for usurious bankers, the bankers precipitated massive inflation, and this inevitably led to the oppression of the poor and needy.
“From 1811 to 1815 the number of banks in the country increased from 117 to 212; in addition, there had sprung up 35 private unincorporated banks, which were illegal in most states but were allowed to function under war conditions…
“Suspensions of specie payments informally or officially permeated the economy outside of New England during the panic of 1819, occurred everywhere outside of New England in 1837, and in all states south of west of New Jersey in 1839. A general suspension of specie payments occurred throughout the country once again in the panic of 1857.”
More on these issues later.
 Johnson and Kwak, 13 Bankers, 19
 Brands, Jackson: His Life and Times, 502-503.
 Rothbard, History of Money, 90.
 Brown, Web of Debt, 1; also Jon Meacham, American Lion: Andrew Jackson in the White House (New York: Random House, 2009), 256.
 Brown, Web of Debt, 78.
 Ibid., 79.
 Johnson and Kwak, 13 Bankers, 20.
 Bray Hammond, Banks and Politics in America from the Revolution to the Civil War (Princeton: Princeton University Press, 1991), 285, 300.
 Gustavus Myers, The History of the Great American Fortunes (Chicago: Charles H. Kerr & Co., 1910), 3:183-184.
 Niall Ferguson, The House of Rothschild: Money’s Prophets, 1798-1848 (New York: Penguin Books), 124.
 Mooney, Usury, 69.
 Quoted in Ferguson, The House of Rothschild: Money’s Prophets, 1798-1848, 214.
 Ibid., 213.
 Ibid., 214.
 Ferguson, House of Rothschild, 373-375.
 Rothbard, History of Money, 91.
 Ibid., 92.
 Meacham, American Lion, 201.
 Brown, Web of Debt, 79; Rothbard, History of Money, 91-92.
 David A. Stockman, The Great Deformation: The Corruption of Capitalism in America (New York: Public Affairs, 2013), 113.
 Mooney, Usury, 71.
 Murray N. Rothbard, The Case Against the Fed (Auburn, AL: Ludwig von Mises Institutes, 1994), 3.
 Stockman, The Great Deformation, 204.
 Ibid., 206.
 Thomas Sowell, Basic Economics (New York: Basic Books, 2011), 483.
 Stockman, The Great Deformation, 14.
 Ibid., 22.
 Paul Craig Roberts, The Failure of Laissez Faire Capitalism (Atlanta: Clarity Press, 2013), 32-33.
 Stockman, The Great Deformation, 579, 699.
 Thomas Sowell, Basic Economics (New York: Basic Books, 2011), 398.
 Ibid., 407.
 J. J. Goldberg, “Is the Jewish Swindler Ready for His Close-Up?,” Jewish Daily Forward, February 7, 2014.
 Mooney, Usury, 77.
 See Detlev S. Schlichter, Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown (New Jersey: Wiley & Sons, 2011), chapter 2.
 Rothbard, History of Money, 56.
 See Schlichter, Paper Money Collapse, chapter 2.
 Rothbard, History of Money, 91.
 Thomas Sowell, Basic Economics, 405.
 Milton Friedman, A Monetary History of the United States, 1867-1960 (Princeton: Princeton University Press, 1993), 17, 21, 29-30.
 Rothbard, History of Money, 52-53.
 Ibid., 53.
 Ibid., 55.
 Ibid., 58-60.
 Ibid., 62-63.
 Mooney, Usury, 67.
 Rothbard, History of Money, 63.
 Ibid., 64.
 Johnson and Kwak, 13 Bankers, 14.
 Allan Mclane Hamilton, The Intimate Life of Alexander Hamilton (New York: Charles Scribner’s Sons, 1910), 3.
 Ron Chernow, Alexander Hamilton (New York: Penguin, 2004), 17.
 For the differences between the two, see Noble E. Cunningham, Jefferson vs. Hamilton: Confrontation that Shaped a Nation (Boston: Bedford/St. Martin’s, 2000).
Jonas E. Alexis has degrees in mathematics and philosophy. He studied education at the graduate level. His main interests include U.S. foreign policy, the history of the Israel/Palestine conflict, and the history of ideas. He is the author of the new book Zionism vs. the West: How Talmudic Ideology is Undermining Western Culture. He teaches mathematics in South Korea.