by REED SIMPSON, M.Sc., Banker and Developer
I have been a banker for most of my career, and I can report that even most bankers are not aware of what goes on behind closed doors at the top of their field. Bankers tend to their own corner of the banking business, without seeing the big picture or the ramifications of the whole system they are helping to perpetuate. I am more familiar than most with the issues raised in Ellen Brown's book Web of Debt, and I still found it to be an eye-opener, a remarkable window into what is really going on.
The process by which money comes into existence is thoroughly misunderstood, and for good reason: it has been the focus of a highly sophisticated and long-term disinformation campaign that permeates academia, media, and publishing. The complexity of the subject has been intentionally exploited to keep its mysteries hidden. Henry Ford said it best: "It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
In banking schools and universities, I was drilled in the technology of money and banking, clearing houses, the Federal Reserve System, money creation through the multiplier effect, and the peculiar role of the commercial banker as the guardian of the public treasure. This idealized vision contrasted sharply with what I saw as I worked in the U.S. banking sector. Although there are many financially sound banks that follow the highest ethical standards, corruption is also rampant that flies in the face of the stated ethical objectives of the American Bankers Association and the guidelines of the FDIC, the Comptroller of the Currency, and other regulators. This tendency is particularly evident in the large money center banks, in one of which I worked.
In my experience, in fact, the chief source of bank robbery is not masked men looting tellers' cash tills but the blatant abuse of the extension of credit by white collar criminals. A common practice is for loan officers to ignore the long-term risk of loans and approve those loan transactions with the highest fees and interest paid immediately – income which can be distributed to the principal executives of the bank. Such distribution is buried within the bank's owner/manager compensation and is distributed to the principal owners as dividends and stock options. That helps explain why, in my home state of Kansas, a major bank was run into bankruptcy after its chairman entered into a development and construction loan involving a mortgaged 5,000 acre residential development tract in the "exurbs" far outside of Houston, Texas. The development included curbs, gutters, pavement, street lighting, water, sewer, electricity – everything but homes and families! If the loan had been metered out in small phases to match market absorption, the chairman of that once-fine institution would not have been able to disburse to himself and his friends the enormous up-front loan fees and interest owing to that specific transaction, or to the many loans he made just like it. During the 1980s, developers from across the country beat a path to sleepy Topeka and other areas sporting similar financial institutions, just to have a chance to dance with these corrupt lenders. The managers and developers got rich, leaving the banks' shareholders and the taxpayers to pay the bill.
These are just individual instances of corruption, but they indicate a mind-set to exploit and a system that can be exploited. Ellen Brown's book focuses on a more fundamental fraud in the banking system – the creation and control of money itself by private bankers, in a debt-money system that returns a steady profit in the form of interest to the debt-money producers, saddling the nation with a growing mountain of unnecessary and impossible-to-repay debt. The fact that money creation is nearly everywhere a private affair is largely unknown today, but the issue is not new. The control of the money system by private interests was known to many of our earlier leaders, as shown in a number of quotes reprinted in this book, including these:
The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the Government ever since the days of Andrew Jackson.-- President Franklin Delano Roosevelt, November 23, 1933, in a letter to Colonel Edward Mandell House
Some people think the Federal Reserve Banks are U.S. government institutions. They are not . . . they are private credit monopolies which prey upon the people of the U.S. for the benefit of themselves and their foreign and domestic swindlers, and rich and predatory money lenders. The sack of the United States by the Fed is the greatest crime in history. Every effort has been made by the Fed to conceal its powers, but the truth is the Fed has usurped the government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will.
-- Congressman Charles McFadden, Chairman, House Banking and Currency Committee, June 10, 1932
Web of Debt gives a blow by blow account of how a network of private bankers has taken over the creation and control of the international money system and what they are doing with that control. Credible evidence is presented of a world power elite intent on gaining absolute control over the planet and its natural resources, including its subservient "human resources" or "human capital." The lifeblood of this power elite is money, and its weapon is fear. The whole of civilization and all of its systems hang on this fulcrum of the money power. In private hands, where it is now, it can be used to enslave nations and ensure perpetual wars and bondage. Internationally, the banksters and their governmental partners use these fraudulent economic tools to weaken or defeat opponents without a shot being fired. Witness the recent East Asian financial crisis of 1997 and the Russian ruble collapse of 1998. Economic means have long been used to spark wars, as a pretext and prelude for the money power to stock and restock the armaments and infrastructure of both sides.
Brown's book is thus about more than just monetary theory and reform. By exposing the present unsustainable situation, it is a first step toward loosening the malign grip on the world held by a very small but powerful financial faction. The book can serve to spark an open dialogue concerning the most important topic of our monetary system, one that is practically off limits today in conventional economic circles due to intimidation and fear of the consequences an honest discourse might bring. Brown is not afraid of stepping on the black patent leather wingtips of the money power and their academic economist servants. Her book is a raised clenched fist of defiance and truth smashing through their finely spun web of disinformation, distortion, deceit, and boldfaced lies concerning money, banking, and economics. It exposes the covert financial enemy that has gotten inside the gates of our Troy, making it our first line of defense against the unrestricted asymmetrical warfare which is presently directed against the people of America and the world.
This book not only exposes the problem but outlines a sound solution for the ever-increasing debt and other monetary woes of the nation and the world. It shows that ending the debt-money fractional reserve banking system and returning to an honest debt-free monetary system could provide Americans with a future that is prosperous beyond our imagining. An 1865 London Times editorial directed against Lincoln's debt-free Greenbacks said it all:
If that mischievous financial policy which had its origin in the North American Republic during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.
-- REED SIMPSON, M.Sc., Overland Park, Kansas
American Bankers Association Graduate School of Banking
London School of Economics, Graduate School of Economics
University of Kansas Graduate School of Architecture
-- November 2006