The Creature from Jekyll Island

A Second Look at the Federal Reserve

Book by G. Edward Griffin

Review & Article by GlobalMacroForex

This is the best book I have ever read on banking and central banks.  The focus is very little on the mechanics of how the Federal Reserve works, and more on the history, context, and effects of central banks.  There are so many shock surprises that you’d be skeptical to believe a word of it were it not for the ample proof and sources this author provides.

The book covers topics including:

·      The Birth of Central Banks

·      Perpetual War

·      Lusitania Sinking

·      How JP Morgan funded the Bolsheviks

·      The Modern Federal Reserve and FDIC

Let’s dig in…

The Birth of Central Banks

Fiat money started in China.  As Marco Polo wrote he was surprised the Chinese would accept the Chinese emperor’s paper backed by nothing.  Fiat means worthless other than governments declare you must use it, which will always be the case once you learn how it works.

In 1609, the Bank of Amsterdam was formed.  In 1619, the Bank of Venice (Banco del Giro)  joined the list.  Throughout the 15th and 16th centuries, many of these banks were created and failed, all of them revolving around creating worthless paper from the overextension of credit until people wouldn’t accept the quantity the banks created  (until the Bank of England which was more unique).

King Charles II of England repudiated over a million pounds of debt.  This was fresh on everyone’s mind in 1693 when King William III wanted to borrow more money for a war with France, which he was currently losing.  Nobody trusted him, so he had to resort to other measures.

The King’s strategy was to make it seem like a different group of bankers wanted to lend him money —  a group that wasn’t directly part of the King’s government.  This other group could issue “money notes.”  Now people would trust notes from these external bankers when previously money directly from King William III had little trust/value.  So the Bank of England was formed to loan to the King, which could be paid with interest through tax revenues.

“The reality of central banks, therefore-and we must not forget that the Federal Reserve is such a creature-is that, under the guise of purchasing government bonds, they act as hidden money machines which can be activated any time the politicians want.  This is a godsend to political scientists who no longer must depend on taxes or good credit of their treasury to raise money.  It is even easier than printing and, because the process is not understood by the public, it is politically safe.”

Prices rose 100% in 2 years, and gold convertibility (the initial draw to use the money) was suspended.  Although when the Bank of England was first formed, they didn’t have a monopoly on the money supply, people voluntarily used it and competitors could exist.  It took over 100 years until 1833, when it became “mandatory” legal tender.

 “The monetary scientists, of course, are amply paid for this service.  To preserve the pretense of banking, it is said they collect interest, but this is a misnomer.  They didn’t lend the money, they created it.  Their compensation, therefore, should be called what it is: a professional fee, or commission, or royalty, or kickback, depending on your perspective, but not interest.”

The bankers who loaned the money at the Bank of England were paid on their loans at an infinite interest rate,  since the bankers could just print up money then lend it.  The down payment is zero and the interest rates were high.  The problem was that sometimes governments didn’t want to borrow.  To fix this problem, bankers realized all they needed to do was get the government into a war.  Since a war meant the very government’s existence and survival were threatened, the government would do anything to stay in power including borrowing.  The more debt the government was in, the more it needed to borrow.  The more it needed to borrow, the more the bankers could print and earn money.

Perpetual War

Bankers needed to get the government into debt so they could create money and loan it to the government.  The bankers realized war was the best way to do this.  The problem is that wars require an enemy.  The best option is if there are two equal enemies who fight forever.  This fits the plan perfectly since one can loan money to both sides!

So as soon as the Bank of England was formed.  It funded the following wars:

1689-1697 – War of the League of Augsburg

1702-1713 – War of Spanish Succession

1739-1742 – War of Jenkin’s Ear

1754-1763 – French and Indian War

1793-1801 – War against Revolutionary France

1803-1815 – Napoleonic Wars

According to the author, Edward Griffin, the Rothschild family created a banking dynasty by funding both sides of wars to keep perpetual war/borrowing going.  In 1830 the Dutch fought the Belgians, and both sides were loaned to.  Now some people question the Rothschild situation as a conspiracy theory, but even if you reject a conspiracy, long after their power in Europe faded, influential elite groups continue to follow their model.

Lusitania Sinks!

JP Morgan was the bank doing bond sales for the British and French governments in World War 1.   Not only did he underwrite their bonds, but JP Morgan directly loaned large sums to the British and the Russians.  Here’s the best part; JP Morgan also sold the British weapons, ammunition, and supplies.  So he got money from all sides of the transaction.  He got paid first on the loan, then selling the loan as a bond, and finally receiving those cash flows as payment for war goods.

The problem was the allies were losing World War I to Germany U-boat submarines, so nobody wanted to buy these bonds anymore.  If the British lost, JP Morgan would lose his loaned money.  So JP Morgan purposefully influenced America to join the Allies to sway the war in the Allies’ direction.  To do this, JP Morgan had the ship the Lusitania sunk in 1915 (according to the author).

Despite US President Woodrow Wilson’s promise to keep America out of the war, the Lusitania was carrying smuggled ammunitions on board, which was a direct violation of America’s neutrality.  The Germans knew about the weapons and, in 50 East Coast newspapers, issued multiple warnings to Americans not to get on the Lusitania.

Years later, in 2008, divers found millions of rounds of ammunition in the Lusitania.  Sam Greenhill from the publication Mail Online explained,

“The diving team estimates that around four million rounds of US-manufactured Remington .303 bullets lie in the Lusitania’s hold at a depth of 300 ft.”

In 1915, the Lusitania had a bodyguard ship, a destroyer, which suspiciously Winston Churchill (then Great Britain’s then First Lord of the Admiralty) ordered to abandon guarding it right before the incident. The Lusitania reduced speed to be easily hit and there was a second explosion from within.  The second inside explosion explains how the Lusitania, one of the largest ships ever built, sunk completely in just 18 minutes.

The Woods Hole Oceanographic Institution (which is funded by the US Government via the National Science Foundation) surveyed wreckage in 1993 and found:

“There was no hole.  We found no evidence that U-20 torpedo had detonated an explosion, Undermining one theory of why the liner sank.” 

This lack of a torpedo hole is strong evidence, when combined with multiple statements from surviving crew members, that there was an internal explosion.  When the Lusitania was hit, America entered the war and the Federal Reserve was formed that same year.  What a coincidence; the US dollar’s value rapidly depreciated the following years.

JP Morgan funded the Bolsheviks

You may find it hard to believe, but in addition to dragging America into World War I, JP Morgan and other New York and British bankers funded the Bolshevik revolution at the same time.  This is so shocking because at the time Russia was fighting AGAINST the Germans, and the Russian Revolution compromised Britain’s ally’s commitment to the war. 

Financier William Boyce Thompson was sent by the banking community under the guise of the Red Cross.  This is a photograph of a cablegram from JP Morgan to Thompson advising that the money had been transferred to the National City Bank branch in Petrograd.

Mr. Thompson says he was there to ensure that Russia stays in the war, but author Edward Griffin proves that Thompson funded both the temporary government of Kerensky (which was for the war against the Germans) and the Bolsheviks (who were against war against the Germans).

Edward Griffin points out how Leon Trotsky was arrested after leaving New York City, but was quickly released.  In Trotsky’s book, My Life, he admits to receiving a large loan from the British.  In addition, once the Bolsheviks took control, banks and other businesses owned by this group of New York and British bankers (including JP Morgan) were the only ones that weren’t nationalized.

Edward Griffin argues that the bankers funded the Communists so that there could be a perpetual war between America/Britain and the future Russian government.  This conflict would provide the excuse for more debt and power.  Griffin demonstrates that New York bankers didn’t care if they loaned money to Communists.  Thomas Theobald, Vice-President of Citicorp in 1981, was asked about loans to Communist Poland.  Poland’s regime had brutal oppression of trade unions.  Theobald replied “Who knows which political system works?  The only test we about is, can they pay their bills.”

Modern Federal Reserve

Following the example set by the Bank of England, the US Federal Reserve creates money and buys government bonds, altering the interest rate.  They do it through “primary” dealers who get to flip the bonds like drug dealers.  This means all “base money” comes from US Treasury debt.

As we covered in a different article on how fractional reserve banking works, while all base money is a debt owed by the US Treasury via bond sales, the other 90% of the money supply comes from fractional reserve banking loans.  This means if all the debt, both public and private, was paid back, there would be not one dollar in existence.  All money is some claims to someone.  This means that money itself is a bank loan for private gain, but socialized losses through the FDIC.

FDIC insurance pays when a bank is bankrupt, thus ensuring depositors do not lose their money.  Edward Griffin argues it’s fundamentally unfair because smaller banks’ only got reimbursed up to $100,000, while as larger banks get every dollar of every deposit.  This unequal treatment is justified by saying that the large banks are a “systemic risk” or “too big to fail.”

Edward Griffin demonstrates how all banks are too big to fail.  Because they all have the same reserves restrictions and lend to each other, all the banks will fail at the same time. The same reserve requirements reduces the ability of a “prudent lender” to compete.  Griffin goes over numerous examples of huge banks bailed out by the Fed throughout the 1980s, 90s, and today.  By the very nature of fractional reserve banking, banks all fail at the same time, since the money supply itself is dependent on their survival.  The banks know the government will step in to help them, and no individual bank will be blamed for the crisis.


I highly recommend this book because it has such a wealth of information, and I can’t possibly cover it all.  However, the main premise of the book is that central banking exists to extract wealth from taxpayers when there is a failure.  In addition, central bankers promote perpetual war to enslave the government to its lenders.  Usually, both sides of the war are armed, from ancient Europe to the US vs. the Soviet Union (extended even into modern Iraq and Syria where we arm both Sunni and Shiite Muslims).

Central banking is a tool for corrupt slavery of the masses.  Only when we abolish it will we be truly free.