Healthy Money Healthy Planet - library.uniteddiversity.coop

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master of all industry and commerce.’ 10 Because of this awesome power, international
bankers can create booms or crashes, and can choose to support governments or
undermine them. And here are the chilling words of someone who wielded this power
in 1790, wealthy Frankfurt banker Mayer Amschel Rothschild: ‘Let me issue and
control a nation’s currency and I care not who writes the law.’ 11
Also in 1790, in the USA, a powerful adviser to the first Secretary of the Treasury,
Alexander Hamilton, proposed a bill to Congress calling for a new privately owned
central bank. Interestingly, one of Hamilton’s first jobs after graduating from law
school in 1782 had been as an aide to Robert Morris, the head of the Bank of North
America. Hamilton had written a letter to Morris the previous year, saying: ‘A national
debt, if it is not excessive, will be to us a national blessing.’ 12
Boom and Bust
Bound up with debt­money creation is a cycle of boom and bust, made worse by the
deregulation of banks. As discussed above, since the late 1980s banks in New Zealand
have been able to set their own reserve ratios. Now recall how a 10 per cent reserve
ratio means that money can be multiplied ten times by the banks. Well, with a lower
reserve ratio the money multiplier effect becomes even more potent. A lot of money is
created very quickly, and when inflation sets in the Reserve Bank raises interest rates
and the whole process is reversed. This results in a roller­coaster ride euphemistically
called the ‘business cycle’, which is essentially boom followed by bust.
Many US presidents, although unaware of the possibility of an alternative to
centrally created money, have issued strong statements about the money­issuing power
of banks. Thomas Jefferson, for example, who for many years fought with the banks,
warned: ‘If the American people ever allow private banks to control the issue of their
currency, first by inflation, then by deflation, the banks … will deprive the people of all
property until their children wake­up homeless on the continent their fathers