Chapter 3:How successful has the Federal Reserve System been? It depends on your point of view. Since Woodrow Wilson took his oath of office, the national debt has risen from $1 billion to $455 billion. The total amount of interest paid since then to the international bankers holding that debt is staggering, with interest having become the third largest item in the federal budget. Interest on the national debt is now $22 billion every year, and climbing steeply as inflation pushes up the interest rate on government bonds. Meanwhile, our gold is mortgaged to European central banks, and our silver has all been sold. With economic catastrophe imminent, only a blind disciple of the “” could believe that all of this has occurred by coincidence.

When the Federal Reserve System was foisted on an unsuspecting American public, there were absolute guarantees that there would be no more boom and bust economic cycles. The men who, behind the scenes, were pushing the central bank concept for the international bankers faithfully promised that from then on there would be only steady growth and perpetual prosperity. However, Congressman Charles A. Lindberg Sr. accurately proclaimed: “From now on depressions will be scientifically created.”

Using a central bank to create alternate periods of inflation and deflation, and thus whipsawing the public for vast profits, had been worked out by the international bankers to an exact science.

Having built the Federal Reserve as a tool to consolidate and control wealth, the international bankers were now ready to make a major killing. Between 1923 and 1929, the Federal Reserve expanded (inflated) the money supply by sixty-two percent. Much of this new money was used to bid the stock market up to dizzying heights.

At the same time that enormous amounts of credit money were being made available, the mass media began to ballyhoo tales of the instant riches to be made in the stock market. According to Ferdinand Lundberg: “For profits to be made on these funds the public had to be induced to speculate, and it was so induced by misleading newspaper accounts, many of them bought and paid for by the brokers that operated the pools…”

The House Hearings on Stabilization of the Purchasing Power of the Dollar disclosed evidence in 1928 that the Federal Reserve Board was working closely with the heads of European central banks. The Committee warned that a major crash had been planned in 1927. At a secret luncheon of the Federal Reserve Board and heads of the European central banks, the committee warned, the international bankers were tightening the noose.

Montagu Norman, Governor of the Bank of England, came to Washington on February 6, 1929, to confer with Andrew Mellon, Secretary of the Treasury. On November 11, 1927, the Wall Street Journal described Mr. Norman as “the currency dictator of Europe.” Professor Carroll Quigley notes that Norman, a close confidant of J. P. Morgan, admitted: “I hold the hegemony of the world.” Immediately after this mysterious visit, the Federal Reserve Board reversed its easy-money policy and began raising the discount rate. The balloon which had been inflated constantly for nearly seven years was about to be exploded.

On October 24 [1929], the feathers hit the fan. Writing in “The United States’ Unresolved Monetary and Political Problems”, William Bryan describes what happened: “When everything was ready, the New York financiers started calling 24 hour broker call loans. This meant that the stockbrokers and the customers had to dump their stock on the market in order to pay the loans. This naturally collapsed the stock market and brought a banking collapse all over the country because the banks not owned by the oligarchy were heavily involved in broker call claims at this time, and bank runs soon exhausted their coin and currency and they had to close. The Federal Reserve System would not come to their aid, although they were instructed under the law to maintain an elastic currency.”

The investing public, including most stock brokers and bankers, took a horrendous blow in the crash, but not the insiders. They were either out of the market or had sold “short” so that they made enormous profits as the Dow Jones plummeted. For those who knew the score, a comment by Paul Warburg had provided the warning to sell. That signal came on March 9, 1929, when the Financial Chronical quoted Warburg as giving this sound advice: “If orgies of unrestricted speculation are permitted to spread too far the ultimate collapse is certain … to bring about a general depression involving the whole country.”

Sharpies were later able to buy back these stocks at a ninety percent discount from their former highs.

To think that the scientifically engineered Crash of 1929 was an accident or the result of stupidity defies all logic. The international bankers who promoted the inflationary policies and pushed the propaganda which pumped up the stock market represented too many generations of accumulated expertise to have blundered into “the great depression.”

Congressman Louis McFadden, Chairman of the House Banking and Currency Committee, commented: “It [the depression] was not accidental. It was a carefully contrived occurrence… The international bankers sought to bring about a condition of despair here so that they might emerge as the rulers of us all.”

Although we have not had another depression of the magnitude of that which followed 1929, we have since suffered regular recessions. Each of these has followed a period in which the Federal Reserve tromped down hard on the money accelerator and then slammed on the brakes. Since 1929 the following recessions have been created by such manipulation:

1936-37 : Stock Prices fell fifty percent (50%)

1948 : Stock prices dropped sixteen percent (16%)

1953 : Stock declined thirteen percent (13%)

1956-57 : The market dipped thirteen percent (13%)

1957 : Late in the year the market plunged nineteen percent (19%)

1960 : The market was off seventeen percent (17%)

1966 : Stock prices plummeted twenty-five percent (25%)

1970 : The market plunged over twenty-five percent (25%)

Chart 5, based on one appearing in the highly respected financial publication, Indicator Digest of June 24, 1969, shows the effects on the Dow-Jones Industrial Average of Federal Reserve policies of expanding or restricting the monetary supply. This is how the stock market is manipulated and how depressions or recessions are scientifically created. If you have inside knowledge as to which way the Federal Reserve policy is going to go, you can make a ton of money.

The members of the Federal Reserve Board are appointed by the President for fourteen year terms. Since these positions control the entire economy of the country they are far more important than cabinet positions, but who has ever heard of any of them except possibly Chairman Arthur Burns? These appointments which should be extensively debated by the Senate are routinely approved. But, here, as in Europe, these men are mere figureheads, put in their positions at the behest of the international bankers who finance the Presidential campaigns of both political parties.

And, Professor Quigley reveals that these international bankers who owned and controlled the Banks of England and France maintained their power even after those banks were theoretically socialized. The American system is slightly different, but the net effect is the same: ever increasing debt requiring ever-increasing interest payments, inflation and periodic scientifically created depressions and recessions.

The end result, if the Insiders have their way, will be the dream of Montagu Norman of the Bank of England “that the Hegemony of World Finance should reign supreme over everyone, everywhere, as one whole super-national control mechanism.” (”Montagu Norman” by John Hargrave, Greystone Press, N.Y., 1942.)

Editor’s notes:E1. As of early 2006, the U.S. debt to the bankers exceeded $8,200,000,000,000 ($8.2 trillion), and was increasing at the rate of $50,000,000,000 ($50 billion) per month. See the current Treasury report of the national debt.