The-Creature-from-Jekyll-Island-by-Edward-Griffin

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Published: 0101-01-01T00:00:00+00:00

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The Creature from Jekyll Island

http://www.biblebelievers.org.au/jekyll.htm

by G. Edward Griffin

(Available from: The Reality Zone)

Chapter 10

What is the Mandrake Mechanism?

It's the most important financial lesson of your life!

THE MANDRAKE MECHANISM . . . What is it? It is the method by

which the Federal Reserve creates money out of nothing; the concept

of usury as the payment of interest on pretended loans; the true cause

of the hidden tax called inflation; the way in which the Fed creates

boom-bust cycles.

In the 1940s, there was a comic strip character called Mandrake the Magician.

His specialty was creating things out of nothing and, when appropriate, to make them disappear back into that same void. It is fitting, therefore, that the process to be described in this section should be named in his honor.

In the previous chapters, we examined the technique developed by the political JAGCorps Critical Thinkers Resources: jagcorps.co.nr

and monetary scientists to create money out of nothing for the purpose of lending. This is not an entirely accurate description because it implies that money is created first and then waits for someone to borrow it.

On the other hand, textbooks on banking often state that money is created out of debt. This also is misleading because it implies that debt exists first and then is converted into money. In truth, money is not created until the instant it is borrowed. It is the act of borrowing which causes it to spring into existence. And, incidentally, it is the act of paying off the debt that causes it to vanish. There is no short phrase that perfectly describes that process. So, until one is invented along the way, we shall continue using the phrase "create money out of nothing" and occasionally add "for the purpose of lending" where necessary to further clarify the meaning.

So, let us now . . . see just how far this money/debt-creation process has been carried -- and how it works.

The first fact that needs to be considered is that our money today has no gold or silver behind it whatsoever. The fraction is not 54% nor 15%. It is 0%. It has traveled the path of all previous fractional money in history and already has degenerated into pure fiat money. The fact that most of it is in the form of checkbook balances rather than paper currency is a mere technicality; and the fact that bankers speak about "reserve ratios" is eyewash. The so-called reserves to which they refer are, in fact, Treasury bonds and other certificates of debt.

Our money is "pure fiat" through and through.

The second fact that needs to be clearly understood is that, in spite of the technical jargon and seemingly complicated procedures, the actual mechanism by which the Federal Reserve creates money is quite simple. They do it exactly the same way the goldsmiths of old did except, of course, the goldsmiths were limited by the need to hold some precious metals in reserve, whereas the Fed has no such restriction.

The Federal Reserve is candid.

The Federal Reserve itself is amazingly frank about this process.

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