The History of the Federal Reserve

Michael J. Ross writes "Money plays a key role in modern life; in fact, for some people, nothing is more important than acquiring more of it. Yet most people do not know what money really is, how it is created, how its supply is expanded and contracted, and who benefits from those changes. In the United States, the central figure in this ongoing drama, is our central bank, the Federal Reserve, whose history, power, and effects are explored in G. Edward Griffin's fascinating book The Creature from Jekyll Island: A Second Look at the Federal Reserve." Read on for the rest of Michael's review. The Creature from Jekyll Island author G. Edward Griffin pages 624 publisher American Media rating 9 reviewer Michael J. Ross ISBN 0912986212 summary A compelling history and indictment of the Federal Reserve system For the citizens of the United States and several Latin American countries, the "coin of the realm" is the US dollar, which is, in simple terms, created by the Federal Reserve, a.k.a., the Fed. But who created the Federal Reserve, and why? The subjects of banking in general, and the Federal Reserve in particular, would be considered by most Americans to be dry, boring, and of little importance to their day-to-day life. But those same people are endlessly fascinated by how to make more money (with minimal effort, such as the lottery), how to spend as little of it as possible (coupons never go out of style), and how to maximize one's investment returns. Why this disconnect? Why do Americans care so little about the origins of that which they spend a third of their time pursuing, and seemingly another third spending?

Some of these "salary slaves" may understand that their money serves as a store of wealth and a medium of commercial exchange, which makes possible their daily financial transactions without the need for bartering. But, for the most part, they do not understand the critical importance of what is backing that money, if anything; how that money comes into existence, and what debt offsets it; what entities control the supply and distribution of that money; and how those changes can be used to legally steal purchasing power from victims who may not be entirely unsuspecting, but do not truly comprehend how they are getting ripped off.

The typical American, if he or she has given any thought to the matter, would consider the following statements to be true: The Federal Reserve is federal, i.e., a part of the US government. The Federal Reserve is a reserve, i.e., it has monetary savings of real value. The Federal Reserve serves the public, and is not a cartel of private banks serving itself. The US dollar has real value, i.e., it represents tangible wealth, such as gold securely stored at Fort Knox. Inflation is an increase in prices. Inflation is caused by greedy companies, not the US government or the Federal Reserve.

As G. Edward Griffin makes clear in his book, none of these beliefs are true — regardless of how well entrenched they are in our conventional "wisdom." He also explains why the US government and the Federal Reserve have their own reasons for being in no hurry to eliminate this ignorance. Yet these topics are just a small portion of what is covered in his far-ranging discussion of the theory and history of money and banking, particularly within the United States.

Spanning 624 pages, the material is organized into 26 chapters, which are grouped into six sections: "What Creature Is This?" (the Federal Reserve's shameful birth, and the shenanigans of the Fed, S&Ls, the IMF, and the World Bank), "A Crash Course on Money" (money, gold, debasement, fiat money, fractional-reserve banking, and money creation), "The New Alchemy" (the Rothschilds, J.P. Morgan, and banker financing of wars and revolutions), "A Tale of Three Banks" (America's failed experiments with central banking, and the American Civil War), "The Harvest" (the unconstitutional creation of the Federal Reserve, and its dreadful effects, including the Crash of 1929), "Time Travel into the Future" (current crises caused by central banking, how they can be reversed, future scenarios, and what the individual can do regardless). Every one of the six sections begins with a brief summary, as does every chapter, with every chapter wrapped up with a more extensive summary.

The section summaries also appear in the table of contents, which precedes a preface and the author's acknowledgments. These are followed by a delightful introduction — a piece from the British humor magazine Punch, comprising a rather telling exchange between an unusually honest banker and a soon-to-be-disillusioned bank customer. The book contains three appendices: a summary of the structure and function of the Federal Reserve system; natural laws of human behavior in economics; and whether the M-1 measure of money is subtractive or accumulative. The author also provides an index, as well as an impressive bibliography, reflecting his extensive research on the topics. In addition, the author invites readers to join Freedom Force, an organization dedicated to increasing liberty in the United States, curbing federal totalitarianism, and abolishing the Federal Reserve — all through peaceful participation in government, and the shaping of public policy starting at the grassroots level.

The Creature from Jekyll Island is published by American Media, under the ISBNs 0912986212 and 978-0912986210. It first came out in July 1994, and is now in its fourth edition, and its 19th printing. It also has Japanese and German editions, published in February 2005 and August 2006, respectively. On the book's Web page, visitors will find testimonials and comments from readers, updates to the book, a review of the book by Jane H. Ingraham of The New American, and G. Edward Griffin's response to a critique of his book by Edward Flaherty, who holds a Ph.D. in Economics. On that Web page, interested readers can order audio cassettes or CDs of the author's lecture, based upon this book, and produced in 1998.

My only criticisms of the book concern not the material itself, but its production — more specifically, the printing and layout, presumably chosen and thus fixable in the future by the publisher. The generous font size used throughout the volume, makes it easy to read; but the bold text, such as the subheads found in every chapter, is a bit rough-edged — on some pages worse than others. The subheads, already bolded, do not need to be in all uppercase; the publisher should choose one or the other. In addition, the inside margin length is a bit too small, forcing the reader to crack open the book more than should be needed, in order to comfortably read the text closest to the binding. In future editions, some of the space in the outer margin could be used to solve the problem, without any change to the words on each page, and thus the length of the book.

But aside from these minor flaws, this book is to be highly recommended. The Creature from Jekyll Island is a remarkably thorough, detailed, and challenging critique of central banking and America's latest incarnation of it, the Federal Reserve. G. Edward Griffin's precision of language, and his interweaving of the major players and their motives, makes for a most compelling historical study.

Michael J. Ross is a Web developer, freelance writer, and the editor of PristinePlanet.com's free newsletter.

You can purchase The Creature from Jekyll Island from amazon.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.

Comments

Real worthless...

[lelitsch]

Man did some reviewer drink the Cool Aid.

One not so minor flaw is, for example this statement "The US dollar has real value, i.e., it represents tangible wealth, such as gold securely stored at Fort Knox."

The gold standard was abolished on June 5th, 1933. After WWII, the Bretton Woods agreement fixed currency exchange rates in a narrow 1% band around the value of gold, but there was no 1-1 relation between the amount of gold a country had and the total money in circulation. In 1971, the US abolished convertibility from currency to gold, and for all intents and purposed ended any relation between gold and currency. Many banks, including the Fed have been slowly selling off gold reserves ever since.

So either the author or the reviewer doesn't know even the most basic historical facts. Fun additional fact, in 1999, the total worth of all the world's gold was $1.1 trillion, the US GDP alone was $9.3 trillion. So all the world's gold couldn't even have paid for 1/8th of the good and services produced that year in the US alone.

Re:You want the negatives on this book?

[benzapp]

The United States did not become the world's largest economy until after WWII. The economy in the 19th century was wild, with massive swings in employment, GDP growth, and inflation. It was not uncommon for the economy would grow by 20+% one year, only to contract by 15% 2 years later (1813 and 1815, for example). The average nominal GDP growth for that century was only around 4.5% compared that to almost 7% since then (and that includes the Great Depression!).

Do you just pull facts out of your ass and hope no one will notice? Lot's of people don't hold much faith in the GDP measurements. In terms of actual industrial and agricultural output, those numbers are bullshit. Find a source. Also, there was virtually no unemployment in the United States in the 19th century. More bullshit.

This is incorrect. Between 1790-1913, the annualized inflation rate was around .1%, which is very low, but still positive. With only one exception, every deflationary period during the 19th century time corresponded directly with an economic contraction. The exception to this is the years 1866-1878, where there were 12 years of sustained deflation (the longest deflationary period on record) but GDP growth remained positive. This period is an outlier in our economic history, and not a basic rule like you claim.

And this of course, is the most comical piece of bullshit in your post. You can find the exact opposite information regarding the value of money in the government's own publications! Read Historical Statistics of the United States, Colonial Times to 1970. Washington, DC: Bureau of the Census; U.S. G.P.O., 1975. I even found a nice online calculator for you to show how prices declined by 50% during the 19th century.

I have seen that video before, and I do not like it. It is classic conspiratorial propaganda- just enough fact so you can't accuse them of outright lying, but dressed up with the most inflammatory language possible and reaching conclusions not supported by the facts. I found it to be an appeal to emotion rather than to reason, and I don't like that.

Well, we've already established you're not very interested in facts either. Your entitled to an opinion of course, but let's not make the bogus claim you have made a legitimate argument here despite your use of words like "reason". It is a complicated subject that most people don't understand, and the video conveys the truth to the average person quite well. I'd love to know what "conclusion" was reached that is not supported by fact. I guarantee you won't tell me, because well - you're full of shit!