“….. (Paterson’s group) turned their attention to a scheme that did interest (the British government) very much: the creation of money. The two groups came together and formed an alliance. No, that is too soft a word. The American Heritage Dictionary defines a cabal as ‘a conspiratorial group of plotters or intriguers.’ There is no other word that could so accurately describe this group. With much the same secrecy and mystery that surrounded the meeting on Jekyll Island (Jekyll Island, Georgia, where key bankers secretly converged for 10 days to conceive the Federal Reserve) the cabal met in Mercer’s Chapel in London and hammered out a seven-point plan which would serve their mutual purposes:
Here you have a priceless example of what “central banks” are all about and the fraud they perpetrate.
- The government would grant a charter to the (Paterson group) to form a bank.
- The bank would be given a monopoly to issue banknotes (paper money issued by the bank), which would circulate as England’s paper currency.
- The bank would create money out of nothing—with only a fraction of its total currency (its paper money) backed by coin.
- The (Paterson group) then would loan the government all the money it needed (the bank’s paper money backed only by a very small amount of coin).
- The money (the bank’s paper money backed only by a very small amount of coin) created for the government loans would be backed primarily by government I.O.U.s (written loan documents describing the loan details and the government guarantee to repay the loans under the described conditions).
- Although this money (the bank’s paper money backed only by a very small amount of coin) was to be created out of nothing and would cost nothing to create, the government would pay ‘interest’ on it (to the bank) at the (annual) rate of 8%.
That’s the scam, right there. In effect, the British government agreed to pay Patterson’s group an 8% annual fee on all the paper money the Paterson’s group printed out of nothing. And that accumulating 8% fee was called national debt. That is exactly how the Federal Reserve operates, too.
- Government I.O.U.s would also be considered as ‘reserves’ (paper money owed by the government which the bank lent it), for creating additional loan money to private commerce. These (additional) loans also would (pay interest to the bank). Thus, the (Paterson group) would collect double interest on: (i) the bank’s paper money created out of nothing and lent to the government and (ii) the additional paper money also created by the bank out of nothing, but based on the fictitious
“reserves,” for creating more unbacked loan money to be lent to private commerce.
Welcome to the world of fraudulent banking. “Fraud” is defined as wrongful or criminal deception intended to result in financial or personal gain. Both groups (the Paterson group and the British government) entered into a fraudulent banking operation and they both greatly benefitted. The problem they overcame was the inability of the government to either raise taxes or borrow money from depositor banks or other real lenders. The essence of the fraud bears repeating, as follows:
- The bank created its own paper money backed with only a very small amount of coin. Of course, this action immediately begins to diminish the value of the paper money in circulation, thereby subjecting the public to slow financial loss.
- The government created written loan documents describing the loan details and the government guarantee to repay the loans under the described conditions.
- The bank lent its paper money (backed only by a very small amount of coin) to the government and received the written loan documents describing the loan details and the governments guarantee to repay the loans under the described conditions.
- Both groups agreed to use deceptive language to describe this transaction: they pretended that the bank made a loan to the government, but what it really did was to manufacture the money for the government’s use with no significant backing with coins. If the government had simply printed new paper money itself, without significant backing with coin, and tried to pay its expenses with this new paper money, the recipients of the “unbacked” paper money would not have accepted the money at face value, and would have applied a substantial discount rate in receiving payment for their goods and services. In other words, the much lower value of paper money created by the government (which was perceived to be financially untrustworthy) made that alternative unacceptable to the government.
But, public perception would be very different if a seemingly independent “Bank of England” was formed with special privileges; with a monopoly to issue “banknotes” which would be the official currency of England and this bank would be the sole lender to the government. In his The Mystery of Banking (1983), Murray Rothbard wrote: “In short, since there were not enough private savers willing to finance the (government’s) deficits, Paterson and his group were graciously willing to buy
government bonds (the written loan documents describing the loan details and the government guarantee to repay the loans under the described conditions) provided they could do so with newly-created out-of-thin-air banknotes (the bank’s paper money backed only by a very small amount of coin) carrying a raft of special privileges with them. This was a splendid deal for Paterson and company, and the government benefitted from the flimflam of a seemingly legitimate bank’s financing their debts….
King William himself and various members of Parliament rushed to become shareholders of the new money factory they had just created.” (still more fraud at work)
To be continued..