The Maier Files | Treacherous Federal Reserve System
banking, bankster, banker, money, conspiracy
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Treacherous Federal Reserve System

Federal Reserve System

19 May Treacherous Federal Reserve System

The following conversation was published in the British weekly magazine of humour and satire, Punch. (April 1957) It is a nice mental exercise to loose the mind for the thread about the bearer bonds and gold topic occuring through the Maier files history.
Q. What are banks for?
A. To make money.
Q. For the customers?
A. For the banks.
Q. Why doesn’t bank advertising mention this?
A. It would not be in good taste. But it mentioned by implication in references to reserves of £249,000,000 or thereabouts. That is the money that they have made.
Q. Out of the customers?
A. I suppose so.
Q. They also mention Assets of £500,000,000 or thereabouts. Have they made that too?
A. Not exactly. That is the money they use to make money.
Q. I see. And they keep it in a safe somewhere?
A. Not at all. They lend it to customers.
Q. Then they haven’t got it?
A. No.
Q. Then how is it Assets?
A. They maintain that it would be if they got it back.
Q. But they must have some money in a safe somewhere?
A. Yes, usually £500,000,000 or thereabouts. This is called Liabilities.
Q. But if they’ve got it, how can they be liable for it?
A. Because it isn’t theirs.
Q. Then why do they have it?
A. It has been lent to them by customers.
Q. You mean customers lend banks money?
A. In effect. They put money into their accounts, so it is really lent to the banks.
Q. And what do the banks do with it?
A. Lend it to other customers.
Q. But you said that money they lent to other people was Assets?
A. Yes.
Q. Then Assets and Liabilities must be the same thing?
A. You can’t really say that.
Q. But you’ve just said it. If I put £100 into my account the bank is liable to have to pay it back, so it’s Liabilities. But they go and lend it to someone else, and he is liable to have to pay it back, so it’s Assets. It’s the same £100, isn’t it?
A. Yes. But …
Q. Then it cancels out. It means, doesn’t it, that banks haven’t really any money at all?
A. Theoretically …
Q. Never mind theoretically. And if they haven’t any money, where do they get their Reserves of £249,000,000 or thereabouts?
A. I told you. That us the money they have made.
Q. How?
A. Well, when they lend your £100 to someone they charge him interest.
Q. How much?
A. It depends on the Bank Rate. Say five and a-half per cent. That’s their profit.
Q. Why isn’t it my profit? Isn’t it my money?
A. It’s the theory of banking practice that …
Q. When I lend them my £100 why don’t I charge them interest?
A. You do.
Q. You don’t say. How much?
A. It depends on the Bank Rate. Say half a per cent.
Q. Grasping of me, rather?
A. But that’s only if you’re not going to draw the money out again.
Q. But of course, I’m going to draw it out again. If I hadn’t wanted it out again I could have buried it in the garden, couldn’t I?
A. They wouldn’t like you to draw it out again.
Q. Why not? I keep it there you say it’s a Liability. Wouldn’t they be glad it I reduced their Liabilities by removing it?
A. No. Because if you remove it they can’t lend it to anyone else.
Q. But if I wanted to remove it they’d have to let me?
A. Certainly.
Q. But suppose they’ve already lent it to another customer?
A. Then they’ll let you have someone else’s money.
Q. But suppose he wants his too … and they’ve let me have it?
A. You’re being purposely blunt.
Q. I think I’m being acute. What if everyone wanted their money at once?
A. It’s the theory of banking practice that they never would.
Q. So what banks bank on is not having to meet their commitments?
A. I wouldn’t say that.
Q. Naturally. Well, if there’s nothing else you think you can tell me … ?
A. Quite so. Now you can go off and open a banking account.
Q. Just one last question.
A. Of course.
Q. Wouldn’t I do better to go off and open up a bank?

In episode 2 of Maier files there’s mention of some US-bearer bonds. There’s something very odd with those bearer bonds, as there are plenty of these very fluky bonds in circulation covering mega amounts. But what is the Federeal Reserve System? The answer may surprise you. It is not federal and there are no reserves.

The basic plan for the Federal Reserve System was drafted at a top secret meeting held in November 1910 at the private resort of J.P. Morgan on Jekyll Island off the coast of Georgia (USA). Those who attended represented the great financial institutions of Wall Street and, indirectly, Europe as well. The reason for secrecy was quite simple. Had it been known that rival factions of the banking community had joined together, the public would have been alerted to the possibility that the bankers were plotting an agreement in restraint trade – which, of course, is exactly what they were doing. What emerged was a cartel agreement with 5 objectives:

  1. Stop the growing competition from nation’s newer banks
  2. Obtain a franchise to create money out of nothing for the purpose of lending
  3. Get control of the reserves of all banks so that the more reckless ones would not be exposed to currency drains and bank runs
  4. Get the taxpayer to pick up the cartel’s inevitable losses
  5. Convince the American Congress that the purpose was to protect the public.


It was realized that the bankers would have to become partners with the politicians and that the structure of the cartel would have to be a central bank. The record shows that the Fed has failed to achieve its stated objectives. That is because those were never its true goals. As a banking cartel, and in terms of these 5 objectives, it has been an unqualified success.

Although national monetary events may appear mysterious and chaotic, they are governed by well-established rules which bankers and politicians rigidly follow. The central fact to understanding these events is that all the money in the banking system has been created out of nothing through the process of making loans. A defaulted loan, therefore, costs the bank little of tangible value, but it shows up on the ledger as a reduction in assets without a corresponding reduction in liabilities. If the bad loans exceed the size of the assets, the bank becomes technically insolvent and must close its doors. The first rule of survival is to avoid writing off large, bad loans and, if possible, to at least continue receiving interest payments on them. To accomplish that, the endangered loans are rolled over and increased in size. This provides the borrower with money to continue paying interest plus fresh funds for new spending. The basic problem is not solved, but it is postponed for a little while and made worse.

The final solution on behalf of the banking cartel is to have a federal governement guarantee payment of the loan should the borrower default in the future. This is accomplished by convincing Congress that not to do so would result in great damage to the economy and hardship for the people. From that point forward, the burden of the loan is removed from the bank’s ledger and transferred to the taxpayer. Should this effort fail and the bank be forced into insolvency, the last resort is to use the FDIC to pay off the depositors. The FDIC  (Federal Deposit Insurance Corporation) is not insurance, because the presence of “moral hazard” makes the thing it supposedly protects against more likely to happen. A portion of the FDIC funds are derived from assessments against the banks. Ultimately, however, they are paid by the depositors themselves. When these funds run out, the balance is provided by the Federal Reserve System in the form of freshly created new money. This floods through the economy causing the appearance of rising prices but which, in reality, is the lowering of the value of the currency, here in this example the dollar. The final cost of the bailout, therefore, is passed to the public in the form of a hidden tax called inflation. So much for the rules of the game.  -to be continued-



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