This Is Our Banking System

by Jim Carter
[email protected]

Special to L. Neil Smith’s The Libertarian Enterprise

“What difference does an increase in the National Debt make? We owe it to ourselves.” is something that virtually every Keynesian has declared. Such a federal program gives the government/Congress purchasing power not previously available—to buy votes (and campaign contributions) from home.  Unfortunately, the inflation created dilutes the purchasing power and value of assets owned by individuals.

The methodology and extent of the transfer of wealth has been exponentially altered by the Federal Reserve’s use of QE—without public awareness—within the recent 24 years. Page 4

Keynesism, an euphemism for inflation by credit expansion, also known as Modern Monetary Theory [MMT], is an action of debauching the currency.1 As Lenin said: “There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency.” A coup, with financiers foreclosing on the $28 trillion debt, is the ultimate object. Think Greece. 2

Benjamin Ginsberg has compiled historic European Rothschild banking entities that left the host nation in chaos and revolt. 3 Law professor Tayyab Mahmud has shown, in 91 pages, more current transfers of various nation’s wealth to financiers during national bankruptcy which have resulted in poverty for the citizens. 4

The Federal Reserve system conceals the immense transfer of value to financiers which has justified the intense subterfuge and chicanery necessary for the Fed’s creation. An existing structure for a bankruptcy transfer of national wealth to covert owners of the FRBOG, Inc., is suggested in this writing. World travelers have observed tactics used to dominate foreign nations by civil turmoil are being developed in the U.S. 5

Medieval Rothschild banks established a line of credit for the King provided he pledged collateral with a written promise (a security) to pay gold with interest to the bearer.  The book-entry Rothschild credit was used to satisfy obligations incurred by the king. 6 The credit continued to be circulated in the kingdom between merchants. The bankers sold the king’s interest-bearing promise to investors for hoarded gold. The promise (security) was renewed by the bank on its maturing date and became perpetually rolled-over. 7

VOILA !!! The king made the suppliers of services happy with Rothschild credit; the bankers had the gold from investors; the investors gained interest on their assets and a promise the king would eventually return their gold—which would never happen. 8 Everything went smoothly as long as the bankers could sell the promise and the investors, or merchants, did not demand the gold. 9 The king would pay the interest with more credit from the bank so the credit cost nothing.  After the hook was set, the bankers would demand token ‘good faith’ payments of gold from the king until he was destitute. The gold backing of the security was removed by law. The schemes stole the wealth from the people with its book-entry fiat money 10 until the angry people brought a catastrophic climax. 11

The Federal Reserve System does the same thing with the U.S. government’s deficit spending. The banking wizard is hiding behind Frank Baum’s curtain of the government image Federal Reserve marquee 12 as obscurant to any public inquiry.13 The Federal Reserve Bank of New York will grant credit (not “create money”) in an account of the U.S. government in an amount that the government will pledge. 14 The government will expend the book-entry credit account (deficit spending) to pay for goods and services consumed by the government. The suppliers are content.

Evidence that the supplier has received a credit voucher is obvious. The heading of the currency given to the supplier by a local commercial bank is Federal Reserve Note; i.e., a debt obligation of the Federal Reserve. Historically, it was identified to be redeemable for gold, silver, or lawful money.  It is now identified as a “tender”  (substitute) required by law to be accepted for an imprinted number of dollars. What you have is what you get.  [It is touted to the public as a loan.] 15

To sell the promise from the government at the highest price,  the Federal Reserve (as fiscal agent for the government) will hold an auction but will imply it is an auction by the government. 16   Acceptance of bids, determining the interest rate, and the amount of deficit spending permitted is controlled by the BOG.17 Government regulations establish the funds from the auctions are controlled exclusively by the FRBNY; i.e., a franchisee of the BOG.18 These accounts of government money have never been audited, despite misleading GAO statements.19 They are client accounts—not operational accounts.

The roll-over of approximately $14 trillion debt from prior years (publicly held maturing) is annually auctioned and disbursed by the FRBNY. The approximate $1 trillion auctioned for deficit spending is evidenced by TreasuryDirect as “new cash.” 20 [Currently new cash can be 100% to a negative (input) of the issue.] Since all values are determined by the Fed, they must be given to TD.

The difference in handling of the two accounts is the supreme camouflage.  Funds for roll-over securities are credited by the FRBNY to a government account.  The FRBNY then pays the Primary Dealers among others (from the government account) for their task in collecting the maturing securities from the public.  There is no increase in the National Debt nor is there any inflation as a result from these rollover transactions.

If the funds from deficit spending securities (new cash) were to be used in redeeming Treasury securities in the market (i.e., paid by the FRBNY for government expenses), it would eliminate any increase in the National Debt. It would, in effect, buy back the securities that created the debt. It would also eliminate any increase in money in circulation (inflation). That clearly does not occur. Request for documentation from TreasuryDirect as to the destination of the funds are ignored.


The Primary Dealers receive the bulk of auction funds for their task in redeeming maturing securities. If the Primary Dealers include shareholders of a privately held incorporated Board of Governors of the Federal Reserve, they would not have to reveal corporate records. 21 The commingling of new cash funds could be completely hidden from view. 22  The deficit spending amount 23 would be clear profit for the owners of the BOG.24 No other destination of the funds appears viable.

The statutory charter of the Federal Reserve stipulates profit of the operation belongs to the government. 25 No consideration appears to be received by the government for the funds.  Consideration for commercial bank loans involve a risk; such a condition does not appear applicable to the instant action.

Each annual trillion dollars of deficit spending transfers $4 billion DAILY for an entire year to the unidentified owners of the alleged Board of Governors, Inc.  The recent trillion dollars of deficit spending in one month transfers $34 billion daily for four weeks. The source of wealth inequality becomes obvious. If the securities can not be auctioned at an acceptable price, they accumulate on the Fed’s balance sheet. They, as collateral for book-entry extension of Fed credit, would then become a claim by the Fed against the taxpayers.  A contract, without consideration from each party, is an act of fraud and is invalid from conception.

An abundance of such covert funds would go a long way to advance David Rockefeller’s utopian world government touted in his autobiography MEMOIRS. Globalism was mentioned decades earlier by Carroll Quigley in TRAGEDY AND HOPE. Funds from Wall Street could be used to dominate foreign nations as documented by John Perkins in CONFESSIONS OF ECONOMIC HIT MAN and William Blum in KILLING HOPE: CIA  AND  U.S.  MILITARY  INTERVENTIONS. Unused funds could be laundered in the stock or bond market and extend ownership of the six mega-corporations. Ownership of virtually all Fortune 500 companies, including MSM, are so held. 26   Some such firms have been used to fund riots on the west coast.

The Goldman Sachs government budget (Trump’s Budget) included huge deficit spending increases (increased military spending with cuts in social programs) with unrealistic increases in national productive/tax base. 27 This is the same scheme Wall Street and the CIA have used to bankrupt other nations for four decades. 28 The psychopathic Wall Street warmongers demand a humongous deficit-busting military expenditure, but this statement may reverse cause and effect. 29 Douglas Valentine identifies chaos by U.S. elements in foreign nations is being duplicated in the 50 states.30 Whether this involves the development of the United Nations, NATO, drugs, or a virus31 depends on the observer.

Bankruptcy of the Nation is inherent in this plan. The Federal Reserve Ponzi scheme creates an expanding National Debt with no possible way to pay it off. The principle of a ‘loan’ is created by deficit spending. [Notice that the ‘loan’ (sic, credit that is never negated) is from the Federal Reserve system but the taxpayers have become responsible for it.] The required interest to pay it off is never created. Only more debt, with the new principal being used to pay the prior interest, delays the Ponzi’s collapse. The growth required to perpetuate such a scheme, of interest upon interest upon interest, is exponential as evidenced in any graph of the National Debt. Again, a contract that cannot be culminated is an act of fraud and is void from its inception.



Up to this time we have detailed the historic operation of the Federal Reserve. The financial dilemma on Wall Street in 2008 found the Fed exercising new power to prevent economic collapse. The Fed purchased Treasury securities from select banks, suspected to be covert shareholders of FRBOG, Inc., to provide instant cash. The Fed was rescuing their owners from bankruptcy. The strange thing is the Fed balance sheet did not have the value of the purchases on their balance sheet before the $3.5 trillion purchases. The Fed established the value on their accounting books out of thin air before using it to buy the securities. If commercial banks had done this, it would be called fractional reserves.

At some point we must draw back and identify the use and purpose of various accounts of the Federal Reserve. Prior to 2008, the account of Federal Reserve assets was the identification of value received from auctions of Treasury securities that exceeded transfer to a government account accessible by the US Treasury. The auctions were the only source of $1 trillion in assets for the Fed; i.e., the difference between securities being auctioned and the prices being redeemed. The account was government money. It eliminated the requirement that money coming in from auctions precisely match each money sent to suppliers of mature bonds. 2008 apparently changed that; private funds of the Fed for QE were commingled with government funds.

If the commercial banks that received the QE credit had been committed to repurchase the securities after their financial condition improved, it would have eliminated any increase in value added to the market. But the banks did not repurchase the securities from the Fed. $3.5 trillion of value was created by book entry action. Fed testimony to Congress offered a statute that was claimed to authorize the action. This same procedure has been repeatedly used by the Fed to purchase an additional $4.5 trillion to prevent bank failures. $8 trillion credit has been added to the market [inflation] without any benefit to the government. $8 trillion would be a lot of money to laundry in BlackRock, Vanguard, MSM, pharmacy companies, fuel production, and to fund globalist projects [including Ukraine]—as has been $30 trillion. When similar industry is owned by one firm, such as BlackRock, competitive pricing becomes monopolistic price gouging.

The Fed has made several efforts to sell the $8 trillion of credit they created on their books which, according to the thesis above, would appear to be profit for the shareholders of the FRBOG, Inc. Those efforts have repeatedly resulted in market rejections and downturns.32 If the Fed was able to sell them on the market, it would transfer the value of securities to the FR Board of Governors, Inc. If the government bought the securities, it would retire the securities which would reduce the National Debt and also reduce credit in circulation [deflationary]. It would be the precise reverse of issuing deficit spending securities.

Bernanke told us the QE was not nationalizing the national debt. It was a loan of the Federal Reserve—not a government function. The loans would be paid off when the securities were repurchased by the banks that had been rescued and no value would be added to circulation. To expedite the accounting procedure, the private assets of the Fed were merged with the government money used for auction accounts. The procedure was so handy that $8 trillion of private loans by the Fed to rescue banks has been added to the government account. Now the Fed wants to sell those assets but every attempt to sell them on the market has crashed the economy. [NOTE: The funds received from auctions of deficit spending Treasury securities as identified above are alleged to involve other private accounts that are never identified.]

Powell has recently announced the Fed is going to “roll off” Fed assets which will retire them. The only way to retire national debt is to sell it to the government. The Fed can do this without even asking the government for the funds. The FRBNY, as fiscal agent for the government, has exclusive authority for disbursement of government funds from auctions of Treasury securities, and to any related operation they wish to claim. Ref. 31 USC 375.3. Administrative and regulatory supervision of the FRBNY franchise is vested in the FRBOG, Inc. Instruction by Powell to buy securities held by the BOG would be no big deal. If funds to redeem maturing securities in the market run short, well, times are tough all over. The Fed comes first. It just requires more deficit spending. It makes no difference that the assets were generated as a book-entry credit for the Fed. Such an easy way to crash the economy, bankrupt the Nation, and make it look like Congress did it.

The tightening of money from retiring securities seems eerily similar to what the Fed did in 1929. Call loans were repeatedly demanded to be paid immediately which stopped construction and inventory expansion. The crash was instrumental in flushing gold from under mattresses and did not stop until war was declared. When the Fed squeezes the economy, the affect is multiplied by the commercial banks losing reserves.

An alternate rescue plan to rescue the Fed involves use of the Fed’s new Special Purpose Vehicles (SPV) program to sell securities to the Treasury Department (read Stephen Mnuchin of Goldman Sachs) to procrastinate bankruptcy of Wall Street banks. It will apparently additionally balloon the national debt but will be used to avoid bankruptcy of Wall Street banks and their cronies. 33 BlackRock, allegedly owned by bankers, is central to the scam. 34 Unrelenting access to government funds, while the tax base is destroyed by compelled national unemployment and corporate bankruptcies by a created virus 35, is a textbook recipe for insolvency.

If the scheme is not altered, Wall Street internal memos identify the “ultimate goal” is to collect on the $24 trillion National Debt.36 During national bankruptcy, the FRBNY will handle redemption of the PD’s tendered securities they have purchased in the market for pennies. They will demand face value from the U.S. Treasury; i.e., a financial rape of the nation. They are all one clan. Hello Greece and a U.S. troika controlled by financial entities.37

It appears as if Larry Kudlow, Director of the United States National Economic Council, has conceded control of the Treasury has passed to Wall Street to complete the coup.38

National bankruptcy would duplicate the Greek chaos within the United States. 39   The financiers’ objective in Greece40 is not to exploit, but is to destroy the nation.41 42 Indeed, national sovereignty has been acquiesced by Greece to the Troika (financiers) as the terminal end of Goldman Sach’s “shitty” three billion Euro debt.43 New York financiers, using the IMF, extended credit to 86 nations for covid relief in March 2020. What appears to be a planned global economic collapse would put financial entities controlling all of those nations. The USA would be 87.

Get ready to kiss your 401(k), your government benefits, your pension, and your bank accounts goodbye, with strikes prohibited, health care costs escalated, perpetual war, mass layoffs (including government personnel), and economic chaos—among other dire occurrences. The economic chaos initiated by the virus, which has served to destroy the tax base and make the budget unsustainable, will be only the prelude.

The U.S. has four options:

The entire situation can be ignored with the public meekly submitting to Wall Street’s collection of the fraudulent $30 plus trillion National Debt and accept the fate of Greece [Greece has surrendered national sovereignty control to Goldman Sachs/Troika. Approval by Troika (financiers) is required for all government actions.] The New World Order will become established.


They can assert public pressure on Congress-critters to audit relevant accounts and investigate the Federal Reserve’s handling of government funds. The GAO has the authority to audit the handling of government funds by any entity. 44 It has made at least two reviews of the FRBNY’s security handling of funds [but not audits] from auctions of Treasury securities. The FRBNY has exclusive handing of such funds. Ref. 31 USC 375.3. All that is required for the GAO to review the handling of government funds is a request by a Congressional committee. Unfortunately, it is rumored that votes [to prevent an audit ?] can be purchased as cheaply as $50,000.


Citizens can use the FOIA 45 to demand relevant official Fed documents for analysis as affirmed by the Second Circuit Federal appellate court. 46 The future remains to be seen.

Or fourth, insurrection would be against the law.


This writing is not copyrighted. Feel free to distribute.



3  Benjamin Ginsberg identifies historic European banking events/chaos in FATAL EMBRACE; (financiers) AND THE STATE even from the Magna Carta.   European origin of the Federal Reserve is well known.  Ref.

4  GREEK, OR DEJA VU ? ; ;

5  Douglas Valentine; CIA AS ORGANIZED CRIME.

6  This creation of book-entry credit is similar to Main Street bank making a loan to a client (fractional reserves).


8  In fact, the “king” has been known to confiscate the public gold in “the public interest.”

9  After the hook was set, the bankers would clandestinely demand token payments of gold from the king until his coffers were emptied and he was bankrupt. After the king was ban,krupt and the people resisted increased taxes, bankers (who controlled the roll-over of prior debt and the paying of interest) would demand the king sell his assets to the bankers (for the banker’s make-believe book entry credit) at fire-sale prices (as in Greece) so interest on the king’s promises could be paid.   Consider the irony of it. For the king to have a bit of purchasing power to advance the kingdom, the kingdom was lost. The people finally wised up and revolted.

10  The Magna Carta as a rebellion against the war-mongering by London financiers is an interesting observation of Benjamin Ginsberg. It has been omitted from history books.  1000 years hasn’t changed the financiers’ war-mongering obsession.  Ref.  Michel Chossudovsky, GLOBALIZATION OF WAR; Douglas Valentine,  CIA AS ORGANIZED CRIME ;;  A FACE FOR THE SHADOW GOVERNMENT.

11  A debt-based national economy without specie backing is a Ponzi scheme inherently destined for bankruptcy but that is another story.  Ref.  p4.

12;  The “Federal Reserve” name is a first camouflage to disguise the bank with a facade of government agency for sovereign immunity and to mitigate public animosity from bankers exposure.  The claim of agency status does not appear to comply with Supreme Court adjudication of parameters for agencies. Nor is status of agency available for the economic benefit of private entities. The status of the BOG is not known to have been adjudicated.

13  A favorite line is the government borrows money. It is impossible to see that what was not there before the event could be borrowed.  It would appear that the Fed did not put up any legal consideration for the agreement. A contract without legal consideration by both parties is void from its inception.  Nor can it be rational that the Federal Reserve had $20 trillion a century ago while they purchase $100  Ben Franklins for 15 cents each from the US government. [The Fed does not ‘print money’ (sic); it buys it from the government.]  Another inane concept is that the government borrows from the public.  If there is any logic to this concept, how then is the public in debt ?

14  A Treasury Bill, Bond, or Note is backed by the taxing power of the U.S. FDR removed domestic demand for gold.  President Nixon removed the pledge of gold  for other nations.  Cynics might conclude the FRBOG had confiscated the government’s gold by that time. China received bogus gold bars from the Fed.

15  A loan involves money exchanging hands.  There is no increase in money in circulation (inflation) with a loan.

16  “… To sell marketable public debt, the Treasury, through the 12 Federal Reserve district banks and their branches, acting as fiscal agents for the Treasury[ 12 USC #391] , sells securities to the public through a competitive auction process.”  page 22 of 161.

17  This was a surprise for President Clinton.  Appointees to the BOG are selected from a short list submitted to the government (by the Wall Street owners of the corporate Board of Governors ?).

18  The BOG has regulatory and administrative authority over the 12 FR banks.  Any of the 108 directors can be fired without cause and without recourse.  Ref. 12 USC #248(f).

19  The 1992 GAO report reveals the FRBNY electronically receives auction bids [ ].   31 CFR 375.3 grants exclusive authority to disburse auction funds and any related action to the FRBNY.  .Congressional Research Service Report 42079, Federal Reserve; Oversight and Disclosure Issues, March 27, 2017.   The CRS report on the Federal Reserve states the GAO has conducted many audits of the Fed.  At footnote 15, “audit” is identified to have a broad application in the report.  It is used to confuse the reader.  In fact, the GAO has conducted two REVIEWS of the FRBNY’s handling of security measures of Treasury auction procedures.  No audit of FRBNY’s handling of United States’ funds, as fiscal agent for the government, from auctions of Treasury securities in accordance with standard accounting practices is known.  The footnote clearly identifies “statutory restrictions” do not apply to audits by the GAO. Further, the Report appears to imply identification of recipients of FR funds is not subject to disclosure  That misconception was laid to rest in the Bloomberg adjudication.

20  Ref.     The tabulated entries do not include government account holdings.  The public holds 72.41%  of total government debt. Your Social Security payment goes toward the purchase of a Treasury security.

21  The Federal Reserve banks have twice been adjudicated as privately owned corporations for the issues at bar. This should not be confused with the privately owned closely held corporate ownership of the Board of Governors of the Federal Reserve alleged herein.    A query of “Who owns the Fed ?” allows an evasion of owner allegation.

22  Audit reports (by professional accounting firms) of the Federal Reserve are conducted in accordance with guidelines established by the BOG.  The accounts relevant to this writing are private client accounts, not operational accounts, and have never been audited.

23  The funds exceed $3 billion daily.  [ $1 trillion deficit divided by 365 days is $3 billion.]

24  Status as a government agency is not applicable for an entity created for private profit, or for theft.

25  The FR system is required to give all revenue in excess of expenses to the U.S. Treasury. 12 U.S.C. § 289.

28  Congressional funding of some covert foreign political action by the CIA in the 1980’s is detailed in

29   Robert Stinnett in DAY OF DECEIT uses government documents to show FDR and his cronies on Wall Street developed a 17 month agenda to pressure Japan to hostile action. Codes were broken; Pearl was not a surprise.  Douglas Valentine in CIA AS ORGANIZED CRIME concludes the CIA has repeatedly initiated US military action for the economic benefit of Wall Street.  Nomi Prins relates in ALL THE PRESIDENTS BANKERS that World War I was foisted on the US to safeguard many billions in loans by Wall Street with a set-up false flag HMS Lusitania.   David Swanson gives a lengthy list of US invasions.  Ref.  THE GLOBALIZATION OF WAR by Michel Chossudovsky.

30  Douglas Valentine, CIA AS ORGANIZED CRIME.



37  Bankers have successfully lobbied for bankers to receive super priority for derivatives, in the event of government default.


39  General Smedley Butler declined an offer from Wall Street to be the leader of a U.S. coup in the 1930’s.  Ref. WAR IS A RACKET by Smedley Butler.

40  It was started with a mere $2.8 billion loan foisted by Goldman Sachs and known to be unpayable.

42  GREEK, OR DEJA VU ? ; ;

44  31 U.S.C. §714(b).   Such federal statute restrictions are not applicable when the GAO is considering their mission to “ensure the accountability of the federal government [money] for the benefit of the American people.” CRS report id, p3.    Ref. Footnote 1 and 7.

45  FOIA requests directed to the Federal Reserve system are codified at 12 CFR 261.   12 CFR § 261.3 (a) identifies the Secretary of the Board of Governors as custodian of all Federal Reserve records.  12  CFR § 261.3 (c)  directs service to the Secretary of the Board.  Procedures for requesting records are detailed at 12 CFR § 261.12.(b)  and (c).

46   “So long as records at the [Federal Reserve Banks] satisfy the plain language meaning of 12 C.F.R. § 261.2(i)(1), they qualify as agency records of the Board and are subject to FOIA requests. … Records of the Board include . . . all information coming into the possession and under the control of the Board, any Board member, any Federal Reserve Bank, or any officer, employee, or agent of the Board or of any Federal Reserve Bank, in the performance of functions for or on behalf of the Board that constitute part of the Board’s official files; or [records] [t]hat are maintained for administrative reasons in the regular course of business in official files in any division or office of the Board or any Federal Reserve Bank in connection with the transaction of any official business…The FRBs give all revenue in excess of expenses to the U.S. Treasury. 12 U.S.C. § 289.”    Bloomberg L.P. v. Bd. of Governors of Fed. Reserve Sys., 649 F. Supp. 2d 262, 274 (S.D.N.Y. 2009), aff’d, 601 F.3d 143 (2d Cir. 2010).

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