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Video lesson

Who Controls All of Our Money?

Who Really Holds the Purse Strings?

A Deep Dive into Monetary Control

Amidst the labyrinth of finance, a burning question has lingered over centuries: Who controls all of our money? This enigmatic inquiry is the centerpiece of a compelling lesson that unveils hidden complexities of modern banking and monetary systems. Quoting Henry Ford, this exploration suggests a profound ignorance among the masses regarding their financial overlords—a revelation that could spark a revolution of consciousness. In an age where money dictates global dynamics and individual lives, understanding its origins is increasingly vital, particularly as cryptocurrencies like Bitcoin emerge as disruptive contenders in the financial arena. This lesson, a pivotal part of the Crypto Is FIRE (CFIRE) training program, seeks to demystify the monetary system, offering insights into its bearings on both traditional and modern financial infrastructures.

Overview

This lesson embarks on an expedition through the historical and contemporary realms of money control. From the inception of the first central banking system by William Paterson in 1694 to the clandestine creation of the Federal Reserve in 1913, the narrative delves into how a select few shaped, and continue to shape, the economic world order. Anchored by striking anecdotes, such as the secretive meetings on Jekyll Island and the subsequent legislative maneuvering, the lesson lays bare the calculated establishment of monetary monopolies.

Central banks, we learn, wield power beyond governments and laws, influencing economies through money creation—a process misunderstood by the public. Former Fed Chairman Alan Greenspan’s candid admission about the Federal Reserve’s independence underscores its unchallengeable authority. Historical manipulation, like the transition away from the gold standard under President Nixon, has left global currencies backed by mere trust in governmental stability. The lesson reveals that while trust may maintain facade stability, it obscures a fiat system prone to inflation and inequality.

Critical Analysis Strengths of the Argument

First, the lesson effectively highlights the historical roots of central banking, providing a clear lineage of its evolution. The narrative begins with the Bank of England, establishing a crucial context for understanding modern-day issues. This historical perspective is further reinforced by the detailed account of the creation of the U.S. Federal Reserve, drawing from credible sources and firsthand accounts like that of Frank Vanderlip. The secretive nature of the Jekyll Island meeting, detailed eyewitness accounts, and the deceptive rebranding of the Aldridge Bill to the Federal Reserve Act, provide a coherent storyline that validates the video’s thesis.

Second, the explanation of fiat currency and its inherent vulnerabilities is presented with clarity. By tracing the move from gold-backed currency to fiat currency, the lesson paints a vivid picture of systemic fragility. Historical examples, such as the economic instability in post-World War II Europe, offer tangible proof of the described phenomena. The explanation that central bank actions devalue other global currencies—due to reliance on the U.S. dollar—brings immediacy to the discussion, as does the critique of fractional-reserve banking systems.

Third, the lesson effectively argues the connection between monetary policy and socioeconomic consequences. It elucidates how policies initially designed to stabilize economies instead result in wealth disparities and economic cycles of boom and bust. This is exemplified by the 2008 financial crash, a direct consequence of the Federal Reserve’s interest rate cuts. Similarly, Japan’s central bank’s aggressive stock market interventions epitomize potentially perilous overextensions of monetary policy.

Potential Weaknesses and Limitations

One limitation is the lesson’s reliance on historical examples without sufficient exploration of how institutions have adapted. For instance, while detailing the origins of central banks and the federal reserve, the lesson could benefit from examining modern regulatory frameworks that have evolved in response to past abuses. This might provide a more balanced view of current safeguards.

Another area for critique lies in the lack of counterarguments or perspectives supporting central banks. While the narrative effectively details the dangers intrinsic to private control of money, it doesn’t thoroughly examine the potential benefits of central bank independence or the economic stability they’re credited with maintaining. Such benefits might include interest rate adjustments to control inflation or liquidity provisions in times of financial distress.

Connections to Cryptocurrency and Blockchain

Cryptocurrencies present a revolutionary divergence from traditional monetary systems, challenging fiat currency’s status quo. Bitcoin, for example, embodies decentralization—sidestepping central banks by enabling peer-to-peer exchanges without relying on traditional financial institutions. This decentralization addresses several issues highlighted in the lesson, such as currency devaluation through arbitrary money creation. The finite nature of Bitcoin’s supply stands as a direct contrast to inflation-prone fiat systems.

Blockchain technology further embodies transparency and democratization, potentially disrupting financial operations that benefit from opaqueness. Projects like Ethereum, with its smart contract capabilities, allow users to create decentralized applications that operate with minimal trust involvement—challenging monopolistic banking practices.

Yet, cryptocurrencies also face their own challenges. The lesson’s critique of central banks also applies to decentralized finance (DeFi), which, despite its innovation, grapples with issues like volatility, regulatory blindness, and scalability. DeFi introduces unique opportunities to reimagine financial systems, yet it also entangles users in new uncertainties.

Broader Implications and Future Outlook

The insights from this lesson stir vital dialogue on the future of finance. As central banks continue to influence macroeconomic landscapes, dependence on fiat currencies may cast long shadows over global economies, exacerbating wealth inequities and fostering economic volatility. Cryptocurrencies, with their deflationary and decentralized properties, may redefine monetary foundations, potentially reducing fiat hegemony.

This evolving landscape carries profound societal impacts. A shift toward decentralized monetary systems could democratize financial access, yet it remains to be seen if cryptocurrencies can effectively assume the mantle of a global currency. With governments and regulatory bodies moving cautiously around cryptocurrencies, the trajectory of these digital assets embodies an ongoing tug-of-war between innovation and stability.

Personal Commentary and Insights

Drawing from personal experiences in the cryptocurrency space, the rise of digital currencies feels akin to the stirrings of a techno-financial renaissance. I’ve witnessed firsthand how blockchain solutions have transformed industries from finance to logistics, highlighting an undeniable trend toward transparency and accountability. Yet, I also recognize the growing pains of this fledgling sector—a need for user education, robust infrastructure, and regulatory clarity.

The lesson’s exploration of fiat vulnerabilities aligns with my observations within the crypto sector, where speculative fervor often overshadows foundational technology. However, cautious optimism endures, fueled by projects dedicated to building equitable financial structures. In this, the crypto movement isn’t merely a disturbance in finance—it embodies a philosophical shift toward economic sovereignty and inclusion.

Conclusion

The exploration into who controls money unveils a matrix of power and influence spanning centuries. While central banks have historically wielded monetary power, the door is now ajar for cryptocurrencies to question this paradigm, offering pathways to decentralized finance. This transformational potential underscores the importance of remaining informed and adaptable, as financial landscapes continually evolve. As this journey in the Crypto Is FIRE (CFIRE) training program continues, I encourage learners to embrace curiosity, bridging knowledge with innovation in mastering the finance-beyond as we know it.

 

Who Controls All of Our Money?

Welcome to a deep dive into the mysterious and labyrinthine world of monetary systems. In this lesson, we’ll explore the intricacies of who really controls money on a global scale and unravel a storyline that’s as dramatic as any thriller. You’ll discover how historical decisions have led to current practices, and why these have sparked interest and innovation in cryptocurrencies like Bitcoin. This lesson is a part of the Crypto Is FIRE (CFIRE) training plan, encouraging you to connect traditional financial knowledge with insights into the new digital currency landscape.

Core Concepts

  1. Central Banking System

    • Traditional Finance: Central banks control a country’s currency, money supply, and interest rates.
    • Crypto World: Cryptocurrencies propose decentralized alternatives to mitigate central control.

  2. Fiat Currency

    • Traditional Finance: Money that has value by government decree without intrinsic value or backing by physical commodities.
    • Crypto World: Cryptocurrencies like Bitcoin aim to provide systems that are not reliant on government intervention or trust in a centralized entity.

  3. Fractional Reserve Banking

    • Traditional Finance: Banks hold a fraction of customer deposits as reserves and lend out the rest.
    • Crypto World: Cryptos champion transparent and fixed supply systems without such mechanisms.

  4. Debt-Based Monetary System

    • Traditional Finance: Money is primarily created through debt issued by banks and governments.
    • Crypto World: Cryptocurrencies are issued through protocols like mining, not debt.

  5. Inflation and Its Effects

    • Traditional Finance: Inflation decreases the value of currency over time due to increasing money supply.
    • Crypto World: Some cryptocurrencies have mechanisms to guard against inflation by limiting total supply.

  6. Central Bank Independence

    • Traditional Finance: Central banks operate independently from government control.
    • Crypto World: Cryptocurrencies are inherently decentralized to avoid reliance on single entities.

Key Sections

The Origins of Central Banking

  • Summary:
    • Originated with the Bank of England in 1694.
    • The concept was refined in the U.S. with the creation of the Federal Reserve.
  • Explanation:
    • A central banking system was introduced where private banks could create money for the government.
    • It’s important because this sets the foundation for modern economic policies.
  • Parallel to Crypto:
    • Cryptocurrencies began as a reaction to centralized control, aiming for a system free from such concentrated authority.

Fiat Currency: A System Based on Trust

  • Summary:
    • Post-1971, the global monetary system transitioned to fiat currencies.
    • These currencies are not backed by physical commodities.
  • Explanation:
    • Fiat currencies rely solely on trust in governments.
    • Concerns over fiat have fueled interest in stable, alternative forms of money such as bitcoin.
  • Crypto Connection:
    • Bitcoin, for instance, has a capped supply and is secured by a decentralized network, unlike fiat.

Fractional Reserve Banking and Debt Creation

  • Summary:
    • Banks can create money by lending out more than they actually hold in reserves.
  • Explanation:
    • This leads to inflation and economic instability.
    • Cryptocurrencies, by contrast, operate without these traditional banking operations.
  • Crypto Connection:
    • Crypto protocols create fixed supply limits to prevent inflationary pressures inherent in fractional reserve systems.

Global Influence of Central Banks

  • Summary:
    • The Federal Reserve and other central banks are powerful entities with global economic impact.
  • Explanation:
    • Decisions made by these banks can lead to booms and busts, influencing economies worldwide.
  • Crypto Connection:
    • Cryptocurrencies embody a move towards decentralized systems to avoid single points of economic control.

Debt as Economic Fuel

  • Summary:
    • Under our current system, debt drives the creation of money.
  • Explanation:
    • This necessitates continuous borrowing to sustain economies.
    • Cryptocurrencies offer a different model where currency creation is independent from debt issuance.

The Crypto Perspective

In traditional finance, central banks have an outsized influence on the economy by controlling money supply and interest rates. Cryptocurrencies disrupt this by introducing decentralized, transparent, and finite systems that operate outside traditional banking. Bitcoin and other digital assets reduce reliance on centralized institutions, presenting both opportunities and challenges. They offer potential solutions to problems like inflation and economic inequality, but face hurdles in mass adoption and volatility.

Real-World Applications

Historically, moments like the U.S. leaving the gold standard in 1971 have significantly impacted global finance. Similarly, the advent of Bitcoin in 2009 marks a pivot toward decentralized finance. These applications show how shifts in policy or technology can redefine economic landscapes.

Cause and Effect Relationships

Central banking policies, like adjusting interest rates, directly affect economic cycles, causing booms or busts. In crypto markets, algorithmic adjustments (like Bitcoin’s difficulty level) also influence supply dynamics but offer more predictability.

Challenges and Solutions

A major challenge in traditional finance is managing inflation and debt. In crypto, ensuring security, scalability, and consensus is critical. Blockchain technology offers unique solutions, such as decentralized consensus mechanisms which replace centralized oversight.

Key Takeaways

  1. Central banks wield significant control over money supply, influencing global economics.
  2. Fiat currencies rely on trust, while cryptocurrencies offer trustless alternatives.
  3. Fractional reserve banking enables money creation through loans, contrasting with crypto’s transparent supply.
  4. Debt fuels modern economies, whereas cryptocurrencies are designed to operate independently.
  5. Understanding these dynamics can empower individuals to make informed decisions in the evolving financial landscape.

Discussion Questions and Scenarios

  1. How does the concept of fiat currency compare to cryptocurrency?
  2. In what ways might decentralization in crypto provide solutions to issues in traditional banking?
  3. How do you think the economy would react if cryptocurrencies became mainstream?
  4. Compare and contrast the effects of inflation in traditional vs. cryptocurrency systems.
  5. Consider a scenario where a country transitions entirely to a cryptocurrency-based economy.

Additional Resources and Next Steps

Next, consider studying blockchain consensus algorithms to further bridge knowledge from traditional finance to crypto.

Glossary

  • Central Bank: Institutions that manage a nation’s currency, money supply, and interest rates.
  • Fiat Currency: Government-issued currency not backed by a physical commodity.
  • Fractional Reserve Banking: Banking system where only a fraction of bank deposits are available for withdrawal.
  • Debt-Based Monetary System: Economic system where money is primarily created through debt issuance.

With this knowledge in hand, you’re ready to embark on the next lesson in the CFIRE training plan, which will delve into the exciting world of blockchain technology!

 

 

Read Video Transcript
You are watching ColdFusion TV.  Welcome to another ColdFusion video. I’m going to start this video off with a quote.  Henry Ford once said, “It is well enough 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.” I quote this because  it encapsulates the fact that the contents of this video may be unsettling compared to  the videos that I normally make. I still feel compelled to make this video because I’ve  been exploring the financial world for the last four years and it’s definitely given  me a more complete view of the world. I want to share some of what I’ve come across with you guys.
 I’m also going to do a video about cryptocurrencies like Bitcoin in the future,  and to understand why Bitcoin and other cryptocurrencies may continue to rise,  it’s critical that you understand the contents of this video. I hope that you find this topic  interesting and that it inspires you to do your own research afterwards.
 Now, with that said,  let’s begin.  So who controls all of our money? It’s a simple question. We all know that you and  I don’t control it. Our employees don’t control it. The companies that they work for  don’t control it. So who does? Where does it even come from in the first place? I’ll give you a hint, money does not come from the government.
 It’s a seemingly obvious question that’s never asked or taught in schools for  some reason. Unfortunately most people’s lives are basically dedicated to money.  It’s all people ever worry about or talk about. We go to school to learn basically  how to go to university, to  learn the skills to get a good job so that we can trade hours of our lives all  for this thing called “money”.
 So why wouldn’t you want to know where money  comes from and who issues it? Today in this very special video you’re about to  find out the answer to the question of “Who controls all of our money?” People  today can tell something isn’t quite right with our financial system but they just can’t put their finger on it. Some people think it’s  the failure of government, others think that it’s the failure of capitalism itself.
 This  video should clarify a few things.  The year is 1694, and England had just suffered through 50 years of war.  Exhausted, the English government needed loans to fund their political means.  Brainchild of Scottish banker William Paterson, it was decided that a privately owned bank that could issue the money to the government out of thin air was to be  the solution.
 This was the very first modern central banking system in the  world. Central banking is more influential than laws, governments and politicians, but strangely not the focus of the general public.  Fast forward to the early 20th century and after two failed attempts, a group of bankers wanted to put a central bank in the United States of America.  It was December of 1910 and Senator Nelson Aldridge boarded a private train car in New  York with six others.
 The six were not to be spotted by any news reporters to avoid questions.  Their destination?  Jekyll Island off the coast of Georgia.  The meeting went for nine days and from that they created the Federal Reserve System.  This is all documented and a matter of public record.  Some of them went on to write about the meetings in their personal biographies.
 Here’s a quote from Frank Vanderlip, President of the National City Bank of New York,  February 9th, 1935, in the Saturday Evening Post.  “I was as secretive, indeed as furtive as any conspiracy or discovery we knew simply must not happen or else all our time and effort would be wasted.  If it were to be exposed that our particular group had got together and written a banking  bill, that bill would have no chance whatever of passage by Congress.”
 The six men that Nelson Aldrich brought together included the head of banks, branches of government  such as the treasury, and some of the richest people on earth at the time to give you an idea  of how rich they were in 1910 these six men represented a quarter of the world’s  worth the bank has told the American public that the purpose of the system  was to stabilize the economy and to stop the grip of the Wall Street banks over  America the problem was the guys that wrote the bill were the Wall Street banks over America. The problem was, the guys that wrote the bill were the very same people they said they’d stop. If they succeeded, it would give a small  group of men the ability to create money from nothing and loan it to the American government  with interest.  So why was it done in secret? Because the American people didn’t want a central bank.  Back then, unlike today, people knew what central banks were and understood them very  well.
 Everywhere a central bank went, there’d be wealth inequality, wild swings between economic  booms and busts, and after each bust, those at the top of society mysteriously came out richer  while everyone else got poorer. Europe was the running example of this at the time.  The Federal Reserve was originally drafted as the Aldridge Bill, but when it came  into Congress, they recognized Senator Aldridge’s name and smelt a rat.
 The bankers needed better  cover. They decided to send two millionaire friends to carry the bill to quell the suspicions of Congress and renamed it the “Federal Reserve Act”. Next, in a textbook lesson of deceit,  the bankers set out to fool the American people through disinformation.  In the newspapers of the day, the bankers screened and protested against the new Federal  Reserve bill.
“It would ruin the banks!” they exclaimed.  The average person read the protesting articles of the bankers and thought to themselves, “If the bankers hate it, it must be good” and then they ended up unknowingly supporting a Trojan horse.  The bankers  also fooled Congress by putting clauses in the bill that limited their power  only to remove them once the bill was passed.
 A double head fake of the public  and Congress was all it took. The bill was passed on December 23rd 1913 while  most of Congress was out on holiday and with that a small group had complete  monopoly over the issuing and creation  of American money.  Today, the Federal Reserve is the most powerful entity in the United States, and they’re  not ashamed to admit it either. Here’s former Fed Chairman, Alan Greenspan.
 What should be the proper relationship between a chairman of the Fed and a president of the  United States? Well, first of all, the Federal Reserve is an independent agency and that means  basically that there is no other agency of government which can overrule actions  that we take. What the relationships are don’t frankly matter.
 In addition to this, it seems that the Fed can’t even be touched by investigating parties.  So I’m asking you if your agency has, in fact, according to Bloomberg,  extended $9 trillion in credit, which, by the way, works out to $30,000  for every single man, woman, and child in this country.  I’d like to know, if you’re not responsible for investigating that, who is?  We actually, we have responsibility for the Federal Reserve’s programs and operations  audits to conduct audits and investigations in that area. In terms of who’s responsible for investigating, would you mind repeating the question one more time?  Mr. Chairman, my time is up, but I have to tell you honestly,  I am shocked to find out that nobody at the Federal Reserve,  including the Inspector General, is keeping track of this.  “So what does all of this have to do with me, you might be asking?  I don’t even live in the U.S.”
 Well, two reasons.  Number one, the central banking model from the Bank of England and the United States  has now been put in all countries, and even consolidated power in parts of Europe as the  European Central Bank, or ECB.  This unites separate countries under one economic policy.  The only places in the world that don’t have central banks are North Korea, Iran and  Cuba.
 In 2000, this list suspiciously included Afghanistan,  Iraq and Libya.  And number two. Since the end of World War II, the US dollar has been the reserve currency  of the world. This means that all central banks hold US dollars in their reserves. In  other words, all other currencies are backed by the US dollar.
 This directly links your  country to the Federal Reserve’s monetary policy in America.  More on this later.  When the post-World War II monetary system,  called the Bretton Woods system, was created,  all US dollars were backed by and exchangeable for gold.  A byproduct of this was that currencies  used to be very stable in relation to each other.
 Before that, all the countries,  the exchange rates were fixed, and year after year you could  predict what prices were going to be.  You could start a business elsewhere, you could calculate profits.  Business was much, much easier before floating exchange rates.  Unfortunately in 1971, due to a falling US dollar, international capital flows into gold,  and the funding of the Vietnam War, President Nixon took the US dollar off the gold standard.
 I have directed Secretary Connolly to suspend temporarily the convertibility of the dollar  into gold or other reserve assets.  Now the dollar was floating and backed by nothing and has been ever since.  Okay, so let’s think a little. If the US dollar is backed by nothing and has been ever since.
 Okay so let’s think a  little. If the US dollar is backed by nothing but the world’s reserved are  backed by the US dollar, intrinsically since 1971 doesn’t this mean that all  currencies are now backed by nothing tangible, only trust in the American  government? Well this is correct.
 Money backed by nothing is known as fiat  currency. Fiat in Latin means let  it be done. In other words, the government says it is money, so it is.  A consequence to having money backed by nothing is that whenever the Federal Reserve creates  money, it dilutes the currency supply of all other nations because their reserves are backed  by the US dollar. All countries’ reserves are worth less each time money is created.
 In the past few years the Federal Reserve has printed  trillions of dollars and countries like Russia and China have noticed this. As a  reaction to the money printing these countries have been selling US dollar  reserves and buying gold over the same period. But wait a second, some of you  clever thinkers out there may have asked yourself, if every  currency on earth is backed by nothing, how am I able to pay for things?  Well as it turns out, the whole economic system today is running because it’s backed by  faith.
 Faith that you can exchange your unit of currency for goods or services.  In a way, part of that faith comes from the fact that not many people actually know where  money comes from.  We’re about to find that out in this video.  A central bank is essentially the entity that manages a nation’s money supply and it can  loan money to the government with interest.
 In the United States and most other countries,  it works like this. When the government needs more money than they receive from taxes, they ask the Treasury  Department for money.  The Treasury then receives an IOU or bond from the government.  The Treasury through the banks gives this IOU to the Federal Reserve.  The Fed then writes a cheque for this IOU and hands it to the banks.
 At this exchange at the banks, money is created and it can be used  to pay government bills. So hang on, where does the Fed get the money to be able to write this  check? They get this money from nowhere. They literally just invent it. Here’s a quote from  the Boston Federal Reserve. “When you or I write a cheque, there must be sufficient funds in our  account to cover the cheque. But when the Federal Reserve writes a cheque, there is no bank deposit  on which that cheque is drawn. When the Federal Reserve writes a cheque, it is creating money.”
So in essence, they’re writing a cheque and creating money from an account that has no  money in it.
 The money the Federal Reserve creates can be used as legal tender to buy things and eventually makes its way into the real  economy. If you and I did that we’d go to jail for fraud but they can do it  because they invented the system. This is the same system used throughout the  world today. Another part of this money creation happens at the commercial bank  side.
 Every time you take out a loan to buy a house, car or TV, banks create money out of nowhere  to give you this loan and you still have to pay interest on it.  And don’t just believe me when I say that, hear it for yourself from the horse’s mouth,  the people running the system.  Graeme Towers, former governor of the Central Bank of Canada states, “Each and every time a bank makes a loan, new credit is created,  new deposits, brand new money.” Paul Tucker, Deputy Governor of the Bank of England,  “Banks extend credit by simply increasing the borrowing customer’s current account.” So what they’re basically saying is that each time the bank makes a loan,  the bank doesn’t use other people’s deposited money and give it to you.  It creates new money.  In modern times, this means typing digits into a computer.
 97% of all money is digitally created like this.  Only 3% is the physical cash and coins that we carry.  Another crazy thing that commercial banks can do is lend out 10 times more money than they actually have in reserves.  This is called fractional reserve lending.  So who wrote this ridiculous system into law?  For the United States, it was part of the Federal Reserve System drafted in 1913.
 And again, this is the same system used throughout the world.  So what’s the issue? Why should I even care?  Well, there’s consequences.  When more loans are given out, more money is created and the rest of the money in circulation  is worth less and less as the years go on.  This is known as inflation.  In a way, inflation is basically a tax that we all pay for the fraud of money printing.
 Easy money now in exchange for tax on our future generations. It’s also  why in 1950 a house used to cost $7,000 and a car $2,000. Obviously this is no longer  the same today. Things will always keep getting more expensive as long as this system is in  place.
 This was actually kind of okay because wages grew in relation to inflation until  about 2008. Why this  stopped happening is a story for another day.  So things are already pretty crazy but they get even crazier. The more you look  into it the stranger things become. So remember how we’re talking about how  central banks and commercial banks can create money out of nothing? This  procedure actually does create something. It creates debt. Let me explain.
 When you take out a loan, it’s written  down as an asset in the bank as a negative form, kind of like a negative value of money,  or otherwise known as debt. Under this system, debt is actually money. And again, don’t  just listen to me. Mariner Eccles, former governor of the Federal Reserve states, “If there were no debts in our money system, there wouldn’t be any money.”
 So in essence, instead of gold being the backbone of our economy, it’s now debt.  The system we’re under now is sometimes referred to as the “debt-based monetary system”.  It requires that debt always grows.  Countries and people must become deeper  in debt so that there’s more money in the system because remember, debt is money.
 If people and  governments stop borrowing money and pay back loans, the debt doesn’t grow, the money supply  shrinks and the system falters. It truly is bizarre but we all live in this system each and every day.  It truly is bizarre, but we all live in this system each and every day.
 The Federal Reserve and other central banks control money by adjusting its supply and  how much it costs to borrow money, otherwise known as the interest rate.  With these tools, and as a consequence of human group psychology, central banks can  create booms and busts in the economy at will and also distort and derail an economy  by messing with it.  Let’s take a quick case study.  In the year 2000, Federal Reserve Chairman Alan Greenspan cut interest rates to 1%.
 He did this to try and fight off a recession from the dot-com bubble and encourage people  to borrow money.  When interest rates are low, if you’re borrowing money, you save a whole lot on repaying mortgages.  Since the 1% interest rate hadn’t been seen at the time since the 1950s, it was a pretty good deal.
 Greenspan’s idea was that he could create a wealth effect.  People would start to buy houses, the prices would go up, and then people would feel wealthier and spend more money in the economy and stimulate it.  Greenspan sure succeeded in getting people to borrow money to buy houses but they borrowed too much and  the result was the 2008 housing bubble.
 This is a prime example of what can go  wrong when central banks mess with an economy. Yes, corrupt bankers have a lot  to answer for on their role in the 2008 crisis but the Fed has a far bigger  long-term impact.  Even crazier things are happening in Japan.  Their central bank is buying so many stocks that they were the number one buyer of Japanese  stocks in 2016.
 So they have part ownership of companies with money that they created from nothing.  So in essence, it is the central banks that control our economy and the central and commercial  banking system together that control all of our money.  The difference is, central banks can create money at will, while commercial banks need  loans to create money.
 To give you an idea of people’s views of central banking when people actually knew  what central banks were, here’s a couple of examples.  In 1881, then President of the United States, James Garfield states,  “Whoever controls the volume of money in any country is absolute master of all industry and commerce,  and when you realise that the entire system is very easily controlled one way or another by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.”
 Benjamin Franklin in his autobiography stated that the prime reason for the American War  of Independence was a battle over who actually controlled and issued the money of the new  colonies.  Moving on to more modern times, Nobel Prize winning economist Milton  Friedman states, “the Federal Reserve definitely caused the Great Depression by  contracting the amount of currency in circulation by one third from 1929 to 1933.” So with all of this being said, some would argue that central banks are not inherently a bad thing.  They just need to be part of the government and not privately owned. The government should be able to issue its own  money for the benefit of the people and shouldn’t have to pay a massive interest on its own  debt.
 This was tried at least once in the United States by President Lincoln who stated  this.  “The government should create, issue and circulate all the currency and credit needed to satisfy  the spending power of the government and the buying power of consumers. By the adoption of these principles, the taxpayers  will be saved immense sums of interest. Money will cease to be master and become the servant  of humanity.” Abraham Lincoln then issued his own government money. It was called the “greenback”.  No further comments on that story.  So I think we’ll end the video there.  There’s so much more that I could cover about what central banking decisions led to  what revolutions around the world.  Pretty much when you look at it, all revolutions and all wars, when you dig through everything,  it all boils down to money.
 I could also have talked about the new global movement of those who are rejecting the debt  based economic system.  People are starting to move their currency into gold, silver and cryptocurrencies, like  bitcoin.  So there is a light at the end of the tunnel, but that’s a whole other story for another  day.
 Anyways, if you’ve watched the whole way through this video, congratulations.  You’re one of the few who have found out the hidden truths about who controls all of  our money.  I think I’ve only met about 4 people in real life that have been aware of the debt-based economic system.  It’s strangely unknown but is as true as anything.
 I even showed you all the quotes of the bankers  and the former heads of the federal reserve telling you from their own mouths how the system  actually works. If this is your first time hearing all of this I encourage you as I said before to do  your own research and then you’ll start to see the bigger picture, and the world today will make a whole lot more  sense.
 If you want some good starting resources, I recommend Mike Maloney’s “Hidden Secrets of  Money” series. It’s here in CFIRE. Mike is a very knowledgeable guy,  and I’ve had some great long conversations with him about the economy. If you are into reading,  and you want to know more about the history of the Federal Reserve,  I recommend the book by G. Edward Griffin, “The Creature from Jekyll Island”.
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