Creature From Jekyll Island by G. Edward

perpetually flowing river of wealth? Did they lend out their own capital obtained through the investment of stockholders? Did they lend out the hard-earned savings of their depositors? No, neither of these were their major source of income. They simply waved the magic wand called fiat money.

The flow of such unearned wealth under the guise of interest can only be viewed as usury of the highest magnitude. Even if there were no other reasons to abolish the Fed, the fact that it is the supreme instrument of usury would be more than sufficient by itself.

WHO CREATES THE MONEY TO PAY THE INTEREST?

One of the most perplexing questions associated with this process is 'Where does the money come from to pay the interest?' If you borrow $10,000 from a bank at 9%, you owe $10,900. But the bank only manufactures $10,000 for the loan. It would seem, therefore, that there is no way that you—and all others with similar loans—

can possibly pay off your indebtedness. The amount of money put into circulation just isn't enough to cover the total debt, including interest. This has led some to the conclusion that it is necessary for you to borrow the $900 for the interest, and that, in turn, leads to still 192 THE CREATURE FROM JEKYLL ISLAND

more interest. The assumption is that, the more we borrow, the more we have to borrow, and that debt based on fiat money is a never-ending spiral leading inexorably to more and more debt.

This is a partial truth. It is true that there is not enough money created to include the interest, but it is a fallacy that the only way to pay it back is to borrow still more. The assumption fails to take into account the exchange value of labor. Let us assume that you pay back your $10,000 loan at the rate of approximately $900 per month and that about $80 of that represents interest. You realize you arc hard pressed to make your payments so you decide to take on a part-time job. The bank, on the other hand, is now making $80 profit each month on your loan. Since this amount is classified as 'interest,' it is not extinguished as is the larger portion which is a return of the loan itself. So this remains as spendable money in the account of the bank. The decision then is made to have the bank's floors waxed once a week. You respond to the ad in the paper and are hired at $80 per month to do the job. The result is that you earn the money to pay the interest on your loan, and—this is the point—the money you receive is the same money which you previously had paid. As long as you perform labor for the bank each month, the same dollars go into the bank as interest, then out the revolving door as your wages, and then back into the bank as loan repayment.

It is not necessary that you work directly for the bank. No matter where you earn the money, its origin was a bank and its ultimate destination is a bank. The loop through which it travels can be large or small, but the fact remains all interest is paid eventually by human effort. And the significance of that fact is even more startling than the assumption that not enough money is created to pay back the interest. It is that the total of this human effort ultimately is for the benefit of those who create fiat money. It is a form of modern serfdom in which the great mass of society works as indentured servants to a ruling class of financial nobility.

UNDERSTANDING THE ILLUSION

That's really all one needs to know about the operation of the banking cartel under the protection of the Federal Reserve. But it would be a shame to stop here without taking a look at the actual cogs, mirrors, and pulleys that make the magical mechanism work.

It is a truly fascinating engine of mystery and deception. Let us, therefore, turn our attention to the actual process by which the

THE MANDRAKE MECHANISM

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magicians create the illusion of modern money. First we shall stand back for a general view to see the overall action. Then we shall m o v e in closer and examine each component in detail.

THE MANDRAKE MECHANISM: AN OVERVIEW

DEBT

The entire function of this machine is to convert debt

into money. It's just that simple. First, the Fed takes all the government bonds which the public does not buy

and writes a check to Congress in exchange for them. (It

acquires other debt obligations as well, but government

bonds comprise most of its inventory.) There is no

money to back up this check. These fiat dollars are cre-

ated on the spot for that purpose. By calling those bonds

'reserves,' the Fed then uses them as the base for creating 9 additional dollars for every dollar created for the bonds themselves. The money created for the bonds is

spent by the government, whereas the money created on

top of those bonds is the source of all the bank loans

made to the nation's businesses and individuals. The

result of this process is the same as creating money on a printing press, but the illusion is based on an accounting trick rather than a printing trick. The bottom line is that Congress and the banking cartel have entered into a

partnership in which the cartel has the privilege of

collecting interest on money which it creates out of nothing, a perpetual override on every American dollar