The Inner Workings of the Monetary System

A review of Ellen Brown's book
By Stephen Lendman

This is the first of several articles on Ellen Brown's superb 2007 book titled "Web of Debt," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." Given today's global economic crisis, it's an appropriate time to review it and urge readers to digest the entire work, easily gotten through Amazon or Brown's webofdebt.com site. Her book is a remarkable achievement - in its scope, depth, and importance.

In the forward, banker/developer Reed Simpson said:

"I have been a banker for most of my career, and I can report that even most bankers (don't know) what goes on behind (top echelon) closed doors....I am more familiar than most with the issues (Brown covered, and) still found it an eye-opener, a remarkable window into what is really going on....(Although many banks follow high ethical practices), corruption is also rampant, (especially) in the large money center banks, in one of which I worked."

"Credible evidence (reveals) a world (banking) power elite intent on gaining absolute control over the planet and its natural resources, including its subservient human (ones)." Money is their "lifeblood," and "fear (their) weapon." Ill-used, they can "enslave nations and ensure perpetual wars and bondage." Brown exposes the scheme and offers a solution.

Debt Bondage

What president Andrew Jackson called "a hydra-headed monster...." entraps entire nations in debt. Financial commentator Hans Schicht listed how:

• by making concentrated wealth invisible,


• "exercising control through leverage(d) mergers, takeovers" or other holdings "annexed to loans;" and


• using a minimum of insider front-men to exercise "tight personal management and control."

Powerful bankers want to rule the world by creating and controlling money, the very lifeblood of world economies without which commerce would cease. Professor Henry Liu calls the monetary system a "cruel hoax" in that (except for government issued coins) "there is virtually no 'real' money in the system, only debts" - to bankers "for money they created with accounting entries....all done by a sleight of hand," only possible because governments empowered them to do it.

The solution is simple but untaken. As the Constitution mandates, money-creation power must "be returned to the government and the people it represents." Imagine the possibilities:

• the federal debt could be eliminated, at least a more manageable amount before it mushroomed to stratospheric levels;


• federal income taxes could as well; entirely for low and middle income people and at least substantially overall;


• "social programs could be expanded....without sparking runaway inflation;" and


• financial resources would be available to grow the nation economically and produce stable prosperity.

It's not pie-in-the-sky. It happened successfully under Abraham Lincoln and early colonists. More on that below.

Brown's book explains that:

• the Federal Reserve isn't federal; it's a private banking cartel owned by its major bank members in 12 Fed districts;


• except for coins, they "create" money called Federal Reserve notes, in violation of the Constitution under Article I, Section 8 that gives Congress alone the right "To coin (create) money (and) regulate the value thereof....;"


• "tangible currency (coins and paper money comprise) less than 3 percent of the US money supply;" the rest is in computer entries for loans;


• money that banks lend is "new money" that didn't exist before;


• 30% of bank-created money "is invested for their own accounts;"


• banks once made productive loans for industrial development; today they're "a giant betting machine" using countless trillions for high-risk casino-type operations - through devices like derivatives and securitization scams;


• since Andrew Jackson's presidency (1829 - 1837), the federal debt hasn't been paid, only the interest - to private bankers and other owners of US obligations;


• the 16th Amendment authorized Congress to levy an income tax; it was done "to coerce (the public) to pay interest to the banks on the federal debt;"


• the amount has mushroomed to about $500 billion annually and keeps rising;


• creating money doesn't cause inflation; it's "caused by banks expanding the money supply with loans;"


• developing nations' inflation was caused "by global institutional speculators attacking local currencies and devaluing them on international markets;"


• it could happen in America or anywhere else just as easily; and


• escaping this trap is simple if Washington reclaims its money-issuing power; early colonists did it; so did Lincoln.

As long as bankers control our money, we'll remain in a permanent "web of debt" and experience cycles of boom, bust, inflation, deflation, instability and crisis. Yet none of this has to be nor repeated and inevitable bubbles - created by design, not chance, to advantage empowered "moneychangers," much like today with its fallout causing global havoc.

Prior to the Fed's creation, the House of Morgan was dominant in contrast to the early colonists' model. Operating out of Philadelphia, the nation's first capital, it favored state-issued and loaned out money, collecting the interest, and "return(ing) it to the provincial government" in lieu of taxes.

Lincoln used the same system to finance the Civil War, after which he was assassinated and bankers reclaimed their money-issuing power. Wall Street's "silent coup (was) the passage of the (1913) Federal Reserve Act," the most destructive ever congressional legislation, thereafter extracting a huge toll amounting to permanent debt bondage with national wealth transference from the public to private bankers - with most people none the wiser.

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