Funny Money

. the new paper money system

This reveals the primary reason why the inflatable paper
money system was created: it enables nations to fight and
prolong their wars. It also makes the human struggle for
physical existence in a modern economy more difficult due
to the massive debt and parasitic absorption of wealth that
the system causes. Furthermore, steady inflation reduces the
value of people's money so that their accumulated wealth
is gradually eroded.
The initial success of the Bank of Amsterdam encouraged
similar banking arrangements in other nations. The most
notable offspring was the Bank of England, founded in
1694. The Bank of England established the pattern for our
modern-day central banks by refining the inflatable paper
money system of Holland. The Bank of England system
was subsequently spread from nation to nation, often on
the backs of revolutions led by prominent Brotherhood
network members. The worldwide reformation announced
in the Fama Fraternitis was well underway by the end of
the 17th century, and the "new money" was a big part of
it,
















Funny Money




distorted the otherwise altruistic
social and political goals of the Brotherhood revolutionaries.
The newly-weakened monarchies and parliamentary
governments allowed for greater power to be assumed by
a new institution being installed by the revolutionaries: a
new banking and monetary system. This new monetary
system was a major element of the revolutions of the 16th,
17th, and 18th centuries, yet this fact is only minimally
discussed in the majority of history books. Those who
ran, and still run, the new monetary system have been
aptly labeled by one author, Howard Katz, "the paper
aristocracy." The revolutions which began to sweep the
world after the Reformation heralded the diminishment of
powerful political aristocracies in favor of the less visible,
but in many ways equally potent, "monetary aristocracies."
This happened because, during the Reformation, banking
and moneylending, which were once viewed as lowly
occupations, were being forged into a renewed power due
to a clever new science of money.* This new money was a
type of paper currency that could have its value deliberately
and systematically diminished through a process known as
"inflation." It is the type of money still in use today. This
new money, and the institutions which arose from it, have
had an enormous impact on our modern civilization. We
cannot fully appreciate the effects of Protestantism and the
revolutions which arose out of it without comprehending
just how the new money system works.


*For a simple and amusing introduction to the history of money and
economics, I recommend The Cartoon Guide to Economics by Douglas
Michael, published in the United States by Harper and Row Publishers,
Inc., and in Canada by Fitzhenry & Whiteside Ltd. of Toronto.


FEW TOPICS OCCUPY as many minds or stimulate as many
emotions as money. This is largely because money is an
overwhelming problem to a majority of people. One thing
which causes modern money to be a problem is inflation,
whether inflation is climbing at 3% annually or 300%. Inflation,
of course, is the situation in which the costs of goods
and services steadily rise due to the ever-decreasing value
of money. This happens when the money supply becomes
larger in proportion to the supply of valuable goods and
services.
Money itself is not valuable; only the goods and services
that can be bought with it are. The wealth of any individual
or nation, therefore, is ultimately determined by what it
produces in terms of valuable products and services, not by
how much money it prints, distributes or holds. A nation
could actually survive without any currency at all as long
as it was otherwise productive.
The purpose of money is to facilitate the exchange of
goods and services. Money is therefore an extension of

the barter system. Barter is the act of trading something
one possesses or does for something of someone else's.
Production and barter are the bases of all economy.
Coins and paper money were originally created to assist
in barter. They allowed people to barter without having to
carry around actual goods or immediately deliver a service.
This permitted individuals to trade more easily and to save
the profits of their labors for the future.
Paper money initially began as "promissory notes." A
promissory note is a written promise to pay a debt. A person
would write a note on a piece of paper promising the bearer
of the note a certain quantity of goods or services that the
notewriter could provide on demand. To illustrate, let us
look at the following fictitious example:
Let us pretend that a chicken farmer was in the village
market and wanted to trade for a basket of apples. He did
not have his chickens with him, so he might write a note
to the apple seller entitling the bearer of the note to come
up to the farm at any time to pick out two healthy chickens.
The chicken farmer would be able to walk away with his
basket of apples and it would be up to the apple grower
to visit the farm one day to redeem the note by getting his
two chickens. As long as people have faith in the chicken
farmer's ability to honor his notes, he will be able to use
them for barter.
Let us now pretend that as the day draws to a close, the
apple grower decides to have a look around the market. He
comes across the cloth merchant. The apple grower's wife
has been henpecking him for days to buy some of the new
silk that just arrived on a caravan from the Far East. The
apple grower's home life has been made miserable by her
unceasing demands and her denial of wifely comforts, so
he negotiates with the cloth merchant for some silk. The
cloth merchant, however, does not need any more apples,
so the apple grower, remembering that he has a note for
two chickens, asks the merchant if the merchant needs
poultry. The merchant says that he does, and the apple
grower gives him the note for two chickens in exchange
for silk. It is now up to the cloth merchant to trudge on
up to the chicken farm to redeem the note. The chickens

themselves have never left the coop, yet they have changed
ownership twice in one day. This type of exchange was all
that paper money was initially created for; but do you see
the temptation that it can open up?
If the chicken farmer knows that some time will pass
before he must redeem his notes with actual chickens, or
that some if his notes will circulate forever and never come
in for redemption, he may be tempted to issue more notes
than he has in actual chickens, thinking that he will be able
to cover all the notes by the time they come back to him.
Temptation now gets the best of the chicken farmer.
The chicken farmer has a big family get-together coming
up and he wants to impress his in-laws for once by putting
on an opulent feast. Down to the market he goes where he
writes notes for chickens not yet hatched and stocks up
with an abundance of goods from other merchants. Several
things can now happen. The chicken farmer will get away
with it if he is always able to meet the demand for chickens
when his notes come in for redemption. Another thing that
may, and often will, occur is that he has so saturated the
marketplace with his chicken notes that most people just
do not want any more of them, so he must offer even more
hens for each trade to make people feel that it is worth their
while. He is now writing notes for two or three chickens in
exchange for items for which he previously only had to issue
single-chicken notes. As these chicken notes circulate, they
become less and less valuable because there are so many of
them. A vicious spiral ensues: the more notes the chicken
farmer issues, the less valuable they become, and the more
he has to issue in order to get what he wants. This is known
as inflation.
Now comes the worst part.
With more and more notes outstanding, an increasing
number of notes will start coming in for redemption. Soon
the farmer will see that his true wealth, which is his supply
of chickens, is becoming rapidly depleted even though only
a small portion of his outstanding notes have come back.
To preserve his chickens, he must decrease the value of his
notes by declaring that the outstanding notes are now only
good for half of what they say. This is called devaluation.

Since the farmer may find it difficult to admit that he had
issued many more notes than he had chickens, he may try to
save his reputation by lying, such as by saying that a fierce
chicken plague had wiped out half of his flock. That will
probably not prevent him from becoming very unpopular.
Public faith in his notes will be destroyed. He will either
have to revert back to straight barter, or else he will need
to acquire someone else's notes in order to continue trading
in the market.
As we can see, paper notes, or money, are rooted in
actual commodities and are meant to be an expression that
the creator of the notes has something valuable to trade.
In contrast to notes are coins, which functioned somewhat
differently. Metals have always been considered valuable,
and so pieces of metal were convenient trading tools.
Metal pieces were imprinted with various designs, thereby
becoming coins, and their metallic purity was guaranteed
by the imprinter. Coin values were initially determined by
the quantity and purity of the metal contained within the
coins. Gold was a rare and popular metal, so coins made
from gold were more expensive and had a higher barter
value than, for instance, copper coins.
Metal coins became a popular tool of barter because they
were durable and quantities could be controlled. They did
create some problems, however. Realistically, people were
only trading pieces of metal for other goods. This created
a disproportionate emphasis on metals. The acquisition of
coins and coin metals became an obsession to a great many
people, and such obsessions tend to drain away energy
better spent producing other valuable goods and services.
The system also gave a disproportionate amount of power to
those who possessed large quantities of coined metals, even
though other commodities, such as food, are ultimately more
valuable. The person with the coin metals could immediately
acquire any good or service, but a farmer first had to go
through the intermediate step of exchanging his product for
a coin or coin metal before he could have the same spending
flexibility.
Coin metals merged with paper notes to create the foundation
of our modern monetary system in the 1600's. Those

who laid this foundation were reportedly the goldsmiths.
Goldsmiths usually owned the strongest safes and lockboxes
in town. For this reason, many people deposited their coin
metals with the smiths for safekeeping. The smiths issued
receipts to the depositors that promised to pay to the receipt
holders on demand those quantities of gold or silver shown
on the receipts. Every such receipt was actually a note which
could be circulated as money until a holder of the note went
back to the goldsmith to redeem it for the specified amount
of metal.
The goldsmiths made an important discovery. Under
normal circumstances, only about 10% to 20% of their
receipts ever came back for redemption at any given time.
The rest circulated in the community as money, and for
good reason. Paper was easier to carry than bulky coin
and people felt safer holding receipts in lieu of actual gold
and silver. The smiths realized that they could lend out the
unredeemed metals and charge interest, and thereby earn
money as lenders. In making such a loan, however, the
smith would try to convince the borrower to accept the
loan in the form of a receipt instead of actual metal. The
borrower could then circulate that note as money. As we can
see, the goldsmith has now created "money" (his receipts)
for double the actual quantity of metal he has in his safe:
first to the original depositor, and then to a borrower. The
goldsmith did not even own the metal in his safe, yet by
simply writing upon a piece of paper, someone now owes
him money up to the full value of the gold in his safe. The
smith could continue writing his notes as long as the notes
coming in for redemption did not exceed his actual deposits
of precious metals. Typically, a smith would issue notes four
to five times in excess of his actual supply of gold.
As profitable as this operation may have been, there were
some pitfalls. If too many of the goldsmith's notes came
back for redemption too rapidly, or the smith's borrowers
were slow to repay, the smith would be wiped out.
The credibility of his notes would be destroyed. If the
smith ran his operation cautiously, however, he could
become quite wealthy without ever producing anything
of value.

The injustice of this system is obvious. If for every sack
of gold the smith had on deposit people now owed him
the equivalent of four sacks, someone had to lose. As
public debt to the goldsmith increased, more and more true
wealth and resources were owed to him. Since the goldsmith
was not producing any true wealth or resources, but was
demanding an ever-increasing share of them because of his
paper notes, he easily became a parasite upon the economy.
The inevitable result was the enrichment of the careful
goldsmith-turned-banker at the cost of the impoverishment
of other people in the community. That impoverishment
was manifested either in the people's need to give up
things of value or in their need to toil longer to create
the wealth needed to repay the banker. If the goldsmith
was not careful and his monetary bubble burst, the people
around him suffered anyway due to the disruption caused
by the collapse of his bank and the loss of the value of his
notes still in circulation.
Such was the birth of modern banking. Many people
feel that it is an inherently dishonest system. It is. It is
also socially and economically destabilizing, yet all of the
world's major monetary and banking systems today operate
on a close variation of the system I just described.
By the 17th century, the Medici banking house of Italy
had come up with the idea of using gold as the commodity
upon which to base all paper currency. Gold was touted
as the perfect basis for paper notes because of the scarcity
and desirability of gold. This was the beginning of the
"gold standard" in which all other goods and services are
valued in relation to gold (and sometimes silver). The gold
standard was certainly a terrific idea for those people who
owned plenty of gold and silver, but it created an artificial
reliance on a commodity that is not nearly as useful as
many other products. To base an entire monetary system
on a single commodity is better than basing it upon no
commodities at all, but even under a gold standard paper
notes will far exceed the metals used to back the notes. The
best solution is to root a money supply firmly in a nation's
entire valuable output so that the money acts as an accurate
reflection of that output.

Once the gold standard was created, paper notes were
thought to be "as good as gold" because people could
redeem the notes for actual gold. This created a false
sense of security. As more and more gold notes entered
the market, they gradually became worth less and less,
resulting in a steady inflation. The gold owners/bankers
had to keep issuing a constant stream of notes because that
is how they earned their profits. As long as the bankers
planned carefully and the people retained faith in the notes,
the note writers could stay ahead of the inevitable inflation
they created and make an enormous profit from it. If, on the
other hand, they issued an overabundance and too many of
their notes came back for redemption, they could, as a last
resort, devalue the notes to save their gold. In this fashion,
inflatable paper money, even under a gold standard, became
a source of wealth and power to those entitled to create the
money. It also generated indebtedness on an enormous scale
because most of the "created-out-of-nothing" gold notes
were released into the community as loans repayable to
the bankers. If people did not borrow from the bankers,
little new money would enter the market and the economy
would slow down.
This method of creating money clearly destroyed the
true purpose of money: to represent the existence of actual
tradeable commodities. Inflatable paper money allows a
handful of people to absorb and manipulate a great deal
of true wealth, which are the valuable goods and services
people produce, simply through the act of printing paper
ahd then slowly destroying the value of that paper with
inflation. It causes money to become its own commodity
which can be manipulated on its own terms, usually to
the detriment of the production-and-barter system. Money
was meant to assist that system, not to dominate and control
it.
The inflatable paper money system described above was
the new "science" of money being installed by Brotherhood
revolutionaries. An early version of the system was established
in Holland in 1609. That was the year in which Dutch
and Spanish forces signed a truce suspending the hostilities
of the Eighty Years War. The truce marked the birth of the


independent Dutch Republic and the founding of the Bank
of Amsterdam in the same year.
The privately-owned Bank of Amsterdam operated on the
inflatable paper money system described above. It was run
by a group of financiers who pooled some of their precious
metals to form the asset base of the Bank. By prior agreement
with the new Dutch government, the Bank helped
Dutch forces resume the wars against Spain by issuing notes
four times in excess of the Bank's asset base. The Dutch
magistrates were then able to draw on three quarters of
the "created-out-of-nothing" money to finance the conflict.
This reveals the primary reason why the inflatable paper
money system was created: it enables nations to fight and
prolong their wars. It also makes the human struggle for
physical existence in a modern economy more difficult due
to the massive debt and parasitic absorption of wealth that
the system causes. Furthermore, steady inflation reduces the
value of people's money so that their accumulated wealth
is gradually eroded. The Custodial aims expressed in the
Garden of Eden and Tower of Babel stories were greatly
furthered by the new paper money system.
The initial success of the Bank of Amsterdam encouraged
similar banking arrangements in other nations. The most
notable offspring was the Bank of England, founded in
1694. The Bank of England established the pattern for our
modern-day central banks by refining the inflatable paper
money system of Holland. The Bank of England system
was subsequently spread from nation to nation, often on
the backs of revolutions led by prominent Brotherhood
network members. The worldwide reformation announced
in the Fama Fraternitis was well underway by the end of
the 17th century, and the "new money" was a big part of
it,









Dr. Quigley's book describes in great
detail the development and workings of the international
banking community as it established the inflatable paper
money system throughout the world.
Let us take a brief look at what Dr. Quigley had to say.
32



Funny Money Goes
International
IN HIS BOOK, Tragedy and Hope, Dr. Quigley divides the
history of "capitalism" into several stages. The third stage,
which is described as the period from 1850 until 1931, is
defined by Dr. Quigley as the stage of Financial Capitalism.
Dr. Quigley states:
This third stage of capitalism is of such overwhelming
significance in the history of the twentieth century, and
its ramifications and influences have been so subterranean
and even occult, that we may be excused if
we devote considerable attention to its organizations
and methods. Essentially what it did was to take the
old disorganized and localized methods of handling
money and credit and organize them into an integrated
system, on an international basis, which worked with
incredible and well-oiled facility for many decades.1
Dr. Quigley described the overall intent of the new integrated
system:
328
THE GODS OF EDEN 329
... the powers of financial capitalism had another farreaching
aim, nothing less than to create a world system
of financial control in private hands able to dominate
the political system of each country and the economy of
the world as a whole. This system was to be controlled
in a feudalist fashion by the central banks of the world
acting in concert, by secret agreements arrived at in
frequent private meetings and conferences. The apex
of this system was to be the Bank for International Settlements
in Basel, Switzerland, a private bank owned
and controlled by the world's central banks which
were themselves private corporations. Each central
bank.. . sought to manipulate foreign exchanges, to
influence the level of economic activity in the country,
and to influence cooperative politicians by subsequent
economic rewards in the business world.2
In the English-speaking world, the newly-organized central
banks exerted significant political influence through an
organization they supported known as the Round Table.
The Round Table was a "think tank" designed to affect the
foreign policy actions of governments.
The Round Table was founded by an Englishman named
Cecil Rhodes (1853-1902). Rhodes had created a vast diamond
and gold-mining operation in South Africa and in the
two African nations named after him: Northern and Southern
Rhodesia (today Zambia and Zimbabwe, respectively).
Rhodes, who was educated at Oxford, did the most of any
Englishman to exploit the mineral resources of Africa and
to make the southern African continent a vital part of the
British Empire.
Rhodes was more than a man driven to make a personal
fortune. He was very concerned with the world and where
it was headed, especially in regard to warfare. Although
he lived almost a century ago, he envisioned a day when
weapons of great destruction could destroy human civilization.
His farsightedness inspired him to channel his
considerable talents and personal fortune into building a
world political system under which it would be impossible
330 William Bramley
for a war of such magnitude to occur. Rhodes intended to
create a one-world government led by Britain. The world
government would be strong enough to stamp out any hostile
actions by any group of people. Rhodes also wanted to unify
people by making English the universal language. He sought
to diminish nationalism and to increase awareness among
people that they were part of a larger human community.
It was with these goals in mind that Rhodes established the
Round Table. In his last will, Rhodes also created the famous
"Rhodes Scholarship"—a program still in operation today.
The Rhodes scholarship program is designed to promote
feelings of universal citizenship based upon Anglo-Saxon
traditions.
Rhodes' heart was clearly on the right track. If successful,
he would have undone many of the harmful effects caused by
purported Custodial actions and by the corrupted Brotherhood
network. A universal language would have undone the
damaging effects described in the Tower of Babel story of
dividing people into different language groups. Promoting a
sense of universal citizenship would help overcome the types
of nationalism which help generate wars. Something went
wrong, however. Rhodes committed the same error made
by so many other humanitarians before him: he thought
that he could accomplish his goals through the channels
of the corrupted Brotherhood network. Rhodes therefore
ended up creating institutions which promptly fell into the
hands of those who would effectively use those institutions
to oppress the human race. The Round Table not only failed
to do what Rhodes had intended, but its members later helped
create two of the 20th century's most heinous institutions:
the concentration camp and the very thing that Rhodes had
dedicated his life to preventing: the atomic bomb.
Rhodes' idea for the Round Table had begun in his early
twenties. At the age of 24, while a student at Oxford,
Rhodes wrote his second will, which described his plans
by bequeathing his estate for:
.. . the establishment, promotion and development of a
Secret Society, the true aim and object whereof shall be
the extension of British rule throughout the world . ..
THE GODS OF EDEN 331
and finally the foundation of so great a power as to
hereafter render wars impossible and promote the best
interests of humanity.3
Rhodes' secret society, the Round Table, was finally born
in 1891. It was patterned after Freemasonry with its "inner"
and "outer" circles. Rhodes's inner circle was called the
Circle of Initiates and the outer was the Association of
Helpers. The organization's name, the Round Table, was
an allusion to King Arthur and his legendary round table.
By implication, all members of Rhodes' Round Table were
"knights."
It was inevitable that Rhodes' success and political influence
would bring him into contact with other "movers and
shakers" of English society. Among them, of course, were
the major financiers of Britain. One of Rhodes' chief supporters
was the English banker, Lord Rothschild, head of
the powerful Rothschild branch in England. Lord Rothschild
was listed as one of the proposed members for the Round
Table's Circle of Initiates. Another Rhodes associate was
the influential English banker, Alfred Milner.
After Rhodes died in 1902, the Round Table gained
increased support from members of the international banking
community. They saw in the Round Table a way to exert their
influence over governments in the British Commonwealth
and elsewhere. In the United States, for example, according
to Dr. Quigley:
The chief backbone of this [Round Table] organization
grew up along the already existing financial cooperation
running from the Morgan Bank in New York to
a group of international financiers led by the Lazard
Brothers.4
From 1925 onward, major contributions to the Round
Table came from wealthy individuals, foundations, and companies
associated with the international banking fraternity.
They included the Carnegie United Kingdom Trust, organizations
associated with J. P. Morgan, and the Rockefeller
and Whitney families.
332 William Bramley
After World War I, the Round Table underwent a period
of expansion during which many subgroups were created.
The man responsible for getting many of the subgroups
started was Lionel Curtis. In England and in each British
dominion, Curtis established a local chapter (in Quigley's
words, a "front group") of the Round Table called the Royal
Institute of International Affairs. In the United States, the
Round Table "front group" was named the Council on
Foreign Relations (CFR).
Many Americans today are familiar with the New Yorkbased
Council on Foreign Relations. The CFR is usually
thought of as a "think tank" from which come a great many
political appointees at the Federal level. Under the Presidential
administration of Ronald Reagan, for example, more than
seventy administration members belonged to the Council,
including a number of top cabinet members. The CFR has
dominated earlier Presidential administrations as well, and
it dominates the present administration. The chairman of
the CFR for many years has been banker David Rockefeller,
former chairman of the Chase Manhattan Bank. Another
Chase executive chaired the CFR before that. The warning of
Thomas Jefferson has come true. The banking fraternity has
exercised a strong influence on American politics, notably
in. foreign affairs, and the Council on Foreign Relations is
one channel through which it has done so. Regrettably, that
influence has helped to preserve inflation, debt and warfare
as the status quo.
When Cecil Rhodes was alive, he gained considerable
power in South Africa and served for a number of years as
colonial governor there. He had a unique and effective way
of delegating power. According to one of Rhodes' closest
friends, Dr. Jameson, Rhodes gave a great deal of autonomy
to his trusted men. Dr. Jameson once wrote:
. .. Mr. Rhodes left the decision [on what to do in a
situation] to the man on the spot, myself, who might
be supposed to be the best judge of the conditions.
This is Mr. Rhodes' way. It is a pleasure to work
with a man of his immense ability, and it doubles the
pleasure when you find that, in the execution of his
THE GODS OF EDEN 333
plans, he leaves all to you; although no doubt in the
last instance of the Transvaal business he has suffered
for this system, still in the long run, the system pays.
As long as you reach the end he has in view he is not
careful to lay down the means or methods you are to
employ. He leaves a man to himself, and that is why
he gets the best work they are capable of out of all
his men.5
This can be an effective style of leadership, except when
the means used to achieve an end create their own problems.
Some of the methods used by Rhodes' men did more
long-term harm than immediate good. In South Africa, for
example, a struggle between Dutch settlers (the "Boers")
and the English erupted into the Boer War. During that
conflict, one of the British officers under Rhodes, Lord
Kitchener, established concentration camps to hold captured
Boers. The camps were decreed by Kitchener on December
27, 1900 and over 117,000 Boers were eventually imprisoned
within forty-six camps. Conditions were so inhumane
that an estimated 18,000 to 26,000 people died, primarily
from disease. It was tantamount to mass murder. Today
we associate concentration camps with Nazi Germany and
communist Russia, but their 20th-century usage actually
began with the English under Lord Kitchener.
Perhaps the greatest irony in the story of the Round Table
was the role of that organization in creating the atomic bomb.
After Rhodes' death, the Round Table groups went on to
establish other organizations. One of them was the Institute
for Advanced Study (IAS) located in Princeton, New Jersey.
The IAS greatly assisted the scientists who were developing
the first atomic bomb for the United States. Institute members
included Robert Oppenheimer, who has been dubbed
the "Father of the A-Bomb," and Albert Einstein, to whom
the Institute was like a home.
As we have seen, the world was. undergoing many important
developments as it entered the 20th century. Central
banking was being organized into an international network.
Bankers gained great influence in British and American
foreign affairs through such groups as the Round Table
334 William Bramley
and the Council on Foreign Relations. Meanwhile, the
communist movement was gaining increasing momentum
in Europe. This momentum bore fruit in 1917 when communist
revolutionaries established their first "dictatorship of
the proletariat" in Russia.
Once again, the world was on the road to a Biblical
Utopia.