This video, in Dutch, was made by Studio White Cat, Merlijn Janssen Steenberg. Kudos to him for this very professional production.
Subtitles can be turned on with the cc button at the bottom of the Youtube player.
(Left: Grand Master Putin. But his game is poker, not chess.)
“We will strive to ensure a new world order, one that meets current geopolitical realities, and one that develops smoothly and without unnecessary upheaval.”
“I recently had a talk with Henry Kissinger. I meet with him regularly. I fully share this consummate professional’s thesis that close and trusting interactions between Moscow and Washington are particularly important in periods of international turbulence.”
Putin in ‘Russia and the Changing World‘ 2012.
Russia’s central bank is Rothschild and oversaw the proliferation of commercial banking in post-Soviet Russia. ‘Give me control of a nation’s money and I care not who makes the laws’……
Who created the Oil boom that allowed Russia to rebuild its army? Why, the US Empire in its quest to defend the Petrodollar of course! When will we learn about multi faceted strategy coming together? The Money Power’s strategists are good at what they do and this is just a case in point.
Putin did not kill Oligarchic rule in Russia, what nonsense! He pushed back Berezhovsky and Khodorovsky, because they were a threat to the Russian State, which the Money Power needs to be strong and centralized. The Putin – Oligarch deal is quite clear: The Kremlin for him, the economy for them.
Why is he not providing interest-free money to the people? Why is the population in Russia still tanking after 15 years of his rule? Where did all the Oil money go besides the Oligarchs and the weapons industry? Why is he not exposing the bankers that are running this show? Why is he pretending this is a conflict of nations?
And why is Putin so assertive? Because China is behind him.
We want to take sides, but Russia is just another Empire and would love to rule the world if the US were not in the way. ‘They’ always have us choose between evil and lesser evil, but when are we going to make some choices of our own?
Managed Conflict is the goal and the means on the road to World Government.
The decapitation of the US Empire and the Dollar is longstanding Money Power policy. The US is a Colussus on clay feet, it’s already dead. Anybody can see that.
Babylon is bigger than the US, bigger than Jewry. It’s temporal power and it is One. Its core is the Capitalist global monopoly, encompassing first and foremost banking and secondary all major Transnationals.
World Government is just the externalization of the age old hierarchy.
Enough of the Putin worship! Give Peace a Chance!
The US Empire is Not the Money Power!
Hugo Chávez: Enemy of the US Empire, Marxist and Money Power Stooge
Is China part of the New World Order?
The Dying Dollar and the Rise of a New Currency Order
The Few Banks that Own All
Does Rothschild own all Central Banks?
(Left: Michael Tellinger during one of his presentations)
Michael Tellinger is a scientist and activist from South Africa. As a scientist he has brought an ancient, vast and interconnected network of stone circle constructions to the attention of the world. There are millions of them, all over southern Africa and they show advanced knowledge of sacred geometry. He theorizes they were part of a huge infrastructure for energy creation based on hypersound. He has linked them to other ancient structures, including the Pyramids.
He’s written a number of books, among them “Slave Species of God“, based on the work of Zecheria Sitchin and his latest, “Ubuntu Contributionism“. He believes money was introduced into human society by ‘Priest Kings’, ‘the Gods’, most likely an alien race, as a control mechanism.
It is this link that has got him into activism, creating alternatives for our current money based economy and fighting the banks. He’s been in court for three years against the South African Reserve Bank. He’s building a community, Ubuntu, based on an economy free of money. And he’s running for Parliament, with good chances of success.
The core of his program is monetary reform, based on the end of banking as we know it and money creation aimed at unlocking human potential instead of usurping it.
In the interview we cover:
Humanity’s fascination for Gold
The origins and nature of money
At 40 min: his litigation against the Banks
International developments in taking the Banks to court
Monetary reform on a national level with Ubuntu Party
At 1:07 : Community currencies do’s and don’ts
Why the Gelre is the most advanced unit available at this point
The disconnect between the awareness on the web and the stone age conversation in the Main Stream
The need to speak up to break the silence and isolation of the awakened
The interview and Michael’s presentation in Groningen were organized by Earth Matters, a leading Alternative Media outlet in the Netherlands. Many thanks to them for setting up this wonderful opportunity.
Camera: Natasja Depassé
Production: Arjan Bos
Everything about Michael Tellinger’s inspiring work:
Wayne Walton has been making some splendid memes recently and he has been so kind as to make two for Real Currencies too! I could not resist sharing them here!
For all RC articles on the Austrian Economics con game, see Faux Economics.
Positive Money is undoubtedly one of the leading monetary reform organizations in the world. Their analysis of our monetary problems and proposed solutions are basically the Chicago Plan. But the Chicago Plan does not address Usury.
Positive Money, headed by Ben Dyson, is based in the UK and is a spin off of the New Economy Foundation. It’s a not-for-profit corporation and is financed by a number of social justice foundations and grassroots supporters. Total income last year was 135,000 pounds.
They have a powerful presence on the web. A well designed website, with an accessible narrative. They are very active on Facebook, where they have more than 20,000 likes, which is very substantial for monetary reform advocates. And this number grows quickly too, a testament to both their efforts and the growing general awareness of the issue.
Their communication is well thought out and professional. They break down the problem as they see it in concise videos and memes (pictures with a few sentences, which can easily be shared on Facebook). They churn out these memes regularly and they are continuously shared by many people who have an interest in monetary reform. By providing them they enable these people to promote the issue and this in turn gives Positive Money a strong voice in the debate.
Here’s a short video outlining their basic take:
They have a number of unofficial sister organizations abroad. For instance Sensible Money in Ireland and ‘Ons Geld’ (Our Money) in the Netherlands.
Recently they scored a nice success, when the British Green Party included Positive Money’s monetary agenda in their own program.
The Chicago Plan
Positive Money basically promotes the Chicago Plan.
In an effort to address the causes of the Great Depression, a first draft of this plan was circulated March 16th 1933 by a number of economists from Chicago University. It ultimately resulted in a paper called ‘a Program for Monetary Reform‘.
Irving Fisher was the most notable of these economists. At the time his plan, while appreciated by his colleagues, did not gain the attention it undoubtedly deserved, for the reason that his reputation had been severely damaged by his blindness to the bubble that preceded the depression. Only three days before Wall Street’s historic crash in October 1929, he predicted that stocks had reached ‘a permanently high plateau’.
It was an honest mistake, a lesson many continue to have to learn the hard way: he was heavily invested in stocks and really believed in the nonsensical stories that people make up during these, easy credit fueled, booms. He had been a wealthy man, but lost a very substantial part of his fortune in these weeks.
This blunder not only severely diminished his fortune, it was also a great bust for his reputation as a leading economist and it’s perhaps understandable that people at the time gave more credence to Keynes’ analysis of the situation. Keynes, after all, had already written ‘The Consequences of Mr. Churchill’ in 1925, after this Rothschild agent had reinstated the Gold Standard at their behest. Keynes predicted that this move would lead to a depression, undoubtedly one of the key reasons the Austrians always hated him so much.
However, Keynes claimed that depressions were caused by falling ‘aggregate demand’ in the economy (without pointing at the monetary reason: deflation) and suggested that the Government should compensate for this with anti-cyclical spending: borrowing money for investments for infrastructure and the like.
Fischer, perhaps exactly because he had learned the hard way, was much closer to the truth. He correctly stated that booms were caused by credit expansion and busts by deflationary debt deleveraging. What is more: he blamed the banks for this and squarely pointed at Fractional Reserve Banking.
His solution was to end Fractional Reserve Banking and force the banks to lend only what they had in deposits. Money creation should be left to the State, who should have the Central Bank print debt free money.
This then, is also what Positive Money prescribes as an antidote to our current problems.
The Goals of Monetary Reform
The New World Order is basically a group of banking families. They own the banking industry and through it the money supplies of the world. They use this control to suck up the wealth of the nations through Usury, which redistributes, ultimately everything, from the many to the very richest. Compound interest makes it unavoidable that these families owned the world within a few centuries after starting their lending operations.
Their second major tool is the manipulation of volume. Usury and racketeering cause money scarcity and associated permanently depressed economies, which has been the norm throughout the West for most of modern history. Alternating inflation and deflation causes the boom/bust cycle.
The third main issue is that the banks control who gets credit and who doesn’t. They finance those they own or want to own and starve the rest. There is zero democratic control of credit allocation, let alone a recognition of the fact that the credit they create through Fractional Reserve Banking is in fact our credit, to which we are naturally entitled.
The Chicago Plan was devised to solve problem number two: the manipulation of volume and the associated boom/bust cycle. Positive Money correctly states that money must be only printed in good times with low inflation. This is indeed a reasonable formulation of how volume should be managed.
Under the Chicago plan outright bankster racketeering aimed at creating deflation would be more difficult, although not entirely ruled out.
It would probably also to a large extent solve money scarcity. But not entirely, because money scarcity is implicit in a usurious environment. Interest plus debt will always be bigger than the principal.
While solving problem two, the Chicago plan does not even address point one or three. Banks would continue to rake in the interest and pay out to the rich (‘savers’) and the poor would be paying. They would continue to decide who gets credit and for what.
The Money Power and the Chicago Plan
There is little reason to doubt Fisher’s (let alone Positive Money’s) intentions. It fitted well with the thinking of these days.
But on the other hand, the Chicago Plan is not very threatening to the Money Power either.
It is more than noteworthy that we see the same thing with the Chicago Plan as what has become the fundamental conclusion of our discussion of NSDAP monetary policy after they came to power: Schacht solved the depression by providing the economy with some extra liquidity through his MEFO bills, but he vehemently opposed and managed to shut down Feder and the Strasser brothers and their anti-usury movement.
For the Money Power it’s a given that volume is under discussion. Their Austrianism is a typical example. It’s the redistribution through the monetary system that is the taboo.
Some highly amusing anecdotal evidence for this statement was recently provided by a friend, a notable monetary reformer from the Netherlands, who told me that at some convention he was invited by a well known Dutch economics professor to join the wholly innocuous ‘New Economy Transformers’, centered around ex-World Bank chief Herman Wijffels. The good professor had no qualms off handedly adding “but you will have to stop talking about the wealth transfer through the system all the time”.
Another issue is that leading Money Power outlets, including the Financial Times and the IMF, nowadays routinely positively discuss matters in a very similar vein to the Chicago Plan.
Is it worthwhile limiting oneself in the discussion to the boundaries of thought that the Money Power itself sets?
Full Reserve Banking
Until about six months ago, they didn’t mention the Usury issue at all. They reasoned (and basically still do) that Usury is too big an issue and getting it on the agenda, let alone rid of it, impossible.
But the growing momentum and ongoing feedback on their Facebook page made them change course and they produced a number of their typically high quality vids and memes exposing the hundreds of billions per year the British banks are raking in through Usury and the wealth transfer from the 90% to the 10% through this process and Usury in general.
But they frame it in such a way as not to disturb their proposed solution of Full Reserve Banking. They claim private money creation is the problem.
But ultimately it matters not who creates the money. What matters is what it costs and whether volume is stable. What matters is who gains by money creation.
We have already discussed Full Reserve Banking extensively in this article. Suffice it to say that the Money Power will quickly reestablish full control over any ‘debt free money’ and will continue to reign supreme through interest-slavery.
A 200k mortgage would still cost 300k in interest. The opulent would still rake in most of the money.
The conclusion is that the Money Power is comfortable with proposals that end the depression based on the correct analysis that they are caused by deflation. Sure, while implementing depression, they combat these plans, but they are no existential threat and in fact are used by them to solve depression when they have achieved the goals they were aiming for in creating them: they provide the necessary paradigms for the public to ‘understand’ what is going on.
But can we really avoid the Usury issue, considering the myriad profoundly dishonest and destructive implications? Its supreme importance to the Money Power?
The more so since such reasonable ways to do away with it are readily available?
Positive Money and the Chicago Plan are close to Public Banking and the Hamiltonians. And even more so to Zarlenga and the American Monetary Institute. Modern Monetary Theory also fits in this group.
The main difference between the Hamiltonians and the others is either private or public fractional reserve banking with interest vs. private full reserve banking.
Their common basic idea is that the problem is that control of money is private and that it should be nationalized. They either nationalize money creation or the banks (which automatically means the money too).
They all avoid the crucial Usury issue and enforce the State. They do not really accept the commoner’s fair share in it all. The fundamental need to end interest slavery.
But to the common man it matters little whether he is paying interest to the State or to private banks. Governments are not the commonwealth and history shows less is more.
So while Positive Money is doing a wonderful job getting monetary reform on the agenda, their proposals are simply not comprehensive and are co-optable for the Money Power.
The Goal of Monetary Reform
Forget about Full Reserve Banking
Full Reserve Banking Revisited
The Difference between Debt-Free Money and Interest-Free Credit
Austrianism is Dying! Truthers Unite!
More on Mutual Credit
Hitler’s Finances, Schacht in his Own Words
Who in his right mind wants more State? More politicians? More bribes for politicians? More fines, more law, more prison? More Bush, more Hillary, more lies, more war?
Time to wake up people! Regulation is what Big Business lobbies for all the time: it’s killing small and medium business, who don’t have the resources to comply.
80 Years of more regulation, more welfare has done nothing to end Plutocracy. 1% owns 43% of all assets! 50% of Americans have net zero assets or less!
Marxism was invented to consolidate Plutocratic control of the economy in the State, a World State, ultimately. Regulation is their tool.
Now consider this:
– Usury redistributes up to 2 Trillion per year from the poorest 90% to the richest 10% in the US alone.
– Even if you have no debts, you lose 40% of your income to Usury passed on in prices.
– The Federal Reserve handed out 16 Trillion in easy credit to International Banks in 2008/2009. It cannot account for 9 Trillion of these.
– The Federal Reserve is handing out 1 Trillion a year to the ultra rich in exchange for their busted derivatives.
– Because of this ALL economic ‘growth’ of the last five years has gone not to the 1%, not to the 0.1% but to the 0,01%.
– Banking crises have happened and happened again for centuries now.
– Capitalism started in Amsterdam with the Amsterdamsche Wisselbank, the first major Central Bank in history. Its owners moved to Britain, where they founded the BoE in 1694, through which they ruled the world for centuries. Bretton Woods saw the migration of that class to the US.
– Interest-free credit is a total no-brainer. YOU can have an interest free mortgage tomorrow.
– Banks are the main sponsors of both the Dems and GOP. The left is no better than the right.
– All major banks own each other and most Transnationals. It’s one massive, global cartel that owns all Governments.
So: if we have such a bleeding heart for the poor, when are we going stop palliating their wounds, caused by interest on loans of money, and actually DO something about their plight?
When are we going to tar and feather these maniacs in Wall Street and beyond?
When are we going to man up and relinquish our childish political affiliations of our younger years?
When are we going to circulate local currencies? Reform the monetary system?
In a short and forceful vid he calls for a Conference and promises a follow up vid to declare who should be there.
Brother Nathanael Kapner is a very strong voice reaching many people. He is at the heart of the Truth Movement, which is so profoundly affecting global public opinion.
And the Truth Movement simply cannot do without a solid agenda against the banks.
Recently Alex Jones also for the first time started talking some sense, mentioning interest rates, predatory banking and State Banks that could do a great job financing economic development at low cost.
This is a marked improvement over his previous atrocious Austrian Gold position and obviously anathema to Ron Paul.
Nevertheless, both not yet really focus on the Usury issue. They focus on nationalizing money. And this an evasion that could easily result in fascist tendencies if not managed well.
Nationalism is not the same as empowering this Federal Government. We want to empower the People. The commoner. With interest-free mortgages and business loans. Not wage slaves in big corporations, but strong small and medium business. Much less stress, much more free time. Time to think, to study, to build. To heal.
We are proud of our nation but we want to be free men.
However, this is both the coup de grace to Austrianism and a major step forward.
The bickering of the right and the left looks more hopeless everyday. The eternal Capitalism vs. Marxism dialectic is alive, but is it still well?
As we know, the Money Power directs history through dialectics. By creating two camps with a narrative that both suit our masters, they co-opt opposition.
Both sides of the coin always have some good points and some very bad ones. Because people feel forced to make a choice, they are seduced into the evil/lesser evil kind of thinking that is so symptomatic of the Dark Side. By polluting an in itself worthwhile position with other nasty ones, they get what they want anyway.
Crucial to the dialectic is that both camps ignore the true issues, or are in tacit agreement about them.
Capitalism and Marxism both are fundamentally materialistic ideologies. They deny Spirit. That’s why it’s so atrocious that self styled ‘Christians’ defend Capitalism, or that the lefties try to claim Jesus for themselves, because of his love for the poor. This truly is a war against God, ultimately.
The other key issue is, of course, Usury. Capitalism is the idea of ‘return on investment’ and this is unthinkable without Usury. Marxism was designed to co-opt opposition against Capitalism and its banking by claiming private control of the means of production is the probem, instead of this private control being consolidated in ever fewer hands through Usury.
So let us analyze two typical, current examples.
Walter Block and his ruthless attacks on the poor
Block recently made some waves by claiming Black families were doing better under slavery than under the welfare regime of the Great Society.
Here’s an interview with RT:
Everybody fell over him for this and that was probably the idea.
But it cannot be denied that his basic point is fair: welfare creates dependence. It also creates a class of people that will vote for even more Government, more taxation, more detailed management of our lives, more fines, more jail. And worst of all: more civil ‘servants’ and politicians.
Of course, the demise of the family is not only, or not even mainly caused by welfare: the welfare state has been in decline since the early eighties and the demise of the family is only accelerating. The not-so-gay lobby, sexual ‘liberation’ and feminism are more important. But, these (Government sponsored) social engineering outrages are explained away by Libertarianism as ‘Freedom’.
Also note that Block in this video mentions other issues that are bad for the working class, like getting rid of the minimum wage, while spending one second on corporate welfare, which has a far larger impact on the Budget than programs assisting the poor.
This is the same trick as the New York Times uses: reporting an outrage they support in one paragraph on page 42 and then claiming they’re not ignoring it.
Walter Block and his buddies must do this, of course, since it is big bucks from big banking and big business that finance their think tanks.
And how about the Left?
In this short and forceful vid Robert Reich connects the dots in the war against the poor. A minimum wage in decline in real terms, slashing food stamps, medicare, not rebuilding crumbling infrastructure, which could solve the massive unemployment and inactivity all over the States and another few issues.
Is he right that there is a virulent war against the poor? He sure is. As Buffett put it: “There’s class warfare, alright, but it’s my class, the rich class, that’s making war, and we’re winning.”
But while this war against the poor (and the middle class too) is real, Reich is defending patches. He’s not at all pointing at the true cause of poverty: Capitalism and its Banking and Usury.
By ignoring the root cause of the problem, he is relegated to defending ‘solutions’ that clearly disempower many people. Who wants to live from food stamps? Who wants to pay for them? Nobody of course.
Yes, it’s ghoulish to take them away, especially with the ‘high minded’ ‘it’s all for your own good in the long run’ rhetoric of the Libertarians.
But because he’s not looking deeply enough into the economic realities, he must deny the good points the right makes. He must sell his patches by saying it’s better than have people starve. And while I’m with him on this and feel much closer to the left on these issues (while deploring their Cultural Marxism), statist intrusion to our lives is the fundamental Marxist mindset.
40% of what we pay for the goods we buy are usury passed on in prices. It’s even 50% of taxation. All this usury goes to the rich, we’re talking up to $2 Trillion per year in the US alone, far outpacing economic growth even in good times.
And people wonder why the US’ income distribution is at Haiti level?
What use is it complaining about welfare with this massive hand out to the rich? What use is it promoting welfare while ignoring the cause why people need it?
Let us end the dependency of the rich on the poor for their usurious income. Let them find a job or start a business, instead of just milking the credulous masses under State protection.
Interest-Free Money Now!
Left: Gottfried Feder, the intellectual powerhouse that gave Hitler the anti-usury agenda he needed to get to power. But he was sidelined by Schacht and never got the opportunity to implement his ideas.
Clearly far from all were convinced by the analysis that Hitler’s finances were not at all interest-free. But recently some key quotes from Schacht’s memoires have come to my attention. They completely validate the basic premises of the article.
As a reminder, the article pointed out a number of key issues. Hitler did not really reform the German monetary system. The Reichsmark, created by the Weimar republic, continued to be the national unit. The banks continued their operations, based on usurious fractional reserve banking. Their ownership did not change. Germany did have a national debt under Hitler. In 1938 it stood at 18 billion Reichsmark, quite a sizeable sum.
Gottfried Feder was the one behind Hitler’s very strong anti-usury stance during his rise to power. But already in 1931 Hitler’s industrial backers wanted him to reign in Feder and he was completely sidelined in the aftermath of the night of the long knives.
Hjalmar Schacht, aristocrat, mason, top banker, who studied Hebrew to further his career and who was a close friend of Bank of England Chief Montague, became Reichsbank president, in charge of the economy. He solved the depression, which was caused by capital scarcity due to deflation, through the MEFO bills, that circulated between industry, banks and the Reichsbank. But he did not at all solve, or even address usury. Quite the opposite. He was the one who made sure it was business a usual for the banks.
The quotes from his memoires, ‘the Magic of Money’, posted here below, completely corroborate this analysis. He points at Feder and Strasser and interest was the issue. Feder’s interest-free money was ‘nonsense’ and his fight against private banking ‘destructive’.
It also transpires that the MEFO bills came with a 4% interest rate.
Hjalmar Schacht was the man that controlled the German economy and allowed Hitler what the Money Power wanted him to do: build an army against Russia.
Below are the quotes and as an extra the relevant paragraphs from Zarlenga’s ‘the Lost Science of Money’. Interestingly, Zarlenga links Feder to Georg Knapp, who wrote ‘the State Theory of Money’ in 1905. Knapp’s thinking is known as Chartalism and later morphed into Modern Monetary Theory. I will be coming back to MMT at a later stage, it’s making a come back, but unfortunately it does not really solve usury either.
Knapp was probably the link between American Populism in the Greenback wars of the 19th century and Europe’s anti-usury movement.
This truly was a crucial junction in humanity’s struggle against the Money Power’s Usury.
Many thanks to Mark Smith, who got to the bottom of this.
This is an old newspaper snippet, concerning the arrest of Louis de Rothschild in the aftermath of the Anschluss, when Germany and Austria were united, something both countries strongly desired.
This arrest is, understandably, construed by Revisionists as proof that Hitler was working against Rothschild.
But Louis de Rothschild was the owner of the Vienna based Krediet Anstalt, that went bust in 1931. This was a shock that was felt all over the world, quite similar to Lehman’s demise, which left a $700 billion crater in the heart of the financial system.
At the time, like today, bankers were used to getting away with this kind of stuff, and Hitler did well to arrest him.
But it was for a specific reason and cannot really be seen as particularly, let alone comprehensively, anti-Rothschild.
Extracts from Hjalmar Schacht’s 1967 book ‘The Magic of Money’
The bank supervisory authority owes its existence to a law which I instigated when I was Minister of Economic Affairs in 1934. National Socialist agitators led by Gottfried Feder had carried on a vicious campaign against private banking and against our entire currency system. Nationalisation of banks, abolition of bondage to interest payments, and introduction of state Giro ‘Feder’ money, these were the high-sounding phrases of a pressure group which aimed at the overthrow of our money and banking system. To keep this nonsense in check the president of the Reichsbank called a bankers’ council which made suggestions for tighter supervision and control over the banks. These suggestions were codified in the law of 1934, which was strengthened in 1957 by increasing the powers of the bank supervisory authority. In the course of several discussions, I succeeded in dissuading Hitler from putting into practice the most foolish and dangerous of the ideas on banking and currency harboured by his party colleagues. – Hjalmar Schacht: The Magic of Money p 49
…by the end of March, 1933, Hitler had explained to the Reichstag ‘In principle, the German government will safeguard the interests of the German people, not by means of a state organised bureaucracy, but by means of the greatest possible furtherance of private enterprise and respect for private property’. Adolf Weber commented that ‘parts of this and some other utterances sometimes recall almost word for word the “fundamentals of German economic policy” which Schacht had promulgated a year previously’. – Hjalmar Schacht: The Magic of Money p 49
It referred in this context to the financial methods which I had used to reinvigorate the German economy when in 1934 I was re-appointed president of the Reichsbank. I shall come back to this method, here I will only say that it consisted in the discounting by the Reichsbank of bills which granted industry credit over a term of five years. The Reich itself guaranteed repayment. – Hjalmar Schacht: The Magic of Money p 50
National Socialist agitation under the leadership of Gottfried Feder was directed in great fury against private banking and against the entire currency system. Nationalisation of the banks, liberation from the bondage of interest, the introduction of a state ‘Feder’ giro money, these were the catch phrases by which an end was to be made to our monetary and banking economy. I had to try to steer Hitler away from these destructive conceptions. – Hjalmar Schacht: The Magic of Money p 154
Adolf Weber was asked to make a report by the plaintiff in my denazification process before the Ludwigsburg court. In this report he showed how I succeeded in bringing Hitler to his senses where questions of banking and currency were concerned. At the end of March, 1933 Hitler declared in the Reichstag ‘In principle, the German government will safeguard the interests of the German people, not by means of a state-organised bureaucracy, but by means of the greatest possible furtherance of private enterprise and respect for private property’. And a little later he said to his party leaders ‘It is wrong to get rid of a good economist provided he is a good economist because he is not yet a National Socialist, at least not if the National Socialist who is to take his place knows nothing about economics’. – Hjalmar Schacht: The Magic of Money p 155
The second method was the building of the autobahns, and already in the summer of 1933 work began with the building of the stretch connecting Frankfurt/Main with Darmstadt. As the number of employment opportunities grew perceptibly, the Reichsbank began to. grant direct loans for both these activities. A milliard was made available for the Reinhard programme, and 600 million for the autobahn. Both amounts were later paid back into the Reichsbank. The third method was the defence programme. The building of barracks and the equipping of troops brought orders to concerns spread over the entire country. As the cost of this part of the programme to secure employment for everyone was so great and the repayment period so long, the method by which credit was granted directly to the Reich could not be used here. There was too great a danger that the Reichsbank, in granting direct credit, would lose control of currency policy. A way had to be found which would ensure that the Reichsbank was able to restrict and limit the amount of money in circulation. It took us in the Reichsbank a year and a half to find a system which was suitable, and would still enable us to pursue a responsible currency policy. The provision of money for defence did not therefore begin until the late summer of 1934.
The system worked in the following way: a company with a paid-up capital of one million Marks was formed. A quarter of the capital was subscribed by each of the four firms Siemens, A. G. Gutehoffunungshiitte, Rheinstahl and Krupps. Suppliers who fulfilled state orders drew up bills of exchange for their goods, and these bills were accepted by the company. This company was given the registered title of Metallforschungsgesellschaft (Metal ResearchCompany, ‘MEFO’ for short), and for this reason the bills drawn on it were called MEFO bills. The Reich guaranteed all obligations entered into by MEFO, and thus also guaranteed the MEFO bills in full. In essence all the Reichsbank’ s formal requirements were met by this scheme. It was a question of financing the delivery of goods; MEFO bills were therefore commodity bills. They rested on a threefold obligation: that of drawer, acceptor and Reich. This provided the Reichsbank with every justification for discounting the bills, and, although it was put to every test by the Reichsbank’ s directorate in collaboration with the country’s best legal brains and economists, they agreed unanimously that it was valid. The Reichsbank declared itself ready to prolong the bills, which true to the form laid down were drawn on three months’ credit, to a maximum of five years if so required, and this point was new and unusual. Each bill could thus be extended by a further three months, nineteen times running. This was necessary, because the planned economic reconstruction could not be accomplished in three months, but would take a number of years. By and large such extensions by themselves were nothing new with the Reichsbank; it was quite common to prolong agricultural bills, but an extension over five years, together with a firm declaration that such extensions would be granted, that was most unusual.
One other aspect was even more unusual. The Reichsbank undertook to accept all MEFO bills at all times, irrespective of their size, number, and due date, and change them into money. The bills were discounted at a uniform rate of four per cent. By these means the MEFO bills were almost given the character of money, and interest-carrying money at that. Banks, savings banks, and firms could hold them in their safes exactly as if they were cash. Over and above this they proved to be the best of all interest-bearing liquid investments, in contrast to long-dated securities. – Hjalmar Schacht: The Magic of Money p 113
Had it not proved possible to arrange things in such a way that a large part of the issued bills would be retained by the market and thus not presented to the Reichsbank, then an excessive use of the bank-note printing presses would have been unavoidable. This danger was avoided by making the bills rediscountable at any time, and by paying four per cent interest on them.
It is foolish to neglect the positive results and achievements which the German people brought forth even under Hitler’s tyranny. This is true above all in the fields of social and economic policies. The placing of the interests of Germany as a whole before those of the provinces or municipalities, the abolition or at least reduction of class distinctions not only in monetary but also in humanitarian matters, full employment, the optimum use of leisure time, the social services, maternal and family welfare, the battle against waste, all these remain worthy of our consideration and deserve further development even if in some cases we are dealing only with a cumbersome attempt to learn by trial and error. The fact that they were instigated under National Socialist auspices does not detract from the noteworthiness. This applies particularly to the economic policies prosecuted in the ‘thirties. Adolf Weber said of them ‘all in all the economic policy of this period was thoroughly constructive. Nay, as an economist who has made a thorough study of the world’s economic problems I find it incumbent upon me to state: in all the long years between the two world wars no one in any other part of the world carried out so constructive an economic policy as we did between 1933 and 1935′. Weber made this observation not in the Hitler era, but in 1948. – Hjalmar Schacht: The Magic of Money p 82-83
“Since the bills carried four per cent interest and could be exchanged for ready money at the Reichsbank at any time, they took the place of ready cash, so to speak, and earned interest into the bargain.” – Hjalmar Schacht: ‘My First Seventy-Six Years’ p 316
Zarlenga, ‘the Lost Science of Money’
In Mein Kampf Hitler wrote:
When I listened to Gottfried Feder’s first lecture on breaking down the thralldom of interest [in June 1919], I knew at once that here we had a theoretic truth which will be of immense importance for the future of the German nation.23
Feder’s captivating ideas were about money. At the base of his monetary views was the idea that the state should create and control its money supply through a nationalized central bank rather than have it created by privately owned banks, to whom interest would have to be paid. From this view was derived the conclusion that finance had enslaved the population, by usurping the nation’s control of money.
Feder’s monetary theories could easily have originated from the work of German monetary theorists such as George Knapp, whose book The State Theory of Money (1905) is still one of the classics in the monetary area. Right on page one, Knapp nails it:
Money is a creature of the law. A theory of money must therefore deal with legal history.
Knapp describes the invention of fiat money in these terms: “the most important achievement of economic civilization.” For Knapp, the determination of whether something was money or not was: “our test, that the money is accepted in payments made to the state [i.e., government] offices.”24
Near the end of that book, Knapp casually mentions how German monetary theorists of his day, and earlier, would study and discuss American monetary theories. Thus the ultimate source of Feder’s viewpoint was probably the American Populist movement of the 1870s and the ideas that movement promoted to establish a permanent greenback system.
When the National Socialists came to power, Schacht was reappointed head of the Reichsbank, partly to reassure German big business and foreign bankers. Schacht ridiculed Feder’s monetary views:
Nationalization of banks, abolition of bondage to interest payments and introduction of state Giro ‘Feder’ money, those were the high-sounding phrases of a pressure group which aimed at the overthrow of our money and banking system. To keep this nonsense in check, [I] called a bankers’ council, which made suggestions for tighter supervision and control over the banks. These suggestions were codified in the law of 1934… In the course of several discussions, I succeeded in dissuading Hitler from putting into practice the most foolish and dangerous of the ideas on banking and currency harbored by his party colleagues.25
Konrad Heiden noted that:
Industry did not want to put economic life at the mercy of such men as Gregor Strasser or Gottfried Feder, who, marching at the head of small property owners incited to revolution, wanted to hurl a bomb at large-scale wealth. Feder announced that the coming Hitler government would create a new form of treasury bill, to be given as credits to innumerable small businessmen, enabling them to re-employ hundreds of thousands and millions of workers. Would this be inflation? Yes, said Walter Funk, one of the many experts who for the past year or two had advised Hitler – an experienced and well-known finance writer, collaborator of Hjalmar Schacht and, in Hitler’s own eyes, a guarantee that big business would treat him as an equal… Hitler decided to put an end to the public squabble by appointing Göring to [oversee the questions].
Feder’s faction was then given the four-year plan, to keep them busy.26
Feder quickly lost the battle with Schacht and the German business establishment. Perhaps he was in over his head monetarily. He wrote of his monetary plan: “Intensive study is required to master the details of this problem… a pamphlet on the subject will shortly appear, which will give our members a full explanation of this most important task…”27 But this was 1934, which means he hadn’t clearly reduced the problem to written form since 1919, over 15 years.
“When the time comes, we shall deal with these things in further detail…” Feder wrote, but indeed his party was in power, and the time had come.
Feder was put out to pasture by the National Socialists, serving as an under secretary in the Ministry of Economic Affairs, later to be transferred to commissioner for land settlement and then completely sidetracked as a lecturer at the Technische Hochschule in Berlin. Hitler and the National Socialists came to power on January 30, 1933. Germany’s foreign exchange and gold reserves had dropped from 2.6 billion marks in late 1929, down to 409 million in late 1933 and to only 83 million in late 1934.28 According to classical economic theory, Germany was broke and would have to borrow. But classical economic theory is not very accurate.