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Book Review: The Creature from Jekyll Island

With all the talk of Operation Twist, and the possibility of QE3, and the power of the Federal Reserve, it seems an ideal time to examine the Federal Reserve System, which was established as the ce Federal Reserve Act in 1913. However, according to a rather large and exhaustive book documenting the Federal Reserve, by G. Edward Griffin, the Fed was conceived during a secret meeting on Jekyll Island. Griffin charts the development of the Federal Reserve, and its effect on the economy, in the book The Creature from Jekyll Island.

Griffin starts this carefully researched and sourced book with the story of a secret meeting that took place in 1910 on Jekyll Island, off the coast of Georgia. In attendance were six men who represented, according to the calculations in the book, one-fourth of the world's wealth at the time. Men associated with, and representing, interests of the Rockefellers, Morgans, Rothschilds and Warburgs met with Republican Senator Nelson W. Aldrich to figure out a way to allow them grow their interests, and to shift the national banking system from one of thrift to one of debt. What they came up with was the Federal Reserve.

In order to organize the story of the Federal Reserve and its effects on the economy in a way that takes the reader on a journey and provides insightful information, Griffin has grouped 26 chapters into six sections. He also includes an appendix with parts. The book is not presented strictly chronologically, but addresses different, related concepts that illustrate the power and effects of the Federal Reserve. Two of the most interesting sections are II and III. Section II presents "A Crash Course On Money" and takes a look at the monetary system, gold based currency and fiat currency, and how it all works together. Section III addresses the "alchemy" of transforming the "lead bullets of war" into an "endless source of gold." Griffin asserts that modern wars have been largely possible by fiat currency, and the Federal Reserve has been central in this effort.

Griffin explains and acknowledges the arguments in favor of the Federal Reserve System, and then refutes them. He looks at the history of bailouts, and the fact that major banks want anything but competition -- and he exposes the cartel nature of the Federal Reserve System as it was conceived by wealthy and powerful men more than a century ago. It seems amazing, when reading this book, that the Fed has survived when America's previous attempts at a central bank failed miserably. It's a fascinating journey into the past, and one that provides a great deal of insight -- whether or not you agree with Griffin that the Federal Reserve ought to be ended.

The Creature from Jekyll Island ends with a look at the possibilities for the future. Griffin presents a pessimistic view, of America's transition to becoming part of a world government of superstates, and takes a look at the possibility of coming hyperinflation. After scaring you with this outlook, he completes the book with "A Realistic Scenario." This chapter lays out a plan for getting rid of the Federal Reserve and bringing our "monetary binge" under control as a nation. But, it won't be easy:

"There is no optimistic scenario. Events have progressed too far for that. Even if we begin to turn things around by forcing Congress to cut spending, reduce the debt, and disentangle from UN treaties, the Cabal will not let go without a ferocious fight. When the Second Bank of the United States was struggling for its life in 1834, Nicholas Biddle, who controlled it, set about to cause as much havoc in the economy as possible...By suddenly tightening credit and withdrawing money from circulation, he triggered a full-scale national depression...The amount of devastation that could be caused by today's Federal Reserve is infinitely greater than what Biddle was able to unleash." (pp.565-66)

Throughout the book, Griffin offers specific reasons for why he thinks the Fed should be abolished. He uses painstaking evidence and research to back up his claims, and finishes up with a plan for getting rid of the Fed -- and its economic controls -- and reverting back to an economy better based in free market principles. His 16-point plan includes defining a "real" dollar in terms of precious-metal content (Griffin prefers silver), retiring Federal Reserve notes and severely reducing the size of government.

While the plan is compelling, I'm not sure how realistic it actually is. It's well and good to talk about retiring federal reserve notes and restoring free coinage, but, really, our monetary system has moved so far beyond basing money in "real" and tangible assets. So much of our money is digital now. Griffin mentions issuing Treasury Certificates 100% backed by hard assets to become the new paper currency, but how many people even use paper currency? So much of the wealth that we have is represented in digital terms, without paper -- much less gold or silver -- changing hands. Griffin mentions electronic transfer systems, and the difficulty of switching to a new monetary system, but doesn't go into great detail about what happens to those who are almost completely digital in their financial transactions, and whose wealth is expressed in digital terms. More details about this part of the transition would definitely be of interest.

Finally, Griffin offers some very sensible advice for preparing for the future -- no matter what the future holds. Getting out of debt, diversifying investments, keeping a cash stash (including old silver coins), and stockpiling food and water to prepare for a worst-case scenario of interrupted delivery systems, are all suggestions that many of us can benefit from.

Overall, The Creature from Jekyll Island is an interesting and insightful book, with the positions of the author backed by careful research and meticulously sourced. Even for those who may not agree with everything the author sets forth, the book offers an interesting journey through modern monetary history.

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  |     |   Comment #1
EVERYONE needs to understand a few key points. 1. Fiat dollars are backed by existing capital (collateral for a loan) as well as the pledge to create new capital. Essentially this means past labor and future labor. 2. Gold and silver solve nothing. With fiat, you get slow and steady inflation and then deflation which grinds south ie Japan. With gold and silver, you get an OVERNIGHT DEBASEMENT of money to the tune of ten to thirty percent ie ALL AT ONCE. 3. The REAL problem is excess debt and the political system. Politicians run for office and win by promising to give the sheeple more than is taken in in taxes. This is accomplished vie deficits. So every politician runs a deficit to look like a hero and we all fall for it! There are consequences to this...DIRE ONES. The main one is that endless deficits REQUIRE ENDLESS INFLATION to make existing debts weaken over time so we can continue "growing". We have turned the entire economy into a giant pyramid scheme. ****KEY POINT**** However...inflation is not something that can be sustained by the top. As I mentioned earlier, fiat money is backed by the car which can or repo'd or the house which can be foreclosed upon. Any attempts by gvmt to perpetuate the pyramid scheme by injecting more and cheaper credit will fail inexorably since this is UNBACKED EXCESS CREDIT and credit that is NOT BACKED by solid collatoral will always contract because it is unbacked! The REAL MONEY in our system is the stuff we make every day at work...the stuff that backs our fiat money. What must occur: 1. Balanced budget amendments. 2. Strict zero percent inflation policy and a severely curtailed fed. The federal reserve act itself mandates zero percent inflation. See section 2a..."stable prices". 3. An end to the primary dealer system. 4. We can only send what we earn meaning HUGE cuts to social programs and the end to a society living beyond its means. The beauty of fiat currency is that if there were no deficits, fiat ALLOWS FOR DEFLATION and prices in our society can always adjust to reflect the natural balance between supply and demand. But with FIFTEEN TRILLION in debt plus another HUNDRED in unfunded liabilities, we cannot AFFORD to embrace the necessary deleveraging. Suggested blogs for more info are few. 1. DENNINGER. 2. KEEN. 3. DAVIDOWITZ. 4. ROGERS. 5. ZERO HEDGE. but many of those support gold as money which has not and will not work.
  |     |   Comment #2
The fact is that the us dollar is severely undervalued in that its part of a society that is the most powerful in the world, that is an intangible that has signficant value. In addition, you can look it up, but household networth is in excess of 50 billion and personal, mortgage, corporate and national debt add up to something near 50 billion as well. So while that isnt a balance sheet like apple maybe, its still not all that much different from most ever corporation in the world because what it doesnt measure is intangible assets such as infastructure, rule of law and defense power which if included in the balance sheet would show the united states in fine position as it relates to the value of the dollar which in the end is all that counts when discussing fiat currency. 
  |     |   Comment #3
jacob:  50 billion or 50 trillion?
  |     |   Comment #4
my bad...trillion
  |     |   Comment #5
The entire credit supply sans derivatives is less than $50 Trillion. So those figures are not accurate at all.
  |     |   Comment #6
The FEDs dual mandate is enacted by Congress, but is never implemented by the FEDs,
why, because it creates conflict of interest.
The FEDs computer models are set up to include 3% perpetual inflation, so when deflation shows up on the horizon, Bernanke went ballistic and started to print money by tone loads.
It is not what we think the FEDs will do, but what they do is what it counts.

We think that price stability and employments are part of the FEDs job, it is not. FEDs only concern is how to make more money by superimposing their view as the only true reflection of the monetary system, money supply and loan manipulations. In other wards, they control our state of mind by telling us whether there is inflation or not or whatever the value of the Dollar will be. This way, they indirectly control the stock markets around the globe, the value of the exchange rates, money supply and try to always be profitable in their spread sheets.

Why do you think Geithner is in Europe now, Bernanke sent him as deal maker to implement the FEDs idea that the Dollar must be included in the banks bail out in Europe, so they will control the big banks over there too. Why do you think Bernanke gave secret loans to Deutsche Bank, UBS, Society General and others, simple answer, global control of the financial system.

So, as most of you may think differently of what is the purpose of the FEDs, well, it is not what most of us are thought to think, we are brain washed and bombarded with trivial solutions and ideas, but the real truth is that the FEDs are controlling most of our lives indirectly, from salary we get, interest we earn or pay,  undisclosed inflation that is eroding our savings and future of our economic state. Anything else is not part of the FEDs mandate, even when they have those secret meeting to show concerns about the economy, it is not to help us, but to help FEDs only to balance their general ledger entries.

If the FEDs can be dismantled, then the true market economy can take effect, until then , we all live in a controlled environment with false hope of better times ahead.
  |     |   Comment #7
Bob- the fed isn't in control at all. If it were, 2008 would not have occurred. Ending the fed is the BEST PATH to $500 loaves of bread and the destruction our culture. When Barney Frank can print money, he will do so and hand it out like santy Claus. But not to you, to those who vote for him aka public unions etc. Politicians must be kept in check and an independent monetary policy is crucial. As for inflation, it isn't supposed to exist AT ALL. Inflation only occurs when there is excess credit which is VERBOTEN in section 2a of the federal reserve act. What we have had is a fed that ignores its mandate to serve a political system hell bent on overspending to get reelected. It all makes sense and it is all breaking down.
  |     |   Comment #8
To Mayorquimby - #7,

You wrote:

“...Inflation only occurs when there is excess credit which is VERBOTEN in section 2a of the federal reserve act.....”

If that is true, then the housing bubble would have been prevented, since even my cat qualified for credit from the bank to buy a property with stated income only and free credit offers were at every bank’s window, like no money down no interest for 5 years, no income verification, everyone qualifies.

I used to receive free credit cards, unsolicited by me or ever applied for it, credit was given to anyone just for asking from 2000-2006, if that was not excess then what is?
How do you define excess?
Why inflation did not occur?

I still think the FED mandate is not to protect you from excess credit or inflation since excess credit is what the FED wants. Look at the order to the banks to keep the interest rate low, no matter what the consequences will be in future.
  |     |   Comment #9
"shall maintain credit aggregates in tadem with the economy's aility to grow" "stable prices" That is the mandate. And it was ignored since almost day one. Why? Three reasons... 1. The excess liquidity that pushes prices up ends up at the top and the top controls the fed (look at any fed bank board of directors). So those wh receive most money encourage printing too much! 2. As an excuse to paper over jobs outsourcing. 3. The more your money depreciates, the harder you will work to keep up with inflation and those in power in government and at the fed are the recipients of your labor. Your labor is their cash flow.
  |     |   Comment #10
To Mayorquimby,

Every time you post, you contradict yourself. Either you are misinterpreting the statutes you read from or you are trying to portrait yourself as knowledgeable person on the workouts of the FED.

They do not care for any of us and our labor is not guaranty for future payments of any kind.
That is what the FEDs are trying to make you believe, since their computer entry field must be pledged to something (like future income) to stay in balance.

If our labor is pledged as income to the FEDs, then everybody should pay tax on all incomes, including the 40% that don’t pay any income tax at all and another 20% that are exempt from any income tax, like for: not for profit organizations, religious groups. disabled, people on entitlements from cradle to grave and so on. That is more then one half of USA population not pledged for present and future incomes from the definition you presented.
Since the labor is a variable entry point, it will create havoc in the FEDs balance sheet.
I have never ever heard a FED person to say US labor force is our future guaranty for income and balanced economy, but, I hear it from the members of Congress almost daily.

The income tax does not goes to the FEDs, it is used to pay the interest on the national debt and to the military and rest to Federal employees and entitlements and to grants and foreign aid and all of the pork belly projects and wasteful programs.

All of our future is being gambled and made almost impossible to predict with the current $1.3 Trillions yearly deficits.  The FEDs created and unimaginable debt liability on all of us by buying or lending to the US treasury to cover the shortfalls in the budget.
  |     |   Comment #11
I'm not contradicting anything. You re not understanding my point. 1. The monetary system is designed to extract the maximum amount of energy and labor from us as is possible. 2. As bad as this is, gold and silver will achieve nothing and can in fact make things much worse. 3. Allowing gvmt to control the monetary system is suicidal and the very worst option. So...what do we do? We need to ensure that the original Fed mandate IS FOLLOWED...that credit does NOT exceed GDP; that inflation targets are zero and savers are rewarded. In a nutshell..THIS is our problem: http://static.seekingalpha.com/uploads/2011/2/28/saupload_total_credit_market_debt_vs.gdp_.png Try and square THAT with section 2a of the federal reserve act!
  |     |   Comment #12
I can't believe Miranda is seriously touting this right wing conspiracy crap. It was better when she posted glaringly obvious money-saving tips. Here's my tip: if Glenn Beck recommended the book, it is full of crazy and you should avoid it. The Fed is not some secret cabal running the government and ruining the economy. (Also note this was written in 1994, so it's not exactly a current book on the economy.) "Conspiracy theorists have long viewed the Federal Reserve Act as a means of giving control of the banking system to the money trusts, when in reality the intent and effect was to wrestle control away from them." - Edward Flaherty http://www.publiceye.org/conspire/flaherty/Federal_Reserve.html
  |     |   Comment #13
LisaPA: It sounds like you have not read the book from your statement so, have you read the book? If you have not read the book then I would ask how can you judge it?  If you have read it then I would say everybody has the right to their opinion.
  |     |   Comment #14
Mak1118, I have the right to my opinion whether or not I read the book. Just as I don't need to burn myself on a hot stove to know it is hot, I don't need to waste my time reading a conspiracy book to know that it's a conspiracy book.

I don't need to read any of the "9-11 truth" books or "Barack Obama is a secret Kenyan" books to know they are conspiracy books. Any book that says the Federal Reserve was created by a secret cabal of wealthy men to line their own pockets is crap. The fact that it was touted by a borderline crazy man making money off his sucker listeners (Goldline, anyone?) only reinforces that.

Also, in case you didn't notice, I responded to a book review - assuming Miranda did a decent job in summarizing it, I shouldn't need to read the book to comprehend its arguments.
  |     |   Comment #16
To LisaPA postings:

Please explain the secret deals Bernanke did with the Europian banks and please explain why the Congress wants to make Bernanke open the books for review if there are no secret  deals made by the FED.
Please explain why Bernanke gave secret loans with undisclosed amounts to many US banks and brokerage firms. Who benefited with those loans and how much?
If you can not answer the above for certainty, you can not remove the secrecy that enshrouds the FED. 
  |     |   Comment #17
Kyl; She is a close minded and clueless.
  |     |   Comment #18
Back in the 1960's I had a very intelligent elderly male friend who shared with me the same information which seems to be written in the Jekyll Island book.  The names of the wealthy people involved were the same as listed in the book.  He was very concerned and belonged to a group which was trying to find out more about this and it's negative impact on our country.  Since he was elderly, he said he didn't expect the worse of it to hit during his lifetime but that it would have a terrible economic impact during my life.  Well, I feared he was a part of some "conspiracy" group because what he was sharing seemed too impossible to happen to my country.  He passed on, and over the years I have witnessed the economic problems thrown upon our nation which I never dreamed would happen in my lifetime.  It seems the names in the book would be people who should also have passed on by now but what is most important is "who" has taken up their commitment and kept it going over the years?

I do not like the decisions the Federal Reserve is making for our financial survival and at such a cost to the savers of this country.  How I hope that book is a "farce" but the actions being taken by those in charge at the Federal Reserve give me great fear that it may have been a warning too many of us prefere to ignore.  It is affecting our lives and what savings we have skrimped to save over the years for our elderly years.  If it is allowed to continue, I fear much worse is to come for our nation.  I don't belong to "any" conspiracy group but it seems my deceased friend was right to a "T"!  May he rest in peace.
  |     |   Comment #19
My question, regarding the federal reserve, is: currently the only ones buying us bonds is the federal reserve and sovereign developing nations, thus is it possible with the issuance of such bonds that the fed could call the debt on a econically destitute nation and take payment in kind our nation? The implication here is that we as a people and our property and our children would have sold ourselves into slavery. This is a serious ? And deserves a serious answer.

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