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Using Federal Reserve To Fight Inflation

Posted On: 2006-11-08
Length: 1:19:17

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Welcome aboard everybody, this is Johannes Ernharth and you have tuned into Vigilant Investor live every Wednesday night, 9PM via Talk Shoe's streamcast capabilities, talkshoe.com. If you happen to be tuning in for the first time tonight, be advised that at any given time that you feel the compulsion to call up and ask a question you can do that ordinarily, tonight we're going to have an interview with G. Edward Griffin and he's the author of The Creature from Jekyll Island, and it's a prerecorded interview, so we won't be able to take any direct calls at that point during the interview, and it's a reasonably developed, long interview, so we're not going to have a ton of time to take questions today, but ordinarily, (724) 444 - 7444, you can call in, talkcast id. number is 982 and when you dial on in if you don't have a Talk Shoe PIN already, we recommend you just use one of our static PINs that are always available for first time callers, 222-333-4444 is one that you can use. Now, as for Talk Shoe, we recommend also that if you're listening to this interview we will have a chat environment via the Talk Shoe chat interface. So while this interview is going on if you're inclined to tune on in, and want to do some chatting and discuss the interview with some other people, feel free to do so. Go to talkshoe.com, click on the Vigilant Investor show and you should be able to do that, and you can also get links directly to our show site, via vigilantinvestor.com. But in any event, this is your host Johannes Ernharth again, and Stephan Ernharth, my co-host is out there today. Hey Stephan, how are you doing?

Stephan: I'm good Johannes, how about yourself?

Doing fine thanks. Well, kind of an interesting day in the news today, the Dow hit another new high, closed above its previous high. And, gee the general reaction there is that this is sort of an affirmation of the election results in some respects. Any thoughts on that Stephan?

Stephan: I think that you know, you got to keep it into perspective that we're dealing with 30 stocks in the Dow right now, and you know, I've been reading some interesting articles about just the general belief with the public that the election is over, but with that said, in our opinion we seem to feel that at this point in time all bets are off, we can get into potentially later, after the interview or in another show our thoughts on certain things that have come to be conveniently before the election and we will see whether those things that happen whether they were real, or artificial and whether they can forestall some other not so pretty realities which are manifesting themselves.

Absolutely, and I look at some of the other headlines today and you wonder what is it exactly that's driving the market up. And I gather it's somewhat of an affirmation that okay, no big deal, maybe the markets are actually pleased that there is a division in the house and in congress because that means a little more gridlock and you know, sometimes that's a good thing and in fact I think, that is generally is my opinion, they're not doing a whole lot in Washington D.C. we're sure a whole lot safer out here. But still, nonetheless, I mean one of the things out of the [...] Nancy Pelosi the new, excuse me, the new Speaker of the House, talking about lets gruely get that minimum wage cranked up and let's lower interest rates on student loans, all sorts of things that could potentially lead to additional problems, and exasperate existing problems, but I don't want to get too far off on tangents, that's clearly material for another show. Probably the biggest thing I would say out of the election also came is that 6 states decided to raise the minimum wage. So we'll have to see how that actually starts happening. When you start driving prices up for labor, boy it's kind of a A + B = C in terms of the ultimate price is going to be the consumers and everybody is going to have to pay more. And, you know another headline today, you know, financial times is talking about the Federal Reserve having to show its resolve to tackle inflation. In other words inflation is not fully under control, and meanwhile the Fed is also admitting surprisingly that they miscalculated their, just did their calculations poorly and they ended up keeping money cheap for too long and of course we would say that's kind of obvious here, we've got a housing bubble that was driven up, money supply sloshing around and so forth. And that I think is probably the perfect segue into our interview with G. Edward Griffin that we recorded earlier in the week, and it's a heck of a doozie there Stephan I mean, a lot of times people hear about the federal reserve and their eyes either glaze over or when you begin telling them that hey, this is exactly what's going on and this is what's going on, people are just, they're kind of in disbelief, they just don't think that that can actually be the way that things are set up and you almost get you know, the conspiracy kind of stare sometimes. Would you agree with that?

Stephan: Exactly, it's because, it seems far-fetched because we're just not taught it. And we're not even taught the proper definition of inflation, let alone the history or the real economic history of our country. So, this is a great interview, the book, The Creature From Jekyll Island is one of several definitive books out there regarding the Federal Reserve, however it's not part of any mainstream curriculum or part of any collegiate curriculum for that matter.

I would say that the subject itself seems to defy even your majority of your economics classes. And it's covered on some levels, but it tends to be glossed over as being just part of the system, that's you know, very good, it's the way it works, that way on some levels. And you guys are going to hear this interview in just a couple of second and you'll see that on other levels you don't even cross these boundaries, because it just seems too out there to actually contemplate that this is really what's going on. But, in any event, why don't we kick into the interview rather than sticking, you know trying to steal any of its thunder and we do cover a lot of info. in there so, without further adieu, let's get this thing moving here and let you all listen. Again, we have the chat available at talkshoe.com, so tune in there via the IM interface, you just have to download free software at talk shoe and you can click on in and we'll be following along with the interview there, and if you feel inclined at the end of the interview, don't hesitate to dial on in as well. And you can find all that information at talkshoe.com. But let's get cooking with the interview here...

We have our guest, G. Edward Griffin on the line here with us for our interview. Ed is probably best known for his authoritative work, The Creature from Jekyll Island, which is pretty much the best expose you can find out there, I think it is, there's one book to definitely have on your bookshelf, is without a doubt the best expose of the partnership that goes on between the central banks like the Federal Reserve and governments like the U.S. government and the Federal Reserve as well as the connection to the global banking system. And it really paints it as the corrupt alliance that is operating at the expense of non-insiders, that's people like you and me, listeners that it really is. And I'll tell you the book is really shocking, it grabs you and, you know it is a must have for your bookshelf. Ed, welcome to the show, we're very, very glad to have you with us today.

Ed: Well, thank you it's a pleasure.

Well Ed, I think one of the things that I've run into anytime I try to convey some of the ideas at Vigilant Investor, day to day we're talking about problems with the credit bubble, problems with money supply, problems that we think invariably people are going to run into by nature of the system, the way it's structured, I'm just amazed at how little understanding there is, not just with basic economics, people generally in the United States are economically illiterate, but even among people who probably should know better, people with a little bit of an economics background really don't understand the nature of banking, the nature of the Federal Reserve and you know, everybody all the way down to the bottom of the top low, and just kind of takes for grated that the dollars they use are always there, they use their ATM cards, their credit card, you don't even need to have dollar bills anymore today. Perhaps you can get into a little bit of an explanation just what exactly the Federal Reserve is and what it is it's doing with the banking system that we have today and how that all functions, I know it's a lot on the plate to go through, but maybe you can -

Ed: Well that's true Johannes, it's a big topic and that has its advantages and its disadvantages. The disadvantage of course it that you don't know where to begin, and the advantage is that it doesn't make any difference. You can just jump in and splash around and you're going to find a lot of material. So, I'll start just by agreeing with what you said about how little information is out there about the most important topic, our money system. I mean our money is very important, it transmutes our services into our physical assets and to our labor. It's perhaps the most important aspects of our economic lives and we take it for granted. It's like going to that light switch and throwing the switch and, oh the light comes on, and you just assume that it will come on and we have no idea what electricity is, or how it's generated or how it gets to us or how it works inside the light bulb. We don't have to know we think, it's just there. And people have that attitude about money, we don't have to know how it works it's just there. And that of course is a huge mistake, because what people don't understand, and what makes it different from that light switch is that in the delivery of the money system, there are hidden hands and people have hidden agendas and by manipulating the way in which money comes in to existence and goes out of existence, they are able to actually, I hesitate to use the word "steal" but I think that is the most appropriate word, they're able to confiscate a portion of our assets in a way that we don't even know that it's happening. We don't even suspect that the theft or the confiscation is going on. And when you, I'll just jump ahead to one aspect of this which is inflation for example. Inflation is the phenomenon that first interested me in the Federal Reserve System. Years ago, I had decided I was going to produce a documentary film on what is inflation, how does it happen and so forth. And of course that leads you directly to the engine of inflation which is the Federal Reserve System and that's when I started to learn about it, and that was many years ago. But, one of the things that people don't realize is that inflation is a tax, they think that the money just disappears, it goes to heaven somewhere you know. Our purchasing power goes down every year, and you ask the average person, "where did it go? What happened to your purchasing power?" And they'll give you a blank look and say, "well, I don't know."

They think that it's just a natural state in the economy, that it's just from a natural phenomenon that occurs.

Ed: It's a natural phenomenon like water evaporates, you know, I guess money evaporates...

Exactly. [laughs]

Ed: That's how most people think of it. Well, it doesn't evaporate. Our lost purchasing power, every dollar that we lose in purchasing power, someone gains. And that's an equation, it's a mathematical equation. And so you have to learn about money to answer the question, who gains for that lost purchasing power? And, that leads you directly to the mystery story. And so when I wrote the book, The Creature from Jekyll Island, I didn't approach it so much as a text book on money and banking and accounting and all of these arcane science of how you transmute assets into liabilities and debits into credits and all that sort of thing. But I looked at it as kind of a mystery story, it's a whodunnit, because indeed, somebody did it to us and the purpose of writing the book was to find out who did it and how they did it and how they continue to do it and where the bodies are buried and all that sort of thing.

If I can interrupt there Ed, I would absolutely agree with your style on the book, I think that if people hear the subject of the Federal Reserve and banking and the money system, the dismal science comes to mind where, I think it was Mark Twain referred to economic textbooks as ether in print. Pretty much that's what you try to avoid and this book is anything but that. I mean this thing is riveting, it's like you're reading, you know it is history, but you're reading really you know, a whodunnit.

Ed: It is a whodunnit. And that's where I think people missed the boat when they think of the Federal Reserve's system as some kind of a dull topic. And I guess that's the point of my whole monologue here, which is the creation of money is anything but dull. So that leads to finally, get rid of talking around the edges and get, jump in the middle of it. What is the Federal Reserve System? Well, most of us when we went through school we got the impression that it was a government agency of some kind, it was created by Congress and it was put in place to protect the common man, to stabilize the economy and somehow control those big bad banks so they don't take advantage of us. That's how it was sold to the voters and that was the legend that was offered to the American people back in 1913 when it was passed into law. Well, I found out that it was anything but that. When I started to do the research, I found out that it is not a government agency at all, although it had some of the appearances of a government agency, in the fact that the president appoints the board of governors, and so that makes it look very governmental. But, it's not a government agency at all, it's a, and it's not really a private corporation either, what it really is, is a hybrid, it's a special structure that is designed to house a cartel. Now we've finally found the word, the Federal Reserve System is a cartel. And it's no different than the banana cartel or the sugar cartel or the oil cartel, this happens to be a banking cartel that went into partnership with the Federal Government in order to use the government to enforce the cartel agreements. That's really a, when you finally dig all the way down to the rock bottom foundation of what the Federal Reserve is, that's what you come up with, that it's a banking cartel that went into partnership with the Federal Government to enforce the cartel agreements. That's significant awareness because you don't get that when you read about it in the textbooks. I certainly didn't get it when I went through school, and I can tell you with no particular pride on my par, that's just the way it is, that there are a lot of people who have read this book and who are in the banking industry who didn't even understand that. In fact I'm very happy that we're, on the back of the book I've got a statement by Marilyn Magrouter Barnwell from Grand Junction Colorado and she says, "as a career banker, and president of a bank consulting firm I thought I had a good understanding of the Federal Reserve, but this book changed they way I view our entire monetary system." That' s what she wrote. So, she teaches bankers and didn't understand the banking system.

I think that's an important point because the assumption is in our industry that anybody that does what we do, knows the industry top, down, inside out and backwards when the majority of us are primarily sales people and don't recognize, you know, any information we get about the banking system's coming down from up top and just kind of trickles on down and who knows anything about it -

Stephan: Let me interject there fellas, I think that many times you're focused in an industry and it is sad to say the investment consulting industry is predominately is a sales industry and it's up to you as a part of that industry to realize that. But people get so focused day to day. And I think that people that work in the banking industry, they're doing their job, every once in a while you've got to pull back three miles and look down at the big picture and it is astounding.

Ed: Yes, well that's the condition certainly that we face. So we have an interesting problem, which not only is the general public not aware of what our banking system is and what our monetary system is, but even those within it have only the vaguest idea. And that means that there are only a few scholars and a few technicians at the top who really understand it now. That's kind of spooky when you think of what power that gives to those people who do understand it and who do actually operate the system at the very top. They can do just about anything they wish and explain it in anyway they want to, and the average bloke out there will say, oh, thanks for explaining that to me and they have no idea whether the explanation was valid or not. And it turns out in most cases the explanation is false. So, well anyway, back to what is the Federal Reserve System. As I said, it's a cartel and the purpose of the cartel is the same, the banking cartel is the same as any other cartel and that is to preserve and protect and expand the interests of the members of the cartel. Now, since it presents itself as being in the public interest, and they parade around as though they are part of the government and they're there to protect you folks, that's always the line where we're here to protect you, you know. And since that's the image they have to present, they have to distort reality, don't they, since that is not what their purpose is. It wouldn't do if Bernanke the new chairman of the Federal Reserve, or Alan Greenspan, the old one had gone before Congress and said, well, in their annual testimony said, "well, we raised the interest rates today because we figured we could squeeze another half a percent out of everybody and hence our profit." That wouldn't go over too well. So what they have to do, it's by formula they say, "well we raised the interest rates because we are concerned about rampant inflation. We are concerned about you folks. We want to make sure that we stabilize the economy for you folks," or, "we lowered the rate of interest this day because we want to stimulate the economy and increase production for you folks," you see it's always phrased in terms of the benefit for the American people.

They're the responsible steward of the economy is how they're perceived today but -

Ed: That's the image that they all like to present. But when you find out what the reality of the system is, that's just for eyewash. So, anyway, I don't know, we're talking around it as I promised we would jump in the middle and splash, well that's what we're doing, let me think for a minute. Let's go back to the history. I think a lot can be learned from the origin of the Federal Reserve System. The reason I named the book, The Creature From Jekyll Island, it wasn't just a whim, although I have to admit that I take a little bit of a wicked satisfaction, thinking that people who don't know anything about this might see this book in the bookstore, The Creature from Jekyll Island, and think it was some kind of a sequel to Jurassic Park [laughs] and might pick it up thinking it was something else. But anyway, that's, it doesn't work that way. But, the reason I named it that is because, the creature being the Federal Reserve of course, was actually conceived on Jekyll Island. Jekyll Island is a real island and it's off the coast of Georgia, and it was on that island back in 1910 that the Federal Reserve System was conceived at a highly secret meeting that took place there by the top bankers of the United States, and they were representing the largest financial banking interests in the world including the Rothchilds and you know, the bankers from around the world. The ones that created the Federal Reserve System on Jekyll island at a secret meeting, as I'm reading this and discovering this I'm thinking why the secrecy? I mean these guys went there under pretense of going on a hunting trip; in fact they went to great precautions to not even let anybody know that they did go and they traveled in a private railroad car that was owned by Senator Nelson Aldridge, they were told not to tell anybody they were going, and they were told to avoid newspaper reporters, they were, even when they got on board this private railroad car, they were told not to speak to each other and address each other by their last names. They used code names actually in the privacy of this railroad car, and the reason they did that, we learned all this later from some of the testimony given by these people many e years later, the reason they did that was because they were afraid that the servants on board the railroad car might talk about it after the trip was over. They might say, "guess who we served cigars to today," you know, or something like that. And didn't want that word to get out. There were a lot of wars in history that were plotted under less secrecy that this meeting. So I'm learning all of this I'm reading all of this, and I think, wow isn't this interesting, this is a whodunnit, this is a mystery story. Why would they go to Jekyll Island of all places, and why would they deny they were going and for many years there after even deny that they went. Well, I found out the reasons. Jekyll Island was privately owned in those days by a small group of billionaires from New York, I'm talking about people like J.P Morgan and William Rockefeller, and their business associates. And it was a private club, it was where their families went in the cold winter months from New York, they went down to Georgia, had beautiful mansions there and they're still there you can visit it today, it's kind of a monument to these wealthy people. Anyway, that's where they went because it was private. And the secrecy was because they were drafting legislation, which was later offered to the American people as a means of controlling and reining in the power of these big powerful bankers. That was the purpose of the Federal Reserve Act, it was to convince the people that finally the Wall Street moguls were going to be controlled. And here they were writing the very legislation that was supposed to do that. Now, if that fact had been known, obviously the scam would have been exposed and people would never have endorsed the Federal Reserve Act, Congress would never have passed it and so that was the reason for this kind of secrecy.

And, that was in the era of a lot of the antitrust movements going through. You had the break up of all sort of the railroads, everything, you know; and what's misunderstood by a lot of people is that the antitrust movement was oftentimes led by these, you know huge conglomerates, the Rockefellers and so forth, the railroads and [...] trying to control -

Ed: I would even go one step further and say it was always led by the very of that were supposed to be broken up, that's been one of the cases. These people were no dummies, they didn't get to their position of great wealth and power by being ignoramuses. And they understood politics very well, they understood human nature, and they were able to perceive the beginnings of public unrest for monopolies and cartels. And they wisely decided that rather than just sit there idly and wait for such a movement to develop at the grass roots level, and then have to fight it, they decided to lead it. To put up their own leaders so the hidden leaders who would lead their own opposition in such a way as to make it look like a good TV wrestling match, and they were really good, slam those guys around against the ropes, hit them and throw them out of the ring, put up a good fight but always knowing in advance who was going to win. And so these guys were masters of that. They always lead their own opposition, and that's really what the Federal Reserve Act was. It was presented as a means of controlling what was called in those days, the money trust. That was the name that they used in the editorials at the time. We must break the grip of the money trust was the big [...] and cry. And even people like President Wilson took up that cry and that was one of the reasons he was so popular, because people said, "now, there's a man who is going to defend our rights and stand up against the money trust." What the public didn't know is that Wilson was selected by the money trust. He was financed by the money trust. And he surrounded himself with representatives of the money trust. So, those were some of the things that I discovered, that's part of the mystery, that's part of the whodunnit, and it continues today.

With respect to what it was that they created, why go through all that effort, what was their benefit to them by having the Federal Reserve, I mean, what exactly did it provide for them and the banking system?

Ed: Well, there were a lot of advantages to bringing the government into the partnership to enforce the cartel agreement. That's basically the bottom line. You see cartels are rather powerless, if they're, if they don't have some way to enforce cartel agreements. For example, we have members of OPEC today, the oil cartel, and those guys get together in some swank hotel occasionally and they said, alright we're going to limit production of oil, we're going to sit on our oil reserves and limit production in order to put up prices to raise prices. And so they all agree to that. And then a few months down the line, let's say a country like Venezuela or Venezuela is not really part of OPEC so, let's say Mexico decides that, well you know, we need money and we're not going to limit production and so we're going to increase our production, we're going to break the cartel agreement. Well there's nothing they can do about it, unless of course, now we're going to jump topics here if we're not careful, unless they get that country involved in a war, they use some other countries to invade it or start a revolutionary movement and all of the sudden they, the leaders of that country decide, whoops, we should have kept our cartel agreement. But anyway, that's another topic. For normal cartels and monopolies, there's no way to force agreement unless you bring the government in to the formula, and now you take the cartel agreement and you pass it through the legislature and you no longer call it a cartel agreement you call it law. Now you've got the police and the army that can be mobilized to enforce the cartel agreement. And that's why all monopolies and cartels seek to go into partnership with governments at one level or another. But your question is why did they want to do this, what's the benefit to them? Well it's a very profound question, and in seeking the answer to that, we learn a lot about the Federal Reserve System that shocks us. First of all, they talked about this at the meeting on Jekyll Island, and we have a pretty good record of it today of what they discussed and because even though they denied that such a meeting took place in the beginning, in later years after the Federal Reserve was firmly established by law and had become almost revered a great American institution, then they began to talk openly about the roll they played in it's creation, and they gave interviews to journalists, some of them wrote books on it, some of them wrote magazine articles, and their biographers picked up a lot of information. And so now many years later, you can go to any well stocked library and learn a great deal of detail of what was discussed at these meetings and what their motives were. And one of the things they wanted to do was to stop the erosion of money away from the great city banks in New York. At that time, at the turn of the century, those large banks in New York sat astride the great majority of all capital and financial transactions in the United States. But every year a little bit of that was eroding to the south and to the west as the nation expanded and commerce moved away from the east coast, the New York banks were losing a little bit of it every year and they decided that they needed to put a stop to that. The only way they could put a stop to it was to control it, to bring it all under some central directive called the cartel agreement. And so one of the major purposes of the Federal Reserve Act was to stop the erosion of power away from the New York banks. Just the opposite of what it was sold to the American as being, which was to break the grip of the New York banks. The real purpose of the Federal Reserve Act was to consolidate the grip of the New York banks. Another purpose of the Federal Reserve as conceived by it's founders was to spread the risk to the taxpayers. They do that when you create money out of nothing, and perhaps we'll talk about that a little bit later, but that's basically what the bankers do, they create money out of nothing and they collect interest on it. They knew that when you do that and expand your, the money that you have that you promised to pay back and then if everybody wants that money all at once, the banks can't deliver, at least not in those days, and so they knew that some of the banks would have runs on the bank and they would go out of business, they would become bankrupt. And in order to prevent that from happening, they decided to join all together, so that if there was a run on one bank, then the resources of the other banks could be pressed into service to cover the drain temporarily and to smooth everything out and then finally if the rush was too big for even that to happen, then they could turn to Congress and say, okay Congress now you better bail us out. After all you're our partner, we're doing everything according to the law, and the banking industry is very important to the economy of America, so therefore it is in the interest of the American people to make sure that Congress steps in with tax dollars and cover all the bad losses that are being experienced in the banking system. And that was the second reason for creating the Federal Reserve System, was in order to have the taxpayers bail them out periodically in the name of protecting the American people themselves.

A lot of people look at the Federal Reserve and they say well, what they do know about it at least the impression they have is this is what backs up our banking system and God forbid our bank would have a run and the Federal Reserve wasn't there to catch the problem and save us all because you know, just picture a world without the Federal Reserve, I mean banks would go under and that's just because sometimes the economy gets crazy. Maybe you can explain, now you call it the Mandrake Mechanism and you alluded to it as the money being printed out of thin air. Maybe you can explain that a little bit to give people a better perspective exactly, and I say this is like, it's legalized counterfeiting is what I call it. But, maybe you can explain it so that people can have their arms around what really is going on here and what they're protecting.

Ed: Sure, I'd be happy to do that. We're always starting with that basic question or issue that the Federal Reserve is a cartel in partnership with the federal government and basically what you're saying is, what's the advantage of the participants, why did the government go into this cartel agreement and why did the bankers do it? So, and the answers to both of those questions is found in an understanding of the way in which money is created. The way it's brought into being in the United States and the western world. So, let me give you kind of a quick overview of that, this is a highly condensed and admittedly an over-simplified version. But it's accurate in essence, in principle everything I'm going to say is really accurate, and here's how it works. It starts with the federal government, which of course is a partner in this arrangement, the federal government likes to spend money. It likes to spend money a lot because the more money it spends for benefits and contracts and so forth, the more popular the politicians are and the more easily they are elected. But on the other hand they have a conflicting need which is to reduce taxes or to control taxes because the higher taxes go, the less popular they are and the less they tend to be elected. So politicians are always balancing the need to increase spending, but not increase taxes, which of course is impossible. But, they try it nevertheless. How do they do that? Temporarily they can do it by the process of borrowing. So, they say alright we don't want to raise taxes to pay for all these boondoggles because that's unpopular but we'll borrow the money and that way taxes stay where they are and we can still buy votes because we have the extra money. So, they issue bond and treasury notes and that kind of thing. But they're loans basically, the government borrows money from the private sector and from institutions and even from other governments. And so temporarily the fix is okay because they've got the extra money. But now, sooner or later that money has to be paid back plus interest. Well low and behold when that time comes the politicians still are not collecting enough money in taxes to pay for their expenses. And so they cannot pay it back plus interest. So, what do they do? Easy for a politician, just borrow some more to cover the previous loan plus a little extra for the new expenditures. And so this process goes on and on and it's rolled over and rolled over and we have this phenomenon called the increasing national debt, which is designed by the politicians to go on forever, at least as long as they are in office they'll let somebody after their term in office worry about it. And so that's fine, that's well and good, and we see that works, except there's never enough the government never can borrow enough from the private sector, at least at the interest rates that they're willing to pay and that is no problem because now they just go down the street, figuratively speaking, to the Federal Reserve System, their partner in this scheme, and they walk in and they say, "okay we need some more money, we can't borrow enough from the private sector so we need more." And the Federal Reserve says, "how much more?" And typically the guy from the treasury will say, "well, another billion dollars today would do fine, thank you." And so the Federal Reserve officer writes out this big check to the United States government for 1 billion dollars. Now, of course they don't actually write a check, it's all done electronically in the computers and so forth. But just to clarify in our minds, just imagine that they wrote a check for a billion dollars. And so the Federal Government takes this check and deposits it into its checking account and low and behold, now it has a billion dollars to continue spending. And the student would ask, "well, where did this money come from?" that billion dollars that the Federal Reserve loaned 'theoretically,' put a quote mark around that, to the federal government. And the amazing answer is it didn't come from anywhere. There was no money in any account, there wasn't even an account, all they had was just this big checkbook, and they created that money out of nothing. Literally nothing. And then appeared to be loaning it to the Federal Government at interest. Now, that is how, that is the reason that the Federal Government is in the partnership, because it knows that when push comes to shove is can always go to its partner and get any amount of money it needs under any conditions it needs in order to bail itself out and continue operating without having to raise taxes or without having to borrow it at higher interest rates from the private sector. It's not too bad an arrangement for those politicians.

Well really if you think about it, I mean functionally it's no different than you or I Ed, going down into our basement and running a printing press, and loaning money out that way.

Ed: Well, it's exactly the same, and in fact that's the way they used to do it. But when you run printing presses, a lot of this extra money starts showing up, all this paper is fluttering around. But doing it through the banking system, it's so much more mysterious that most people can't figure it out. People think that's complicated, I don't know. It's all done with credits and checkbooks and computers and so it's more mysterious than just printing the money. But, you're right it's exactly the same in principle.

And it's far more fluid and to those that have not read your book, we talk to people all the time when we're explaining what's happening and until they almost get to wrap their brains around it in print it's hard to believe to them that this transaction works this way. But there are a few quotes, Wright Patman was a congressman, and in 1941 he basically stated the Federal Reserve Bank buys government bonds without one penny. Or, a quote from the Boston Fed, one of the Fed members, when you or I write a check, there must be sufficient funds in our account to cover the check. But when the Fed writes a check, if there is no bank deposit in which a check is drawn, when the Fed writes a check it is creating money.

Ed: That's right. And so there's no secret about it, if you want to dig into the you know, into the record, it's all there except people shake their heads and [they say] I don't believe that. Because you know, if you or I were to do that, we would go to jail. But the Federal Reserve System can do it is because they're in partners with the government. They're in partnership and they're supposed to do it. That's the reason that it's there, that's why the government likes them so much.

It also get quoted that a lot of flag waving, Ed maybe you can explain how it trickles down into the banking system, because once it gets down there the flag waving is kind of disappearing it a little more like you and me in our basement loaning it out to our buddies and charging interest off our counterfeit money.

Ed: Exactly, I'm glad you brought that up because what I mentioned so far, the creation of money out of nothing for the Federal Government is just the tip of the iceberg. That's the reason the Federal Government is in the partnership but what's the reason that the banks are in it? And now we get to this larger picture. Let's just assume for a moment, we're going to follow one thousand dollars from that billion dollars that was created out of nothing for the Federal Government. Let's follow one thousand dollars of that and see where it goes and what happens to it. Well, let's say that thousand dollars is given to the postal worker that delivers our mail, he gets a paycheck, and he says, "oh this is great, I got a thousand dollars," and he doesn't know, he can't imagine that that money didn't exist previously, before it was written into his check. He thought it was always there somewhere, he got somebody else's money, but it's new money. But it doesn't make any difference to him, he's got a check, a government check, it's very cashable. So he takes it down the street to his local bank and deposits it into his private checking account. Now it's out of the Federal Reserve's system and the government cycle and it's into the commercial banking cycle. Now this is where the heat really turns up. A thousand dollars is deposited into the local bank. If I were the president of that bank, I could go step forward into the lobby and say to the people there, "attention everyone, I have some good news. This gentleman over here just deposited a thousand dollars into our [...] bank and now we have money to loan," and everybody would be so happy to hear that because when the bank has money to loan, that generally means that if it's a lot of money to loan interest rates go down and a lot of people go to the bank, not to put money in, but to take it out in the form of loan. And so they say, "that's great." So let's assume you were in the room and you said, "well, a thousand dollars, that's not very much, I was looking at this used car down here and I need 9 thousand dollars, so I guess you can't help me." If I were the president of the bank I'd say, "oh don't worry about it sir, I can loan you 9 thousand dollars," and you would say, "but you just told us that you had a thousand dollars deposited. How can you loan 9 thousand dollars on one thousand dollars?" And I would say, "well, if you're really interested, you ought to go to school and get a textbook and read about it, but let me assure you sir, that it is entirely possible," and indeed it is because they're in partnership with the federal over the Federal Government. The government allows them to create one, to create 9 thousand dollars for every one thousand dollars that's deposited. Up to 9 thousand dollars. And so, the bank can in fact loan 9 thousand dollars to you for that used car and it still has it's one thousand dollars in the bank, it keep that and puts it under a column called reserves, and just label it reserves. That gives them the privilege to create 9 thousand dollars out of thin air and loan it to you and now you will have to pay interest on nothing for that 9 thousand dollars.

That is such a huge point for anyone to understand, because I would guess that 99.9 percent of Americans are unaware of this, and unaware of what [you] in effect have practically there have described fractional reserve banking. And could you take 10 seconds and really sort of elaborate on, people I think people really believe that if their money's there, the money's all there in the bank.

Ed: Yeah, well l0 seconds is a short time [laughs] I can do it in 10 seconds, I'll just say fractional reserve banking is a fraud. Any questions?

That's the Cliff Note but what, is you're money when you put ten thousand in the bank, is your money really there?

Ed: No. They call it fractional reserve because by law with the Federal Reserve System banks are only required to keep a fraction, or a percentage, a small percentage in reserve to back up all of the money that they have loaned out. Theoretically, you know, people think that if they put a thousand dollars in the bank and deposit, the bank says okay, we'll keep this for you under protection and you can have it back any time you wish because this is a demand deposit, we're going to give you a checkbook as a matter of fact. You give us a thousand dollars, we'll give you a checkbook, which means you can write a check for that thousand dollars any time you wish. That implies that the bank is keeping your money there, so that when you write the check, they can honor your check. But the fact is that they turn right around and they loan that money out, or they use it as a reserve and loan out 9 times that amount of money all backed up by that deposit of yours.

Now, to carry it one step further, let's say they did lend me that 9 thousand dollars, and I walked down the street and took it to deposit it in another bank, 9 thousand dollars. What could they do with that money.

Ed: The new bank? Well, that's easy, they say, "here's 9 thousand dollars, we'll put that as a deposit into our bank and now we can loan 9 times 9 thousand dollars on that one." So, that bank creates an additional factor of 9 to 1...

81,000 in new money.

Ed: 81, 000, and that goes down the street to the next bank and they do the same thing. And that is how money comes into creation in most of the world today.

So, taking the bigger picture of this, one of the reasons then that this all needs to be supposedly backed up in the first place is that really, if people were to go get their money all at once, there'd be nothing there. And hence the justification, it's almost like literally they're creating the problem that they're purporting to solve.

Oh they do create their own problem, yes. That's why they want the Federal Government involved to protect them when the nasty stuff hits the fan, as it always does. They need to call back to the Federal Government and say, "help, bail us out of this one." That's what happens.

You make the point in your book and again, this book is excellent, it really should be a textbook too. It's not only an intriguing read, it is so well written in explaining clearly, even to someone who is not familiar with the banking system what is really going on. But I think your main premise and one of the toughest things for anyone to get the old brain around, and you've basically eluded to it right here, that all money is created, is based on debt and that if everybody paid down their debt there would be no money under the current system.

Ed: That's correct. It's an amazing and depressing thought that, and I'll just repeat what you said, because maybe your listeners won't believe that they heard it right. But, it's true, if all of the loans were paid back today, there wouldn't be one penny of money in circulation because 100 percent of all money out there is, came into being because somebody borrowed it from a bank. So that means that if the loans were paid back, including the national debt, and all the private loans were paid back there would be no money in circulation and the economy would collapse. So all these politicians talking bravely about let's reduce the national debt, let's reduce that, they talk out of one side of their mouth but, they support a system that makes it impossible to do that.

Mr. Griffin, so would you say politicians in a central bank are pro gold and silver, or not pro gold and silver? Ed: Well, central banks certainly are not pro gold and silver in the hands of the common man, they like to have the gold and silver in their vaults, because they know it has intrinsic value and it gives them great economic and political power in the world. But they don't want you to have it and they don't want me to have it because then we might use that as a means of exchanging value and services instead of the fiat money system they have created. So, the bankers hate gold and silver as a basis for backing up money. And the politicians, at least the ones who are subservient to the banking interests, will certainly go right along because they're just the little lackeys, they're the puppets, they would never dare step out of line on that because they would incur the wrath of their banking masters that they would no longer have the funding, they would no longer have the favorable media, they would no longer have the support in the political parties for nominations and they would be out of office. And so the majority of the politicians sense this, they may not understand all of the details, but they know that they can speak, they can speak up on a lot of issues, but they may not, must not shall not speak up against the Federal Reserve System or they'll be politically assassinated.

I think it's important that our listeners also understand that as an alternative, more of a storage of gold system originally in it's origins going way back, maybe you can just touch quickly on the history of how that differentiated from fractional reserve and fiat currency, it's more like the housing of grain, you get a receipt for grain, you get a receipt for gold, same difference.

Ed: Exactly, that's partial of the fractional reserve story. Banking evolved in the very logical way in which, you have to remember in the beginning money was very simple, it was something of tangible value, and through civilizations all around the world came to the conclusion that silver and gold was the best commodity, has the most qualities that made it most useful as money. And so people were using gold and silver coins and nuggets and so forth as the medium of exchange, which is the definition of money. Well, that's pretty bulky to carry around a sizeable amount of gold or silver, and also you have to worry about defending it and storing it and hiding it and that sort of thing. So, basically what happened historically is that those with a substantial amount of gold or silver would take it to a goldsmith, a jeweler because they dealt with this stuff all the time and they had vaults and they had in many cases they had warehouses with guards, and they were prepared to protect the precious metals. So people would go to the goldsmiths and say, "what would you charge me to store my gold with you?" And the goldsmith would say, "well, not very much, I'll charge you a reasonable amount just to help pay for the guarding of it, and I'll give you a receipt. You give me 10 ounces of gold and here I'm going to write you a receipt, it says I owe you 10 ounces of gold, that you own 10 ounces of gold in my vault." So now the guy no longer has gold, he's got a piece of paper, it's a receipt, and it says I am entitled to 10 ounces of gold. That works fine, he's wants his gold he goes back, give the receipt to the jeweler and he's got his gold back. Then after the passage of many, many years somebody figured out, well you know, I want to buy a cow over here or a herd of cows and I don't want to go get the gold and give it to the present owner, I'll just give him my receipt instead. And the present owner of the herd of cows looks at the receipt that says, "the bearer of this receipt is entitled to 10 ounces of gold," and he knows the jeweler that issued the receipt, and he says, "yeah, I'll take the receipt instead of the gold, because I know that I can go get it any time I want." And so now a piece of paper moved from one hand to the other in return for the herd of cattle and that was the beginning of paper money, the passing around of receipts. And of course the necessary quality in that transaction is that that receipt is good for something of tangible value, it's good for 10 ounces of gold. And so for a long time, people were exchanging receipts for gold or silver and that is how paper money began. And the reserve was 1:1, if the receipt said it was good for one ounce of silver or one ounce of gold, it was good for one ounce of gold, or one ounce of silver which was in the vault and it was guaranteed by the jeweler.

I think it's just as important also to point out that the receipt was as good as the reputation of the jeweler too.

Ed: Exactly yes, and they had their name on it and not anybody could do that, you had to have a reputation as you say. You had to be known in the community. But, given those conditions, those receipts, those paper receipts were as good as gold, because they were backed by gold. Well that's how it all started and I think a lot of people know this story. But what they may not know is how the transition was made from a condition in which those paper receipts were backed to one on one, to where all of the sudden they weren't backed one on one. But the receipt, that there were two receipts for every ounce that backed it, and then three receipts for every ounce that backed it and then five receipts. And the way this came about is that the jewelers figured out that hey, we've got all this gold sitting here in our vault, and those people never come in here, or very few of them come in here and ask for their gold, why should we just let it sit here in our vault? Why don't we loan some of it out, and make an interest on it? Now, of course it doesn't belong to us, we promised we're keeping it here for them, but they never come in and ask for it, so why shouldn't we judiciously and very cautiously and conservatively loan some of it out and earn interest on it, put it to work. And so, now all of the sudden, what they would do is issue another receipt. There's only one ounce of gold but now they've issued two receipts on it. And they loaned that one receipt out. Now we have fractional reserve banking. Because there are two receipts for every ounce of gold and as I said before, could be three and four, and nine and so forth.

And it's not as if the depositor of the gold said, "okay, I'm going to leave this gold there with you for 5 years, do what you want with it," contractually or something like that. This is, that depositor expects to be able to cash that receipt at any given time.

Ed: Exactly, and that's the myth of the banking system. When you put money into the bank, of course you do have an option. Today you can put it into a time deposit or a demand deposit. Most people don't know the difference, when they do they just don't think about it. A time deposit is like a CD. You put your money in and you know that you may not be able to demand it instantly. You may, the bank or the saving institution may require a 30-day, 60-day or maybe even a one year time on it before they guarantee to give it back to you. Nothing wrong with that by the way, because everybody understands that their money is being invested, it's being used and they're not entitled to have it back. And that's what they give up in order to earn interest on it. But when people put it into a demand deposit, such as a checking account, and that's where most of it goes, at least a lot of it goes there, they are given the impression that it's there just waiting for them to write a check on it. And that's where the fractional reserve banking comes in.

And it's interesting you know moving hundreds of years in advance of the 1800's and 1900's, banking is the only industry that seems to be exempted from that rule. If you, back in the 1850's you know, a lot of the banking, there were wars going over whether, or big battles in Congress going over whether banks would have certain rights or not but they always seem to get exempted, whereas if you deposited a ton of grade A wheat and the granary ended up issuing fraudulent receipts out there, they'd go to jail. And, yet bankers somehow have always managed to exempt themselves from those rules.

Ed: Well, you're absolutely right, and the active word there is somehow. The reason bankers can exempt themselves from those rules is because bankers go into partnership with the government. And so they bring politicians into the cartel with them. And now the politicians have invested interest in the, exempting the bankers, their partners from those rules. And it's very profitable to the politicians, the bankers are shrewd, they reward a cooperative politician exceedingly well.

There are, the title of the book, The Creature From Jekyll Island, I think maybe you can talk a little bit about in history of some of the things we've seen with bankers doing, I mean, we've talked about the swindle that's going on basically. That essentially they're exempting themselves from what otherwise would be a fraudulent transaction. That's all fine and dandy but, maybe you can just get quickly get into, you know, some of the things that we've run into historically where you know, bankers have basically done things a lot worse than that relative to you know, wars and so forth. I think it's an important point to because, again when you talk to individuals about this, you know unless you're reading this book, when you talk about this subject, you know Harry Truman said, "there's nothing new in the world but the history you do not know." And the typical perspective is, you know, we're probably really miseducated in school, and everybody knows that oh there was a depression, a one time depression back in the 1920's and it's been fixed. But really, taking a look at this book, for the first time and I'm ashamed as also, and not only some of the law degree but a history degree also, I did not know that our history in the 1800's and the 1700's is rife with central banks or banks printing money and really screwing up the economy.

Ed: Yes, that's, you'd almost be tempted to call it the hidden history of the United States.


Ed: And I don't think that would be an exaggeration to do so. Because it is hidden, well you might argue whether it is hidden or just lost, that's a little different twist on it. But the fact is, it's not there. And it's very important history, the things we're talking about have been going on since day one with the creation of our republic. And, I didn't know when I started this research that the Federal Reserve System was not the first time our country had gone through this dilemma, this challenge. We've had a couple of times before, in fact we even had a central bank at the very time the constitution was drafted. And it was eliminated and there was another one started and it created money out of nothing and it created all kinds of havoc to the economy and it was bounced...

Why were they bounced?

Ed: Well, they were bounced because they did exactly what they were promising to do. They created money out of nothing to loan to the Federal Government, and this created inflation, this created more monetary units out there, dollars if you want to call them that, claims against the deposits than there were. And then there were runs on the bank and then the banks had to close down, they had to admit that they had issued more receipts than they had on deposit, and people lost their money and it was an awful situation to think that you had money in the bank, your life savings and you went to get it and they said, "sorry, we can't give it to you, we don't have it," [audio recording repeats 2-3 lines]and so this was politically unpopular and there was a lot of voter opposition to this kind of a condition and they just got rid of those banks. The politicians responded to the will of the people, and they got rid of the banks. President Jackson, Andrew Jackson had a big war against the central bank of the United States. And he almost got voted out of office because of it. But anyway, he put his whole political career on a battle against the central bank.

And, his life pretty much.

Ed: His life yes. It was a vicious battle and it's amazing when you read that part of the history that he won. Of course it wasn't just him, he was the leader of the battle, there were a lot of people that didn't want the central bank. But they almost ruined the United States, because the guy, the head of the central bank at that time was a fellow by the name of Bittle and he went on record and said, "we're not going to give up control of the economy of this country, we will wrack it shake it and break it before we give up," and he did. He started to increase the money supply and then he artificially decreased the money supply, he created booms and busts and created all kinds of economic havoc so that he could say, "you see, that's all the results of President Jackson trying to eliminate our bank. Look at all the turmoil that he as created while in fact it was Bittle himself who was creating the turmoil in order to frighten the American people into not getting rid of the central bank. It as almost an accident that that became known, but it did through some courageous newspaper reporting and some defectors from the central bank itself. All of the sudden the public became aware that it was Bittle himself that was causing the panics and the expansions and contractions and the bankruptcies. And once that became common knowledge well then the public support went behind President Jackson and he and Congress were able to eliminate the central bank. It was a life and death battle and yet you won't find it, or very much of it in the history books today.

Never learned it and hence the reason for the whole clandestine meetings and the secrecy in creating probably what the forth or fifth United States central bank in existence, which is our Federal Reserve. The history was definitely there, they knew that they had to do it surreptitiously, they just couldn't do it above board because they didn't want to draw the attention. Ed, to shift gears here quickly we're kind of running toward the end of our time here, you know, one of the points I was alluding to earlier is that you know we have this swindle premise, we know that there's definitely the element of earning money for nothing, people left holding the bag when a bank collapses and there really is nothing there. What about things like you now, that's like the Lusitania damned ugly businesses and WWI, the bankers involvement and that kind of thing. What surprised the heck out of me, and I had read Rothbard's books on money and so forth prior, but I had never really understood the degree, or rather the lack of national loyalty that the bankers essentially have. I mean these are monetarists, they're loyalty seems to be the banking almighty, you know making a buck. And maybe just, you know we're kind of running short on time, we only have a few minutes left, but give a quick synopsis of what happened with Lusitania , WWI and that kind of thing relative to the bankers.

Ed: Oh, okay, that's, boy that's an interesting piece of history.

i.e. why did we get into WWI?

Ed: Well, there were a lot of reasons for getting into WWI and it depends on whose skin you were inside. President Wilson wanted to get into WWI because he wanted to be at the peace table at the end of it. And to create, what we would now call a new world order. He referred to it bluntly as a world government, the League of Nations. And he knew that if the United States had not been an active participant, a leading participant in the war then it would not be entitled to recreate the world after the war, and set up a world government. And that was his primary motive. World government based on the model of collectivism. Other people like J.P. Morgan had perhaps a similar view, but they had a personal view and that is that his banking consortium had loaned, well he was the main agent in the United States for generating Huge Loans to France and England, war loans. And as the war began to go badly for France and England and it looked like they would have to sue for peace, or that the Kaiser might even win the bloody war, what would happen to all of those loans, they would go into default, and all the people that invested in war bonds for France and England, would be wiped out, they would lose their money completely. So, J.P. Morgan had this extra motivation to get the United States into the war in order to make sure that England and France didn't lose the war. Of course J.P. Morgan also was sitting there as the, in the center as the agent to spend the very money, this is interesting, he raised the money to loan to England and France and then England and France sent the money back to the United States to manufacture war goods and supplies and he was the agent that determined who go those contracts. So he made his commission as the money went out of the country and made another commission as it came back into the country. So, J.P. Morgan and his associates had a lot of the financial gain to see that the United States got into WWI. And, so I think that's a good start for a discussion like this, it wasn't just to make the world safe for democracy that's for sure.

Very interesting material. Well Ed, there's so many other things we'd love to talk about, of course we're running on longer than we hoped that we would have to go. But [...] bail out and how we talked about central banks enable you know, pretty much keep banks off the hook for any of their blow ups for doing this kind of thing and now Chrysler was a great example but, you know Ed, maybe you can bring us up to speed with what you're up to these days, tell us a little bit about your web site, where people can get your book and some of the initiatives you have on the side of freedom that I think are kind of interesting.

Ed: Well, yeah, thanks for an opportunity to talk on that because that's very near and dear to my heart. First of all, to wrap up the topic of the Federal Reserve and related topics, we have several web sites, the commercial site where we have all of the books and the videos and the audios that we have on these topics is called The Reality Zone. That's pretty easy to remember so it's just www.realityzone.com, and we have over a hundred titles there and I think you'll find most of them very, very interesting. We also touch on the field of health and nutrition, we have a very strong interest in alternative medicine, defined primarily as healing without drugs. Now, what am I spending most of my time on today? I came to the conclusion a few years ago that it's pointless to know about these things, to have all this knowledge, to have read all these books and to understand what's going on in the world if you don't do something about it. And just writing to your Congressman, or signing a petition is not going to change it because these guys pretty much are in the hip pocket of the elitist that we're talking about. So what we're basically doing is writing letters to our opponents. And I looked at that for a long, long time and decided that we have to replace these people who hold the power over us. And it's not just political power, I mean, we're talking about a broad spectrum of power centers in the United States. And elsewhere in the world. Labor Unions, political parties, teachers associations, civic clubs, you name it. The power centers of society are those influential groups and organizations to which the masses belong, and they look to the leaders of those organizations to provide a direction. And in every case you know, look at those most important organizations you find that at the tops there are people who are beholden to the elitists that we are talking about. And that didn't happen by accident, it was part of the plan and it has taken a long time to implement that plan, but they've succeeded. And we're not going to change anything, we're not going to turn anything around unless we replace those people at the tops of these power centers of society with people who really have not axe to grind except freedom. They have no personal agenda's except to restore freedom to their respective countries. How do you do that? A few years ago, I created an organization called Freedom Force International. Perhaps someday we can talk about that as a topic.


Ed: But we don't have time for it today except to say that it's an organization, we now have members in 30 countries, and these people are all concerned about the decline of personal freedom in their respective countries. And the growth of government power and the denial of basic freedom of choice in every area. Not only money, but health care education, everything. And we are determined to do something about it, we have a plan and our goal is not just to complain or petition but to actually acquire control or at least influence in the major power centers of society. So anybody who is interested in participating in that epic challenge, I urge you to come to our web site and check it out, there's quite a bit of material there. And the web site is Freedom Force International and that's the three words all spun together as one, so it's www.freedomforceinternational.org and I urge you to become active and join with us and let's make a difference in the world.

Yeah, we'll definitely contact you, maybe elaborate about that in the future for maybe a future show Ed. And I can tell you as a, myself I'm a former chair of the libertarian party of the Pittsburgh region for a number of years and boy, there certainly needs to be alternatives to the political route, because that's the frontal assault on the castle and I'll tell you what, those walls are pretty high when you're dealing with Republican and Democrat machine you're really showing up to a gun fight without even really a knife. And there definitely has to be other approaches to you know, for people who truly believe in freedom and the right to consent. And that's the fundamental thing that we take for granted, tying it right back into the Federal Reserve System, what we've lost there is the right to consent what currency we use and to basically have a free choice as to what maybe doesn't erode, I mean people don't realize that 97 percent of the purchasing power of the dollar has vanished since the creation of the Federal Reserve whereas generally it retained evenly with some ups and downs over the prior 100 years. That's largely because there was at least competition there. But Ed, I want to thank you so much for being with us today, and oh boy, this is such a big subject, it's great material, keep up the good work and thanks for being part of the show.

Ed: Well, thanks for inviting me and I know you fellows are doing a great job, don't let them grind you down.

I appreciate it, you too, okay?

Thank you.

Ed: Bye

Bye bye.

Well that's, talk about a comprehensive subject that, boy you can cover you know, hours and hours and hours on it and to be honest with you we didn't even scratch the surface of the book it's pretty extraordinary in that, you know geez, if we didn't get into a lot of what the Federal Reserve had engaged in some of the relationships with some of the people who were the bankers and creating things that went down during WWI. I mean the Russian Revolution, there all sorts of material in there and I really, highly encourage folks to take a look at The Creature From Jekyll Island, and we'll have a post up there on our web site with a link to where you can get the book and to Ed's site as well at The Reality Zone and so forth. But, oh boy, you know you start digging through these things and you see them for what they are and granted this stuff really sounds conspiratorial. I know that a lot of people look at you and they say, "you know what are you talking about with this kind of stuff," sometimes, you know you're really getting off on a tangent here you're supposed to be focused in on the financial side of things and here you are talking about what the Federal Reserve and the banking system really are on the up. But I think it's crucial that people expand their perspective. And the very reason why we created the vigilantinvestor.com was specifically so people could connect the dots and broaden their perspective relative to the financial big picture. For the better part of 20 years, from 1982 to 2000, and to today even, people have focused almost exclusively, or have gradually come rely on the system as more or less self-healing, it takes care of itself it takes care of you, you don't have to worry about it, Alan Greenspan was in charge for all those years and good old Uncle Al took care of all of us and we had nothing to worry about. And now we got, you know Uncle Ben is now here for us and he's going to, you know, a little worry at first when he first arrived, but boy this guy seems to be in charge of everything and it will all work out we don't have to worry about anything. But between the lines there's all this information that suggests that there are some serious structural problems out there, we're in the midst of a housing bubble that's beginning to deflate. You start looking at the levels of debt in this country and all these other things that are compounding and yet people act as if it's a non-issue. And it's kind of ironic that just minutes ago I had a colleague of mine e-mail an article from the New York Post, and we'll make sure to post this up for everybody to take a look at. And the title is U.S. Treasury is Quietly Doing the Fed's Work it's a John Crudele article if you are already reading his material from the New York Post. He tries to keep his ear to the ground relative to what's going on with the Federal Reserve. Definitely not your conventional, you know, sort of guy who goes along with what everybody else says, he's definitely not the consensus kind of guy, he's always trying to pick apart and look under every rock and we like that. One of the conclusion is that, and I'll just read you a little verbatim here, we'll make sure to post this like I said, "experts worry whenever there's too much money, liquidity in the financial system because it can lead to things like price spirals in the housing market, bubbles and stocks but even more worrisome for the financial markets than too much liquidity would be an inability to track the amount of money being pumped into the financial system." And he says, "unless I find out differently, it looks as if the treasury has created a way to duplicate the Fed's power and that is a disturbing possibility unless somehow it is monitored." And it's not just along with the Fed, or own it's own, I mean it is along with the Fed, these things work together as the banking system, the banking system enables this to happen, you can read that article a little more in depth as to what's going on. But, I tell you what people don't realize the amount of money supply getting cranked out there, and you just can't do it forever. It's like expecting a free lunch to keep paying and paying for you without ever having the bill come through. So, well we've hit about 5 thousand million things today with this subject, it's broad, there's so much to it. Stephan, do you have any comments as we wrap up here? I see that you're still here online, are you with us?

Stephan: Yeah, I think that it's a darn intriguing subject and think the thing to really point out is sometimes when people listen to this it's overwhelming and they throw up their hands and they say well what can I do? I cannot you know overthrow the Fed, we can't get rid of the Fed. But I think the most important thing to remember is the ability to inflate is there and the ability for the government to spend and create money is there and the trend is continuing and it seems to be accelerating. And I think what we want to discuss in future shows is really how to protect yourself and take advantage of that.

I'd agree Stephan and I think that more than anything I want all of our listeners to just really begin questioning, if you're reading your money magazine and you're reading all the articles you get from most of the popular media, they're not asking to ask any questions, auto pilot, buy and hold and sayonara and it will all work out in the end. This is Johannes Ernharth, with Stephan Ernharth on vigilantinvestor.com. Tune in all the time and make sure to subscribe is you want to, there are all sorts of links on our web site, if you click on the Vigilant Investor Podcast link, or you go to our Talk Shoe site you can subscribe via iTunes and have this kind of material automatically updated to your iTunes system or you can subscribe also to our RSS feed and you will pretty much have a download as soon as our material us up and ready for download and you won't have to go and manually chase our mp3 files. So, all said and done, thanks again for listening, a very long show today, a lot longer than we usually go, but I think it's a great subject. Tune in next week, we'll have Doug Wakefield on the show and we're also talking, Stephan and I have been about maybe doing some shorter, very condensed shows, just so that we don't have these hyper long you now, buck 18 length shows we're about an hour and 18 minutes. I'm looking at our recording right now so, by all means everybody tune on in I see we have a few people listening in today through the site and I lost a couple because of the, apparently our link on Talk Shoe got crashed, too much traffic, too many people listening on in and well here we are so...everybody tune in next week, and if you happen to be, log into the Talk Shoe interface, feel free to stick around and type some questions, we're not going to cut you off and carry on the discussion. Everybody, take care, have a great week.

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