“Fractional Reserve Banking”-The government is in debt to private banks that pretend to have money.

[kpete]

The government is in debt to private banks that pretend to have money
By Ann Tulintseff
Online Journal Contributing Writer


Mar 2, 2009, 00:20
Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free
By Ellen Hodgson Brown

Third Millennium Press; Rev Exp edition (December 22, 2008)
ISBN-10: 0979560829
544 pages; $22.50
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In “Web of Debt,” Brown explains our current “debt-based” private banking monetary system and its history, and the ominous role the private bankers have played in shaping national and world events for their own benefit, amassing great wealth and power, and the myth of the free market and the current events on Wall Street, all with fascinating, highly referenced, and understandable detail. She explains that much of history has been a struggle between the public interest and private banks, connecting the dots with a tale of intrigue that leaves the reader enlightened with how the world really works.

Brown explains that the current financial crisis is an end of a 300-year Ponzi scheme known as “Fractional Reserve Banking” run by the private banks, including the Federal Reserve. She further states that this is an opportune time to change the system now that it is collapsing -- to a system where the people, i.e., Congress, take back the constitutional authority to create money (currently residing unconstitutionally in the hands of private bankers) for the good of the people, with the possibility of funding the government with fees and reasonable profits from public banking in lieu of the income tax.

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Money created “out of thin air.” To understand how 97 percent of our current money supply is created “out of thin air” by banks when they give out loans, consider the following example. When a borrower takes out a $200,000 mortgage loan to buy a house, the bank, upon receipt of a signed IOU, issues a $200,000 check (or, wire transfer, etc.), in US-backed currency, created “out of thin air” as a bookkeeping entry, to purchase the house. The $200,000 check is not drawn on reserves held by the bank, as one might assume, but is just created “out of thin air.” As Brown states, “They merely ‘monetize’ the borrower’s promise to repay.” Brown provides many references attesting to this fact, from the bankers themselves, including the Federal Reserve’s own revealing pamphlet, “Modern Money Mechanics,” which is no longer published but available on the Internet.
http://www.truthsetsusfree.com/ModernMoneyMechanics.pdf

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The Federal Reserve is neither “Federal” nor has “Reserves.” The Federal Reserve is a private corporation, owned by a consortium of private banks, the biggest of which are Citibank and J.P. Morgan Chase, according to Brown. And, while most people think that the U.S. government “prints the money,” the U.S. government is, instead, also a borrower in our debt-based money system, and takes out loans from the Federal Reserve, which, in turn, creates money out of thin air. Brown explains, “The Fed swaps green pieces of paper called Federal Reserve Notes for pink pieces of paper called U.S. bonds (the federal government’s I.O.U.s), in order to provide Congress with the dollars it cannot raise through taxes.” The Federal Reserve and other central banks today use the same device -- “trading its own paper notes for paper bonds representing the government’s promise to pay principal and interest back to the Bank” -- as that of the Bank of England established in 1694. Brown quotes a circular distributed to attract subscribers to the Bank of England’s initial stock offering: “The Bank hath benefit of interest on all moneys which it, the Bank, creates out of nothing.”

Reserve accounts are “smoke and mirrors.” Furthering the illusion of a banking system more in line with the public’s false expectations, Brown explains that “reserves are a smoke and mirrors accounting trick concealing the fact that banks create the money they lend out of thin air, borrowing any ‘reserves’ they need from other banks or the Fed, which also create the money out of thin air.” Now, adding insult to injury, “the Fed acquired the ability to pay interest to its member banks on the reserves the banks maintain at the Fed,” per a provision of the recently enacted TARP bill, Brown writes in a recent article.

more at:
http://onlinejournal.com/artman/publish/article_4427.shtml

[zipplewrath]

1. This is really bad

I can't figure out who is running the Online Journal, and the fact that they hide this bit of information is suspect. But furthermore, it is a really bad description of our monetary system and glosses over alot of the history of banking in the US and of the status of the Federal Reserve system. There are some obvious short comings, and the recent events do highlight some of them, but this article doesn't do much to expose them. Really, it looks like something that Hal Turner would put out.

[kpete]

2. thanks zipplewrath

mrpete agreed with you - so i looked at her bio and she is a health expert?
I should stay away from $$$ analysis - it confuses the heck out of me.
peace, kp

[Wilber_Stool]

3. A very entertaining flash

animation is available called "Mony as Debt". Here is the Google search.
If you look, you can find a download source if you are on dialup.