The Truth of the Federal Reserve System
by Don J. Grundmann

In this short article I will discuss the basic mechanics of the biggest financial crime in the history of the United States and some elements of how this crime, conducted by the Federal Reserve System, is cheating all Americans every day out of the wages which they receive for their labor. A future article will discuss how the savings which Americans are putting aside for their future are being slowly and steadily stolen by this same group. But there is first a even more important question to ask : While you have recently seen the media discuss the financial scandal regarding the Enron corporation why haven't you heard one word about what I am about to discuss which in size makes Enron look like a ant compared to Mount Everest?

From the beginnings of our nation there was a great debate and battle over many years regarding a basic question of how the nation will function : Who shall issue the money of the nation? The answer to the question of who shall issue (make) the money of the nation boiled down to 2 possibilities:

1) The government shall use the sovereign powers granted to it via the Constitution to issue money.

2) A private corporation, established via legislation, shall take over the function of issuing money.

While a fuller understanding of the history of the battles over this issue can be found at the various forums and websites to which we will refer you to for greater information the quickest summation of the answer to the problem is that :

Government issue of money is constitutionally, monetarily, and financially the soundest policy for the prosperity of the nation.

The issuance of the money of the nation by a private corporation leads to the draining of the resources of the nation to the private corporation which controls the issuance of money.

The summated result of this action is that the private corporation, unaccountable to the people of the nation, controls the nation as it controls the flow of money within the nation. As part of a mountain of evidence that the private corporation controls the nation I refer you now to the following website :

You will be taken to a website which has the best explanation of the money situation that I know of and it is here where you will learn of the total corruption of the Federal Reserve System, the private corporation which currently controls the issuance of money within our nation.

Please take your time and read the many extremely well written articles at this site completely. After reading the articles on this site you may ask one of the questions which I did upon learning the truth of our monetary system : Even though the subject of money is a somewhat technical one, why isn't the information found on this site more well known to the citizens of our nation?

The answer to the above question is, that while the history of our nation has included many battles over the question of who shall issue the money of the nation, that after the last victory of the private corporations in their attempt to control the money issuance (and hence life) of the nation there has been a virtual complete blackout of the facts and truths regarding money issuance and its vital importance to the nation. I refer to this phenomenon at various places within this webpage as "The Matrix" - the coordinated control of the mass media in order to both suppress information and to indoctrinate the citizens of the nation as to how they will think, what they will believe, and how they will act. Due to "The Matrix" the information which you will discover regarding the truth of money issuance in our nation is not published in newspapers, discussed on television, spoken of on the radio, printed in magazines, or taught in college (or even any academic) courses. Even CPA's and many other professions with college degrees of advanced standing will not know of the simple and vital truths regarding the issuance of our nations money which you can study at the website noted above. And the reason for this is simple as I shall explain in the following quick example.

This example is the distilled essence of the money issuing question. The actual process is of course more complicated but it all can be boiled down to the following :

Our nation was founded on the following money issuing principle which I shall refer to as Principle 1 :
The government (A) issues money, BASED ON THE AUTHORITY OF THE CONSTITUTION, to the people (B) for its circulation among the people to develop the commerce of the nation. The government is funded by the return of that issued money via taxes specified by the Constitution. These taxes are known as " indirect " taxes and include what are known as tariffs, excises, and imposts. The money which the government issues is (here is a extremely important point) INTEREST FREE.

(government)      (people)

Money issuance is from A to B, government to people, money issued is INTEREST FREE and returns to fund government via "indirect" taxes.

Example : For simplicity we will here presume that the nation is just starting out and that there is no money in existence. The process will hence proceed as follows :

Government wants to have 1 billion dollars in circulation to aid commerce within the nation. Government issues 1 billion dollars into circulation to both aid commerce and to pay for government activities. Government is funded by monies received via indirect taxes. Government owes no money, either interest or principle, to any private interest as a result of this process. No "direct" taxes (such as an income tax) are either needed nor imposed for either the functioning of government or to pay the principle or interest of any loan to any private corporation. FACTS : Under Principle 1 our nation grew to be the greatest nation in the world (most powerful and wealthiest) WITHOUT a income tax. So much revenue was produced by Principle 1 to run the government that the legislators in Washington literally didn't know how to spend it all and had regular surpluses in government funding. For the mass majority of the history of the nation THERE WAS NO INCOME TAX.

The money of our nation is currently issued according to what I shall label as Principle 2. Principle 2 is the OPPOSITE of Principle 1 :

(private bank)    (government)    (people)

private bank makes money out of nothing.

I will repeat that again (it is extremely important) :

the private bank (stealing the constitutional function of the government) MAKES MONEY OUT OF NOTHING - AND THEN LOANS IT WITH INTEREST TO THE GOVERNMENT!

Example - For simplicity we will here presume that the nation is just starting out and that there is no money in existence. The process will hence proceed as follows :
Government wants to have 1 billion dollars in circulation to aid commerce within the nation. Government goes to private bank and asks for 1 billion dollars. Private bank, usurping authority of government, creates 1 billion dollars from nothing. Private bank loans bank created money AT INTEREST to government. Government issues 1 billion dollars into circulation. Government now owes 1 billion dollars PLUS INTEREST to private bank. Private bank demands "collateral" for "loan".  "Collateral" for "loan" comes from the hides of the American people. Personal income tax is imposed upon the American people to pay for the INTEREST AND NOT THE PRINCIPLE OF THE "LOAN".  Greater explanation of example :

Government BORROWS 1 billion dollars as a "loan" from the private bank. private bank gives a 1 billion dollar credit to the government (makes the money out of thin air). Government now OWES 1 billion dollars PLUS INTEREST to private bank. Private bank only created "money" for the principle and NOT the interest. Even if government paid back the 1 billion dollars it would STILL owe the "INTEREST" on the "loan". Therefore government must take out a second loan (L2) to pay the interest on loan number 1 (L1). Private bank creates "money" for principle of loan L2 but NOT the interest of loan L2. Government, even after paying off the interest of loan L1, and the principle of L2, still owes the interest of L2 as that was (in our example) never created yet. Government must take out loan number 3 (L3) to pay the interest on L2. This process must be infinitely repeated as the interest to pay a loan is never made when the loan is made and must be obtained for payment of the previous loan by a new loan for the interest itself. Ultimate results of Principle 2 :

The nation is FOREVER in debt to the private bank. The accumulated debt and interest on the loans from the private bank only grows greater. It will NEVER be smaller. More and more of the labor of the citizens of the nation must be spent in paying interest to the private bank for their "loans" to the nation. Income taxes are unconstitutionally imposed by the hijacked government which is now under the control of the private bank and they are continually raised to pay interest to the private bank for the "privilege" of its "loan" to the nation. The debt to the private bank, WHICH YOU KNOW AS THE "NATIONAL DEBT", can NEVER be smaller nor or can it ever be paid (go to and click on the "money" link for the reasons why this is true ). The financial and monetary policies of the nation are dedicated not to serving the interests of the citizens of the nation but to serving the interests of the real controllers of the nation and its future - the private, and unaccountable, bank which enslaves the citizens to it as it drains off the resources of the nation as its profit for allowing the nation to use the money substitute which it created out of nothing. The interest free money of principle 1 noted above is referred to as "United States Notes".  This is money put into circulation based on the sovereign power of the government. The money substitute of principle 2 noted above, that which carries a interest charge imposed by the private bank on the American people for the privilege of using it, is called "Federal Reserve Notes".  They are the "money" which you carry with you now because the Federal Reserve is the private bank which has seized control of the issuance of money in our nation and now imposes its will upon the American people - demanding collateral for their "loan" and receiving payment in the form of the unconstitutional income tax - for the privilege of loaning us our own money (a process you will learn by going to the website noted above.

What is the difference between Federal Reserve Notes and United States Notes? The answer is that Federal Reserve Notes have a interest charge to them which requires a payment of that interest to the private bank that issued them. United States Notes have no interest charge. Therefore the following can be stated:

Since in 1996 approximately 40% of the United States budget went to the payment of interest on the national debt the replacement of Federal Reserve Notes by United States Notes would eliminate interest payments to the private Federal Reserve System and would save 40% of the budget.


40% of the federal budget equals BILLIONS of dollars.

For, dear citizen, the Federal Reserve System has been swindling our nation of BILLIONS of dollars for YEARS - year in and year out. And I have only described to you ONE of the major ways in which you are swindled; this being via the income tax and the "interest" which the Federal Reserve charges. In later articles I will discuss a even greater swindle (stealing your savings) which the "FED" perpetrates.

But to sum up the problem, it is Principle 1 as noted above and planned by our founders which was to free our nation from control by corrupt forces which wanted to drain the nation for their own profit. The forgotten, ignored, and largely suppressed money history of our nation shows that many battles were fought over this issue; most prominently by Presidents Andrew Jackson, and Abraham Lincoln.

The "Greenbacks" which Lincoln issued in order to finance the Union victory in the Civil War were interest free money which saved the nation millions when the banking establishment of the time wanted to gouge the Union by charging 30 to 40% for any loans to the nation. In the same way the nation today can issue interest free United States Notes and save billions and billions of dollars which can be used for the true growth of the nation - building roads, hospitals, schools, energy facilities, and all of the things which our nation needs to become economically prosperous once more - rather than paying that money (and the labor it represents) to a parasite private bank which has seized control of the monetary and financial life of our nation and now sucks it dry as it drains our nation like a vampire upon the citizens.

For it is the inherent weakness of the Federal Reserve System, which you shall learn about at the forums and websites which we shall note, that leads to the need for 2 parents to work to support a family, the rise in prices, the devaluation of our currency, the impoverishment of our citizens and the collapse of the middle class of our nation, and many other symptoms of a decaying economy.

Yet the knowledge which you will find at and via this website is kept from the general public. Why? Because the mass majority of our media is owned and controlled by those who profit off of the actions of the private bank known as the Federal Reserve. Additionally the mass majority of our politicians, including Senator Boxer here in California, feed off of this same system and have been purchased "lock, stock, and barrel" by the financial forces which profit by helping the vampire Federal Reserve System. This duet of politicians and the media with the addition of their controllers comprises a significant part of "The Matrix".

Could politicians institute "United States Notes" and save the country billions of dollars in lost money each year while also totally eliminating a need for a personal income tax (even if it was legal which it is not)?  Yes, they could - but they would be out of office tomorrow if they tried to do it due to the complete control which the Money Mafia, the Federal Reserve System, and "The Matrix" exercises over our political system.

For the battle to stop the financial vampire of private banking control over the issuance of the nations money has been going on for many years and in the days of Lincoln's fight against the bankers the following comments were written in the London Times which give a hint of the same magnitude of the battle which we have today :

"If that mischievous financial policy, which had its origin in the North American Republic during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe". 

In Lincoln's time the banking elite realized that interest free money, freed from the control of the parasite private banks, was a deadly and mortal threat to their existence and had to be stopped at all costs. This is why you see no discussion in the media or in academia of the issues which I have raised here. They are controlled by the vise-like grip of the banking cartel which controls our nation including you, your future, and (especially) the future of your children.

Isn't it time to apply the "40% solution" and go back to "United States Notes"?

Isn't it time to stop the control of our nation by the private bank known as the "FED" once and for all ?

Isn't it time to stop paying your hard earned money to a private bank as tribute for its conquering of the American financial and monetary system?

Isn't it time to free our children and the generations to come from the private banking vampire which has sucked our nation dry and will keep on doing so unless we stop it?

Isn't it time that we free our government from being "bought and paid for" by the money mafia which rules our nation?

Isn't it time?

The solutions to the problem of the control of our nations money supply by the private bank known as the Federal Reserve System, including the reestablishment of control over the monetary supply of the nation by the United States government, are more greatly explained in a seminal work entitled The Truth in Money Book written by Theodore Thoren and Richard Walker. The basic solution will be that the United States government reclaims its sovereign ability to issue the money of the nation and cuts the 3rd party private bank (as explained above regarding Principle #2) known as the Federal Reserve out of the picture.

The result of this action will be that while our nation is currently considered as the strongest economy in the world (an idea which I dispute and will show as totally false in future articles) the economic life and strength of our nation in all aspects, from both the wealth of the nation as a whole to the wealth of every citizen, will undergo a unprecedented period of prosperity and growth which will totally shatter any illusions of prosperity which our current economic state pretends to have by showing the truth of how government issued INTEREST FREE money, by eliminating the parasite private bank known as the Federal Reserve System, is the true foundation for obtaining true economic prosperity, growth, and security for our nation.

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