Central Banks Lead a Monetary Cartel
Posted by Orrin Woodward on May 13, 2014
My studies for my new book And Justice for All (to be released by LIFE Leadership) have led me to an interesting conclusion – the central banking led bank cartel has captured Western Civilization’s productive capacity. It all centers around the mysterious Fraction Reserve Banking (FRB) process. The (FRB) process could not abuse society to the extent it does without the State approved cartel that backs the Too Big Too Fail (TBTF) entities. Indeed, the cartel permits banks to carry minimum reserve requirements and loan out money it technically does not have.
Fractional Reserve Banking
For instance, imagine a FRB system with a reserve requirement of 5%. This allows the FRB system to turn $1,000,000 into $20,000,000 (1 million/.05 = 20 million). The $1 million has been turned into 20 million, creating $19 million extra dollars out of FRB thin air). Even with just a 5% interest rate, this is approximately $1 million in interest income on an original investment of $1 million! This is an astronomical ROI of 100% before expenses because of the wonders of the FRB process. This cartel-protected profit is drawn from the productive elements of society who are paying interest on money that only exist on a ledger sheet or computer screen. If any other business were to attempt to sell 20 times as much product as he actually had on hand, he would be convicted of fraud. Not so with our State protected FRB cartel system.
Even worse, the FRB increases in the money supply leads to inflation and the subsequent boom/bust cycle. Basically, the fractional loans expand the money supply by further FRB loans until the people are buried in debt and can no longer service it. At this point, the debtors are bankrupted and the house, car, or business assets associated with the loans are returned to the bank. However, during a bust cycle, many debtors in society default at the same time sending the defaulted upon assets back to the banks at a sliver of their former prices. For just as the boom cycle inflated the money supply and prices through the FRB process initiating new loans, the numerous defaults deflate the money supply and prices when the loans are canceled.
In America, the 2008 financial debacle was caused by the boom/bust cycle activated by excessive FRB loans to non-qualified borrowers. When the original manageable interest-only payments reset to the higher interest and principal payments, the house owners defaulted en masse (many bankrupting themselves in the process). The meteoric rise in prices during the housing boom can be traced back to FRB system bubbling up the money supply through approving practically all mortgages. Of course, the central bank is designed as a lender of last resort if banks suffer too many defaults at any given time. But 2008 bust was bigger than the centrally planned cartel-managers could manage. In fact, the losses were so great that the big banks could not borrow enough money from the Fed Reserve to avoid bankrupting themselves (like they had so many consumers); therefore, the central banks and its crony cartel banks ran to the USA Treasury. Shamefully, rather than pay the piper for the FRB misdeeds, they instead sought State bailouts claiming they were TBTF. In essence, society suffered doubly from the evils inherent within the FRB cartel – it loses copious amounts of wealth during the bust period and then is forced to pick up the tab to “save” the banking systems profits. Is this really And Justice For All?
Ron Paul explains his thoughts on the banking cartel (which corroborates my research) in his book End the Fed:
American presidents actually worked to implement and defend the gold standard, which put a brake on the ability of the largest banks to expand credit without limit. The gold standard worked like a regulator in this way. Ultimately, banks had to function like every other business. They could expand and make risky loans up to a point, but when faced with bankruptcy, they had nowhere they could turn. They would have to contract loans and deal with extreme financial pressures. Risk bearing is a wonderful mechanism for regulating human decision making. This created a culture of lending discipline.
In the jargon of the day, the system lacked “elasticity.” That’s another way of saying that banks couldn’t expand money and credit as much as they wanted. They couldn’t inflate without limit and count on a centralized institution to bail them out…
The banking industry has always had trouble with the idea of a free market that provides opportunities for both profits and losses. The first part, the industry likes. The second part is another issue. That is the reason for the constant drive in American history towards the centralization of money and banking, a trend that not only benefits the largest banks with the most to lose from a sound money system, but also the government, which is able to use an elastic system as an alternative form of revenue support. The coalition of government and big bankers provides the essential backbone of support for the centralization of money and credit…
Consider the Soviet case: to my knowledge, no business ever went under with the Soviet system but society in general grew ever poorer. Think of that Soviet system applied to the banking industry and you have the Fed.
Sincerely,
13 Responses to “Central Banks Lead a Monetary Cartel”
Sorry, the comment form is closed at this time.
Randy Robson said
Wow. So powerful!
Scott Staley said
Great blog. We don’t know what we don’t know, and awareness is the first step on the path to change.
David Fidler said
Wow, you make this look so simple. Now I understand better how banks make so much profit even when interest rates are so low. Thanks for all your work. I really need to ‘retire’ from my job sooner so that I can join you in this great work.
Tennyson Hern said
This is the civics & Econ lesson(s) that needs to be taught in our U.S. High schools.
To understand the concept if not at least get introduced to FRB system.
Also, in our country’s brief history to understand the formation of the FED was put back into play in 1913.
It is ironic that there are still people that believe the FED is part of the government & some still think they have reserves.
LIFE information is truly LIFE changing, when one takes the time to truly read the information presented.
The lesson plans & true life lessons that come from you(Orrin) & the rest of the PC, can & should be used as curriculum.
The vetting of knowledge through the scouring of books, to get to the crux of the subject matter is simply amazing in what you guys do.
Taking the complexity out , so everyone can understand what’s going on. Yet there are people reticent to believe that this is actually the way things are working.
Truly blessed to be part of LIFE, which puts even more responsibility on us to share his good news with others.
Looking forward to the release of your next books this summer.
Dave Nelson said
Is it any wonder why politicians change so quickly when they get elected to office in the federal government.
Marie Antoinette Blansett said
Thank you for the awesome information. Looking forward to reading up book. will b attending meeting in Mesa, AZ tonight at First Fountains. Will look for u r book.
Danny Kellenberger said
What fantastic information related in an easy to understand way. Can’t wait for your book to come out so we can educate society on what is happening behind the curtain! Thanks for sharing and believing this needs to be shared!
Carpe Diem
Peter Finlay said
Created credit has been a tool for inflating bank profits for too many generations. The problem is that most people don’t realise they are being fleeced. When one gets a credit card, say for $10,000, the average person thinks the bank has just lent them $10,000 by putting that amount into their account. In fact, the bank has only made a computer entry against the customer’s account for the debt, but they are using real money to pay off the debt plus extremely high interest. This problem increases exponentially with the size of the “bank loans”. It doesn’t take long for the banks to control society’s cash flow. The LIFE Financial Fitness Pack should be read by every school student, before they start earning any income.
Steve Meixner said
The Golden Rule, those with the Gold making the Rules. Terrible but True, and like you said Anyone else would be Convicted!! We need a Million and beyond, this needs to change!!!
Steve
Shaun Bushey said
Great post! I never knew the norm in the Soviet System every business “succeeded”. A while back you posted a video of Mike Maloney and his #4 video and it was so good I watched all 5 and also shared them with my parents. It’s surprising how little of this information is known in the world today and what’s more astounding is that there are still those out there who here this truth and remain intentionally, blissfully ignorant refusing to change.
Elaine Mallios said
I think banks are scared. They cannot compete or influence the powers that be. The regulations are ridiculous. I went to the bank today to close an account no longer needed and they can’t do it because the check for the -$14.60 from bank fees has to be paid in cash, etc. Just a huge mess. The hit list for banks to fail is huge. Probably in response to the FED. I can’t wait to read your book!
BraveheartMicah said
O- thanks for bringing light to the darkness. This is powerful knowledge. I’m excited that my children’s future can be positively impacted by me getting better and growing as a leader today.
God Bless,
Micah
Antonio Rosselli said
As i hear so many times from the recordings … It is time for the individual to get involved and start to stand up …
It all goes back to personal responsibility and to fight for what it is right ( based on correct knowledge ) …