|THE BANKSTER'S MYTHS AND YOUR LOST PROSPERITY
The banksters use a number of myths to enable them to raid the world's supply of sources of income
and objects of enduring value. The myth that destroyed the Savings and Loan industry in the 1980s is
Myth No. 1. Inflation can be controlled.
Inflation is an upward movement in the average level of prices. Inflation results when more people want
to buy commodities than there are commodities available to sell. There are other reasons as well, like
price fixing cartels, but we need only to contemplate the simple. When demand for goods is more than
the supply of goods, prices rise.
Inflation increases as the number of buyers outstrips what is available to buy, so it is obvious that it
would be related to world population. Even if people are desperately poor, they still need, and generally
manage to get: food, shelter and clothing.
The world's population affects inflation. Great growth in population makes inflation inevitable. In 1750
world population was an estimated 800 million. Wars, plagues, famines, unsanitary living conditions, and
general poverty kept the population of earth low.
(The inevitability of inflation due to a rise in population is illustrated by the Louisiana Purchase of 1803.
The Louisiana Purchase was the acquisition by the United States of America of 828,800 square miles of
territory. America paid a total sum of 15 million dollars for the land, which doubled the size of the United
States and comprises about 23% of current US territory. The value of this huge area now is impossible to
By 1950 world population was about 2.5 billion. By 1985, the human population was 5 billion. By 2000
global population was 6 billion and now it is about 6.8 billion.
That means that world population increased by an average of 70 million people a year from 1950 to 1985
and is currently increasing by an average of 80 million people a year.
If the economy of the world was an efficient machine, it could rev up its engine and produce the goods
and services these extra 80 million people require. Then the supply of goods could almost keep up with
the demand for goods. But the world's economy is running at half power, it has been choked by
banksters trying to increase their profits by manipulating the money supply.
The yearly increase in the world's population is closer to 1% than 2%, but in the long term inflation is
much higher than population increase because the economy of the world is so inefficient. Supply
invariably rises more slowly than demand.
Inflation is inevitable, even now in the face of a world wide economic crisis, prices are rising,
particularly the prices for food. It is likely that the slower the economy, the more prices will eventually
Myth No. 2. Inflation is a bad thing.
Inflation is definitely bad for those who want to force the world back to the days of low population
growth and rapidly expanding supply. In those days, loaning money at interest was a reasonable way to
generate income. Because there was no (or very low inflation), when a loan was repaid, the money
returned had the same (or almost the same) buying power as the money loaned. All or most of the
interest was profit.
With inflation, the money returned to the lender has much less buying power than the money loaned.
Sometimes the money paid back plus the interest has less buying power than the original amount
loaned. Not only is there no profit, but the lender has lost money. Inflation is bad for lenders.
On the other hand, inflation is good for borrowers. Generally their income increases with inflation, and if
they are buying real estate, their property increases in value. The dollars they pay back have less value
than the dollars they borrowed. For all these reasons, buying real estate has long been a way to
Because of the inevitability of inflation, lending money for the long term, for example, fixed rate long
term mortgages, is a fool's game. Such lending is best undertaken for reasons other than profits.
Community building, investing in friends and family, and empowering development of local business are
all good reasons for giving neighbors money secured by mortgages.
For this reason, the wanton destruction of the Savings and Loan banks in the early 1980s by the Federal
Reserve was a double loss to tax payers, not only did they have to repay billions for the losses of these
banks, they lost their services.
Myth No. 3. Bankers are cautious and conservative.
Any poor person who has ever tried to get a loan would think this is true, however bankers financed the
stock market bubble of the 1920s, the gross inflation of stock prices that preceded the Great
Depression. The bankers lent money to stock brokers. The stock brokers then allowed their clients to
purchase stocks with only 10% down while they loaned them the rest, a situation which allowed some
investors to buy and resell stocks without having enough money to actually pay for them.
Prices of stocks more than tripled in less than four years, then in October 1929, prices crashed. Stock
purchasers defaulted on their loans. Stock brokers defaulted on their loans. Over 9000 banks failed in
the next decade and the depositors lost their money.
Myth No. 4. Bankers are honest.
The American Savings and Loan Industry had its origins in the British building society movement. The
goal was to help working-class men and women save for the future and purchase homes. American
S&Ls offered mortgages and loans to members (depositors). Because the business made long term
loans, tying up funds for long periods, it required a steady stream of new depositors to survive.
In 1966, to end savings rate wars, the United States Congress set limits on savings rates for both
commercial banks and S&Ls. In 1979, the Federal Reserve decided to put an end to inflation. The prime
rate spiked to over 20% in the early 1980s. Because they could offer only low interest rates, S&Ls
suddenly lost depositors and could not attract new ones. The failure of hundreds of S&Ls was imminent.
To save the S&Ls, Congress deregulated them, allowing them to loan outside their communities and to
make commercial loans, etc. These changes presented an open bank vault to banksters, who
proceeded to loot the failing industry.
A study of the criminality behind the S&L disaster concludes "deliberate insider fraud was at the very
center of the disaster... Systematic political collusion - not just policy error - was a critical ingredient in
this unprecedented series of frauds... The vast majority of savings and loan wrongdoers will never be
prosecuted, much less sent to prison... The savings and loan crimes decimated the industry itself and
brought the American financial system to the brink of disaster. This victimization of thrift institutions by
their own management for personal gain, the existence of networks of co-conspirators with influential
political connections, and other aspects of thrift fraud suggest a greater similarity to organized crime
than to traditional white collar crime." (Kitty Calavita, Henry N. Pontell, Robert Tillman, "Big Money Crime:
Fraud and Politics in the Savings and Loan Crisis," University of California Press, 1999, p 1,2)
Specifics of the crimes, excerpted from the book "Take the Rich Off Welfare," by Mark Zepezauer and
Arthur Naiman, Odonian Press, 1996 can be found on the Internet on the Third World Traveler website. It
can be found by searching "take the rich off welfare S&L crisis." Some of the largest frauds can also be
found on Wikipedia, search S&L crisis.
The cost of the bursting stock bubble that began the Great Depression fell on the depositors of the
9000 failed banks. Following this fiasco, the government began collecting fees from banks for
guaranteeing their depositor's accounts. Because of systemic fraud, the Federal Savings and Loan
Insurance Corporation rapidly went broke, and responsibility for the deposits that the bankers stole fell
on the American taxpayers.
The most conservative estimate of the S&L crisis was that it involved 747 banks and cost the American
taxpayers $124 Billion. Since the payout was financed over 30 years, the actual cost will be much higher.
Myth No. 5. The Federal Reserve works for America.
The Federal Reserve is owned by a group of international banks. A study of corporate and banking
influence which was published in 1976 "reveals the linear connection between the Rothschilds and the
Bank of England, and the London banking houses which ultimately control the Federal Reserve Banks
through their bank stock holdings and their subsidiary firms in New York.
"The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn, Loeb & Co. were
the firms which set up the Jekyll Island Conference at which the Federal Reserve Act was drafted, who
directed the subsequent successful campaign to have the plan enacted into law by Congress, and who
purchased the controlling amounts of stock in the Federal Reserve Bank of New York in 1914.
"These firms had their principal officers appointed to the Federal Reserve Board of Governors and the
Federal Advisory Council in 1914. In 1914 a few families (blood or business related) owning controlling
stock in existing banks (such as in New York City) caused those banks to purchase controlling shares in
the Federal Reserve regional banks.
"Examination of the charts and text in the House Banking Committee Staff Report of August, 1976 and
the current stockholders list of the 12 regional Federal Reserve Banks show this same family control."
(Federal Reserve Directors: A Study of Corporate and Banking Influence. Staff Report, Committee on
Banking, Currency and Housing, House of Representatives, 94th Congress, 2nd Session, August 1976.)
Seven banks are listed on the charts that accompanied this 1976 study, which showed the banks allied
to the Rothschild family that owned controlling interest in the Federal Reserve banks: Rothschild Bank
of London, Warburg Bank of Hamburg, Lazard Brothers of Paris, Chase Manhattan Bank of New York,
Lehman Brothers of New York, Kuhn Loeb Bank of New York, and J. P. Morgan Co. Other sources omit J.
P. Morgan Co. and add four other banks to the list, two of them quite plausible since they are closely
allied with the first banks on the 1976 study chart: Rothschild Bank of Berlin, and Warburg Bank of
Amsterdam. Two other banks mentioned in connection with Federal Reserve ownership do not appear
on the list of banks allied to the Rothschilds: Israel Moses Seif Banks of Italy, Goldman, Sachs of New
All this ownership information is shrouded in Internet controversy; but it is likely correct for the most
part. Smart people would have bought controlling interest after Rothschild representatives, other
bankers and the US government created the Federal Reserve as a public company with stock for sale.
No one has ever accused the Rothschilds of being stupid.
Mayer Amschel Rothschild (1744 -1812), founder of the Rothschild banking cartel, famously said: "Give
me control of a nation's money and I care not who makes the laws." Given his attitude, it is not
surprising that his descendants chose to invest directly and through intermediaries in control of the
Federal Reserve and America's money supply.
The Federal Reserve works for the profit of its owners. The Federal Reserve uses the inflation
associated with economic booms (increased demand raising prices) as an excuse to increase the
profits of their owners by raising interest rates.
The decade from 1920 to 1929 was called "The Roaring Twenties." The mass production of automobiles
and radios and other consumer goods had found wide markets. There were plenty of jobs and people
had money to spend, even though wages were low. Business was booming, prices were rising. America,
the economic powerhouse, had hit its stride.
The Federal Reserve raised interest rates in 1928. Eventually that tightening of credit burst the stock
market bubble created by the American banking community's risky lending practices. The result was the
Great Depression with the failure of 9000 banks and economic misery for a decade in America.
In late 1979 and the early 1980s the Federal Reserve tipped struggling S&Ls into failure by raising
interest rates drastically to "stop inflation." The economic situation of the 1970s was very bad. Rises in
oil prices crippled America's economy. Oil prices were less than $3 a barrel before October, 1973 and up
to $32 a barrel in January, 1981. Manufacturers overseas caught up with American manufacturers and,
with the increased cost of transportation, began to successfully compete with them. Stagflation resulted.
Stagflation is the situation when both the inflation rate and the unemployment rate are high. Since most
manufacturing was dependent on oil for power (or electricity from oil powered plants), it cost more to
produce everything. Shipping products to markets cost more also. Prices rose to reflect the increased
cost of production and shipping, people bought less and jobs were lost. The 1970s were a decade of
economic hardship for many.
Through the 1970s, the Federal Reserve lost money, the rate of inflation ate up the profit from interest.
Despite the condition of the economy, in 1980 the Federal Reserve raised interest rates sharply to over
20% in an attempt to get profits for its owners.
More than 1,600 banks insured by the Federal Deposit Insurance Corporation were closed or received
FDIC financial assistance between 1980 and 1994. From 1986 to 1995, almost half of the federally insured
savings and loans in the United States went out of business, their numbers declined from 3,234 to 1,645.
(Wikipedia, Savings and Loan Crisis). Combined, these bank failures cost American taxpayers hundreds
of billions of dollars.
The Federal Reserve system is both public and private. Federal Reserve regional member banks are
for-profit privately owned businesses. Each private member bank elects their own board of directors at
their regional Federal Reserve Bank, but the Board of Governors of the whole system is selected by the
President of the United States and confirmed by the Senate.
Despite apparent separation between the public government body of the Federal Reserve and the
private regional branches, four of the current six members of the Board of Governors have ties to
regional member banks. The exceptions are Daniel K. Tarullo, whose background is in academia and
government and Kevin Warsh, whose former employment was with Morgan, Stanley and Co, a company
grouped with J. P. Morgan and Co. on the 1976 House Study chart (see below).
Part of one of the five charts from the 1976 House Study is reproduced at the end of this article. The
partial chart gives some hint of the interconnectedness of the super rich investors. Knowing in
advance when the governing board of the Federal Reserve will change interest rates and by how much
allows these investors to maximize profits and avoid losses. Given the ties many governors and
presumably their staff have with the private banks, what are the odds that this information doesn't get
And that brings me to a few comments about insider trading. At the very top of the market, there is
probably ample forewarning of the action of the Federal Reserve to change interest rates. On the next
level down, there are also ways to circumvent the laws against profiting from insider knowledge.
The current scam is the use of investment expert networks. These groups provide several advantages
to market insiders. First, they provide a place where insider information can be secretly sold or
swapped for someone else's insider tips. Second, they provide plausible deniability, the ability of those
who profit from other people's inside tips to say, "I just followed the advice of my expert network, I had
no insider knowledge."
If the expert networks prepare written documents in advance explaining reasons for their
recommendations, they would be very hard to convict. Let the little buyer beware, all of the market fat
cats have more information than you do.
Myth No. 6. American must not allow its big banks to fail.
Irresponsible mortgage lending was at the heart of the 2007 housing bubble burst. Banks bundled
together groups of mortgage loans and sold them as securities. These financial agreements were called
mortgage-backed securities (MBS) and collateralized debt obligations (CDO), and they sold well all over
As the demand for these securities increased, lending standards declined. Sometimes lenders resorted
to outright fraud, falsifying the ability of the homeowner to pay, etc. These practices caused a housing
bubble as prices rose dramatically. Then, when borrowers could not pay, the bubble collapsed.
Estimates of the ultimate cost of the bailout start at $1 Trillion, but many economists expect it to be
Refusal to let the banks fail has led to a situation where the banksters take huge risks expecting the
taxpayers to swallow their losses. To quote US Senator Rand Paul "Federal bailouts reward inefficient
and corrupt management, rob taxpayers, hurt smaller and more responsible private firms, exacerbate
our budget problems, explode national debt, and destroy our US Dollar."
My thinking echoes what Frank Lloyd Wright answered when he was asked how to rehabilitate slums. He
said, "Tear it all down and start over." In this case, you need to do nothing, the banking system of the
world will become more and more fragile due to corruption and mismanagement until it implodes,
bankrupting all the nations.
Rather than put your money in the stock market where big investors always have more information than
you, or into savings where your capital may be eroded by inflation, I recommend that you buy good
farmland, preferably farmland with a small house. Use it as a getaway or as an emergency home, as well
as an investment. If you can, pay for it completely. Despite being poor, I'm hanging on to 8.6 acres in
Texas that I own outright.
Amo Paul Bishop Roden
N.M. Rothschild , London - Bank of England
| J. Henry Schroder
| Banking | Corp.
Brown, Shipley - Morgan Grenfell - Lazard - |
& Company & Company Brothers |
| | | |
--------------------| -------| | |
| | | | | |
Alex Brown - Brown Bros. - Lord Mantagu - Morgan et Cie -- Lazard ---|
& Son | Harriman Norman | Paris Bros |
| | / | N.Y. |
| | | | | |
| Governor, Bank | J.P. Morgan Co -- Lazard ---|
| of England / N.Y. Morgan Freres (Bros.) |
| 1924-1938 / Guaranty Co. Paris |
| / Morgan Stanley Co. | /
| / | \Schroder Bank
| / | Hamburg/Berlin
| / Drexel & Company /
| / Philadelphia /
| / /
| / Lord Airlie
| / /
| / M. M. Warburg Chmn J. Henry Schroder
| | Hamburg --------- marr. Virginia F. Ryan
| | | grand-daughter of Otto
| | | Kahn of Kuhn Loeb Co.
| | |
| | |
Lehman Brothers N.Y -------------- Kuhn Loeb Co. N. Y.
| | --------------------------
| | | |
| | | |
Lehman Brothers - Mont. Alabama Solomon Loeb Abraham Kuhn
| | __|______________________|_________
Lehman-Stern, New Orleans Jacob Schiff/Theresa Loeb Nina Loeb/Paul Warburg
- ------------------------- | | |
| | Mortimer Schiff James Paul Warburg
| | | | |
Mayer Lehman | Emmanuel Lehman \
| | | \
Herbert Lehman Irving Lehman \
| | | \
Arthur Lehman \ Phillip Lehman John Schiff/Edith Brevoort Baker
/ | Present Chairman Lehman Bros
/ Robert Owen Lehman Kuhn Loeb - Granddaughter of
/ | George F. Baker
| / |
| / |
| / Lehman Bros Kuhn Loeb (1980)
| / |
| / Thomas Fortune Ryan
| | |
| | |
Federal Reserve Bank Of New York |
______National City Bank N. Y. |
| | |
| National Bank of Commerce N.Y ---|
| | \
| Hanover National Bank N.Y. \
| | \
| Chase National Bank N.Y. \