FSO Transcription - "The Creature from Jekyll Island" by G.

Edward Griffin 10/28/2006

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TRANSCRIPTION OF INTERVIEW

G. Edward Griffin

The Creature from Jekyll Island

A Second Look at the Federal Reserve
October 28, 2006 Expert Page | Book Information JIM: You hear a lot of talk about the Federal Reserve today: the Fed is supposed to be an inflation fighting institution. In fact, much of todays headlines about interest rates and Fed comments are that the Fed is concerned about inflation, and the Fed is a stabilizing influence in our economy. My next guest doesnt believe thats the case. Joining me on the program is G. Edward Griffin, hes a writer and documentary film producer with many successful titles to his credit. He is well known for his talent for researching difficult topics, and presenting them in clear terms that all can understand. He has dealt with such diverse subjects archaeology, ancient earth history, the Federal Reserve System, and the international banking system. Were here to talk about his book today, The Creature from Jekyll Island. Mr. Griffin, when investors or citizens hear stories about the Fed like the Fed met today, they left interest rates but one Fed governor is concerned about inflation it usually portrays the Fed as an inflation fighting organization, when in fact it is really an inflation-creating institution. Doesnt this create a problem of perception?

The Federal Reserve - An Inflation-Creating Institution

G. EDWARD GRIFFIN: Yes, I think thats the understatement of the century, Jim. Its a

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problem of perception; its a problem of reality. You see the problem is that people do not understand what the Federal Reserve system is. Its not really their fault I mean youre not born with this information; and you either get it in school, or through the media or something like that. Well, the truth of the matter is that the Federal Reserve system is a cartel. Thats kind of a shocking statement for most people a cartel. If somebody had told me that, lets say 10 years ago, I would have thought they were kind of off their rocker. But the fact of the matter is the Federal Reserve System is a cartel, no different than a sugar cartel, or an oil cartel, or a banana cartel this happens to be a banking cartel. And they have gone into partnership with the Federal government to enforce their cartel agreements. Now, thats the hard reality. Well come back to this topic I suppose shortly here, and illustrate how this is so, but just assuming for the moment that this is so, and if youre the head of a cartel a banking cartel in this case and you had to go before the public or Congress and justify your moves, you have to make it sound as though its in the interests of the public, otherwise the public would not go along with it. What would happen, for example, if the Federal Reserve Chairman were to make a speech and he said, well, we raised the interest rates today because we wanted to improve the profit picture of our member banks. Now, that wouldnt go over too well. So they always have to say, we raised or lowered interest rates or whatever theyre going to do, because theyre concerned about inflation, or theyre concerned about employment or unemployment; theyre concerned about world factors. In other words, you see, theyre concerned about you folks and that makes it all very good. And thats the game that goes on, Jim. And so they have to make it sound as though all of these machinations are being done somehow in the interests of the general public. [3:51] JIM: Now, Ed, in your book theres an exchange published in Britains Punch magazine going back to 1957. You featured it in the beginning of your book as an appropriate mental exercise to limber the mind for the material in the book. For example, it starts out with a question: what are banks for? answer: To make money. Question: For the customers? No, for the banks. Why doesnt bank advertising mention this? It would not be in good taste. Why dont we limber our listeners minds as we begin this process.

The Truth About Banks and Their Partnership with The Fed
EDWARD: Well, I think that quotation from Punch is certainly a classic, isnt it? People really have a funny opinion about banks. They think somehow theyre great conservative institutions after all, they have a lot of money and they spend some of it decorating their bank buildings in a very serious dcor; bankers usually dress well, they wear suits and ties, and they have serious expressions on their faces. So we get the impression bankers are very conservative, solid, conscientious human beings, when in fact when you really look at what banking is as its practiced today its one of the greatest scams of all history. And the putting on of this appearance of great seriousness is part of the mechanism by means of which they make the scam possible. Now, when I say scam, lets get down to nitty-gritties here, Jim. Were talking about the fact that the banks create money out of nothing, and then they collect interest on it. Now thats the basic scam. When a bank loans you money that money doesnt exist prior to your walking into the bank. He has the authority of law a moment ago, I said the Federal Reserve System went into partnership with the Federal government, so the government is their partner, and so the government has written laws to make this scam quite legal, that banks can do things now that were you and I to do them wed go to jail. But the banks can do them because they have their partner in government that says, Ok, the banks, and only the banks, can do this. And one of those things is that the banks can lend money that they dont have, and they can collect interest on it. And thats how money comes into creation in the United States and most of the Western world. Let me give you an example. I mentioned that the cartel is a partnership between the banks and the Federal government. Now, when people form a partnership its usually because each party has something to gain, otherwise they wouldnt do it. So the question is: why did the banks go into this partnership, and why did the Federal government go into the partnership? So the answer to both questions is this mechanism that Im just describing here this mechanism by which money is created literally out of nothing and that benefits each of these partners in different ways.

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Heres how it works. Lets start with the government side of the partnership. Lets say that the government needs to have much, much more money to spend than it is taking in in taxes and of course, thats the common reality today. Politicians like to spend money because the more they spend for benefits, for the voters, the more votes they get; but they dont like to raise taxes because the more taxes they raise the fewer votes they get. So the politician is always struggling to find ways to spend money but not get it from the tax payer through taxes. Well, how do you do that, how can you spend more money than you take in? The answer is very simple: you borrow it. Well, thats the same with you and I if we want to spend beyond our income, if we have some credit we can go to the bank and borrow money. Well, that works for a while but sooner or later the loan has to be paid back plus interest. And so, you and I can do that only for very short periods of time, and for limited amounts of money. But in the case of the Federal government, its unlimited amounts of time and unlimited amounts of money. So heres how it goes. Lets say the Federal government wants to borrow some money, more than its taking in in taxes. So the first thing it does is it goes to the open market, and it offers to borrow the money from individuals like you or me, or from institutions, corporations, other countries and so forth. Peope loan money to the Federal government in return for bonds or Treasury notes, or bills, depending on the length of time the loan has to be repaid. So now the government has more money than it takes in in taxes. Now, just like you and I, however, the time comes when that money has to be paid back, plus interest. Lo and behold, when that happens they still dont have enough money to pay for what they want to do through taxes. So now, they have to go and borrow some more money to cover the original loan plus the interest thats due. And this process goes on, over and over and over again, and we have this phenomenon called the rising national debt it just goes on forever. There is no limit to what the politicians are seemingly able to borrow. Now, the money that comes from the private sector you and me and savings institutions, retirement plans, other countries, and so forth that money is already inexistence but theres never enough of that. They need more the government needs more than what they can get from people who already have money to lend to them. And so now, the spillover comes when they want more than they can get that way they go now to the Federal Reserve System. And by prior agreement, the Federal Reserve will create whatever amount of money is necessary at that point, and appear to lend it to them. I say appear to lend it to them because what theyre really doing is theyre creating it for the Federal government, but they call it a loan, when in reality its not a loan its a service: theyre creating money out of nothing for the Federal government. So the Treasury official goes to the Federal Reserve and says: Ok, I need another billion dollars today. We didnt take enough in taxes to cover this, and not enough people in the private sector loaned us the extra money, so we need more money. We need another billion dollars, please. And the Federal Reserve says, Ok, here it is. And the Chairman of the Federal Reserve writes him a check of course, thats figuratively speaking, its all done by computer, but lets just imagine the Chairman of the Fed writes a check to the Federal government for a billion dollars. The government now has that check, deposits it into its own checking account, and begins to write drafts against it. And this money that was given to the Federal Reserve did not exist before that point. It was created completely out of thin air, just the same as if the Federal government had gone to the printing presses and printed it. But in this case they didnt, they went to the banks and got a loan of money that didnt exist before. And it gets so complicated that people dont understand it, so they think somehow its wrapped up with the banking system, therefore the money must have existed prior to that when in reality it did not. So thats how money comes into existence for the government. They can always rely on their partner in the Federal Reserve to create whatever amount may be necessary for them, so they dont even have to go to the private sector to borrow it. Its just guaranteed to be available anytime. Now, thats why the governments into this arrangement. You could see the advantage there. But this is really the tip of the iceberg. If we just stop there as many observers do, my, isnt that terrible, that they create money out of nothing for the government and the government pays interest on nothing, thats childs play compared to the real story. Now, Im going to cover the next part. That takes care of the government, why are the banks in this thing? Well, lets follow that money, that was created out of nothing for the government and see where it goes. It goes into the private banking system. Lets take $1000, for example, that has been paid to a postal worker who delivers our mail. Hes working for the Federal government. Now, hes got $1000 in a pay check that came out of that billion dollars that was created out of nothing and presented to the Federal government. So now were just going to trace a thousand dollars of it that comes to the postal worker. Hes got a paycheck now, he doesnt imagine that that money didnt exist a moment ago or yesterday, and he doesnt care, it looks like a

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good check to him banks will accept it, everybody will cash it. So he takes it down to his local bank at the end of the street there and deposits it into his private checking account. Now things speed up. The money is out of the Federal Reserve government context and goes into the commercial banking system as a deposit. Now if I were a president of that particular bank that got that deposit, I could in a sense go to the people out there in the bank lobby and say: Attention, everybody, I have some good news. This gentleman here just deposited a thousand dollars into our venerable bank. And thats good news, because a lot of people in the bank are there to borrow money, so they know when the bank has money to loan that usually means lower interest rates and everybodys happy. So somebody might ask me, well, how much did this person deposit? And I would say, he deposited $1000. And then this person would say: Well, thats not enough, I want to borrow $9,000 on this car Im looking at, and $1000 isnt going to cut it. And I would have to say just like this article from Punch when hes talking to the depositor in the bank, dont worry about it, this banking business is more complicated than you can possibly imagine. We can lend you the $9,000, even though we only had $1000 deposited. And if anybody asks how is that possible, the answer is: dont worry about it, its possible, its legal, we can do it. We create the extra $9,000 out of thin air. The $1000 is deposited and we can create up to $9,000 on every $1000 thats put into our bank. And that money literally comes out of thin air, at the time the loan is made. That means for every billion dollars thats created out of nothing for the Federal government to spend, an additional $9 billion is created by the private banking system out of nothing to loan to people like you and me and corporations and so forth. Now, we use that money for our purposes the bank doesnt benefit from that money, they loan it to us. But we pay the bank interest on that money just as though it was real money that existed that somebody was sacrificing to make available to us as a loan. We really think were borrowing money that somebody has put into the bank on deposit, and the interest rate is justified because we have to pay that person for the sacrifice he made of making that money available to us, when in fact the money was created out of nothing. And so we are paying interest on nothing. Now that is the scam that Im talking about. That is how all of our money comes into existence, not only in the United States but in the entire Western world. And if that isnt a scam, I cant imagine what would be. [16:26]

A Legalized Cartel?
JIM: Well, lets go back to the beginning when the Fed was created, because what I find rather interesting in this period of time was around the turn of the century you had a lot of negative sentiment against monopolies, cartels, the oil trusts and the money trusts. Theodore Roosevelts Administration was moving against the big oil trusts such as Standard Oil. How did the money trusts manage to create a monopoly for itself, in a period when government was moving against monopolies? In essence, what was created here was a legalized cartel. So how did that originate in a period when they were moving against such trusts? thats their genius I think EDWARD: Well, that is their genius, and its a device that we have seen used over and over again not just in banking, but in every sphere of economic activity. And the answer to that question is that the government is not moving against these monopolies, its just that they appear to be moving against these monopolies. And its a sleight of hand trick, I mean its a magicians trick, they simply appear to be doing something when in reality they are doing something else. As I mentioned before if the Chairman of the Federal Reserve were to say, well, we are taking this measure today in order to improve our profit picture, then the public would be very angry and very alert to the situation, and demand some changes be made. But if the Chairman can say, were concerned about inflation and therefore were increasing interest rates, then everybody goes back to sleep. So what happened at the turn of the century is that there was a public outcry against the concentration of

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political of economic power, I should say, and also that was a Freudian slip, it certainly included political power but the public didnt know that. The public was concerned about the concentration of economic power in the hands of a few very large investment firms and banking firms on Wall Street. And so they were demanding that their elected representatives pass legislation which would curtail that power and make sure it was limited on behalf of the best interests of the people. So the people who were running the banking system, and who had very powerful influence in Washington DC, decided that if this is what the public wanted that they would get at the head of the parade, and they started calling for it. And they made sure that their people were the ones who drafted the legislation that was offered to the public as the solution. So what we had is a very interesting thing in which the people who created the problem were called upon to write the legislation to solve the problem. And they told the American people thats what they were doing when in reality they were writing legislation to continue the problem, and to consolidate their power in the future. That is the reason that the Federal Reserve Act was written on Jekyll Island; and thats the reason I named my book The Creature From Jekyll Island, is because the Federal Reserve Act was not drafted in the halls of Congress, it was drafted in secret on this private island off the coast of Georgia which was completely owned in those days it was a private club actually called the Jekyll Island club by a small group of billionaires from New York: people like JP Morgan, and William Rockefeller, and their business associates. And so the banking fraternity went to Jekyll Island, to this very private club, and for 7 days they sat around a table there in private smoked a lot of cigars Im sure and drank some good whiskey and drafted the Federal Reserve Act. And for years later they denied that they had ever been to Jekyll Island to do such a thing, and of course later it all came out. Its a matter of well documented history now, but they denied it. They didnt want people to know that the legislation which was being offered to break the grip of the money trusts, which was the phrase they used in those days, the didnt want the people to know the legislation to break the grip of the money trusts was written by the money trust. Obviously, if the public had known that then the scam would have been out in the open and the legislation never would have passed. [21:08]

What About Secrecy?

JIM: One of the things that you talk about in the book, all of this secrecy at Jekyll Island, as you just referred to, even today theres a bit of secrecy associated with the Fed moves. But prior to the Feds existence, banks had to exercise prudence and caution in their lending in case of a bank run if they were considered unsound. With the passage of the Federal Reserve Act creating the Fed, it was no longer necessary for banks to practice caution; and what we have now, or seen created since the Fed, theyve gotten more reckless. I mean what do you have to worry about if youre guaranteed a bailout. EDWARD: Exactly, and thats one of the reasons that these people said that they were meeting on Jekyll Island in secret. One of the objectives they had for the creation of the Federal Reserve System was to create a structure which would have a hand in the public purse, so that when the banks got into trouble they would be able to draw upon tax payers support to bail them out, and they would do so under the banner of protecting the public. Its a very clever ploy. But you know, whenever lets say some of these banks make outrageous loans to Third World countries that they know that those countries are not going to repay, they know that theres no capacity in that little country to repay these gigantic loans, but they loan it anyway. Why do they do that? They do it because they know when the time finally comes to fish or cut bait, Congress will vote to pay the loans for those countries. Theyll come to the taxpayer and say, you know, if Mexico cant pay its loans to the banks, why there could be a great economic collapse there. In fact, that country may even turn communist, or something like that. And we dont want a hostile country on our borders. So its in the best interests of the United States, its in the best interests of you folks, the American taxpayers, to dig in a little deeper and cover the debts for the banks so we can keep these loans going. They have done this so many times that its amazing. But even when the loans are not to Third World countries, but to large corporations inside the United States like Chrysler or Penn Central, or some huge corporation or even New York City, and these enterprises can no longer keep paying their interest to the banks, then the banks go to their partners in Congress and say, you

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know: Weve got to have taxpayers cover this debt to keep those payments coming because, you know, we dont want Chrysler to go out of business. Look at all the people that would be put out of work, and no income coming for those families, babies wouldnt have milk, it would be terrible. The story goes on and on. So weve got to have the taxpayer put up the money, guarantee the loan, make sure the banks dont suffer for making the bad loan in the first place, and well do it all in the name of protecting you folks. [24:17]

Is The Fed a Stabilizer?

JIM: Ed, I began this interview with this myth that the Fed is an inflation -ighting institution. Another myth is the Fed was created to stabilize our economy. Looking at history, it sprang from the bank panic of 1907. However, since its inception we have seen more frequent recessions, a depression, stock market crashes and more importantly, and I think this is a key for listeners to understand, the dollar has lost over 90% of its purchasing power. EDWARD: Well, yes, that is the inevitable consequences of creating money out of nothing. And the people that created this mechanism in the first place knew that that was going to happen; and they had to sell it to the American people anyway, so they didnt tell the American people thats what would happen. They told them, yup, its for you folks, were going to put into position an institution that will guard against inflation, protect the economy, knowing all the time that they were lying through their teeth; that they were going to fatten their own pockets at the expense of the taxpayer. And these people still know that that process is going on and they still lie through their teeth to the American people. [25:33] JIM: Another critical factor here to understand when viewing our present financial system is all money in the system, as you have pointed out, has been created out of nothing. So when a bank loses money, it costs the bank little of anything tangible. The key here to survival is to avoid large write-offs where bad loans exceed the equity. EDWARD: Well, thats it, exactly because they can write down the loans a little bit. In fact, Im sure that many of these loans that they make in the beginning are in anticipation that there will be some writedowns along the line thats just common business practice. But the end game however is not just writing it down and extending it and rolling it over and keeping it going, its actually getting the bailout from the taxpayers. But I think people need to realize that banks really dont want you to pay back their loan. They dont make any money when you off the loan; they make money only when you pay interest on the loan thats where the income stream comes from. So theyd be just as happy as can be if you just rolled over your loan and paid interest only every month, which is of course whats happening increasingly in the mortgage market today. Thats very much to the banks benefit, because that just means you keep sending them money every month forever, and thats all they care about is getting that free money forever. Even though it was created out of nothing in the beginning it comes back to them and it has purchasing power dwindling purchasing power but in the meantime theyve got it and you dont. So the banks need the loans and they will do anything to perpetuate the loan. They can write it down, roll it over, get it paid off by the taxpayer, but they must keep those loans going. [27:22] JIM: Well, lets go beyond the scope of the United States, lets go back to the creation of the Bretton Woods system towards the end of World War II. The concept as it was put forth was to facilitate international trade and stabilize exchange rates. The unannounced goals, Ed, as you point out in your book, were much different. Explain the difference between the public goals and the undisclosed goals. EDWARD: Well, there were a lot of goals going on at that time. The main thing that was happening at Bretton Woods is that the nations of the world were falling very heavily under the influence of the Keynesians, the collectivists and the international banking fraternity. And they wanted to create not all at once, but they wanted to create a system that would eventually evolve into a global currency and a global monetary system that would be completely without backing of gold or silver. Because when money is backed by something tangible like gold or silver then the amount of money that can be brought into existence is limited by the quantity of the commodity that is backing that currency. So it severely limits the banks and the politicians in their ability to create money. So the goal at Bretton Woods was to make it sound like it was all in the interests of you folks around the world

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to stabilize international commerce for you folks, and to do all these good things for you folks. But the real goal was to bury the concept of a gold or silver-backed currency every where in the world, and to create an international currency which would be entirely flexible as the word that they used, meaning it could be created completely out of nothing at the political whims of those who were in charge of this global system. This was the beginning of the economic side of building a new world order as they called it since then, and it has been unfolding pretty steadily exactly according to plan. [29:35]

World Bank and the IMF

JIM: You know as we look at this and the extensions of this whole program, wasnt the World Bank and the IMF really an international version of the game called the bailout? EDWARD: Well, yes, I think thats a good analysis. The whole process has been to step this thing up from national to international mechanisms. These people, even though they may be American citizens, or British citizens or citizens of France, or what have you, their minds have driven them to become internationalists. Their real loyalties are not to their respective countries, but to an international concept, an international currency, monetary system and government. So thats whats been happening. If you just look at the surface and read their speeches, it sounds pretty good, but if you realize what their motives were and then of course you dont have to guess about it anymore because hindsight tells us thats a correct analysis. Weve been moving steadily away from national currencies which were backed by gold and silver steadily in the directions of international currencies which are backed by nothing at all. [30:45]

Why Do Central Bankers Hate Gold?

JIM: Why dont you talk about something else thats an anathema to most central bankers, and thats the supremacy of gold. I think a lot of people know that central bankers arent very fond of it even though they own it and loan it. And why does gold guarantee stability and actually give us more of that than the present fiat system we have now? EDWARD: Yes, bankers and politicians hate gold as a backing for currency, because as I mentioned a moment ago that if you have a currency that has to be backed by a quantity of gold or silver youre limited in how much currency you can create and put into circulation. And thats anathema to politicians and bankers. They want more and more of it. And so theyll try and convince its for you folks to have more and more of it so that the economy can prosper, but in reality any amount of silver or any amount of gold behind a currency will work as well as any other amount. The available quantity merely determines the preciousness or the value of any one particular unit. Now, Im getting a little bit ahead of myself, your question is more generic than that, and its a good question because you see when money is backed by gold, say, lets say there is a piece of paper out there that says this piece of paper can be exchanged at the bank or at the Federal government for 1 ounce of .999 gold lets just call this piece of paper the oz, Ok. Its not a dollar, its called an oz because it can be exchanged for 1 ounce of gold. That means that you can take the oz and you know right away what you can buy with it. You can buy approximately whatever takes the same amount of effort to create 1 ounce of gold, because that gold has to be dug up out of the earth, it has to be refined, it has to be put into a little circle and assayed to determine its purity, and stamped with various designs and now we have a 1 ounce gold coin. Theres a certain amount of human effort required to produce that, and so you can take that and exchange it for lets say, anything of material value that takes approximately the same amount of human effort to produce it. I think one of the best examples is the fact that if you lived in Ancient Rome and you had a 1 ounce gold coin at that time, you could have purchased a handcrafted belt, a very fine toga and a pair of sandals that was the price: 1 ounce of gold. Today, thousands of years later, if youve got a 1 ounce gold coin with no numismatic value, just a plain old bullion coin, 1 ounce of gold, you can exchange that for Federal Reserve notes and then immediately go into a mens store and buy a nice suit, a handcrafted belt and a pair of shoes. The value of that gold has not changed in terms of money for thousands of years because it takes the same amount of human effort to produce a nice suit, a handcrafted belt and a pair shoes approximately the same

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as it does to produce a one ounce of gold coin. The miners efforts and the refiners efforts and so forth, all added together, the human effort on both sides on that equation remain approximately the same. And that is why monetary systems that are backed by something that cant be created out of nothing something of intrinsic value that always is a very stable monetary system over a long period of time. But once you take that connection away and say, oh, we dont need to back this piece of paper by anything, this oz now doesnt have anything behind it except a signature from the Secretary of the Treasury, and some words across the top of it that say Federal Reserve note whatever that means now all of a sudden these things can be produced without limit and the quantity increases faster than the expansion of goods and services. And the first thing you know, it doesnt take one oz to buy a suit, belt and a pair of shoes, it takes two, and then it takes four, and then it takes twenty-four, then it takes one hundred, and so forth, which is why as you mentioned a moment ago, since the creation of the Federal Reserve System the value, the purchasing power, of the dollar has dropped by over 90%. That means that the government and the banks, this partnership this cartel that were talking about called the Federal Reserve System has literally taken your purchasing power. They have taxed you in a way that you didnt even know it. Inflation is a hidden tax, its a tax that is just as real as the income tax or any other tax, in fact its even more real because you cant escape it I mean theres no deduction; it falls on people who can least afford to pay it more heavily. Its one of the worst taxes imaginable. Inflation is a tax and its a direct tax as a result of this cartel called the Federal Reserve System. [36:14]

Bankers and War

JIM: You know, one aspect of your book that you find throughout the 19th and 20th Centuries, and you go on to chronicle this, is the international link between large banking family interests. For example, you talk about how the Rothschilds financed both sides of the Napoleonic wars. And in your history of how this system unfolds, we find bankers doing the same thing throughout the wars of the 20th Century. In fact, a good portion of your book describes the role bankers have played in financing both wars and revolutions. EDWARD: Thats true. One of the least appreciated facts of history, I think, is that all the wars since the creation of money paper money and that kind of thing all wars have been exacerbated by the bankers who make money available so easily to finance both sides. Its just a fact of history Im sure if they couldnt create money out of nothing, if it werent possible to use this hidden tax called inflation to raise money for wars, I doubt if many wars would be thought. There would be some kind of skirmishes I suppose, some limited battles, but most people would not tolerateI dont think the American people would tolerate the war in Iraq today if they really had to pay for it in taxes. They dont yet know that theyre paying for it through inflation theyll find out but if the tax man came to them and said, look, we need to double your taxes this year because weve got this war in Iraq, and were fighting terrorism in Iraq, so we need twice the amount of money that we took last year, I think most, most Americans would say, no, lets look at this again. So, the reason banking is so important to wars is that it makes wars relatively easy to finance by the warring governments and the bankers have known this for a very long time. And as you mentioned, the Rothschilds were the first ones who really showed up on the historical horizon and loomed very large, and we find they were financing both sides of many wars. Another aspect of that is when you make a loan to somebody and they refuse to pay it, if youre dealing with a deadbeat within the nation you can call on the courts or the local laws and the local police and say, look, this guy broke his contract with me, hes got to pay back that loan, or were going to put him in jail. So thats how they enforce their loans within a nation. But when you are making a loan to a king, or to a government, and that government or the king says, were not going to pay you, what do you do? You cant send the police to the king and say, pay up or else, because he controls the police, he controls the military. So the banks worked that out a long time ago: if you dont pay up and youre a government theyll go finance some other government and create an enemy and invade you if you dont pay, and youre suddenly ousted by some other government or some revolutionary movement. Banks, on an international level, are very good at financing enemies of the states. So they do finance both sides of many conflicts, simply as a means of making sure that both sides pay up on their international loans. [39:52]

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Is it Inflation or Deflation Ahead?

JIM: Theres a big debate in the financial community today, and its whether were going to experience inflation or deflation. As I look at it, I dont think I can remember last when we ever had real deflation. But when you have a fiat system where you are able to prevent defaults, or lets say a bank loses a lot of money because of bad loans, they can create money out of nothing and just replenish the banks as they did in 90 and 91. As you look at the way the system works today and you see the amount of money that were printing last year we created or this year were creating almost $4.4 trillion of new credit in our system do you see inflation or deflation on the horizon? EDWARD: Well, to me, its pretty clear its inflation. I dont see how you can see deflation in any of this because they have lifted the floodgates and theres no limit to the amount of fresh money that theyre pushing out. I think theres going to be more of that in the future. But the question is still good because there comes a time even though theyre pushing money into the economy, people are still losing jobs and losing purchasing power, so these two opposing forces are fighting each other and its hard to say which ones will be the most devastating. But nevertheless, in my view, I think that the effects of deflation will be more than overcome by the counter effects of inflation, and that in net, we will have an inflationary experience. [41:36]

Can the US Change Course?

JIM: I want to go back to the founding of our Republic. Our Founding Fathers, through the Constitution, prohibited States and the Federal government from issuing fiat money because of their bitter experience that they saw with hyperinflation during the revolutionary war. What they did was put in place a product which I believe was collective genius. How do we ever get back to this? Is it possible to get back to a sound money system given where we are today? EDWARD: Its possible, but when you think of the requirements, its pretty staggering, Jim. Its possible of course, all that it takes ha, here we go all that it takes is that the American people understand the problem that we have today, and have the discipline, and elect Congressmen to office that will have the discipline to bring about the necessary changes. Thats all it takes in other words, all it takes is a miracle. I dont think that the American public I dont see any evidence of it at least so far is really catching on to the scam, at least in sufficient numbers to bring about some kind of political wave of reform. And I certainly see no evidence in Washington, DC that our elected representatives have any indication that even if they did understand it of going against it. Because you must understand that many of them hold their positions of office largely as a result of being cooperative with these banking sources. So for them to turn against the hand that feeds them I dont think is very realistic to think thats going to happen. How do we replace these people in Washington? We replace them simply by having candidates who are independent of this mechanism, and theyre not on the scene. And if they were independent the public wouldnt vote for them because they would be portrayed in the press as madmen. The public - we always get back to that must understand this banking scam so that when the propaganda comes out and tries to convince them that anyone who opposes the Federal Reserve System is some kind of a fruitcake, the public must be able to withstand that propaganda and say: Ah! We know that hes not a fruitcake after all. Hes the guy we want. So we have a lot of work to do ahead of us, so the answer to your question is its possible, but at the present time the locomotive is running in the opposite direction. [44:12]

Doomsday Mechanisms
JIM: I want to fast forward to one of the final chapters of your book where you talk about the doomsday mechanisms. One of the characteristics of our present time is the extent to which the Americans and their governments are mired in debt; you take a look at what the national debt is over $9 trillion and still growing; were running almost 800 to $900 billion worth of trade deficits. And if you take a look at that today, as you point out in your book, you find some interesting statistics: there are more people working for government than

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for all the manufacturing companies in the private sector; there are more bank regulators than bankers; there are more farm bureau workers than farmers; more welfare administrators than recipients; and there are more citizens receiving government checks than there are paying income taxes. I see that as a problem thats very difficult to fix theres a vested interest here. EDWARD: It is very difficult to fix because it looks like it has gone past the point of no return. When you give people the opportunity to vote themselves whatever they want through a majority vote and finally that number has reached more than the majority then that minority is doomed. The minority of honest working people who are not trying to get something for nothing are being pressured more and more, theyre squeezed more and more. I think everybody now knows that the middle class is in great retreat in America. Prior to the establishment of the Federal Reserve the middle class was rapidly growing, the gap between the top and the bottom was getting narrower and narrower, and we were really moving into a very wonderful system based on free market economies. But since the creation of the Federal Reserve, and some other things too might add, the trend has reversed. So now the middle class is getting wiped out. The middle class is the ones who are paying the taxes, the middle class is the one that is doing the work, and as that gets wiped out and gets smaller and smaller, there comes a time when theres no heartbeat left in the system. The system will not have the strength to continue and at that point all well have is just raw naked force: government telling you what you must do or else go to prison thatll be the driving force. Im afraid we see it coming closer and closer unless we turn this thing around very soon. [46:45] JIM: Let's go forward and talk about your pessimistic scenario, because you just mentioned its gone well beyond repair. It sounds like your pessimistic scenario is the course thats going to unfold in the future. EDWARD: If we go on the basis of the trends, we have to say that is coming. If you just sort of plot this on a mental chart in your mind you can see that line is heading straight toward total government, government is growing every year; new laws are being passed every day; personal liberties are being reduced every day. This represents almost a straight line chart if you were to put it on a piece of paper. So you have to say unless something changes, that line is going to continue to go in the same direction its going now, until finally we have more and more and more government, more government, more government and then all of a sudden we reach the end of that line and its total government, which is totalitarianism. So unless the trend changes theres no doubt that we are headed right smack dab into totalitarianism. So the question is and we come to the optimistic scenario what will it take to change that trend, what is it going to take that line and bend it back down and start reducing the size of government? And as I mentioned before, the only thing that will do that is an awakening on the part of the American people that first of all theyre in a mess because of the growth of government many people think were in a mess because government isnt big enough. You know, hey, weve got a problem lets have more laws. Thats the thinking thats gotten us into the problem were at. And these potential tyrants that are just wringing their hands in anticipation and glee expecting to have total control over our lives, are counting on the American people jumping at every problem that lies ahead, and saying, oh golly, we need more laws, more government. Theyre just waiting for the Boobus Americanus to vote itself right into slavery. Well, so what do we do to change that? Thats a hard one to answer, and perhaps this is not the place to get into it, but I created an organization about 4 years ago called Freedom Force International. And its an organization that deals directly with this issue, and these are people who are now in 30 countries around the world, by the way, who have a plan to reverse this trend and get that chart moving back in the other direction. Its a big topic, Jim, perhaps some day we can talk about it, but in the meantime if anybodys interested in how we think it can be done, I would urge them to come to our website, and its a real easy one to remember: Its called www.freedomforceinternational.org - .org for organization. And I think you would be very impressed by the plan that we have already put into motion. [49:53] JIM: I know you do a lot of documentaries and youve received rewards for those. Have you ever thought of producing a documentary regarding The Creature From Jekyll Island? EDWARD: Yes, I have Jim and that would be a wonderful thing. It would be rather expensive to do that, we dont really have the resources for that. There is a fellow by the name of James Jaeger who is the President of Matrix Productions I believe its called, you can find them on the internet and he in fact has made great strides in that direction actually. I saw the preliminaries on it just a little while ago, and its getting pretty close

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to complete. I think its a very good documentary. So anybody thats interested in that can look up Matrix Entertainment or James Jaeger I even think hes got it on the internet so you can look at it. [50:48] JIM: Well, Mr. Griffin, if somebody wanted to get a copy of your book, and by the way, Id recommend to our listeners if they havent read Mr. Griffins book, its an essential book to have in any library to understand how the monetary system works, especially the great, great chapters you have on a crash course on money, because youll really gain an understanding. Mr. Griffin, how can they obtain a copy of your book? EDWARD: Well, the book is on the internet of course Amazon has it, I think most of the major bookstores have it. Although theyre often not stocked in sufficient quantity so that when you walk in to a Borders or some place like that theyll say, Oh yeah, weve got the book but well have to order it. So it takes a little while. But the fastest way is Amazon, or they can come directly to us. I would urge that because we have a lot of other books and we have documentary films and audio recordings on this topic too. So if all else fails, come directly to the source which is Reality Zone, which is our commercial operation, and that too is easy to remember: its www.realityzone.com. [51:59] JIM: Mr. Griffin I want to thank you for joining us here on the Financial Sense Newshour. Its good to talk to you again. We first talked to you when this book came out many years ago, but its more relevant today than ever. EDWARD: Unfortunately thats true. JIM: And once again, thanks for joining us on the program, and would you mind giving out your two websites once again? EDWARD: Well, Id be glad to do that, Jim. The commercial site where the book and recordings and video documentaries can be obtained is called Reality Zone, its www.realityzone.com; and then the organization that I mentioned which is made up of people from all over the world who are trying to do something about this constructively, really make a difference, not just knowing about it and complaining about it but actually doing something about it, thats called Freedom Force. And so thats www.freedomforceinternational.org. JIM: And once again, the name of the book, if youre looking it up on Amazon, is called The Creature From Jekyll Island, by G. Edward Griffin. Mr. Griffin, all the best to you sir, and much success. EDWARD: Thank you very much, Jim, and the same to you. 2006 Financial Sense is a Registered Trademark NOTICE: This transcription may NOT be reproduced without the expressed, written permission of Financial Sense Online. Email FSO Selective quotations are permissible as long as this web site is acknowledged through hyperlink to: www.financialsense.com BACK TO TOP Home l Broadcast l WrapUp l Storm Watch l Perspectives l Sitemap l About Us l Contact Us

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