“The Bank Was Saved, and the People Were Ruined”
By Jeff Thomas, International Man
The phrase above, attributed to William Gouge, refers to the Panic of 1819, a financial crisis triggered by drastic shifts in the money supply orchestrated by the First Bank of the United States. Initially, the bank expanded credit through generous loans, only to suddenly tighten lending standards, leading to a financial collapse.
This poignant observation encapsulates the essence of financial crises arising from reckless banking practices. In every instance, government complicity plays a crucial role in exacerbating the situation.
The roots of this problematic practice can be traced back to Mayer Rothschild. A shrewd financier in the late 18th century, he offered political incentives to German politicians to gain support for his banking operations. Rothschild operated with a long-term vision, providing subtle but consistent benefits to politicians, thereby positioning himself to request larger favors when necessary.
Movie enthusiasts might find a parallel between Rothschild’s tactics and Don Corleone’s strategies in “The Godfather”: “One day – and that day may never come – I’ll call upon you to do a service for me.”
The Creation of Boom and Bust Cycles
Rothschild’s strategies gave rise to cyclical boom-and-bust dynamics that were immensely profitable for his bank, requiring government backing during downturns. He would initially extend loans on favorable terms, only to subsequently restrict lending. The official narrative claimed these actions were necessary to combat inflation, conveniently overlooking the fact that the inflation was initially caused by the bank itself.
The eventual outcome was a financial “panic” or, as we would term it today, a “depression.” Most stakeholders suffered due to this phenomenon, leaving only the politicians and bankers unscathed.
As stated succinctly by G. Edward Griffin in 1994: “It is widely believed that panics, boom-and-bust cycles, and depressions are caused by unbridled competition among banks, leading to a demand for government regulation. The reality is quite opposite; these market disruptions stem from government-sanctioned monopolistic powers granted to central banks.”
Mayer Rothschild’s five sons continued his legacy and gained substantial control over European banking, with the Rothschild family notably recognized for their influence over the Bank of England, one of the world’s dominant financial institutions today.
Let’s turn our attention to central banking in America.
A Brief Look at Central Banking in America
In 1782, the Bank of North America was established during the nascent stages of the United States. Modeled after Rothschild’s Bank of England, it functioned as a central bank intended to serve both its own directors and the politicians of the time.
The bank indeed benefited its financiers and political allies at the expense of ordinary depositors. After losing its charter in 1783, efforts quickly began to establish a similar institution, “The Bank of the United States,” which was backed by the Rothschilds.
Witnessing the severe repercussions of a central bank deeply intertwined with the government, a significant debate emerged within President George Washington’s Cabinet about allowing the establishment of another potentially harmful financial institution. Secretary of State Thomas Jefferson voiced his opposition, stating:
“The system of banking [is] a blot left in all constitutions which, if not covered, will end in their destruction… I sincerely believe that banking institutions are more dangerous than standing armies, and that spending money to be paid by posterity… is merely swindling futurity on a large scale.”
Conversely, Secretary of the Treasury Alexander Hamilton advocated for the formation of a second central bank. Incredibly, despite Congress witnessing the chaos caused by the previous bank, they passed the charter for this new institution in 1791, which opened its doors with a mere nine percent of the required private funding.
The principal aim of the new bank was to supply the government with fiat currency while collecting public deposits. It promptly began printing and lending money, resulting in predictable consequences. By 1811, the institution had collapsed, benefiting only its directors and some politicians while depositors faced significant losses.
This should have marked the end of the disastrous concept of a central bank— a union between financiers and politicians. Yet, in 1816, Congress established the second “Bank of the United States,” which swiftly precipitated the Panic of 1819. As Gouge articulated, “the bank was saved and the people were ruined.”
In 1832, President Andrew Jackson campaigned against the renewal of the Bank of the United States’ charter. He successfully secured both his re-election and the bank’s charter expiration, but the Rothschild family and their American counterparts persisted in their quest for a central bank that would benefit bankers and politicians at the depositors’ expense.
In 1913, they achieved this with the introduction of the Federal Reserve, marking a more advanced relationship between banking and the State that continues to this day. This system has perpetuated boom-and-bust patterns, resulting in the devaluation of the US dollar by over 96 percent. The 1999 repeal of the Glass-Steagall Act unleashed a wave of lending that directly led to the 2007 real estate bubble collapse and the 2008 stock market crash.
Today, the financial system is far more complex than it was in the 18th century. It is no longer necessary to shut down failing banks immediately. Following the 2007-2008 crises, the government declared that closing central banks would result in disastrous consequences, necessitating heavy borrowing to prop them up. No requirement was established for banks to actually lend these funds or assist struggling borrowers. Instead, banks absorbed the funds, while continuing to distribute massive bonuses to the very executives responsible for the original failure.
This historical overview offers a concise glimpse into the development of central banking in the United States since its inception. While it is not exhaustive, it serves a significant purpose. Today, many developed nations face an economic crisis largely rooted in debt, a predicament borne from the collusion between bankers and government entities.
The current situation is not merely coincidental; it reflects a recurring, effective strategy used by bankers and compliant governments to engineer boom-and-bust cycles. These cycles inflict damage on nearly all citizens, while generating significant profits for their creators.
Recent news highlights a plethora of politicians and commentators proposing “solutions”—suggestions like “quantitative easing,” “taxing the wealthy,” or simply “kicking the can down the road.” Audiences are led to believe that politicians, bankers, and Federal Reserve officials will devise a remedy to the crisis.
However, a review of historical precedents indicates that no genuine solutions are forthcoming, as those who instigated the issues have no intention of resolving them. The ongoing strategy seems to be to periodically leave depositors vulnerable to risk, driven by the profitability of these cycles.
If you have not yet faced financial strain that has left your net worth underwater, it may be prudent to explore ways to extract your liquid assets from the banking system—a system that, based on historical patterns, may soon threaten those remaining assets as the second half of the Great Unraveling unfolds.
Some Unpleasant Questions
Should you rush to your bank to withdraw your assets? Not necessarily. However, recognizing the enduring pattern of boom-and-bust cycles is invaluable. You should consider asking yourself some challenging questions:
- – Will my bank be among those that fail?
- – Could my savings be at risk, partially or entirely?
- – How much time do I have to withdraw my deposits?
- – Will my bank honor the terms of any paper gold they have sold me?
- – Am I able to take proper possession of the allocated gold they claim to hold for me?
- – What should I do with my assets if I withdraw them from the bank?
- – Which banks might remain operational, if any?
These questions merit periodic consideration as events progress. Addressing them may ultimately safeguard your assets, securing those you trust your bank to manage.
Sincerely,
Jeff Thomas
for Economic Prism
[Editor’s Note: Jeff Thomas, a British national, resides in the Caribbean. The son of an economist and historian, he grew up wary of government actions. Although he spent his career fostering and developing businesses, he wrote a weekly newspaper column advocating for limited government for eight years. Having begun studying economics around 1990 under figures like Sir John Templeton and Doug Casey, he has since predicted a second Great Depression and focused on its implications globally. If you’re considering internationalizing your assets, income, or personal circumstances, explore the resources available at the International Man Network, which offers a library of informative reports on diverse topics, from relocating gold overseas to establishing international brokers. Click here for more information.]
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