Last week, I rolled out a blog post explaining how private domestic banksters create money out of thin air. The central bank cartel (in Europe) does it exactly the same way. They create an equal amount of debt when they create money and they do it by pressing a computer key. For that privilege, we allow them to charge our governments compounding interest, which our governments pay back by taxing us (which takes existing money out of circulation).
I also explained that inflation and deflation are a result of the amount of money in circulation and that paying down debt to bankers of any stripe reduces debt, but also reduces the amount of money in circulation. Banks create digital money out of nothing, but under our current system, when that digital money gets returned to the banks, it disappears back into nothingness. Through double entry accounting, liabilities will remain equal and, as liabilities are reduced, so are assets.
So banks both domestically and internationally have full control over our economic viability. When they exercise their total financial control, you have results like we’re seeing in Greece. For non-payment to European central banks, these vultures go after the sovereignty of the country. Greece has had to auction off their airports to interests in Germany recently. Many more assets within Greece are being lined up for the same fate, but Greek politicians are currently trying valiantly to slow down the process. This has been the game plan all along—to financially send us back to feudalism.
“The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences.”
— Quote from Caroll Quigley’s Tragedy and Hope
The process began in earnest with the formation of the Bank of England in 1694, giving the Rothschild family (and friends) a legal method of using usury to subjugate the world. In 1946, the Bank of England was nationalized; in 1998, it became independent from the government. However, it gets its money from floating bonds to the private market. As a member of the European banking cartel (Bank of International Settlements), bonds that are not subscribed are gobbled up by this central bank of central banks. Like all the other G7 countries, money is created outside the country. Rather than created internally, it’s borrowed at compound interest.
This is what the current revolution is all about, except that “the herd” hasn’t woken up to this fact, yet.
But let’s look at the solution, in terms of a banking system that would solve virtually all of our problems. It’s called “The Chicago Plan” and presented to the US Congress in 1912 by Professor Irving Fisher, but through trickery lost out to Rothschild-influenced Federal Reserve System, made up of twelve private banks that act very much like the Bank of England. The Federal Reserve System was voted in the following year, in 1913.
The same year the Federal Reserve was formed, the 1913 national income tax act was ratified in the US. From Wikipedia:
“The first Income tax in the United States was implemented with the Revenue Act of 1861 by Abraham Lincoln during the Civil War. In 1895 the Supreme Court ruled that the U.S. federal income tax on interest income, dividend income and rental income was unconstitutional, because it was a direct tax. The Pollock decision was overruled by the ratification of the Sixteenth Amendment to the United States Constitution in 1913”
The Chicago Plan
The Chicago Plan was written as a six page memorandum. In 2012, the International Monetary Fund put out a paper that updated the original plan, The Chicago Plan Revisited, by bringing it up-to-date with today’s monetary system
The basic idea is that banks should be required to have full coverage for money they lend; this is called 100% reserve banking, which would replace the fractional reserve banking system.
Under this proposal, banks would no longer be allowed to create new money in the form of credit in connection with their lending activities. Instead, the government-owned central bank of the country should be solely responsible for all the creation of all forms of money, not just paper money and coins.
There are four great advantages in state controlled issuance of money compared with the private money creating activity of the banks:
- increased control with the fluctuations of the market so that exaggerated booms and slumps are prevented
- increased financial stability due to the likely elimination of the risk of bank runs
- a dramatic reduction of public debt
- a great potential for minimizing private debt
The most important feature of the Chicago model is that the banks would be obliged to back up deposits 100 percent with credits issued by the government. This means that they would not be allowed to create their own new credits which, in turn, are made into deposits (along with the same amount of debt).
This government credit, which is an asset for the government and a debt for the banks, would, from a government perspective, be used for redeeming the interest-bearing government bonds that the banks own (which is an asset for them). In the next step, the banks would credit the government credit as well as the assets from private deposits and holdings of government bonds. In other words, the debt owed to the government would be cancelled out by assets from deposits and governments bonds.
In this way, the national debt owned by the private sector would be eliminated and all deposits, which today lack backing, would be fully backed up. Proponents argue that all this would be possible with the aforementioned government credit. The process would be concluded by the banks adapting to a lower official cash demand by lowering the amount of their own capital.
Other Countries and Sovereign Money
Canada: Until 1974, The Bank of Canada created Canada’s money. Unfortunately, that year, Prime Minister, Pierre Elliott Trudeau (father of our current Prime Minister—yes, the US does not have a monopoly on dynasties) made the decision on his own to ignore our constitution, contract the BIS to create our money, and charge us interest for it, which is paid back to these private bankers through taxes collected from citizens.
From the time that the Bank of Canada was created as one of the world’s only public banks (creating its own money for the country), Canadians were able to pay for two wars, the St. Lawrence Seaway, the Trans-Canada highway, the Canadian National Railway, and much more. And contrary to common arguments about governments unnecessarily inflating, there was no above normal inflation over that entire period. In fact, our inflation chart mirrored that of the US during the same period, when the Federal Reserve was in full control of the US money supply.
There is a lawsuit currently being undertaken by a private group, the COMER Group, to demand that the Government of Canada adhere to our constitution and revert back to using the Bank of Canada as our public bank, based on our constitution. It has now reached the Supreme Court level.
Australia: In 1912, the Commonwealth Bank of Australia was founded with £10,000 from the government. It operated as a state bank, and for the next twelve years, Australia enjoyed one of the greatest eras of prosperity in its history. It sparked a huge infrastructure program, with the construction of dams, the great Transcontinental Railroad, electricity power plants, gasworks, harbours, roads, and tramways. World War I cost Australia $700 million, which was financed as non-interest bearing debt.
However, in 1924, Prime Minister Bruce privatized the bank and borrowed £230 million from the Bank of England, and by 1927, the federal and state debt had reached £1 billion. In 1947, Australia joined the International Bank of Settlements and now it, too, is not in control of its economic prosperity.
Napoleon: When Napoleon came to power in 1799, his first act was to establish the Banque de France. It replaced the fifteen mainly Jewish private banking houses which has been charging extremely high rates of interest on loans to the French crown, which was causing the government to allocate over 50% of its resources to paying interest.
In taking over the ownership of the banking system and the printing and issuing of money, Napoleon make the franc the most stable currency in Europe. It completely shut out the Rothschild family from France’s economy. As has been proven over and over again, when this group is shut out from the money making and government control business, they react negatively.
“England under the direction of her international bankers, proceeded to bankroll Austria, Prussian, Russia, Spain, and Sweden and duly declared war on France,” A History of Central Banking, Stephen Mitford Goodson.
Libya: In 1969, when Mu’ammar Muhammad al-Qathafi took control of Libya, he kept the central bank as the creator of money for Libya and did not allow foreign banks to operate. Financing of government infrastructure was free of interest and the country had no foreign debt.
Beggars and homeless people didn’t exist, electricity was free, as was health care and education (in fact, students were paid a salary). The literacy rate was 82%. With the exception of Benghazi and its environs, he had the support of 90% of the people. He also constructed the Great Man-Made River, which supplies fresh water daily to the cities of Tripoli, Sirte, and Benghazi. The total cost of the project was financed without a single foreign loan. Well, we know what eventually happened.
Iceland: After their bankruptcy of a few years ago, the government of Iceland has come up with a plan for monetary reform based on the Chicago Plan, but also incorporating several elements from other developments. The plan centers on the idea of replacing the current system of private creation of money by banks by a system where only the government is authorized to issue “Sovereign Money.” The economy has fully recovered and is doing very well.
Here’s an article from “World Finance,” which goes into greater depth.
The solution, of course, is that governments need to create their own public banks (owned by the people) that create their own money, which represents the equity of the commonwealth rather than debt. Opponents of governments having a monopoly on the creation of their own money is that such a system would be highly inflationary. There is very little in the history of ancient societies and Western civilization to support this view.
Here’s a link to a PDF outlining the experiment of Guernsey, which created its own interest-free money.
|“Let me issue and control a nation’s money and I care not who writes the laws.”|
|Mayer Amschel Bauer Rothschild (1744-1812)
founder of the private International Banking House of Rothschild.
Projection for a Top
The US market continues to frustrate. We seem to be in suspended animation. However, periods of inactivity always lead to spans of volatility. We’re very close to a change in trend.
Wave three of the ending diagonal has taken 11 weeks, counting the double top of the past few days. Under than scenario, I would expect the fourth and fifth wave combination to take less than that same amount of time to find its way to the top.
The length of the fourth wave down (and the stopping point) will determine the length of the fifth and final wave up (and the stopping point). The fifth wave of the ending diagonal cannot be longer than the third wave (about 253 points in ES).
NEXT Federal Reserve Annct: February 1, 2pm EST
Change in Trend Coming: Here’s the latest daily chart of ES (emini futures):
Above is the daily chart of ES. I’ve been warning my Trader’s Gold subscribers of an impending top that might not make it all the way to my preferred fibonacci ratio stopping point. That’s exactly what we have—a change in trend that I thought was going to happen last week. However, we’ve gone sideways for almost two weeks now.
We did nearly the same thing at the top of the first wave. This time, however, we clearly have 3 waves down so far, and that required a retrace to the top (in ES, this is at about 2277). ES and SPX have struggling so long to reach the double top that I’m expecting a dramatic drop through the fourth wave.
USD currency pairs (and the US dollar, of course) have already turned and are in countertrend moves, to varying degrees of progress. They will need to finish these moves before turning one final time to complete their ending waves. They will all finish their bull markets are the same time, a time we can now measure in weeks.
Volume has picked up and I expect it to pick up even more as wave four unfolds. Wave four will unfold in three waves and needs to reach 2184 at least to stop in the area of the first wave of the ending diagonal.
Here are the rules going forward:
- Wave 3 must be shorter than wave 1 and reach a new high.
- Wave 5 must be shorter than wave 3 and reach a new high (usually it does a “throw-over”—extends above the upper trendline defined by the tops of wave 1 and 3, but it is not necessary.
- Wave 4 must be shorter than wave 2 and must drop into the area of wave 1.
- All waves must be in 3’s (zigzags).
- The trendlines of the ending diagonal must converge.
Summary: We’re beginning the fourth wave of the ending diagonal before zigzagging to the top of the largest bubble in history. The long awaited bear market is getting closer.
Sign up for: The Chart Show
Thursday, January 26 at 2:00 pm EST (US market time)
The Chart Show is a one hour webinar in which Peter Temple provides the Elliott Wave analysis in real time for the US market, gold, silver, oil, major USD currency pairs, and more. You won’t find a more accurate or comprehensive market prediction anywhere for this price.
Get caught up on the market from an Elliott Wave perspective. You’ll also get Andy Pancholi turn dates for the balance of the current month. There’ll be a Q&A session during and at the end of the webinar and the possibility (depending on time) of taking requests.
All registrants will receive the video playback of the webinar, so even if you miss it, you’ll be sent the full video replay within about an hour of its conclusion. For more information and to sign up, click here.