Modern Money Mechanics | The Alchemy of Global Neo-Feudalism

"Modern Money Mechanics" was a booklet published
and distributed by the Federal Reserve Bank of
Chicago, originally written by Dorothy M. Nichols
in May 1961. Described as a "workbook on bank re-
serves and deposit expansion", the text offers a
detailed description of the basic process of money
creation out of absolutely nothing in today’s glo-
bally established fractional reserve banking schemes
such as the Federal Reserve System and the European
Central Bank (see also HERE).

Most academic texts teach that money is created first by someone making a deposit and then the bank waits for someone to come along and borrow it. 

However, that is not true: Modern Money Mechanics explains how money is created the instant it is borrowed. In other words, debt creates money. All the so called ‘Western’ governments create bonds (= public debt), give them to private bankster-cartels called ‘independent central banks’ or 'commercial banks' which use that debt to create money. There is no other value attached to it. It is the act of borrowing which causes it to spring into existence. Also all other banks are creating money based on a borrower’s promise to pay (the IOU = I Owe You). They create money by ‘monetizing’ the public and private debts of businesses and individuals.

In his book ‘The Creature from Jekyll Island’ G. Edward Griffin elaborates on this in the example of the US:

» The entire function of this machine is to convert debt into money.  It’s just that simple.  First, the Fed takes all the government bonds which the public does not buy and writes a check to Congress in exchange for them.  (It acquires other debt obligations as well, but government bonds comprise most of its inventory.) There is no money to back up this check. These fiat dollars are created on the spot for that purpose. By calling those bonds “reserves,” the Fed then uses them as the base for creating 9 additional dollars for every dollar created for the bonds themselves. The money created for the bonds is spent by the government, whereas the money created on top of those bonds is the source of all the bank loans made to the nation’s businesses and individuals. The result of this process is the same as creating money on a printing press, but the illusion is based on an accounting trick rather than a printing trick. 

The bottom line is that Congress and the banking cartel have entered into a partnership in which the cartel has the privilege of collecting interest on money which it creates out of nothing, a perpetual override on money which it creates out of nothing, a perpetual override on every American dollar that exists in the world. Congress, on the other hand, has access to unlimited funding without having to tell the voters their taxes are being raised through the process of inflation. If you understand this paragraph, you understand the Federal Reserve System.

[…] The federal government adds ink to a piece of paper, creates impressive designs around the edges, and calls it a bond or Treasury note. It is merely a promise to pay a specified sum at a specified interest on a specific date […] this debt eventually becomes the foundation for almost the entire nation’s money supply.  In reality, the government has created cash, but it doesn’t yet look like cash. To convert these IOUs into paper bills and checkbook money is the function of the Federal Reserve System.

An instrument of government debt is considered an asset because it is assumed the government will keep its promise to pay […] so the Federal Reserve now has an ‘asset’ which can be used to offset a liability. It then creates liability by adding ink to yet another piece of paper […] the “Federal Reserve Check” […]

There is no money in any account to cover this check. Anyone else doing that would be sent to prison. It is legal for the Fed, however, because Congress wants the money, and this is the easiest way to get it […] The process is mysteriously wrapped up in the banking system […] The Federal Reserve check is then deposited in one of the Federal Reserve Banks […] These checks become the means by which the first wave of fiat money floods into the economy. «