A provocative presentation suggests the Federal Reserve System, the powerful institution overseeing America's money, is not what it appears to be. Instead of a neutral government body, it is portrayed as a private banking cartel, secretly formed and operating to concentrate wealth and power, often at the public's expense.
According to G. Edward Griffin, author of "The Creature From Jekyll Island," the Federal Reserve System is an "appearance of The Fourth Kind"—something "which is not and yet appears to be". He argues it should not be audited, but abolished, because it is already doing exactly what it was designed to do: serve as "one of the greatest scams of all history".
Griffin asserts seven key reasons for abolishing the Federal Reserve:
- It is incapable of accomplishing its stated objectives.
- It is a cartel operating against the public interest.
- It is the Supreme instrument of Usury.
- It generates our most unfair tax.
- It encourages War.
- It destabilizes the economy.
- It is an instrument of totalitarianism.
While time does not permit a full demonstration of all seven points, Griffin aims to support at least the first four through a historical examination of the Federal Reserve's creation.
The Secret Birth on Jekyll Island
The story begins in November 1910 on Jekyll Island, a private resort off the coast of Georgia owned by a small group of New York millionaires, equivalent to today's billionaires. Here, the Federal Reserve System was secretly conceived at a meeting shrouded in extreme secrecy.
Seven powerful men, including Senator Nelson Aldridge, Abraham Pat Andrew, Frank Vanderlip, Henry Davidson, Charles Norton, Benjamin Strong, and Paul Warburg, convened under strict instructions to avoid detection. They were told to:
- Come one at a time.
- Not be seen or dine together.
- Pretend not to know each other if they arrived at the same time.
- Avoid newspaper reporters.
- Use only first names once aboard the private railroad car; two men even adopted code names, "Wilbur" and "Orville".
One attendee even carried a shotgun to claim he was on a duck hunting trip if questioned, despite never having fired a gun in his life. The extreme secrecy was vital because if the public knew who was crafting banking legislation, it "would have had no chance whatever of Passage by Congress". As Frank Vanderlip, one of the attendees, later admitted, the bill's purpose was to "break the grip of the money trust," but it was written by the money trust itself. This, Griffin explains, was like "having the fox build the hend house and install the security system".
These seven men, incredibly, represented approximately one-quarter of the wealth of the entire world. They spent nine days hammering out the details of what would become the Federal Reserve System. For years afterward, they denied the meeting took place, only speaking openly about it once the Federal Reserve was firmly established.
The Federal Reserve: A Cartel, Not a Government Agency
Griffin contends that the Federal Reserve System is a banking cartel. A cartel, he defines, is a group of independently owned businesses that come together to reduce or eliminate competition among themselves to "enhance their profit margins or secure their position in the marketplace". This is done through practices like price fixing, dividing geographical markets, or sharing patents. In the case of banking, this means the public "pays more for those products or Services than they would otherwise".
The shocking fact, Griffin states, is that this "government operation" was, in reality, a banking cartel formed by competing giants like the Rockefellers, Morgans, Kuhn, Loeb & Company, Rothschilds, and Warburgs. These entities, previously "beating their heads against each other for dominance," decided it was "time to come together" to eliminate competition, which they viewed as a "sin".
The name "Federal Reserve System" itself is described as a "brilliant strategy" of deception:
- "Federal": Meant to make it appear like a government operation.
- "Reserve": Intended to make it seem like there were actual reserves, a banking concept.
- "System": Designed to imply a diffusion of power across 12 regional banks, addressing concerns about concentrated financial power in New York.
- "Banks": The Federal Reserve Banks are not even banks in the traditional sense.
Griffin concludes that on "all four words we're dealing with appearances of The Fourth Kind". He adds that early provisions restricting the Federal Reserve's power to create money were included to gain support, with the intention to "fix it up later," which indeed happened through over a hundred amendments since its passage.
The Federal Reserve is a hybrid entity, "half government and it's half private," reflecting its nature as a partnership between the government and a private cartel. While it has stock certificates held by member banks, these do not grant the typical powers of private ownership, as they cannot be sold, voting power is limited, and national management is appointed by the President. Griffin emphasizes that the issue isn't who owns it, but "what does it do".
The "Mandre Mechanism": Creating Money Out of Nothing
The core of the alleged "scam" lies in how the Federal Reserve System creates money, a process Griffin dubs the "Mandre mechanism," likening it to a magician creating something from nothing.
Here's a simplified explanation of how money is supposedly created:
- Government Debt: Congress needs more money than it collects in taxes. It prints "certificates" (U.S. treasury bonds, notes, or bills) which are essentially IOUs, backed by the "full faith and credit of the United States government"—meaning a promise to tax the public to pay them back.
- Fed Creates Money for Government: When the government needs more than the public will loan, it goes to the Federal Reserve. A Federal Reserve officer then writes a check to the U.S. Treasury for the needed amount, say $1 billion, without any money actually being in the Federal Reserve's account. This money "springs into being precisely at the instant that the Federal Reserve officer signs the check". This ability to obtain instant, unlimited funds without directly confronting taxpayers about tax increases is the "payoff" for the government's partnership.
- Commercial Banks Multiply Money: Once that $1 billion government check is deposited and spent into the economy (e.g., a postal worker receives a $100 government check), it enters the private banking system. Due to fractional reserve banking rules (member banks must keep only 10% of deposits in reserve), a $100 deposit allows the bank to lend out $90. When that $90 is deposited elsewhere, 10% is kept, and 90% is lent again, and so on. This process allows the banks, in essence, to loan up to $900 from an initial $100 deposit.
- Interest on Nothing: This loaned money also "springs into being precisely at the point where the loan is made; it didn't exist before anywhere". Crucially, while the government spends the money created for it, the money created by commercial banks is loaned out, and people pay interest on it. This "perpetual interest on nothing" is the primary "payoff to the commercial banks in the cartel".
Consequences for the Public: Hidden Taxation and Loss
This mechanism has severe consequences for ordinary citizens, Griffin argues:
- Inflation as a Hidden Tax: The money created out of nothing "dilutes down the value of the dollars that were already out there," similar to pouring water into soup. This is inflation, where the purchasing power of money decreases, rather than prices genuinely rising. Unlike a tangible monetary system (like gold-backed currency), Federal Reserve Notes (dollars) "buy less and less and less because they keep creating more and more and more of them". This inflation acts as a "hidden tax" from which there is "no Escape".
- Wealth Transfer: The people who benefit from this diluted purchasing power are those "at the nozzle" where the fresh money is injected into the economy first—primarily the government and those who receive government contracts or grants. On the banking side, those who borrow early also benefit from inflation, but this "paper gain" is largely given back to the banks as "interest on nothing". When the economy contracts, borrowers are wiped out, and banks acquire their "hard assets" (cars, houses, factories) that were pledged as collateral. Ultimately, Griffin claims, the two beneficiaries are "the government and the members of the banking cartel".
True Objectives and Alarming Outcomes
Griffin asserts that the Federal Reserve has demonstrably failed its stated objective of stabilizing the economy. He points to a history of:
- Crashes (1921, 1929)
- The Great Depression (1929-1939)
- Numerous recessions (1953, 1957, 1969, 1975, 1981)
- Black Monday (1987)
- Soaring corporate and personal debt
- Record bankruptcies for businesses and individuals
- High rates of bank and Savings & Loan failures
- The national debt consuming half of all taxes
- Loss of heavy industry to overseas competition
- An international trade deficit
- Foreign ownership of major metropolitan areas
- Widespread recession
Instead, Griffin argues the Federal Reserve has succeeded in its true objectives, which align with any cartel's goals: "to make money," "enhance the profit margins of the members of the cartel," and "stabilize its position in the marketplace to prevent competition". These objectives were:
- Reverse the Erosion of Power from New York: Despite appearances of diffusing power, the Federal Reserve has ensured that "Wall Street maintained its dominant position and even enhanced it".
- Reverse the Trend of Private Capital Formation: By artificially lowering interest rates through the creation of "flexible currency" (money created out of nothing), individuals and corporations are "enticed away from saving their own money and going to the bank". This leads to debt, and when the economy contracts, the banks acquire assets pledged as collateral.
- Pass on Inevitable Banking Losses to Taxpayers ("Operation Bailout"): Large banks, when in trouble, are routinely "bailed out by the government," meaning with taxpayer money, under the guise of "protecting the people" from economic collapse. This ensures interest continues to flow to the banks. Griffin lists numerous examples of such bailouts.
Usury and the Pursuit of Power
Griffin introduces a new definition of "usury": "any interest on any loan of Fiat money," meaning money created out of nothing. He illustrates this with a $100,000 home loan where the borrower pays $172,741 in interest to the bank, compared to $70,000 for labor and materials, stating that this "interest on nothing is excessive".
This "huge wide river of wealth flowing into the banking cartel" is not primarily used for material pleasures once basic needs are met. Instead, Griffin claims, it is spent on power—to "acquire power over you and me and our children". This involves "buying up control over people" by influencing leaders of societal "power centers" like politicians, media networks, universities, labor unions, and even international organizations.
He contends this process is complete in many "third world" nations, where money from the IMF and World Bank (ultimately sourced from the Federal Reserve and thus U.S. taxpayers) goes to politicians and governments, not to raise living standards, but to "perfect and strengthen the control mechanisms over their people," often building "efficient dictatorships". This, he suggests, is part of a plan to weaken nations like America, making them more receptive to "world government" solutions, as "a strong nation is not a candidate for surrendering its sovereignty".
The Call to Action: Slay the Creature
Griffin's ultimate message is clear: the "creature" – the Federal Reserve System – must be "slain". Since it was created by Congress, Congress must be compelled to abolish it. This requires an informed electorate and organization, emphasizing the need for quality educational materials and leadership that offers "real solutions instead of non-solutions" and cannot be "purchased and run by the opposition".
He concludes with a sense of urgency, noting that the "New World Order is being built all around us," with a "world Army," "world Court," and "world taxing Authority" emerging. Despite the late hour, he asserts, "we still have time and we have the freedom to work". The solution, he states, is for citizens to "overthrow the government of the United States every two years without firing a single shot if we'll simply discharge the responsibility of citizenship".