Banking and Financial Reform

World leaders probably know what’s happening but they are not doing anything about it. They don’t care because they are benefiting from what they are doing to us

- Victoria Grant

12 year old central bank reformist Victoria Grant and her mother Marcie

If a 12 year old girl can understand the problem with central banks, then surely we adults can?

There is an analogy I like to use; the fish cannot know water.

Because the fish is swimming in the ocean it’s whole life and it is surrounded by water from the day it is born to the day it dies, how can it know there’s something that surrounds it all the time called water? How can it know that there’s another world of purely air-breathing creatures living above the water?(Assume the fish is not caught by a fisherman). The lesson here is that when something is so ubiquitous, it is not noticeable.

In the same way, the whole concept of borrowing money from a bank at an interest rate is so ubiquitous and passed down from one generation to the next that it appears to be absolute and the right way of doing things. We all know banks need to make money too, right? Well, that’s where 12 year old Victoria Grant and other money and central bank reformist like Ellen Hodgson Brown tell us we are wrong.

You see, a relatively short time ago, banks were run by the government. This all changed due to a very small handful of greed-driven men hatched up a scheme to allow their private enterprises to intervene in the low or zero interest rate government’s issuance of money. You may have heard of these great financiers of the 20th century? J.D. Morgan, Rothschilds? These and a handful of the most powerful financiers in the world met for years in secrecy at the turn of the last century to create the US Federal Reserve, which has since become the central bank model the world over. Find out more about the world’s greatest con job here.

This small handful of PRIVATE corporations effectively took over the government printing of money and tacked on an interest rate – creating the greatest money making scheme in history. Here is the simplicity of the scheme we have all bought into:

  1. Convince the public that the paper money coming from the central bank is legal tender. This means that by law, we must use it for exchange of goods and services. This effectively causes the entire population of a society to use it.
  2. Loan money into existence. Every dollar that’s ever brought into any kind of circulation, whether paper money or electronic money in a bank account, is loaned into existence.
  3. The loan comes at an interest rate
  4. The principal is created into existence but the interest is not. Therefore, there is an inherent shortage of money in the system and people are forced to compete to get enough created money to pay back their principal AND interest. This means that however much interest is in the system, is how many people who take out loans must ultimately default from their loans and lose all their assets they have accumulated. Losers are inherently designed into the system.

This is what keeps the entire world economy, with it’s guaranteed winners (the top winners being the private consortium of banks that sit on the board of the central banks) and losers (who have defaulted on their loans). To find out more, watch an excellent series of films about the central banking system here.

The Central Bank Reform Movement

Ellen Hodgson Brown is a central bank reform advocate and her book Web of Debt is an eye opening introduction to the problem of central banks.


Our money system is not what we have been led to believe. The creation of money has been “privatized,” or taken over by private money lenders. Thomas Jefferson called them “bold and bankrupt adventurers just pretending to have money.” Except for coins, all of our money is now created as loans advanced by private banking institutions — including the privately-ownedFederal Reserve. Banks create the principal but not the interest to service their loans. To find the interest, new loans must continually be taken out, expanding the money supply, inflating prices — and robbing you of the value of your money.

Not only is virtually the entire money supply created privately by banks, but a mere handful of very big banks is responsible for a massive investment scheme known as “derivatives,” which now tallies in at hundreds of trillions of dollars. The banking system has been contrived so that these big banks always get bailed out by the taxpayers from their risky ventures, but the scheme has reached its mathematical limits. There isn’t enough money in the entire global economy to bail out the banks from a massive derivatives default today.

Web of Debt unravels the deceptions in our money scheme and presents a crystal clear picture of the financial abyss towards which we are heading. Then it explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln. If you care about financial security, your own or the nation’s, you should read this book. – Source: Web of Debt



For more on the Public Bank solution, go here

Replace Reckless Financial Institutions with Limited Liability Banks

A safety measure that would prevent financial institutions from partaking in risky behavior  could be established in what are referred to as Limited Liability Banks to prevent fraudulent activity on Wall Street.

Professor Larry Kotlikoff  of Boston University is author of the book “Jimmy Stewart is Dead”. The title comes from the movie It’s a Wonderful Life. In this movie, Stewart potrays George Bailey, a trustworthy banker who suddenly faces a run on his bank and the clients all arrive at the bank to pull their money out. He tries to assure the customers that their money is safe but he was actually engaged in a fraud…..he invested the money that was deposited in his bank. This is a story about financial fragility and honest bankers…a story that reflects that fraud happening on Wall Street.

Kotlikoff does not feel there are many honest bankers any more, especially at the head of large banks. These bankers gamble in the derivatives markets which totals $600 trillions of dollars in size while the total GDP of the US economy is only $14 trillion. They are gambling on bets worth billions and even trillions of dollars and the liability of  bad bets can exceed the total GDP of the US economy.  These companies are effectively gambling with the public’s money. While there is a big personal reward if they win, if they lose, the liability can be so large they cannot pay for it and appeal to the government for a bailout claiming that they are “too big to fail”.

Because of this exposed risk, Kotlikoff recommends redesigning a financial system which does not rely on honest people, creating what is called limited purpose banking to prevent such financial disasters. He wants to move banks, insurance companies and other financial middlemen out of the gambling business. These companies make promises to secure public funds and then gamble with it. Kotlikoff’s strategy is to restructure limited liability companies (those where corporate failure do not affect the personal equity of the people at the top) so that if  the bank fails, the top people lose their homes and other assets.

Federal Financial Authority and Mutual Funds get around all the corruption we have seen

Like the FDA which makes sure food is safe, Kotlikoff recommends establishing the FFA, which would inspect securities to make sure people aren’t buying bad apples, no more liar loans. They would verify the statement on loan applications by employing independent appraisers and the information would be disclosed on the web in realtime.

The switch would not cost much and large financial companies could still do investment banking, but as a consulting business..they would be prohibited from taking on risk on behalf of the public.


1. Bob Blain, “The Other Way to Deal with the National Debt,” Progressive Review (June 1994).

2. David Kidd, “How Money Is Created in Australia,” (2001); Michael Rowbotham, “How to Cancel Third World Debt,” in Goodbye America! Globalisation, Debt and the Dollar Empire (Charlbury, England: Jon Carpenter Publishing, 2000), pages 188-89.

3. Keith Bradsher, “From the Silk Road to the Superhighway, All Coin Leads to China,” The New York Times(February 26, 2006).