“Central Banks are more dangerous than a standing Army.”
“To preserve our independence,” Thomas Jefferson once said, “we must not let our rulers load us with perpetual debt.
“We must make our choice between economy and liberty, or profusion and servitude. I place economy among the first and most important of republican virtues, and public debt is the greatest of the dangers to be feared. It is incumbent on every generation to pay its own debts as it goes.”
“We must have a central bank to secure this country’s finances,” Alexander Hamilton, his opponent, would say.
“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that grow up around them, will deprive the people of their property, until their children will wake up homeless on the very continent their forefathers conquered.”
“Jefferson,” Hamilton shot back, “you’re mad. This country will have a central bank!”
Vice President Aaron Burr didn’t take too kindly to Hamilton. He later killed him in a gun duel.
Unfortunately, Hamilton’s death did nothing to halt the vampire squid from sticking its slimy appendages in Uncle Sammy’s every orifice — which brought upon our doorsteps the very situation Jefferson warned of.
Why bankers love blood
It is no secret, or mystery, why bankers love war. In a system where we’re told to mindlessly accept that debt == prosperity, what better way to plow our way into the Golden Age than by rallying up the troops?
But it’s not just war. Bankers had their hands in all political matters which concerned their business — which leaves very few stones unturned.
In her book All the Presidents’ Bankers: The Hidden Alliances That Drive American Power, Nomi Prins writes:
Throughout the century that I examined, which began with the Panic of 1907 … what I found by accessing the archives of each president is that through many events and periods, particular bankers were in constant communication [with the White House] — not just about financial and economic policy, and by extension trade policy, but also about aspects of World War I, or World War II, or the Cold War, in terms of the expansion that America was undergoing as a superpower in the world, politically, buoyed by the financial expansion of the banking community.
Humans respond to incentives. And bankers have had every perverse incentive to keep wars going, piggybacking on conflicts and even throwing gas on the fire.
As Britain’s main rag, The Guardian, reported in 2004: “UBC was caught red-handed operating an American shell company for the Thyssen family eight months after America had entered the war and that this was the bank that had partly financed Hitler’s rise to power.”
To explain precisely how war makes banks rich, we leave you with a piece from Washington’s Blog below.
Bankers love blood because war makes a killing.
War Makes Banks Rich
Bankers are often the driving force behind war.
After all, the banking system is founded upon the counter-intuitive but indisputable fact that banks create loans first, and then create deposits later.
In other words, virtually all money is actually created as debt. For example, in a hearing held on September 30, 1941 in the House Committee on Banking and Currency, the Chairman of the Federal Reserve (Mariner S. Eccles) said:
That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.
And Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, said:
If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.
Debt (from the borrower’s perspective) owed to banks is profit and income from the bank’s perspective. In other words, banks are in the business of creating more debt … i.e. finding more people who want to borrow larger sums.
Debt is so central to our banking system. Indeed, Federal Reserve chairman Greenspan was so worried that the U.S. would pay off it’s debt, that he suggested tax cuts for the wealthy to increase the debt.
What does this have to do with war?
War is the most efficient debt-creation machine. For starters, wars are very expensive.
For example, Nobel prize winning economist Joseph Stiglitz estimated in 2008 that the Iraq war could cost America up to $5 trillion dollars. A study by Brown University’s Watson Institute for International Studies says the Iraq war costs could exceed $6 trillion, when interest payments to the banks are taken into account.
This is nothing new … but has been going on for thousands of years. As a Cambridge University Press treatise on ancient Athens notes:
Financing wars is expensive business, and the scope for initiative was regularly extended by borrowing.
So wars have been a huge – and regular – way for banks to create debt for kings and presidents who want to try to expand their empires.
Major General Smedley Butler – the most decorated Marine in American history – was right when he said:
Let us not forget the bankers who financed the great war. If anyone had the cream of the profits it was the bankers.
War is also good for banks because a lot of material, equipment, buildings and infrastructure get destroyed in war. So countries go into massive debt to finance war, and then borrow a ton more to rebuild.
The advent of central banks hasn’t changed this formula. Specifically, the big banks (“primary dealers”) loan money to the Fed, and charge interest for the loan.
So when a nation like the U.S. gets into a war, the Fed pumps out money for the war effort based upon loans from the primary dealers, who make a killing in interest payments from the Fed.
[Ed. note: This article originally appeared on Washington Blog’s website right here.]